China’s Market Reformers

The extended crisis of globalization has led to increased interest in China’s path over the last four decades. China is the only large poor country to achieve a dramatic increase in wealth and status in the neoliberal era, and it did so while maintaining a powerful role for the state in the economy. Its authoritarian political system has been exceptionally resilient. During the upheavals of recent years—from the Great Recession to the eurozone crisis to the emerging markets taper tantrum to the worldwide failure to stem the COVID-19 pandemic—China has seemed to stand outside the chaos.

This apparent strength has provided fodder for a cottage industry on Chinese exceptionalism both inside and outside China. According to these accounts, China is either a sinister autocracy bent on dismantling the liberal international order or an accomplished meritocratic bureaucracy securing the welfare of its people against the implacable hostility of the West. The conviction that China is an outlier has deepened geopolitical tensions, encouraging Chinese nationalists in their demands for greater global influence while galvanizing the defenders of U.S. hegemony determined to prevent such an outcome.

In her new book, How China Escaped Shock Therapy, Isabella M. Weber offers a valuable corrective to such essentializing narratives. She provides a fine-grained account of the contentious economic reform debates that took place in China in the 1980s, and situates them in a larger historical and conceptual context. Unlike most of the former Soviet bloc and the former Third World, China did not suffer the debilitating effects of neoliberal shock therapy—the rapid transformation of a state-led economy to one dominated by market forces—and for Weber, the story of how China avoided this fate is key to what makes it different today.

Shock therapy consists of a set of policies implemented in quick succession: deregulation, privatization, tax cuts, public spending austerity, trade and capital account liberalization, and—particularly important in those countries moving away from a planned economy—a rapid switch from state prices to ones set by the market. In vivid detail, Weber shows how close the Communist Party leadership came in both 1986 and 1988 to unleashing such a storm on Chinese society. In contrast to most of the countries that did implement shock therapy, the Chinese version would have been entirely voluntary. China’s unique trajectory, then, was not predetermined, but came about through the contingent resolution of elite policy debates.

Earlier accounts of this period, like Joseph Fewsmith’s Dilemmas of Reform in China and Barry Naughton’s Growing Out of the Plan, remain essential, yet they are indelibly marked by the moment of neoliberal triumph out of which they arose. Their narrative—still common in the present—is of “reformers” fighting the good fight of freedom and utility-maximization against “conservatives” who protected special interests by veiling their opposition to reform in criticism of rising corruption or economic instability.

Weber’s approach is different. She argues persuasively that every participant in these debates, having fundamentally broken with Maoist orthodoxy, was a reformer. All were contending within a single paradigm that privileged economic development over social equality and asserted impersonal economic laws like the determination of value by the market against mass mobilization and political voluntarism. Despite these shared assumptions, passionate debates raged among different camps on the role of the state in the market, how to understand growth and inflation dynamics, and the right path for price and enterprise reform. The outcome of these debates helped set China on its unusual path.

As the 1980s dawned, the political struggle that followed Mao’s death in 1976—which pitted the orthodox Maoists against the party leaders who had been purged during the Cultural Revolution—was settled with the victory of the latter group. Deng Xiaoping and Chen Yun, who had been sidelined for much of the 1970s, were back in power, with Deng in charge of politics and Chen overseeing the economy. A major shift of resources from urban heavy industry to light industry and the rural...