ABSTRACT
This chapter discusses the story of how China's market economy with socialist characteristics rose from the ashes of Mao Zedong's failed experiments with central planning and control, and how it developed despite many bumps in the road. The key insight of economics is that individual freedom will generally induce good outcomes in a spontaneous order, while coercion generally induces bad outcomes. Economic freedom of choice in international trade is central to economic development because it finds both the top income-earning opportunities for the poor and the cheapest prices for essential goods for the poor. Economic policies based on a high degree of coercion also can cause a big divergence between private and social returns, to the detriment of overall development. Indicators of these reforms are correlated with economic growth recoveries, including the decent economic growth in Africa and Latin America since the "Lost Decades" of the 1980s and 1990s.
