The Transition to Market Guided Economies: Lessons for Russia and Eastern Europe from the Chinese Experience

Abstract

The process of economic reform in China began in 1978 and continues to this day. The process is far from over — there is much that remains to be done — but a great deal has been achieved in the last fifteen years and much can be learned from the Chinese experience. Our purpose, however, is not to attempt a comprehensive evaluation of the economic reforms in China but to consider what lessons from the Chinese experience might be applicable to Russia and Eastern Europe as they attempt a transition from centralized quantitative planning to an economy guided by market forces. China would seem to be an obvious point of comparison for socialist countries in transition since China was and remains a. socialist country which none the less aspires to harness market forces to serve national purposes. It would perhaps be an exaggeration to claim that China has led the way in the transition from socialism as practised in the communist ruled countries, since there were numerous experiments with economic reform in Russia and Eastern Europe going as far back as the 1950s, but the Chinese reforms have lasted longer, penetrated more deeply and apparently been more successful than any of the reforms introduced in other socialist countries.