The last few years have seen a new turn in the relationship between the People’s Republic of China and the rest of the world. In the early 2000s, as China entered the World Trade Organization and made preparations for its first-ever Olympics, outsiders were optimistic that it would assimilate into a US-led world order, embracing global markets and retiring its old socialist economy. But those rosy predictions have faded since the 2008 financial crisis and the 2013 ascension of Xi Jinping as leader of the Chinese Communist Party. The idea of endless growth avowed by American liberals in the 1990s has been replaced by the zero-sum logic that China’s success will come at the expense of others. True or not, China has been successful: Its economy has continued to grow, not only from global trade but also through government-financed debt and infrastructure investment, both at home and abroad in Asia, Africa, and the Americas. That China has embraced such an approach instead of the austerity programs and free market policies of the former Soviet states has made it clear to leaders in the United States and the European Union that China has emerged in the 21st century not only as a trading partner and an ally but as a potential rival.

The emergence of a new era also suggests the end of an old one. In the future, we may look back on the Covid-19 pandemic and attendant US-China hostilities as the culmination of China’s four-decade-long economic ascent, which began in the late 1970s with the death of Mao Zedong and the political coronation of Deng Xiaoping. At the same time that much of Asia, Africa, and Latin America stagnated under policies of austerity and deregulation, China has undergone an unprecedented transformation from third world country to global power. Much of the credit is given to Deng, who oversaw a new set of economic policies known as gaige kaifang (reform and opening), dismantling the agrarian commune system in favor of a household responsibility system and opening coastal cities to trade and investment. But as is made clear by two new books, Jason Kelly’s Market Maoists and Isabella Weber’s How China Escaped Shock Therapy, the real story is far more complex. Positioning China’s economic development and reintegration in longer historical terms, both books argue that the architects of China’s socialist economy had long experimented with and borrowed from mixed economic systems from around the world. The “new” China is, in fact, much older: Widening the cast of characters beyond Mao and Deng to other factions within the state, Kelly and Weber show how China’s political economy was shaped by vibrant internal debates and profound intellectual shifts over multiple generations, complicating received views about the contours of Chinese communism.

Both books highlight concrete policies that defy the stereotypes of the so-called “high socialist” period from the 1950s to the ’70s and the subsequent era of market reform. Kelly demonstrates how market-oriented policies during the Mao era created the precedents for subsequent internationalization. From the 1940s on, the Hong Kong–Guangdong border became a crucial meeting point between China and the world market, and similar coastal hubs were central to the country’s development strategies in the 1980s and ’90s. Further, starting in the 1960s, the Chinese Ministry of Foreign Trade experimented with export production bases that imported raw materials from overseas, refined them with local labor, and re-exported them abroad as higher-value-added goods, all in pursuit of foreign currency. This strategy was summed up in the phrase “yijin yangchu” (“use imports to cultivate exports”) and presaged the 1990s shift toward export-oriented industrialization. Indeed, Kelly reminds us that many of the leaders involved in the late-century reforms—the long-serving Premier Zhou Enlai, Central Committee member Chen Yun, and Minister of Finance Li Xiannian—were already experimenting with market-based solutions in the decades before the policies spearheaded by Deng and Premier Zhao Ziyang.

Conversely, Weber argues that Chinese leaders sought to retain substantial control over the economy in the 1980s—the same period, many now assume, that China uncritically joined an ascendant global neoliberal consensus. In Weber’s telling, China avoided the fate of other formerly socialist countries, with their extreme abdication to market forces, because of the efforts of Zhao and a circle of trusted young rural-minded economic reformers, who pushed for a dual-price-track system to develop China’s agriculture and heavy industries. Paradoxically, this decision to retain elements of a socialist economy helped sustain China’s rise as a capitalist power. Even today the Chinese state views the market primarily in instrumental terms—as Weber puts it, a “tool in the pursuit of its larger development goals”—thereby preserving a degree of economic sovereignty that distinguishes China from other powerful countries.

Market Maoists focuses on the origins of China’s new economy and the Chinese Communist Party’s forays into international trade from 1949 to the late ’70s. Kelly casts his history in a decidedly post–Cold War framework by eschewing the idea of a strict rivalry between socialist and capitalist states. If one looks beyond political alliances and examines China’s actual policies, he argues, one finds a reality that was “less doctrinaire, more nuanced, and often ideologically promiscuous.” Notably, Kelly’s book is a history of the CCP and not the longer arc of Chinese history. The context of Qing- and Republican-era treaty ports and semicolonial trade remains absent, even if they shaped the outlook of the party’s first generation. Moreover, despite inviting reflection on the porousness of the categories “capitalism” and “socialism,” Kelly uses them as straightforward geopolitical terms to designate Cold War alliances, with little rumination on what they meant conceptually and how they overlapped in surprising ways.

Kelly’s concerns and strengths, rather, are archival ones. Market Maoists begins in Hong Kong in the 1930s and ’40s, when the city became a valuable gateway for the Chinese diaspora living overseas and a hub for the export of raw goods and the import of foreign currencies. Across the war with Japan (1937–1945) and the ensuing Civil War between the ruling Kuomintang nationalist party and the rebel Communists (1946–1949), the CCP set up an underground office in Hong Kong, then a British colony, and enlisted young cadres to create front companies, funneling supplies and money to its base in the north. Kelly offers captivating portraits of young Chinese operatives such as Liao Chengzhi and Qin Bangli, scions of the bourgeoisie who had crossed over to the other side. Repurposing their technical and business acumen to help sustain the rebel party thousands of miles away, the pair founded Liow and Company, which appeared to be a small trading firm. In 1948, with the CCP wearing down KMT forces in Manchuria, Liow and Company would be renamed China Resources, or Hua Run, and become a major state-owned holding company that to this day facilitates trade between the mainland, Hong Kong, and the rest of the world.

With these companies and connections, the CCP had begun, even before the People’s Republic was founded, to ship raw materials—primarily grains and soybeans—from Dalian, Manchuria, to Hong Kong in order to exchange them for valuable supplies. The shipments traveled by train to the Korean peninsula, then aboard Soviet ships to Victoria Harbor. There, party cadres also took the time to visit the Hong Kong Shanghai Banking Corporation (HSBC) in the city center and unload several pounds of gold lining their vests.

Students of modern China will recognize that the early years of party rule in the 1940s and ’50s were marked by debates over how to gradually transition to communism. Mao contended that the People’s Republic should expand and instrumentalize capitalist development under party rule before shifting to socialism, a theory known as “new democracy.” Ruling over an impoverished country, CCP leaders understood that building a strong and independent China would require the money and resources then concentrated in the hands of a national bourgeoisie. Trade was no exception: In the 1940s, the Chinese government did not necessarily see the United States and its European allies as mortal rivals. Only with the outbreak of the Korean War, with US and Chinese forces pitted against each other, did hostile Cold War containment policies solidify in Asia. Afterward, the United States placed an embargo on Chinese goods and seized roughly $42.5 million worth of Chinese assets in US banks. This only made Hong Kong more important to the People’s Republic, as the border with Guangdong became host to a lively black market for goods and a pipeline of refugees leaving China (as Peter Hamilton, Denise Ho, and Zhou Taomo’s new research explores).

Earlier, CCP officials had viewed trade in pragmatic terms, though for political reasons they remained secretive. With the embargo, Zhou Enlai and Mao Zedong understood the political expediency of loudly championing foreign commerce. In April 1952, Chinese representatives joined a major trade conference held in Moscow featuring 443 delegates from both “capitalist” and “socialist” countries. They actively pursued deals with France, West Germany, Pakistan, and Indonesia, among others, that would have totaled more than $220 million (despite some deals ultimately being unsuccessful), proclaiming them as acts of internationalism against the “American imperialist policies of embargo and blockade.” In one comic scene, Chinese and British representatives in Geneva years later silently slid slips of paper back and forth with lists of potential items for trade. The Chinese side pushed the UK to export goods that were forbidden under the US embargo, such as metals, ships, and vehicles, while the British side refused to budge beyond the agreed list of medicines and chemicals. The geopolitical subtext was understood by both parties but never voiced.

Though foreign trade represented less than 10 percent of China’s GDP, the acquisition of foreign currencies and technologies proved essential to domestic projects. During the 1950s, Central Committee member Chen Yun helped design the country’s first Five-Year Plan, which involved contracts for Soviet technology in exchange for Chinese raw goods. To supplement a shortage of foreign currency, local officials also held the first Canton Fair in 1957, attracting merchants from around the world to peruse Chinese silks, teas, and handicrafts. The fair continues to operate twice a year and was for many years a discreet lifeline to the global market.

But if so many elements for international activity were already in place by the 1950s, then what prevented Chen Yun and Zhou Enlai from more openly embracing world trade and capitalist practices until the 1970s? The simplest answer, for Kelly, is Mao Zedong.

After only a few years in operation, the Ministry of Foreign Trade had “much to be proud of,” Kelly writes, noting that it had established relationships with 82 countries and regions. But this optimism was shattered when Mao spearheaded an economic campaign of rapid agricultural collectivization and industrialization, driven by moral incentives and mass mobilization, that would come to be known as the Great Leap Forward.

In Mao’s vision, the Great Leap Forward would remedy the imbalances of the first Five-Year Plan by raising output in both city and country. In the campaign’s frenzy and disorganization, however, large swaths of the countryside were left fallow and countless home metals were rendered useless in backyard furnaces. For the Ministry of Foreign Trade, the Leap was a disaster that “sabotaged” its pro-trade policies. Agricultural shortfalls meant China could meet less than half of its export contracts, mainly for rice, wheat, and pork, and Mao’s campaign also “uprooted the discipline and control that the Ministry of Foreign Trade had long sought to instill in its work,” Kelly writes.

The Cultural Revolution, which began four years after the Great Leap Forward, proved equally disastrous. In the interregnum, the Ministry of Foreign Trade had begun importing grain from Canada and, with the end of the Chinese-Soviet alliance in 1960, pursued more deals with Australia, Europe, and Japan. But these best-laid plans were once again foiled by a major Maoist campaign. This time, the trade numbers did not suffer greatly, but the Cultural Revolution laid waste to the bureaucracy, and several major figures in Kelly’s story—including Qin Bangli, Ye Jizhuang, and Li Xiannian, party members who had helped carve out trade policies in earlier decades—were subsequently purged by the party or “struggled against” by revolutionary rebels.

Kelly acknowledges that there were many reasons why China embarked on the Great Leap Forward and the Cultural Revolution, including the widening inequalities between city and country and between party and nonparty. Even so, for him the culpability lies mainly with Mao and his peculiar psychology—a familiar theme in China scholarship. The Cultural Revolution, Kelly argues, was the product of Mao’s deteriorating mind and his fear of a diminished “legacy.” Though Mao’s concerns over the country’s new class inequalities are acknowledged, they are framed as things that existed solely in his writings—the paranoid concerns of an aging leader. One does not get the sense, as the sociologists Joel Andreas and Wu Yiching have argued, that these campaigns developed out of objectively identifiable social contradictions specific to the socialist system.

Kelly is understandably more interested in the campaigns’ outcomes than their initial logic. But by framing this history through the opposition between a practical, technocratic bureaucracy and its mad leader, he risks undermining his book’s explanatory power. I came away from reading Market Maoists with the impression that party officials were more or less secretly capitalist all along, championing the ideals of socialism and revolution only nominally or cynically. As a result, the subsequent economic liberalization no longer feels like the world-historical transition that it actually was, but rather an apolitical, almost inevitable continuation of the policies and programs led by Zhou, Chen, and others in the 1950s. Contrary to its title, then, Kelly’s book pits Mao against the market: Rather than locate the “origins” of China’s “capitalist ascent” in the socialist era, it views those early political ideals as a temporary roadblock against the ineluctable, natural march of the global economy.

How China Escaped Shock Therapy, by contrast, highlights not the continuity of China’s capitalist ascent but the very real political disagreements that animated the first decade of Deng’s “reform and opening.” In the 1980s, many reformers embraced the advice of an emergent neoliberal orthodoxy that advocated the overnight liberalization of all prices within the Chinese economy—that is, unraveling the state’s planned system of prices for all goods, from cigarettes and bicycles to petroleum and raw cotton. Price liberalization paired with fiscal austerity constituted a “package reform” that would later be adopted in Eastern Europe and the former Soviet states in the 1980s under the title of “shock therapy.” Had it come to pass in China, Weber argues, the results would have been equally disastrous, leading to hyperinflation, deindustrialization, and plummeting incomes.

Thankfully, a handful of young, pragmatic, rural-oriented Chinese reformers led a countermovement to persuade the state’s top economic decision-maker, Premier Zhao Ziyang, to adopt a gradualist dual-track price system (shuanggui zhi). The industrial core of the socialist economy would remain under state price controls, while “nonessential” goods at the margins were gradually commodified, enabling China to maximize its economic potential. The tragic events of 1989, however, with mass state violence against students and workers in Beijing’s Tiananmen Square, resulted in the political exile of Zhao and many of the young reformers, burying a valuable record of vibrant debate, even as the consequences of their policies helped secure China’s ascent at the turn of the century.

Weber begins her book with a basic question: Why did the Chinese state decide to maintain price controls in an era seeking to unleash the market? In her view, there are many historical reasons as well as economic ones. She frames the debates of the 1980s in terms derived from the text Guanzi, from the seventh century bce, which argued that in economic questions, one should distinguish between “light and heavy” goods (qingzhong): that is, between “heavy” essential goods, such as salt, grains, and silk, which the state has a duty to regulate, versus everything else, which officials could leave unprotected from market dynamics. Such principles grounded the economy of the 18th-century Qing Empire, for example, especially when it came to its regulation of massive granaries, the most elaborate famine-relief program in world history. “Light and heavy” principles, Weber suggests, influenced the two tracks of price reform in the 1980s as well.

Another source for the dual-price scheme came from modern times: US planners during World War II rationed and set prices on basic goods, and the new Chinese state, recovering from decades of war with Japan and civil war with the KMT, also fixed many prices in order to establish a new currency. In both cases, the problem was the exceptional hardships of war, which led to an overabundance of money in circulation that outpaced material goods. Rather than stimulate production, as neoclassical economics might argue, high demand combined with inelastic supplies meant prices would spiral upward endlessly and speculation and hoarding would overtake productive agriculture and industry. In China, the new state succeeded by prioritizing “heavy” or essential items, buying up grains and cloth and selling them at state-designated prices, cutting out speculators and restoring faith in the new currency, the renminbi. Thus, the price control strategies taken up by 1980s reformers could also be seen in multiple times and places throughout world history, neither uniquely Chinese nor exotic to modern economics.

From this historical survey, Weber next turns to the unresolved tensions in the socialist system that had built up over the decades before the 1980s. From the 1950s on, she notes, the CCP had implemented a state monopoly over the purchase and sale of agricultural goods, subsidizing urban industry by extracting surpluses from the countryside. The main method was the state’s “price scissors”—a term coined by Trotsky—which paid cheap prices for agricultural goods and sold industrial goods back to the peasantry at higher rates. Such exploitation invited peasant and labor protests throughout the 1950s, ’60s, and ’70s, forming the crucial economic context for the Great Leap Forward and the Cultural Revolution—structural factors deemphasized in Kelly’s account. Even before Mao’s death, the CCP largely recognized the need for change: Though the Soviet model had provided China with absolute gains in GDP, the economy was plagued by lagging living standards and widespread poverty, and it became impossible to ignore the stories of peasants fleeing to Hong Kong. With the political reinstatement of Deng and Chen in the late 1970s, the state committed itself to a pragmatic, nonideological approach to economic growth. “Not changing was not a possibility,” Zhao Renwei, a major reformer, tells Weber in an interview. “We had to reform. But how to reform? This was not clear.”

To solve this question, Chinese economists first turned their focus to Eastern European thinkers, who shared their Marxist and Stalinist vocabulary, and then to European and US scholars steeped in the neoclassical tradition. They paid special attention to the émigrés from socialist countries who visited China: Włodzimierz Brus from Poland (then at Oxford University), Ota Šik from Czechoslovakia (then at Switzerland’s University of St. Gallen), and János Kornai from Hungary (then at Harvard). They also organized meetings with World Bank officials, first in Zhejiang in 1982 and then on a cruise ship called the M.S. Bashan on the Yangzi River in 1985. Each voice stressed that Soviet- and Chinese-style price controls were structurally flawed and that it was necessary to overhaul the economy by embracing market prices.

China, it appeared, was heading toward “package reform.” That is, until a generation of young intellectuals began to advocate for partly retaining the structure of price control. Born between 1940 and 1960, these reformers shared the experience of living and working in the countryside during the Cultural Revolution. They were acutely sensitive to the problems of collectivism but also, more broadly, to the “agrarian question” of how to raise the material standards of the peasantry. They were kindred spirits, Weber suggests, with older party members born at the turn of the century, whose formative experiences came from the guerrilla bases in Yan’an in the north. “Those who had spent many years in a poor village,” Weber writes, “had become accustomed to living among the peasants, and they were different from their younger classmates or those who had remained in the cities.”

For these young thinkers, China needed to follow a mixed economic path—moving toward decollectivization but still controlling prices for essential industrial sectors. As Wang Xiaoqiang, one of the rural reformers, vividly explains to Weber, many consumer goods—such as watches, bicycles, radios, and TVs—were overvalued at the time, but market competition would naturally tame their prices. The real problem lay with state-supplied capital goods and raw materials—timber, cement, chemicals, coal, iron ore, fertilizer—whose prices were too low. Because these items were used across all downstream industries, neoliberal package reforms would amplify demand and send their prices shooting up. Unless they were regulated, higher prices would have severe “ripple effects,” inducing a “chain reaction” of runaway inflation reminiscent of World War II.

The young intellectuals’ argument won the day in 1984, convincing Zhao Ziyang to formalize the dual-track system. The state would gradually liberalize nonessential goods at the margins but retain power over the essentials in the socialist industrial core: It would control the “heavy” but release the “light.”

Over the next two years, however, calls for package reform grew even louder. Wu Jinglian, currently a member of the People’s Political Consultative Conference, was one of the strongest voices, promoting the work of Kornai and serving as China’s link, Weber writes, to a “transnational network transcending the Cold War divide” that served as “the breeding ground for neoliberalism in Eastern Europe.” For a brief period, it appeared Zhao might reconsider Wu and Kornai’s push for overnight liberalization and market correction, privately remarking in March 1986 that “package reform is superior to reform by individual measures.” But the rural reformers once again prevailed. The economist Li Yining, one of the veterans of the countryside, argued publicly that package reform assumed perfect competition and information, flexible prices, and elastic supplies, none of which existed in China or could be created in one fell swoop. The problem was not the misalignment of planned and natural prices but the underdevelopment of China’s enterprises. Only the continued development of heavy industry could alleviate excess demand.

It is instructive to compare Weber’s analysis with a similar treatment by Julian Gewirtz, currently the director for China in President Biden’s National Security Council. In his recent book Unlikely Partners: Chinese Reformers, Western Economists, and the Making of Global China, Gewirtz tackled the same liberalization debates of the 1980s but framed them as a story of reformers overcoming conservatives and cosmopolitan thinkers conquering nativism. Weber’s book complicates this tale of globalization’s inevitability by foregrounding how, in fact, these 1980s debates yielded trenchant criticisms of neoliberal thought.

Ultimately, both package and rural reformers agreed on the need for a market system, and both were receptive to ideas from around the world. The real disagreement, Weber notes, turned on some fundamental questions about social inquiry and the underlying human values of economics. The starting premise for neoliberals was the existence of a well-functioning market, expressed through the movement of prices. Through complex calculations, they hoped to “get the prices right” and fully unleash the market’s forces. By contrast, the rural reformers stressed China’s historical and regional differences, prioritizing fieldwork surveys, empirical evidence, and hypothesis testing. They disagreed that economic life could be reduced to market activities, consistently drawing distinctions both against and within the realm of production, between agriculture and light industry versus heavy industry. Goods from across these sectors may have shared a knowable underlying market value, but that did not guarantee they would behave similarly. The industrial core for energy, steel, and chemicals was decades old, designed to function in a planned economy. It was ill-suited for competition, suffering from inescapable material constraints such as older technology and unintegrated supply chains. Higher demand would not induce discipline but instead overwhelm the system.

The rural reformers, in my view, were also issuing a warning. Although economic figures were abstracted from concrete realities, material crises could still arise in capitalist economies, short-circuiting the most elegant models. Whereas market exchange takes what is solid and melts it into air, it is in the realm of production, from agriculture to industry, that stubborn materialisms persist. It seems the rural reformers were unusual among their generation in continually bringing attention back to the hidden abode of production, less concerned with developing a perfect marketplace than in the project of reindustrialization. “The answer does not lie in books or in other countries’ models,” Chen Yizi, one of the rural reformers, put it. “Only through practice can we find the best way to build a socialist country with Chinese characteristics.” They took this view for a variety of reasons, Weber implies: intimate familiarity with the hardships of the countryside, firsthand experience with collective agricultural labor, and fluency in the classics of Marxism, from Lenin to Stalin to Mao, in contradistinction to the neoclassical science that enamored Wu Jinglian and the proponents of package reform. Ultimately, though Weber writes about the challenge to neoliberal idealism from the standpoint of the practical, the rural reformers also presented a provocative intellectual challenge from socialist economics itself as a formidable tradition of thought.

Still, Weber’s story concludes with a profound sense of pathos. In the summer of 1989, Chinese leaders violently disagreed over the protests in Tiananmen Square, and splits within the party resulted in the imprisonment or exile, to varying degrees, of Zhao Ziyang and reformers Chen Yizi and Wang Xiaoqiang, erasing their legacies. In the absence of a counterweight, Chinese leaders in the coming decades would pursue more market-driven policies resembling neoliberal price reforms.

Indeed, Weber initially presents the economic debates of the 1980s as political in nature and revolving around questions of power in society. But it is also fair to ask broader questions—not directly addressed by Weber—about how the rural reformers would have diverged from subsequent policies of social commodification, such as the precaritization of factory workers, the explosion of rural labor migration, and the privatization of rural industry. What she does make clear is that the mixed state capitalist economy, whose blueprint was forged in the 1980s, has remained intact in spite of appearances. Just last year, Xi Jinping signaled that the state-owned enterprises at the core of the Chinese economy would have a larger role than under previous regimes, both to manage the ongoing pandemic and its economic fallout and to steer the country into a “V-shaped recovery.”

The rural reformers may have averted the disaster of shock therapy, then, but the economy they saved is unlike the one they envisioned. The China of today is not the product of any single party model, whether Maoist or neoliberal, but an unintentional hybrid of diverse, contending historical forces.

Kelly and Weber present two plausible stories about China’s economic rise in the late 20th century. In one, China smoothly integrated into the world market by tapping into older experiments with coastal trade and international diplomacy. In the other, state officials avoided the fate of Russia’s shock therapy, and even the 1997 Asian crisis, precisely by restricting the influence of an ascendant, universalizing economic orthodoxy that prioritized market interest over material well-being and industrial development. Both stories provide valuable insights into the China we know today, reflecting the multifaceted character of the world’s second-largest economy, one that draws its strengths from a mixture of market competition and avowedly illiberal state power.

Weber writes that reformers in China successfully diverged from the national neoliberal ideal, but this is not to deny that the rise of China is central to the story of the global neoliberal era. Not long ago, it was possible to narrate the history of neoliberalism by reducing it to the ideology of a handful of economists in Chicago and Vienna, who successfully disseminated their ideas to the rest of the world. Since then, new scholarship has broadened this inquiry beyond the “West” to include synchronous patterns unfolding in the “rest”: development projects in Latin America, export-processing zones in Asia, and offshore tax havens in postcolonial territories. Similarly, if China’s position as an economic power has pushed Sinologists to now pay greater attention to global history, then, likewise, scholars of North Atlantic capitalism will find it increasingly unavoidable to take the study of China more seriously. The flip side of the extreme financialization of economic life in Euro-America, it seems to me, was the state-led industrialization of East Asia.

If earlier notions that China would assimilate to a US-led world order have proved to be wishful thinking, then it should be vitally important to reexamine what, exactly, the socialist project meant in the 20th century. No doubt China has been thoroughly reintegrated into the global economy after a long hiatus, but this was not a unilateral movement. For over half a century, policy-makers and economic thinkers in China—from Mao to Deng, spanning both rural and package reformers—studied globally ascendant market ideas and practices, assimilating some but not others into their own traditions of Chinese socialism, folding them into their own specific universe of meaning.