The Logic of the Market: An Insider’s View of Chinese Economic Reform

The Logic of the Market by Weiying Zhang—considered China’s “leading market liberal”—comprises his most influential essays on economics over the past three decades. First published in China in 2010, this revised edition contains three new essays, which offer those outside China a deeper understanding of the Chinese economy. “Market competition is a really just competition to create value for others… Only through this approach did the Western economy advance over the past 200 years. It is also the reason for China’s economic marvel over the past 30 years,” writes Zhang. Readers will appreciate Zhang’s ability to address both everyday economic issues and the questions that confront a nation’s leaders, not the least a nation seeking to escape mass poverty.

The economic reforms and subsequent growth in China may be the most astonishing and hopeful event of our age. Zhang was among the leaders who set China on its path of change. Here he emphasizes the importance of entrepreneurs in the new China and celebrates leaders who mixed sustained idealism with judicious compromise. Zhang provides a unique perspective on his country’s market economy, implementation of economic policies, and the potential for Chinese economic development. “I hope that the logic of the market becomes every person’s ideal,” he writes. “That is my reason for writing this book.” Readers seeking to learn from China’s successes will find much of interest here.

This remarkable book testifies to the power of economic analysis to isolate basic economic forces that transcend countries and political regimes. People are people everywhere—for good or ill, they respond to incentives. This fascinating book has many insights about the ongoing struggle of some people in China to remove impediments to Adam Smith’s invisible hand.

—Thomas J. Sargent, 2011 RECIPIENT OF THE NOBEL PRIZE IN ECONOMICS, PROFESSOR OF ECONOMICS AT NEW YORK UNIVERSITY, SENIOR FELLOW AT THE HOOVER INSTITUTION

Weiying Zhang, a significant voice in China’s policymaking and a star in its academia, presents in this book a deep analysis of China’s extraordinary escape from poverty. I advise all students of economic development to read this important book.

—Edmund Phelps, 2006 RECIPIENT OF THE NOBEL PRIZE IN ECONOMICS, DIRECTOR OF THE CENTER ON CAPITALISM AND SOCIETY, COLUMBIA UNIVERSITY


In this stimulating book, Weiying Zhang goes well beyond the usual review of China’s recent reforms and future prospects. The strengths and weaknesses of reforms, what remains to be done, political and legal reforms, are all anchored in a discussion of the underlying principles and strengths of the market. He draws on the writings of the Austrian economists, Adam Smith, philosophers from early Chinese history, and contemporary experience to make his points. Established economists, students, and scholars will learn much about China and markets from this book.

—Dwight H. Perkins, PROFESSOR OF POLITICAL ECONOMY, HARVARD UNIVERSITY – KENNEDY SCHOOL OF GOVERNMENT

Weiying Zhang is widely regarded as the leading advocate of the free market in China as well as an authority on the theory of the firm and ownership reform. His insightful and provocative opinions about China’s reforms have been widely reported both in Chinese and international media. The Wall Street Journal called him “China’s Anti-Keynesian Insurgent.” Since 1997, Zhang has taught economics at Peking University, and was the Dean of the Guanghua School of Management between 2006 and 2010. He is the chief economist for the China Entrepreneurs Forum. He is the author of nine books, including The Theory of the Firm and Chinese Enterprise Reform (1999); Thirty Years of Chinese Reform (2008); and Games and Society (2013).