The origins of China’s distinctive tiered economy

Abstract

In this study, I analyse the historical origins of China’s distinctive tiered economy by employing the analytic framework of a complex adaptive system to examine how the process of change involves selection, interaction among elements, and variation in types, which ultimately lead to adaptation. I argue that the rise of China’s tiered economy can be traced back to the Mao era and that it was enhanced throughout Deng’s economic reforms. To elaborate on this argument, I first describe how Mao’s invisible hand planted the seeds of the tiered economy. Selection at the strategy level and the resulting variation are examined as Mao’s adaptive tactics for nurturing the industrial sector. This mechanism of selection was also maintained to partially embrace market forces in Deng’s early era of reform. I then closely examine how Deng’s vision of the socialist market economy provided the party-state with raw materials for adaptation, deepening its tiered economy.