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Period 1991-1996 1 Gradualism vs Shock therapy Despite the bias of analysis caused by the different transition periods between China and Former Soviet Sates and by different countries characteristics we believe that the rapid growth observed in China from 1978 and in Eastern Europe from 1991 is a concern of convergence process This process makes up think that the steady state for Chinese and Eastern European economies could be achieved by providing solutions in rules and institutions in line with Western Europe for Former Soviet States and Japan South Korea for China To develop the Chinese way could be described as crossing the river by touching the stones while Eastern European transformation should be described as a shock therapy Still in terms of trade liberalization and trade policies China and Post Soviet Economies experienced some similarities Big bang policy can be described as 1 rapid and comprehensive trade and price liberalization 2 macroeconomic stablization 3 alignment of the official exchange rate to the market rate 4 ending legal discrimination towards all types of non-state enterprises 5 early commintment of mass privatization of SOEs Policy of gradualism should be described as follows 1 Gradualism strategy is transferable to other transition economies 2 Chinas experiments in non-capitalism intsituations are providing to be usefull in agriculture TVE SOEs 3 China is evolving into a unique set of instituatinal organizations as a result in experimentlizm in policy design In the beginning gradualism was a good solution especially with social protection Now China is lacking large scale reforms Newspapers news Critics of this approach say that gradualism comes because of lack of consensus over the proper course with power divided equally between old-time thinkers and modernizers there is a risk of loosing control over vital areas of political and economic activities Similarity Centralized and inward-looking economic system followed closely the Soviet model Foreign trade activity remained completely under central control This contrasted
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