China's reform has produced some tremendous achievements in the last thirty years, but also some problems, most of them related to the gradual manner of reform. A gradual reform implies that, when new arrangements of the market system emerge, some elements of the old system still linger on. The conflict between the two systems is the root cause of many problems. In fact, both systems have their strict underlying logic and both are made up of correlated and interacting institutional arrangements. Likewise, while some new institutional arrangements have emerged, others are denied due to the persistence of some old arrangements. In such circumstances friction and conflict are inevitable.

In theory a solution to the dual system is either a complete transition to the market system or a complete restoration of the original planned system. But in practice neither option is easy. True, the original system could get rid of the problems of the financial system – corruption and loss-making state-owned enterprises (SOEs). But it simply is no longer possible to go back. Even if it were possible, after tasting the sweetness of the reform, people would not be willing to do so. And if the old system were reinstated, the incentives to work would be even weaker. So, China's economic reform has to forge ahead with full momentum.

Although the reform started over three decades ago, China has not yet completely transformed to a market economy. The major reason is that the reform of its SOEs has yet to be accomplished, imposing great inertia on the transition.