This article examines market-oriented reforms in China’s graduate placement system (GPS) of higher education during 1978–1994 when China’s GPS was transformed from a state-controlled and centrally planned Soviet type to a rudimentary market model. Its goals are twofold. First, it advances the scholarship on GPS reform, a subject that is underresearched in studies of Chinese politics and of Chinese education. Second, it analyzes reform features by engaging the “gradualism” school on the political economy of China’s economic transition, especially Barry Naughton’s widely accepted “growing out of the plan” version of Chinese “gradualism” in 1978–1993. Through this process, the article sheds light on our understanding of the perennial debate about China’s economic transition. We argue (1) that GPS reform during 1978–1994, in retrospect, adopted a gradualist “dual-track” approach and was successful, much like China’s economy in that period; and (2) that the applicability of perspectives of the “gradualism” school can be extended from the customary confines of economic sectors to a social policy sector of higher education.