enegade territories and rebellion. The economic transition toward a more market-based economy began in the late 1970s with Deng Xiaping and the reforms he instituted following the Cultural Revolution. With Xiaping in power, China evolved into a socialist market economy characterized by self reliance and a centrally directed allocation of resources.
The goals of reform in China were four-fold; modernize the country, build up the economy, reestablish China as a world power, and restore effective administration to state institutions. The overriding theme in Xiaping's reforms was pragmatism and the political order remained stable from pre-reform days.
Policy makers recognized China's thirst for capital to restructure its economy, the importance of markets, and the power of individual incentives for stimulating production, but resisted widespread private ownership. Therefore these decision makers sought solutions that simulated the institutions of a market economy while retai
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