BOOK REVIEWS The China Miracle: Development Strategy and Economic Reform

China has created an economic miracle since its economic reforms began in the late 1970s, becoming the fastest growing economy in the world. Gross domestic product has grown at an average rate of 10 percent annually for the past 18 years, and personal income and living standards have improved significantly. China may become the world’s largest economy early next century. The great success of China’s economic reforms has attracted worldwide attention. The China Miracle is a book that addresses the following questions: How did China’s economic reforms create the miracle? Why has there been such a dramatic difference in China’s economic performance since the reforms? Despite the reforms, why is there a ‘‘boom-bust’’ cycle in the Chinese economy? Can China continue its growth? What are the general implications of China’s experience for other economies in transition? The authors of this book have been involved in many of the decisionmaking processes during China’s economic reforms. Combining their first-hand experience and solid training in modern economics, the authors provide new insights into China’s economic development strategy and reforms from both theoretical and empirical perspectives. The main argument of the book is that economic performance and growth depend crucially on the choice of development strategy. The China miracle is the result of China’s having chosen the right development strategy—that is, pursuing the economy’s comparative advantage and abandoning the ‘‘heavy-industry-oriented’’ or ‘‘leap-forward’’ development strategy adopted during the pre-1979 reform period. According to the authors, the dream of China’s socialist revolution was prosperity for the people and the country. After the People’s Republic of China was established in 1949, Chinese leaders chose a leap-forward strategy that required the development of heavy industry, as in the Soviet model, to catch up with Western industrialized countries. However, at