The paper analyzes the political basis for China's economic success, arguing that China's system of political decentralization and market-oriented reforms has created a unique form of federalism, "Chinese style." This system provides a political foundation for economic reforms by limiting the central government's discretion and fostering local economic autonomy. While China has not fully embraced democratic reforms, it has made significant changes in political decentralization, ideological shift towards market-oriented policies, and economic openness. These changes have led to a new political system that supports market-oriented enterprises and provides political protection for economic reforms. However, the system still faces challenges, including the absence of private property rights, a commercial law, and a judicial system, as well as the need for institutionalization of political decentralization to ensure long-term stability. The paper argues that China's system of market-preserving federalism is a special form of federalism that balances political durability with economic freedom, allowing for significant economic growth while maintaining political stability. The system's success is attributed to its ability to limit central government discretion, encourage local economic development, and provide a political foundation for market-oriented reforms. The paper also highlights the importance of political durability in ensuring the long-term success of economic reforms and the need for continued institutional development to address existing limitations.The paper analyzes the political basis for China's economic success, arguing that China's system of political decentralization and market-oriented reforms has created a unique form of federalism, "Chinese style." This system provides a political foundation for economic reforms by limiting the central government's discretion and fostering local economic autonomy. While China has not fully embraced democratic reforms, it has made significant changes in political decentralization, ideological shift towards market-oriented policies, and economic openness. These changes have led to a new political system that supports market-oriented enterprises and provides political protection for economic reforms. However, the system still faces challenges, including the absence of private property rights, a commercial law, and a judicial system, as well as the need for institutionalization of political decentralization to ensure long-term stability. The paper argues that China's system of market-preserving federalism is a special form of federalism that balances political durability with economic freedom, allowing for significant economic growth while maintaining political stability. The system's success is attributed to its ability to limit central government discretion, encourage local economic development, and provide a political foundation for market-oriented reforms. The paper also highlights the importance of political durability in ensuring the long-term success of economic reforms and the need for continued institutional development to address existing limitations.