[3][1] Yang contended that the essential conflict in China was between the new "red capitalist class", consisting of CCP cadres and their families, and the masses of the Chinese people.

So great was his influence that some members of the 1980s Democracy Movement in China viewed Yang Xiaokai as "the forerunner of the Thinking Generation".

[1] He learnt from and deeply admired a fellow prisoner who happened to be a mathematics professor and a devout Christian; but Yang did not convert yet at that time.

[3] In 2002, Nobel Prize Winner Professor James M. Buchanan said that: "In my view, the most important and exciting research in economics in the world is done at Monash, and it is done by Xiaokai Yang.

He is praised by his colleagues for having cleared up many unhelpful digressions in economic writing, and returning the discipline to the fundamental insights of Adam Smith.

According to Buchanan, this approach has major implications for a wide range of issues in economics, such as globalisation, outsourcing, as well as interoccupational and locational mobility.

Yang's major contribution at the time of his death was the development of infra-marginal economics, which are those discrete decisions that dictate future path dependencies.

[8] He was a prolific author in economics, but Yang simultaneously wrote a large body of influential political essays in Chinese, including a best-selling book.

When he died, Southern Weekend, the most influential reformist magazine in China, published a long obituary, praising Yang, and discussing the pervasive impact of his writings.