Abstract. In his monograph Lin Yifu explains why China was at the forefront in the pre-modern era, what reasons have caused its decline for nearly two centuries, the way in which it walked to a market economy, where lies the potential for further dynamic growth and what further reforms should be held to complete the transition to a well-functioning, advanced market economy. Reviewer analyzed the author's attempt to push "a general theory of the transition to a market economy and economic development," based on the strategy of comparative advantages. The study by Nicholas Lardi shows the key role of the private sector in the development of China's economy. One critically evaluates the author's conclusions about the relative efficiency of the private and public sectors of China's modern economy.