> To understand the Chinese economy you must understand that there are really two Chinese economies. One mustn't confuse them with each other:
>> “There is a parallel economy that is geographic as well as politically strategic. This is commonly referred to as the economy “inside the system,” (tizhinei 体制内) and from the Communist Party’s viewpoint, it is the real political economy. All of the state’s financial, material, and human resources, including the policies that have opened the country to foreign investment have been and continue to be directed at the “system.” Improving and strengthening it has been the goal of every reform effort undertaken by the Party since 1978. It must be remembered that the efforts of Zhu Rongji, perhaps China’s greatest reformer, were aimed at strengthening the economy “inside the system,” not changing it.” (p. 8)
> Westerners often describe China's explosive economic growth as a product of its export sector. This sector, however, is not "in the system":
>> “The private export oriented sector suffered massive losses in jobs, earnings, and the closure of small companies in 2008 and 2009. But China’s banks were not exposed in any material way to this sector. It is simple fact that China’s financial system and its stock, bond, and loan markets cater only to the state sector, of which the “National Champions” represent the reddest of the Red. These corporations, the heart of China’s state owned economy, are “inside the system.” The private economy, no matter how vibrant is “outside the system,” and in fact serves the will of the system.” (p. x)
>> “There is a parallel economy that is geographic as well as politically strategic. This is commonly referred to as the economy “inside the system,” (tizhinei 体制内) and from the Communist Party’s viewpoint, it is the real political economy. All of the state’s financial, material, and human resources, including the policies that have opened the country to foreign investment have been and continue to be directed at the “system.” Improving and strengthening it has been the goal of every reform effort undertaken by the Party since 1978. It must be remembered that the efforts of Zhu Rongji, perhaps China’s greatest reformer, were aimed at strengthening the economy “inside the system,” not changing it.” (p. 8)
> Westerners often describe China's explosive economic growth as a product of its export sector. This sector, however, is not "in the system":
>> “The private export oriented sector suffered massive losses in jobs, earnings, and the closure of small companies in 2008 and 2009. But China’s banks were not exposed in any material way to this sector. It is simple fact that China’s financial system and its stock, bond, and loan markets cater only to the state sector, of which the “National Champions” represent the reddest of the Red. These corporations, the heart of China’s state owned economy, are “inside the system.” The private economy, no matter how vibrant is “outside the system,” and in fact serves the will of the system.” (p. x)