The collapse of the Soviet Union in December 1991 sparked a wave of marketization in Russia Federation and Eastern Europe during which the term ˜transitional economy' was coined. Economic liberalisation in Russia was initiated by Boris Yeltsin who was given special power by the Russian parliament to carry out reforms by decree. The process of economic reforms had already been continuing for more than twenty years by then. Both China and Russia are or were massive socialist countries however, the differences in their social, political and economic features destined two very different paths of transition. The Russians opted for what is called neoliberal transition strategy1 whereas the Chinese adopted a more controversial and conservative state-lead transition strategy2. This essay firstly aims to explain and analyse the theoretical differences between the two strategies on a macro level and illustrate various achievements and reality with statistics. Moreover, I will explore the differences of the two transitional economies on a sub-national level as how the distinctive features of the pre-reform Chinese political and economic enabled the births of many regional development paradigms such as the Pearl Delta Model, the Wenzhou Model and the Sunan Model all of which tailored to exploit fully the unique economic characters of the regions from where they originated, and promote growth during transition. At the end I will discuss briefly the difference in the two systems that might have led to the success of China's reforms.
2. Russia and NTLS.
Neoliberalism, the core of Neoliberal transition strategy, was initially coined by Milton Friedman who recommended the use of ˜shock therapy' to make a sudden and radical transition within a few years (Kotz, 2000). It calls for a minimal government during the process, leaving almost everything to the rational agents in the economy.