Mixed economy with Chinese Characteristics : Embedding Market Mechanism in a Relational System

Abstract

Over last three decades, Chinaa s economic success amazed the world. It can be traced back to the year 1978 when the Communist Party of China decided to pursue a a reform and opening upa policy. There are a lot of literature on the subject. However, the cultural aspect of China's economic transformation lacks in the existing literature. As this dissertation suggests, the Chinese economy is embedded in a relational system, which is helpful to the essential institutional transition from central planning to market. This dissertation studies how a relational system affects the market structure from a dynamic perspective and investigates the agricultural, industrial and financial sector respectively. The Household responsibility system, the township and village enterprises and private lending system are several key institutional innovations based on the cultural embedding of market mechanism. Chinese economy is indeed a mixed economy in the sense of mixing the relational and market system.