The fundamental question about the Chinese economic model is the amount of liberalisation the government has granted to the entrepreneurs and workers. There have been historical evidences of the communist regime practises about providing minimal political liberalisation with decent economic liberalisation. However, equilibrium between the two is necessary in other economies, especially in those of the western nations. Moreover, the Chinese model of economy is actually more complex than a simple equilibrium game between the politics and economics.
The economy was started on the foundation of the early Asian models. The Chinese early days of manufacturing boom was borrowed from the ideologies of Taiwan and South Korea. The model was built on the idea to keep the state at the centre of the entire ecosystem and all decision-makings must spread from the political centre. The Chinese Communist Party made sure that economic power must remain with the state and economic policies must reflect the political long term agendas. In order to make sure that workers are efficient enough to compete with other economies, the state has been pushing primary education as its priority and the literacy rate among youth has been close to 98 percent in the country. The rate is much higher than the average found in developing nations (about 70%).
Usually the Asian high growth countries focus on the foreign investments. The Chinese government took the early steps in order to make conducive environment for the foreign entities to do business and invest for the long term. The government at the same time takes care that the control over the foreign investment is kept under tight monitoring and control in the favour of the Chinese interests.