China’s Miracle

Abstract

We construct a framework for the interaction between economic system reform and the technological-economic system in order to analyze the dynamic process of China’s economic transformation and development. China has passed through three major phases of economic system reform, which have involved reforming the commodity economy through planning, establishing the socialist market economic system, and improving the socialist market economic system. Correspondingly, China has gone through three technological-economic systems, which may be summed up as: “quantitative subsistence consumption and extensive production without technological progress,” “qualitative subsistence consumption and extensive production with technological progress,” and “standardized mass consumption and mass production.” Since 2012, China’s economy has entered the era of a “new normal,” characterized by lower growth rates. This indicates a fundamental shift in the patterns of social demand away from the current technological-economic system that is growing incapable of sustaining rapid capital accumulation and thus needs transforming. To better explain China’s miracle, we focus on the ways in which the contradictions within each technological-economic system have evolved and have been resolved through targeted reforms to the economic system. Eventually, these reforms will lead to a new system that facilitates further capital accumulation.