Explaining the Chinese miracle through lens of political economy

By ZHOU WEN / 09-01-2022 / Chinese Social Sciences Today

After more than 70 years since the founding of the People’s Republic of China (PRC) and more than 40 years of reform and opening up, China has pulled off an economic miracle. The Chinese miracle is a grand theme in economic research. From a historical perspective, the study of economic development is undoubtedly of great significance. As Turkish political economist Dani Rodrik said: “Historically, nothing has worked better than economic growth in enabling societies to improve the life chances of their members, including those at the very bottom.” 
Meanwhile, based on the successful experience of China’s economic development, efforts should be made to reveal and extract the economic theoretical logic behind China’s experience, and provide a new explanation for the great practice of China’s economic development, which is helpful in promoting the formation of Chinese theory of economics and establishing a new discourse system of socialist political economy with Chinese characteristics, with economic development at the core.
When we examine the history of economic development since modern times from such a perspective, whether it is the sudden rise of Western European countries at the beginning of the Great Divergence, the economic miracle of East Asian countries after World War II, or the decline of British and American powers after the spread of neoliberalism, a series of myths can almost be solved. In the context of economic globalization, all countries and regions should establish an institutional basis for high-quality development led by a central coordinating body, and on this basis, comply with the trend of world multipolarization and establish a multilateral global governance system, so as to truly break the unreasonable old international economic order, allow people of all countries to share the dividends of economic globalization, and promote the construction of a community with a shared future for mankind.
Looking back through history, whether the 30 years before reform and opening up or the more than 40 years after reform and opening up, China’s pace of building a great modern socialist country has never stopped, and has constantly emphasized the CPC’s leadership and the role of the government in the process of socialist economic construction. Hence, the PRC’s history of more than 70 years of achievements has jointly created the Chinese miracle. Based on the current situation, China is still on the great journey of catching up and rejuvenation. The reform of the economic system, characterized by giving full play to the role of the market and opening up to developed Western capitalist countries, once unleashed huge growth momentum. However, the upheaval in Eastern Europe and Latin America’s economic plight have taught us an extremely important lesson, that is, not all market-oriented reforms and opening up can succeed.
China’s economic miracle is outstanding. A more convincing explanation is the modernization of the national governance system and state governance capacity. Over the history of human civilization, whether the rise of the West or the overtaking of the East, economic development has always been driven by the state as the main body. In fact, the rise and fall of the system and capacity for state governance has always been the main line of economic development and change. Taking history as a mirror, neither a pure market economy nor a complete government-planned economy can lead national economic development onto the right path. 
Studying how to make the market play the decisive role in resource allocation and ways for the government to play its role better, and realize the organic combination of the market and the government should be the theme of contemporary economic research. It is clear that the internal mechanism of economics behind China’s great and successful practice lies in the adherence to the dialectics and organic combination of the relationship between the market and the government, and the constant efforts to break through the shackles of existing neoliberal theories. Therefore, China’s economic miracle demonstrates the critical reconstruction of the government-market relationship in liberal economics, and indicates the embryo of brand-new Chinese economics.
Zhou Wen is a Distinguished Professor and director of the Center for Sinicization of Marxist Economics at Fudan University. This article was edited from his paper submitted to the forum.