Recent Developments in China, the US and Europe
Edited by Michael Faure and Xinzhu Zhang
Liangchun Yu and Donghua Yu 5.1 INTRODUCTION: THEORETICAL FOUNDATION OF THE MEASURE OF REGIONAL ADMINISTRATIVE MONOPOLY After 30 years of reform and opening-up, China has undergone profound changes: rapid economic growth, substantial social progress, significant increases in residents’ income and a gradual establishment of social security system; a buyer’s market for major commodities has been formed, the role of the market in resources allocation has initially been established; the economic system is steadily reforming, and the basic framework of the socialist market economic system has been shaped. However, at the same time, the ‘invisible hand’ and the ‘visible hand’ have interacted in China’s socialeconomic activities, resulting in a series of special economic phenomena and problems. Some of these have become the constraints of development and reform. The regional administrative monopoly arose in this period, emerging as the government influences or limits the market in order to play a role in resource allocation. Regional administrative monopoly is therefore defined as the use of the administrative power of regional governments to limit or exclude competition, resulting in the non-integration of the market. The regional administrative monopoly poses great harm to the economy. It impedes the free movement of goods and factors throughout the country, weakens the efficiency of market mechanisms to optimize resources allocation, is not conducive to promoting regional comparative advantage and the formation of specialized division of labour, is not conducive to obtaining economies of scale, and often results in duplication and inefficient investment. Moreover, the regional administrative monopoly is...
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