China: Developmental state or dysfunctional development?

Since 1978 the Chinese Communist Party (ccp) leadership has implemented a series of reforms designed to restore the party's legitimacy by moving from a politically to a more economically mobilised society. This strategy has entailed the gradual dismantling of the instruments of state planning, and their replacement with market mechanisms, in an attempt to increase economic efficiency and productivity. With China's internal Maoist model of development and other socialist developmental models now essentially moribund, some within China, and even among the ccP itself, have looked East for inspiration-or for aspirations. Where reform in much of Eastern Europe had resulted in a decline in party authority and the descent into economic chaos, China's East Asian neighbours appeared to provide shining examples of how rapid economic growth could be compatible with continued authoritarian government. While it is true that the Chinese reform experiment does contain some similarities with the capitalist developmental states of East Asia, we should not conclude from this that China is following a coherent strategy of emulating the NICS. China's developmental trajectory has been to a large extent dysfunctional. There are three key factors here which this paper will explore in detail. The first is the way that political demands-both from within the party-state structure itself and from other societal groups-have obstructed the formulation of a coherent and effective national economic development strategy. In the words of the title of Susan Shirk's excellent interpretation of reform in China, we must assess 'The political logic of economic reform'.' Second, the reform process has resulted in a significant redistribution of economic decision-making power, primarily from central to local level authorities. The central authorities have granted local governments across China varying degrees of financial autonomy. In addition, some have exploited growing international contacts to find further sources of extra-budgetary investment