Port Cities and Trading Networks in China, Japan and Southeast Asia, 13th–21st Century
Chapter 19: Local Protectionism and Trade Wars: Market Fragmentation in China
Ever since the early 1980s, economic reforms in China have been characterised by two associated phenomena: the partial dismantling of economic planning and the decentralisation of economic decisions. However, less planning does not automatically mean a better market. Very often, the attributes of planning migrated – intact and even reinforced – to the local level. The problem was that the reforms took place in a context where three levels of decision entered into collision: central government, local authorities and companies. These three echelons set up different – even contradictory – strategies throughout the reform process. Does administrative de-concentration lead to a unified market, or on the contrary, to a fractioning of the economic space? Recurrent in China since the late 1950s (the Great Leap Forward and the Cultural Revolution are examples), decentralisation of the Chinese economy corresponded to an administrative logic. First of all, it meant the devolution of decisions concerning the allocation of resources, investments, the levying of certain taxes, price fixing and policies of redistribution to administrative organs at the municipal or provincial level. In other words, it was a matter of redistributing power within the bureaucracy, more than delegating economic decisions to independent operators. The ambivalent actions of the local authorities thus became more obvious: they diverted the administrative power of control over the economy, which was formerly the privilege of central government, to their own advantage, and their actions were detrimental to the creation of a unified market. It should also be pointed out that after 1989, they also served...
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