ABSTRACT
This chapter provides a set of primary and secondary elements of the shock therapy model of transition. The primary elements include the Chinese process of reform is often cited as the leading example of a feasible and successful gradualist and evolutionary transformation to marketization, with the possible exception of the 'mini bangs' or 'controlled explosions' necessary to get the process started. The reform movement in China, as in Central Europe, Eastern Europe, and the former Soviet Union (CEEFSU), combined demands for both political and economic reform. The secondary elements includes by 1984 the Chinese government had become convinced of the necessity of a price reform. In CEEFSU, privatization emerged as a radical strategy to counteract the problems that haunted centrally administered economies, such as bureaucracy, lack of enthusiasm and initiative, and inefficiency. The dynamic process of reform in China revealed the unfolding of market capitalism, not market socialism.
