ABSTRACT
This chapter argues that China is still below the optimal degree of marketization and international integration. It suggests that the chosen method of World Trade Organization membership to advance marketization and integration is a desirable one, conditional upon supplementary policies being enacted to reduce the adjustment costs. The chapter examines some claims in the literature that Chinese economic exceptionalism is the cause of the phenomenal growth and focuses mainly on the dual-track price reform. The academic analysis of China's dual track price system (DTPS) has gone through two phases: the partial-equilibrium approach and the general equilibrium approach. The introduction of DTPS cannot cause an increase in the output of the light industrial good unless there is a decrease in the output of the heavy industrial good. The explosive growth China's non-state industrial sector had made a deep impression on the Russian reformers and inspired them to push for a double track on ownership as well.
