This book focuses on the gradual reform of Chinese society since China's opening up to the
world and gives a unified explanation of the process based on bargaining theory. It studies
institutional changes as a non-violent bargaining process in which different parties constantly
make adjustments to social contracts by following the tradition of classical economics
initiated by Adam Smith. The book has two major conclusions: First bargaining-driven
institutional reform ensures both efficiency and equality. Second bargaining-driven
institutional reform involves the principles of and is an essential approach to democracy. The
book's interpretation of the economic phenomena and the reform mechanism in China not only
reflects China's 30-year reform experience but also pays due homage to the academic heritage
in the related areas. Yet as a departure from traditional theories of the Chinese reform this
book lays out a unified and legitimate theoretical framework in order to clarify the
international misinterpretations of China's social change and institutional reform.
