Abstract

Academic opinions about the characteristics of China's economic development differ with each other dramatically. However, based on the studies of china's economic history of 1927-1937,1949-1957,1958-1980, it can be found that, the social attributes of economic development factors, economic polices, political uprightness and political system constitute the universal variables that designate a nation's development characteristics. Without them, the latter can not be determined. Due to the negative values of these variables, the period of 1927-1937 has handed down nothing positive to China, even though it was taken by some people as“the golden decade”of economic development under the Guomindang regime. In 1949-1957, China, with an attempt of creating a socialist society, had completely reversed the movement of the above four variables, during which a period of rapid development appeared, and solid theoretical and institutional foundations for its future development were laid. In 1958-1980, despite some complicated factors that contributed to the Great Leap Forward and the Cultural Revolution, China had yet enjoyed a rather surprising high level of economic growth, which could not have been realized without the theoretical and institutional foundations laid in 1949-1957.1981-2010 was a period with high speed of economic growth, but went in opposite direction in some major aspects of the above four variables to that of the 1949-1957 era. If the 1949-1957 China conducted a socialist transformation of private enterprises into public ones, the reform of the state-owned enterprises in the late 1990, whatever the background or the reason it was, together with some other reform measures, seemingly led to a privatization of socialist industrial and commercial enterprises. With private capital appearing as a powerful power in China, the problems that China has been suffering from since the late 1990 can not be inculpated to the econo-political situation before 1980. With the sovereignty of private capital, China has burdened itself with huge avoidable costs in pursuing the 8% economic growth rate, with two economic recessions only as illuminating examples. Without the equality of income and wealth, recession tends to be a cyclical thing for China, and it will be only too superficial a word to describe what will happen in the future of China. The explanation for this inequality in income and wealth can only be found in a rapid growth of private capital in China. China has claimed to establish a socialist market economy, but whether the market exchange is of equality and what the equality degree is indexed will depend on the characteristics of production agent. Once private capital dominates China's markets, the nature of the market will be determined by the properties of private capital. And to establish a well functioned market economy is thus to limit the malfunctions of private capital. But this can only be accomplished through greatly eliminating private capital. From this perspective, Marx provided a paradigm that is most suitable for analyzing China's development characteristics, i. e., in short, capital does not create value. China's development strategy should be built upon this Political Economy principle.