ABSTRACT
Introduction In the last 25 years of transition, China has been ‘crossing many rivers’ in its quest for development. Not only has China had to develop a competitive manufacturing capacity more or less from scratch, but, in order to be a global economic power at the forefront of technology it has had to grasp the ‘New Economy’ at the same time. We argue in this chapter that China has, so far, been successful in both tasks. We argue, however, that what successes have been achieved have not been the result of crudely replacing the ‘plan’ with the ‘market’. Rather we argue, with empirical examples, that China’s recent path to development of the ‘New Economy’ under Deng Xiaoping and his successors, has been underpinned by institutional arrangements laid down under Mao Zedong and subsequently nurtured by the state, despite frequent rhetorical claims to the contrary. We argue that in order to ‘cross the river’ to the New Economy, China has moved gradually and pragmatically, has been ‘feeling the stones’ of ‘fuzzy property rights’ and ‘public entrepreneurship’ and that without these very Chinese path-dependent elements of its institutional environment, would still only be half-way across.
