The People's Republic of China, as a progressively developing economy, is subject to dynamic structural changes, which are potentially de-stabilizing in nature. Since the end of the 1970s China had abandoned Mao Zedong's socioeconomic theories and policies and instituted profound socioeconomic reforms. Her more pragmatic approach has increasingly emphasized economic freedom and individualism. The pursued "pragmatism" involves a revolutionary mixture of both a planned and a market economy with greater economic but not political freedom. Essential socioeconomic reforms were not complemented by requisite political reforms. According to Walter Eucken's "instability thesis," this may de-stabilize China's socioeconomic and political structures. The challenge which China continues to face is how to reconcile two sets of conflicting principles, economic freedom and Marxist-Leninist-Maoist control of politics and society, resolving Eucken's hypothesis of potential long-term instability. This paper addresses this challenge in terms of ethical and economic perspectives.