1
An Unusual Path of Transition
from Plan to Market
• Uninterrupted growth since 1979
• Unprecedented since 1840
•Ex ante it was not clear if China could muddle
through
Doubts in the late 1970s and early 1980s
More doubts in 1989 and early 1990s
Still more doubts after the Asian crisis in 1998
Still doubts today
An Unusual Path of Transition
from Plan to Market
• Economists have not anticipated this
– Ask an economist in 1988 which country would
come first economically, China or the Soviet
Union?
• Political scientists have predicted otherwise
– China was, and still is, a Communist country
– Political liberalization should come before
economic liberalization
