| Abstract | China’s gradual market-oriented reform is effective. But on the other side, the state advances, the private retreats, and the residents' welfare still need improvement. All these make some people doubt about the direction of the reform. To have a better understanding of China’s gradual market-oriented reforms, this paper portrays a non-market economy with DSGE model, where markets of elements are segmented and some industries are restricted to enter. And we find that, in the process of gradual market-oriented reform: (1) in the beginning, free elements will flow into inefficient sectors, and the state advances;(ii) later, the case will be reversed;(3) residents’ wealth and the ratio of wages to output rise tortuously, and the Gini coefficient is up and down during the process;(4) when the market-oriented reform completes, the inefficient sectors will disappear, and all the indicators improve, except the Gini coefficient, which is slightly higher than before the reforms. |