Abstract
This paper is an attempt to interpret recent rapid Chinese growth in a longer term perspective and in comparison with Russian economic performance. First, it is argued that recent economic liberalization produced spectacular results (1979-onwards) because the reform strategy was very different from the Washington consensus package (gradual rather than instant deregulation of prices, no mass privatization, strong industrial policy, undervaluation of the exchange rate via accumulation of reserves). Second, recent Chinese success (1979-onwards) is based on the achievements of the Mao period (1949-76) — strong state institutions, efficient government and an increased pool of human capital. Unlike in the former Soviet Union, these achievements were not squandered in China due to gradual rather than shock-therapy type