ABSTRACT
This chapter discusses the early stages of China’s market reforms. Drawing on archival material and oral history interviews, it traces the experimental beginnings of reform and the intellectual origins of wholesale price liberalization. Early reforms proceeded from experimentation with markets and price liberalization on the margins of the old system. Meanwhile, academic economists were trying to derive a reform program from economic theory. Chapter 5 analyzes exchanges between China’s established economists and Eastern European émigré economists, the World Bank, and other foreign visitors, including Milton Friedman, to show how market socialist concepts prepared the ground for a radical market reform paradigm. This radical reform approach closely resembled the logic of shock therapy and came to be called “package reform” in the Chinese debate. By the overarching logic of this paradigm, reform was to begin by designing a target model in order to then articulate a package of reform measures to institute this desired economic system. Package reform competed with China’s gradualist experimentalism that prevailed at the time. As in other contexts, package reform was grounded in neoclassical economics—both the neoliberal kind and the socialist type represented in China by the contributions of Włodzimierz Brus and Ota Šik.
