Apr 15, 2022

How China Escaped Shock Therapy

The Market Reform Debate

Isabella M. Weber

Hosted by Peter Lorentzen

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Summary

China has become deeply integrated into the world economy. Yet, gradual marketization has facilitated the country's rise without leading to its wholesale assimilation to global neoliberalism. This book uncovers the fierce contest about economic reforms that shaped China's path. In the first post-Mao decade, China's reformers were sharply divided. They agreed that China had to reform its economic system and move toward more marketization - but struggled over how to go about it. Should China destroy the core of the socialist system through shock therapy, or should it use the institutions of the planned economy as market creators?

With hindsight, the historical record proves the high stakes behind the question: China embarked on an economic expansion commonly described as unprecedented in scope and pace, whereas Russia's economy collapsed under shock therapy. Based on extensive research, including interviews with key Chinese and international participants and World Bank officials as well as insights gleaned from unpublished documents, How China Escaped Shock Therapy: The Market Reform Debate (Routledge, 2021) charts the debate that ultimately enabled China to follow a path to gradual reindustrialization. Beyond shedding light on the crossroads of the 1980s, it reveals the intellectual foundations of state-market relations in reform-era China through a longue durée lens.

Isabella M. Weber is a political economist working on China, global trade and the history of economic thought. She is an Assistant Professor of Economics at the University of Massachusetts Amherst and the Research Leader for China at the Political Economy Research Institute.

Host Peter Lorentzen is an Associate Professor in the Department of Economics at the University of San Francisco, where he leads a new Master's program in Applied Economics focused on the digital economy. His own research focuses on China’s political economy and governance.

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Peter Lorentzen

Peter Lorentzen is economics professor at the University of San Francisco. He heads USF's Applied Economics Master's program, which focuses on the digital economy. His research is mainly on China's political economy.

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