Viewed from the perspective of globalisation, China’s experience of economic transformation over the past three decades appears to be anomalous – indeed paradoxical. The sustained rapid growth of the Chinese economy has been in sharp contrast to the prolonged stagnation in most parts of the non-Western world. The mixed economic system that has persisted despite market reforms further contradicts the orthodox doctrines of globalisation, i.e. the doctrines of market fundamentalism commonly known as the Washington Consensus. There is of course no shortage of proponents of the Washington Consensus attempting to interpret the Chinese experience in a way that is consistent with the orthodox doctrines. There is a recurring proposition which states that China’s economic system has been a mix of market-conforming and market-supplanting elements, that its developmental achievements have been ascribable to the conforming elements whilst its accumulated problems are due to the supplanting elements, and that the problems have tended to outweigh the achievements as the country’s economic transition proceeds from the allegedly ‘easy’ phase to the ‘difficult’ phase (The Economist 1998; IMF 2000; OECD 2005; World Bank 2002). Essentially, this proposition is based on the belief that economic development as dictated by principles of the market, and the actual working of the world market in reality, is somehow natural or easy. This is the notion of the ‘natural path of development’, the ultimate promise of globalisation. This interpretation of the Chinese experience has been shared by many in the critical, anti-globalisation scholarship. There is a widely-held view in this camp that, rather than fundamentally deviating from principles of the market, China has actually followed through a capitalist transformation. Indeed, it is posited that China has been following the extreme form of capitalist transformation, namely neoliberalisation. What distinguishes these critical scholars from the orthodoxy is in terms of assessment. They have often argued that China’s seemingly phenomenal developmental performance has been mainly based on the ‘super-exploitation’ of Chinese labour (and the natural environment), as well as on ‘under-cutting’ the world working class as a whole (Hart-Landsberg and Burkett 2004; Harvey 2005; Walker and Buck 2007). Essentially, the fact that these writers unequivocally deny that China’s sustained rapid economic growth is a real process of development appears to reflect the belief that capitalism can

never deliver development anywhere, any time, on a world-significant scale. This belief can be called the ‘natural path of under-development’. This chapter takes on the orthodox, market-fundamentalist discourse on China, while also attempting to engage with the critical scholarship. Specifically, it seeks to construct an alternative account of China’s economic transformation, based on the following two-fold proposition. First, China’s economic transformation has been mainly based on productivity growth, and is thus to a significant extent a real development. Second, development has been achieved mainly through a process of ‘governing the market’ by a set of structural-institutional factors that are China-specific, but can be of general importance for late developing countries. Based on this proposition, this chapter will also attempt to explore the future prospects for China’s economic transformation and draw some lessons for late development.