ABSTRACT
The traditional socialist system of China and the development strategy of prioritizing heavy industry did not bring China prosperity and allow the country to forge ahead as envisaged. Instead, such a system and the development strategy, together with the political campaigns that frequently occurred (such as the Great Leap Forward and the Cultural Revolution), caused a great deal of damage to the Chinese economy. At the same time, the success of Japan and the Four Asian Tigers1 seems to symbolize the superiority of another economic system. Clearly, in the peaceful competition of the different economic systems between the East and the West, the West had overtaken the East. Thus, in 1978, the Communist Party of China did not hesitate to learn from the West, launching unprecedented reforms in economic system. The system reform of Chinese economy has already lasted more than 30 years, and is still continuing. In this chapter, we will describe the reform of the economic system. This will enable us to understand the current institutional environment of the Chinese economy, thus preparing for the study of contemporary Chinese economy in the next chapter.
