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How Reform Worked in ChinaThe Transition from Plan to Market$
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Yingyi Qian

Print publication date: 2017

Print ISBN-13: 9780262534246

Published to MIT Press Scholarship Online: May 2018

DOI: 10.7551/mitpress/9780262534246.001.0001

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Federalism, Chinese Style: The Political Basis for Economic Success in China

Federalism, Chinese Style: The Political Basis for Economic Success in China

(p.201) 7 Federalism, Chinese Style: The Political Basis for Economic Success in China
How Reform Worked in China

Yingyi Qian

The MIT Press

The purpose of this paper is to provide an explanation of China’s high performance despite several factors that would indicate otherwise according to conventional wisdom. The authors argue that conventional wisdom is problematic in regards to China. First, it provides too narrow a definition of political reform. Second, although it asks the right question about political discretion, the inappropriate definition of political reform leads it to the wrong conclusion. Third, though much is wrong with the system of property rights in China, looking for a system of such rights as exists in the West has confused many analysts. Rights are not as secure in China as they could be, and the absence of a law of property and contracts along with a judicial system to enforce it remains a significant lacuna in the reform process. And yet, property rights are not completely insecure and without political foundations. Indeed, political reform in China has provided considerable limits on the discretion of the central government. These limits, in turn, provide the beginnings of a strong and credible political foundation for many market-oriented enterprises throughout the successful regions of China. China has a new political system that we characterize as federalism, Chinese style. This system, in turn, provides considerable political protection for China’s reforms, including limits on the central government. Viewed from the perspective of the individual, this system differs considerably from federalisms in the developed West.

Keywords:   Federalism, Political reform, Economic reform, Political system, Political discretion, Property rights

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