Markets over Mao: The Rise of Private Business in China

by Nicholas R. Lardy
September 2014
Book Description

China's transition to a market economy has propelled its remarkable economic growth since the late 1970s. In this book, Nicholas R. Lardy, one of the world's foremost experts on the Chinese economy, traces the increasing role of market forces and refutes the widely advanced argument that Chinese economic progress rests on the government's control of the economy's "commanding heights." In another challenge to conventional wisdom, Lardy finds little evidence that the decade of the leadership of former President Hu Jintao and Premier Wen Jiabao (2003–13) dramatically increased the role and importance of state-owned firms, as many people argue. This book offers powerfully persuasive evidence that the major sources of China's growth in the future will be similarly market rather than state-driven, with private firms providing the major source of economic growth, the sole source of job creation, and the major contributor to China's still growing role as a global trader. Lardy does, however, call on China to deregulate and increase competition in those portions of the economy where state firms remain protected, especially in energy and finance.

Data disclosure: The data underlying this analysis are available here [xlsx].

Selected chapters and sections are provided for preview only.

Preface [pdf]



1. State versus Market Capitalism [pdf]

2. Reform of State-Owned Enterprises

3. Rise of the Private Sector [pdf]

4. Implementing the Reform Agenda

Appendix A Alternative Measures of Private Sector Credit

Appendix B State versus Private Borrowing Costs



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Book Data

September 2014
ISBN paper 978-0-88132-693-2
186 pp.

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Video interview with Nicholas Lardy

Commentaries on This Book

"Everyone concerned with the future of China in the global economy should carefully consider Lardy's thesis."

Lawrence H. Summers, former US Treasury Secretary and Director of the National Economic Council

"Nick Lardy is one of the world's leading experts on the Chinese economy. This book is critical reading for anyone trying to gauge China's economic prospects."

Robert Rubin, former US Treasury Secretary and cochairman of the Council on Foreign Relations

"At a time when the new conventional wisdom is that the Chinese dragon is deploying 'state capitalism' to challenge the international market economy, Lardy has mined the data to discover China's real driving engine: its private sector."

Robert B. Zoellick, former World Bank President, US Trade Representative, and US Deputy Secretary of State

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