Reform and political coalition: 1990–2003

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Chapter 4 in The Institutional Evolution of China, 2018, pp 104-154 from Edward Elgar Publishing

Abstract: 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.

Keywords: Asian Studies; Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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