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Government and market: A case study of the political economy of post Mao economic development in Xihu District, China

Zhang, Jian (1998) Government and market: A case study of the political economy of post Mao economic development in Xihu District, China. PhD thesis, Murdoch University.

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This thesis examines the behaviour of local governments during China’s transition to a market economy. In particular, it addresses the question of why local government officials embraced market reform despite the potentially detrimental effects on their power. In contrast to recent studies of local government in China, which have tended to explain local state activism in the economy in terms of the economic interests of local government officials, this thesis highlights the part that political interests have played in shaping economic behaviour. The thesis contends that the involvement of local governments in the economy has been motivated not only by a desire to seek economic benefits, but also by a desire to maintain power over the local economy. This, in turn, it is argued, has greatly shaped the ways in which local governments intervene in the economy, thereby profoundly impacting upon the pattern of local economic development.

The thesis is a case study of Xihu district in the city of Hangzhou, Zhejiang province. Utilising data and interviews derived from eight months of fieldwork in Xihu, the thesis traces the economic intervention by local governments to its political origins. The importance of political interests in shaping intervention by the local state has resulted in the rise of a group of local collective enterprises that are under the control of local governments, and form the economic basis of their political power. Faced with the erosion of the monopoly of economic resources in the hands of the local state due to increased marketisation, local state actors have placed strong importance on collective enterprises not only because of their economic interests, but also for political reasons.

The political approach adopted in this thesis further allows us to identify the detrimental effects of local government activism on the economy. The thesis demonstrates that, despite the economic interests created by the reforms, political objectives have consistently compromised the effectiveness of intervention by the local state. Such intervention has lessened the incentives for collective enterprise managers, a group - the study argues - that has been pivotal to local economic development. The conflict of interests arising from this situation has in turn placed pressure upon the economic basis of the power of the local.

Item Type: Thesis (PhD)
Murdoch Affiliation(s): Division of Social Sciences, Humanities and Education
Notes: Note to the author: If you would like to make your thesis openly available on Murdoch University Library's Research Repository, please contact: Thank you.
Supervisor(s): Wright, Tim
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