The mainstream economics interpretation of the local state and central-local relations in Post-Mao China: a critical review

Alexandre De Podestá Gomes ()
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Alexandre De Podestá Gomes: Department of Economics, SOAS University of London, UK

No 214, Working Papers from Department of Economics, SOAS University of London, UK

Abstract: Decentralization and the role of local governments have long been touted as key factors in the Chinese economic miracle. This paper intends to critically assess the chief theories advanced by mainstream economics in its attempt to make sense of these aspects of Chinaís growth story. Firstly the theoretical underpinnings of fiscal federalism, new institutional economics, and market-preserving federalism approaches will be presented, as these theories offer the bedrock for most of the applied insights in which China is framed through the lenses of the central-local relations debate. Secondly, the idea of ëmarket-preserving federalism, Chinese-styleí will be critically appraised, highlighting its shortcomings. Thirdly, the paper proceeds by bringing in the mainstream response to these problems, relying on the notion of political incentives and career concerns faced by local cadres. It will be argued that the continual adherence to some core tenets dear to the new institutional economics literature in all previous explanations prevents this broad camp of knowledge to properly grasp the complex dynamics of Chinaís decentralization drive and the role of local governments in the process. Finally, and in closing, an alternative approach will be offered.

Keywords: Decentralization; Central-local relations; local state; federalism; political incentives; career concerns (search for similar items in EconPapers)
JEL-codes: D72 H70 H77 O43 P26 P30 P48 (search for similar items in EconPapers)
Pages: 35
Date: 2018-11
New Economics Papers: this item is included in nep-cna, nep-tra and nep-ure
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