In This Review

Markets over Mao: The Rise of Private Business in China
Markets over Mao: The Rise of Private Business in China
By Nicholas R. Lardy
Institute for International Economics,U.S., 2014, 154 pp

A common view holds that economic reforms in China stalled or even were reversed during the past decade—an impression reinforced perhaps by the Third Plenum of the Chinese Communist Party, which convened in November 2013 and resulted in an official call for more market-oriented policies. But in this carefully documented study, Lardy shows that in reality, China’s private sector has continued to grow and thrive for the past 15 years and now accounts for more than three-quarters of industrial production and a comparable share of investment in industrial assets. Moreover, China’s private sector now attracts a growing (albeit still small) share of bank financing and enjoys notably higher rates of return than the country’s public sector, suggesting that private businesses are likely to continue to outpace state-owned enterprises. To be sure, the latter still dominate important sectors of the Chinese economy, such as banking, oil, telecommunications, and tobacco. But their relative importance has greatly receded and will likely continue to do so. Such observations make Lardy’s book an important addition to scholarship on China’s complex and rapidly changing economy.