Show Less
You do not have access to this content

The Institutional Evolution of China

Government vs Market

Fan Zhang

China’s experience over the past decades is not just a story of economic growth, it is also one of institutional change. The current political-economic system is a bureaucratic market system, in which the government and the market both coexist and conflict with each other. This book gives a detailed description of the institutional evolution in China, using large amounts of documents and cases. The book provides a theory explaining the origin of China’s reform, the political and economic forces driving the reform, and the reasoning behind the stagnation and turn-over of reform.
Show Summary Details
You do not have access to this content

Chapter 4: Reform and political coalition: 1990–2003

Fan Zhang

Extract

The leadership resolved the political crisis and reinitiated the economic reform, though it was subject to a narrower political restriction. State-owned enterprise (SOE) reform and tax reform were the major elements of the reform in this period. The reform in the 1990s was driven partly by the top-down design and partly by the enthusiasm to develop the market economy from the bottom of the society. The most important institutional changes were (i) the reform of SOEs, a silent privatisation in which the small SOEs were sold to the public, while the large SOEs were kept by the government; (ii) the setting up of the tax-sharing system between the central and local governments, which readjusted the financial sources and responsibilities of the central and local governments; and (iii) China’s World Trade Organization (WTO) entry, which further opened the door of the Chinese economy to the world. A large private sector and a financial market were formed by the end of this period. As a result of the downward shifting of power from the central government, the local government played a significant role in economic development through political competition among local governments. The leadership formed a coalition with the elites of the society, which provided a foundation for its stability.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.