Re-Interpreting the ‘Chinese Miracle’: A Multi-Dimensional Framework

This article is based on a longer piece published under the same title in the International Journal on World Peace, Vol. XXVIII No. 1 March 2011.

China is widely regarded as one of the success stories of globalization. Analysts identify China’s success in terms of high and sustained rates of aggregate growth and per capita national income, the absence of a major financial crisis, and a substantial reduction in poverty. They tend to view these results as the consequences of a prudent, yet extensive, program of domestic deregulation and global economic integration, as well as sound macroeconomic management. The outcome of highly accelerated economic development has been frequently called the Chinese Miracle.

However, the existence of a Chinese Miracle is surrounded by heated debates and controversies related to the understanding of China’s rapid growth of the past three decades. China’s success has defied traditional models of economic growth, and social scientists have struggled to provide comprehensive explanations for the Chinese Miracle. Indeed, most scholars focus their research on only one aspect of China’s economic growth. One-dimensional explanations, such as comparative advantage of cheap labor, identify important contributors to China’s economic accomplishment; yet it seems doubtful that any single variable affords an adequate understanding of the complexity of the causes. More likely, China’s economic development was a result of numerous institutional factors.

Article at a glance

  • China’s economic transformation cannot be fully explained by focusing on a single variable; rather, it is a result of multiple institutional factors.
  • Since the introduction of market-oriented reforms in 1978, a combination of formal and informal institutional changes as well as top-down and bottom-up initiatives led to the creation of pro-growth conditions in China.
  • In order for the Chinese Miracle to continue, China must strengthen the economic freedom of individuals and enterprises, which is currently eroding.

Xingyuan Feng is Deputy Director and standing board member at the Unirule Institute of Economics, Professor of Economics of Rural Development Institute of Chinese Academy of Social Sciences (RDI/CASS), Executive President of Cathay Institute for Public Affairs, and Research Associate of East-West Centre for Business Studies and Cultural Science of Frankfurt School of Finance and Management. His main research fields include Austrian School of Economics, Freiburg School, public choice, institutional economics, evolutionary economics, banking and finance, private sector development, and government finance. Xingyuan authored or co-authored a dozen of monographs, including Capital Freedom in China: 2011 Annual Report (2011), Local Government Competition (2010), and The EMU and Euro (1999), He also authored papers published on top international journals, including "Reinterpretation of Chinese Miracle (2011). He is also editor of the influential book series “Modern Western Thought Series” (with the Chinese version of Hayek’s The Constitution of Liberty, Popper’s Open Society and Its Enemy, and Buchanan’s The Power to Tax).

Christer Ljungwall is Associate Professor at the Department of International Economics and Management of the Copenhagen Business School. Dr. Ljungwall received his Ph.D. in economics from Gothenburg University in 2003. His research focus is on macro-finance and development in China and India. He is currently Counselor Science and Innovation - Office of Science and Innovation, Swedish Agency for Growth Policy Analysis, Embassy of Sweden, Beijing. He was Sr. Country Economist at the Asian Development Bank in 2009-2010, and a visiting research fellow at Peking University, CCER, in 2004 - 2009. He is a founding member of China Economic Research Center at Stockholm School of Economics, where he was assistant professor in 2007 - 2009.

Sujian Guo is a Professor at the Department of Political Science and Director of the Center for U.S.- China Policy Studies at San Francisco State University. Dr. Guo has concurrent academic appointments as adjunct professor and guest research fellow of many Chinese academic institutions, such as Fudan Institute for Advanced Study in Social Sciences, Fudan University Center for Chinese Foreign Policy, Renmin University of China, North China University, Inner Mongolia University, and Guizhou University. He is also Editor-in-Chief of Journal of Chinese Political Science, and Editor of Rowman & Littlefield Publishers-Lexington’s book series “Challenges Facing Chinese Political Development.” He received his PhD in political science from University of Tennessee in Knoxville.

The views expressed by the authors are their own and do not necessarily represent the views of the Center for International Private Enterprise (CIPE). CIPE grants permission to reprint, translate, and/or publish original articles from its Economic Reform Feature Service provided that (1) proper attribution is given to the original author and to CIPE and (2) CIPE is notified where the article is placed and a copy is provided to CIPE’s Washington office.

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