This book presents a story of two Chinas - an entrepreneurial rural China and a state-controlled urban China. In the 1980s, rural China gained the upper hand, and the result was rapid as well as broad-based growth. In the 1990s, urban China triumphed. In the 1990s, the Chinese state reversed many of its productive rural experiments, with long-lasting damage to the economy and society. A weak financial sector, income disparity, rising illiteracy, productivity slowdowns, and reduced personal income growth are the product of the capitalism with Chinese characteristics of the 1990s and beyond. While GDP grew quickly in both decades, the welfare implications of growth differed substantially. The book uses the emerging Indian miracle to debunk the widespread notion that democracy is automatically anti-growth. The single biggest obstacle to sustainable growth and financial stability in China today is its poor political governance. As the country marks its 30th anniversary of reforms in 2008, China faces some of its toughest economic challenges and substantial vulnerabilities that require fundamental institutional reforms.

"The development of the Chinese private sector is a key to the future shape and performance of the Chinese economy. At present, the subject is widely misunderstood. This book does more than any other to clarify the issues and point the way forward." - Christopher Howe, FBA, School of East Asian Studies, University of Sheffield

"Yasheng Huang is an insightful scholar of China's political economy. In this important book, he shows how China's rural economy took off in the 1980s, led by 'township and village enterprises' that were essentially private, only to be ignored in the 1990s by state-led development that focused on urban regions such as Shanghai. The 'Shanghai miracle,' he argues - and as any businessman who has worked there knows - was not the simple triumph of capitalism, but of a stronger and more intrusive (and effective) state. If one wants to understand the policy origins of China's growing divide between rich and poor, urban and rural, one need look no further than this book." - William Kirby, Harvard University

"Sure to generate a lively debate, Professor Huang's study provides a provocative and well-researched challenge to much current thinking on China's economic development. The widely shared gains of the 1980s have not been matched in more recent years. Danger signs include the stagnation in household incomes, growing inequality and illiteracy, and heightened governance problems. Huang argues that China will not be able to continue to grow unless the benefits of growth are widely shared through fundamental political and legal reforms." - Susan Rose-Ackerman, Yale Law School

"Most books about China's economy and their authors fall into one of two camps: those that are hypercritical and those that are hyperlaudatory. Professor Huang's book is closer to the former than the latter, for example, he characterizes China's economy as '...crony capitalism built on systemic corruption and raw political power.' Yet, his book is different from, as well as better than, others in that genre because it gives ample recognition to contrary views and empirical data supporting them. Consequently, Capitalism with Chinese Characteristics is both immensely informative and enormously provocative." - Charles Wolf, Jr., Pardee RAND Graduate School

"For years, Western economists are amazed that China's growth is obviously fueled by factor accumulation and yet her capital markets appear to be under developed. Yasheng Huang's book provides some refreshing information and analysis. He shows that in China's vast rural areas, which Western academics often cannot obtain good and detailed information, economic and financial liberalization went much further than credited by outside analysts and that the rigorous development of private entrepreneurship explained much of China's takeoff. His thesis is worthy of attention; this book will enhance our understanding of China's economy and lead us to take a more thorough look at the development process." - Bernard Yeung, University of Singapore Business School