Markets with Chinese Characteristics

This book presents a rigorous analysis of “the complex and volatile history of economic liberalism in China” (p. 11). 

Employing a narrative-driven approach, it systematically addresses three core questions: “why some Chinese were so captivated by economic liberalism; how and why it declined in influence; and the trajectory and implications of its revival in recent decades” (p. 15). Through meticulous historical examination, the study arrives at a sobering conclusion: “Since Western first entry after the first Opium War, China has struggled to reconcile itself with economic liberalism. At first too weak to resist it, and then rejecting it for decades [if not centuries]” (p. 261). I highly recommend this work to scholars of modern Chinese history and political economy, as it provides a valuable classical liberal perspective for understanding the evolving relationship between economic liberalism and China’s unique institutional context, spanning from the First Opium War (1839–42) to the present day. 

The monograph is structured into eight chronologically organized chapters that trace the evolution of economic liberalism in China through both theoretical and practical lenses. Chapter 1 opens with a contemporary case study of entrepreneur Zhou Qunfei, illustrating how entrepreneurship demonstrates remarkable adaptability to shifting social contexts. Through this lens, the author highlights the scholarly neglect of economic liberalism in Chinese studies. Establishing historical context, Chapter 2 examines indigenous Chinese economic thought (dating back to Guanzi circa 700 BC) before analyzing the initial encounter with Western economic liberalism in the eighteenth century. The analytical core of the work emerges in Chapters 3 and 4, which present a nuanced examination of (1) the ideological tensions between imported liberalism and traditional Chinese thought, (2) the initial enthusiastic reception, and (3) the gradual emergence of a modern liberal culture during the Qing dynasty’s collapse. Chapter 5 documents the turbulent republican era (1911–49), when economic liberalism fell into disfavor as one of many perceived failed remedies for China’s developmental challenges. The narrative reaches its nadir in Chapter 6’s account of economic liberalism’s near-total suppression during the early communist period (1949–78). A significant transition occurs in Chapter 7, which analyzes the post-1978 reform era’s distinctive “socialist market economy” and its paradoxical revival of liberal economic elements. The concluding chapter offers cautiously pessimistic projections about economic liberalism’s future trajectory in China’s unique institutional environment. 

This book amazes me with its lucid prose and thought-provoking debates. I particularly enjoyed the use of Deirdre McCloskey’s approach to understanding Chinese bourgeois capitalists. This approach not only evokes parallels with the German bourgeoisie of the seventeenth to eighteenth centuries but could also extend to an evolutionary theory of the “Hawk–Dove–Bourgeois game” à la mathematician John Maynard Smith. The first half of the book offers an unusually discerning review of economic liberalism movements in the late Qing dynasty. Chapter 5 stands out for its prudent comparisons between economic liberalism and Marxist collectivism, while Chapter 6 provides a rare libertarian critique of Mao Zedong’s era in communist China. These are just a few of the many illuminating ideas explored. 

This book carves out a unique niche in the literature by complementing other excellent works on related topics. Isabella M. Weber’s How China Escaped Shock Therapy: The Market Reform Debate (2021, Routledge) offers a masterful examination of ancient Chinese economic thought, paired with interview-based qualitative analysis of China’s early market reforms. Susan Shirk’s The Political Logic of China’s Economic Reform (1993, University of California Press) employs a rational-choice institutionalist framework to explain why communist leaders might embrace market liberalization. Meanwhile, Justin Yifu Lin’s writings—exemplified by his book Demystifying the Chinese Economy (2009, Cambridge University Press)—provide a Chicago school–inspired historical survey of two millennia of China’s economic leadership, decline, and resurgence. Among existing works, Yasheng Huang’s Capitalism with Chinese Characteristics: Entrepreneurship and the State (2008, Cambridge University Press) may offer the closest comparison to Osborne’s book, as suggested by the thematic parallels in their titles. Huang’s study concentrates on the political and economic tensions that shaped China’s development from the 1980s to the early 2000s. There is also a growing body of literature on the Chinese economy since Xi Jinping came to power in 2012. Finally, I would like to highlight the contributions of libertarian economist Gordon Tullock, who was a diplomat in China from 1947 to 1949. His works provide valuable insights into hyperinflation, rent seeking, and the civil war of China during the late 1940s. While Osborne’s book surprisingly omits references to the aforementioned works, it makes its most significant contribution precisely where others fall short by offering a distinctly libertarian analysis of the late Qing dynasty. 

While this book presents an ambitious framework for analyzing economic liberalism in modern China, it could be significantly expanded in a potential second edition. Below are several constructive suggestions for improvement. 

• The book would benefit from engaging with the aforementioned works (Weber, Shirk, Lin, Huang, and Tullock). 
• A deeper exploration of how the libertarian perspective offers more rigorous explanations of historical events—particularly through its focus on spontaneous order and entrepreneurship— would strengthen its theoretical contribution. 
• As classical liberalism emphasizes individual agency and bottom-up processes, the book could develop its promising start with individual case studies into a sustained analysis of entrepreneurship. For instance, the provocative observation on state-market relations—“make money, but don’t make trouble” (p. 261)—could serve as a springboard for examining how grassroots economic actors navigate institutional constraints. 
• Building on John Locke’s classical liberalism and metrics such as the Fraser Institute’s Economic Freedom Index, the analysis could extend beyond market liberalization to incorporate property rights, the rule of law, and bureaucratic efficiency. This would align with Dani Rodrik’s framework in In Search of Prosperity (2003, Princeton University Press) while maintaining the book’s distinctive libertarian lens. 
• Chapters 6 and 7 could be enriched by tracing Chinese scholars’ engagement with liberalism during the 1970s–80s reform era; analyzing online discussions of liberal economic ideas among netizens; and expanding on the brief but crucial mention of Hayek’s The Road to Serfdom (1944, Routledge), which profoundly influenced China’s intellectual circles.
• The arguments would benefit from additional visual aids. Currently, with only one figure and one table, the analysis lacks robust empirical grounding. Incorporating data from sources such as the Economic Freedom Index would lend greater credibility. 
• The final chapters require substantial revision, as they introduce numerous underdeveloped themes (including COVID era policies, the “lying down” movement, and Ma Yun’s legacy) without adequate analysis. A more focused synthesis of these elements would provide a stronger conclusion. 

In conclusion, I wholeheartedly recommend this thought-provoking book to scholars and readers passionate about classical liberalism and its intersections with China’s economic history. The work makes a compelling contribution to the field, and I eagerly anticipate a potential second edition that might incorporate the suggestions outlined above—particularly those that could strengthen its theoretical framework, empirical foundations, and narrative depth. Such an expanded edition would undoubtedly become an even more indispensable resource in the study of Chinese political economy.