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Abstract: Contrary to popular belief, the rise of China over the past half century was not driven by industrial or mercantilist policies. The economy grew fastest when the government played a more passive role, allowing market forces and bottom-up initiatives from farmers, local officials, and private entrepreneurs to shape economic development. China’s vast size and extensive markets created strong incentives for entrepreneurial innovation. However, the government remained committed to preserving its political system and a dominant state sector, imposing clear limits on private sector and market development. Whenever private entrepreneurs sought to push these boundaries, the government responded forcefully. Over the last five decades, China’s economic trajectory has been shaped by the tension between these two forces.
Keywords: China's Economic Growth, Market Forces vs State Intervention, Policy Cycles, Bottom-up Reforms, Top-down Industrial Policies, Private Sector Development, State-Owned Enterprises, Political Economy of Reform
JEL Classification: O25, O43, P30,