Economic analysis of China’s marketization process over four decades and the construction of the Chinese model and Economics with Chinese Studies

Abstract

Purpose Over the past four decades, China has strived to make the market mechanism play a decisive role in resource allocation under the conditions of adhering to the basic socialist economic system. The paper aims to discuss this issue. Design/methodology/approach On this matter, this paper proposes a three-phase transition hypothesis for the Chinese institutional change models, namely, a de facto path, which gives potential to a successful incremental transition of a centralized country from planned economy to a market economy, lies in the incremental transitions of the institutional change models from a supply-oriented model at initial reform to a middle-proliferation model and to a demand-induced model along with the gradual establishment of exclusive property rights, thereby completing the transition to a socialist-market-economic system. Findings The Chinese economic model’s unique connotation is the reason why the solution to this model often baffles both the traditional political-economic logic and western mainstream institutional change theory. Originality/value This hypothesis corroborates that China’s unswerving practice of economic reform has provided unprecedented opportunities and challenges for the development of economic theory. The Chinese model constitutes the source of innovation for the subject of Economics with Chinese Studies.