ABSTRACT
China presents a bit of a puzzle for would-be reformers of socialist and post-socialist economies. The economy has been growing at a steady 9 percent a year since the early 1980s-13 percent in 1992-yet nearly half of its state-owned enterprises (SOE), the flagships of its economy, are losing money and a further quarter are barely breaking even. Calculated on a purchasing power parity basis, China has become the world’s third largest economy, and yet, in contrast to Central and Eastern Europe and to the Commonwealth of Independent States (CIS), the country has embarked on no massive programme of privatization of state-owned assets: modest experiments with stock ownership leave the state firmly in control. Moreover, the Chinese leadership is in no way committed to the replacement of a Marxist-Leninist regime by a market order; at most it is committed to combining the two. Western observers thus confront the paradoxical possibility that by the year 2010, if it maintains just two-thirds of its current rate of growth, China could have become the world’s largest capitalist and Marxist-Leninist state. What is going on?
