In this volume, Hongyi Lai argues that economic reform in China succeeded because Deng Xiaoping skillfully stage-managed the thorny politics of pushing China away from the Maoist command economy and toward a more open and marketized economic model. As such, Lai joins the ranks of the “top-down” school, which sees reform as primarily a product of decisions made in Beijing. In particular, he builds on Susan Shirk's argument that Deng succeeded in overcoming first latent Maoist and then later orthodox Stalinist conservatism by playing to reformers outside the inner leadership, including the provincial leadership. Lai's argument is arrayed against the school that sees reform as a relatively chaotic process wherein reforms promulgated in Beijing unleashed spontaneous forces that drove the process far beyond where Deng and his coalition of cautious reformers ever anticipated pushing the desocialization of China's economy.

Drawing on a Machiavellian model, the author argues that to achieve his goal of reforming the Chinese economy and radically accelerating growth, Deng faced a set of preexisting constraints defined by historic contexts, factional divisions and preexisting institutional structures around which he had to make choices that would turn these preconditions into opportunities and construct the political coalitions needed to sustain the reform effort. Deng also needed, Lai admits, a good bit of luck to pull off his reform program. In broad terms, he argues, Deng opted for a strategy that initially forged an alliance with Chen Yun and his conservative allies to outmaneuver Hua Guofeng and the “Whateverist” faction—the latent Maoist faction within the leadership. At the same time, Deng encouraged key provinces to adopt bold reforms, often by deploying his allies to head these provinces, while also sustaining the support of the People's Liberation Army. Having pushed the Whateverists aside, Deng slowly brought younger reformers into the leadership while pushing older conservatives into retirement. Thus, Lai concludes, Deng “grew” the party out of socialist orthodoxy and toward a new more market-oriented mindset. As such, Lai's argument is not all that different from what we might call the conventional narrative of how Deng engineered the initial round of reforms and how he skillfully played the factional game in ways that allowed him to first isolate and topple Hua and the Whateverists before moving on to undermine and weaken Chen Yun and his conservative allies.

Where Lai splits off from the mainstream is by asserting that Deng was committed to a sweeping modernization from the beginning. Conventional wisdom holds that Deng set out to reform the Chinese economy without having a particularly clear idea of what the outcome of reform would look like. Typically, Deng is presented as a relatively cautious reformer who, in line with his famous cat aphorism, was simply casting about for reforms that would make China's socialist economy perform better. Lai's argument, by contrast, is predicated on the assumption that Deng intended to build the largely marketized economy that the party came to call “socialist with Chinese characteristics.”

On the basis of his assumption that Deng knew more or less where reform was going, Lai portrays the politics of reform in terms of the difficulties Deng faced in navigating a political business cycle in which reforms tended to stimulate growth but then led to overheating, inflation, social unrest, political dissent, and a conservative backlash. Each time he faced a conservative backlash, Lai argues, Deng took a step back. Reform thus progressed through a process of two steps forward, one step back, edging ever closer to Deng's vision of socialism with Chinese characteristics.

In my view, Lai's assumption that Deng had a vision and plan from the outset is the weakest link in his argument. I, like many in the field, tend to assume that Deng wanted higher rates of growth and was prepared to embrace policies that stimulated growth, but was also at heart a conservative who wanted to preserve the socialist system as much as possible. As reform deepened, Deng discovered that you could not simply graft a little bit of capitalism onto socialism and get the latter to work. Instead, he and those around him discovered that if you wanted to boost the productivity of state-owned industries, for example, you had to do more than provide the workers and managers with new incentive packages. You also had to allow firms to retain profits, let prices float based on shifting supply and demand, transform firms from administrative units to joint stock corporations, allow equity markets to set the value of their stock, shift capital markets away from allocation based on administrative fiat, and encourage allocation based on efficiency, ultimately allowing the emergence of a new class of “red capitalists” and then incorporating this new bourgeoisie to join the CCP—the vanguard of the proletarian revolution. The enormity of the changes required to transform China's economy from a sluggish underperformer to a hyperperformer seems, to many, so great that Deng and his allies could never had envisioned them back in the later 1970s. In this view, circumstances—including most centrally the outbreak of massive antigovernment protests in the spring of 1980 and the party's ever-deepening need to generate high rates of growth to sustain its legitimacy—drove Deng and his allies to embrace ever more radical reforms, reforms that were unthinkable in the early days. In the end, Deng's reform program ended up essentially destroying the socialist character of China's economy.

In a sense, Lai does a good job of laying out his argument and showing how Deng stage-managed the factional contest among liberal reformers, socialist conservatives, and latent Maoists. To an extent, some of the proofs offered in his discussion of how Deng pushed reform forward by “playing to the provinces” seem contrived. Lai, for example, presents a series of quasi-statistical tests to show why specific provinces were selected to lead the reform drive. Although his conclusions appear correct, the recourse to statistical analysis seems unnecessary because in reality, choices were generally highly constrained. In selecting which provinces should be home to the first Special Economic Zones, for example, common sense dictated that Guangdong be selected because of its proximity to Hong Kong and its stock of investment capital. Lai's proof thus ends up seeming a bit superficial and unnecessary. The constrained nature of many of the choices facing Deng may, in fact, explain some of the inclusiveness of Lai's quasi-quantitative tests.

In conclusion, Lai offers an alternative to the conventional wisdom that reform in China unfolded in an incremental and unplanned manner. His argument would, however, be considerably stronger if he better substantiated his assertion that Deng had a clear vision of where the reform process was headed when he started down that road from Mao to the market.