For most countries of late-modemization, the emergence of the market as a spontaneous order is a history that cannot be easily repeated. The experiences in East Asian countries clearly demonstrated that the state can be a major actor in pushing forward modernization. As some scholars have noted, the relationship between the economy and the state in this region has involved “a market that is the engine of economic growth and an authoritarian state as the driver of the engine” (Simone and Feraru 1995, 163). Chinese scholars agree that this development has not been spontaneous, but induced and guided by the state (Cheng 1998, 93-100; Wang and Hu 1993; Rosen 1990-91). Since the state has been an indispensable partner with the market forces in driving forward the Chinese economic engine, it is justifiable to discuss the impact of the institutional arrangements within the state and the state’s policies upon the economic development of China.