The Fundamental Institutions of China's Reforms and Development

2011/12/01 by Chenggang Xu · 2,633 citations
Economics, Econometrics and Finance · Social Sciences · #Authoritarianism #Business #China #China's Socioeconomic Reforms and Governance #Corporate governance #Decentralization #Democracy #Development economics #Economic growth #Economic policy #Economic reform #Economic system #Economics #Finance #Fiscal Policy and Economic Growth #Government (linguistics) #Institution #Law #Local Government Finance and Decentralization #Market economy #Negotiation #Political science #Poverty #Poverty reduction

paper · open access · doi:10.1257/jel.49.4.1076

published in Journal of Economic Literature 49(4), 1076-1151 (American Economic Association)

openalex publication_date 2011/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04

Abstract

China's economic reforms have resulted in spectacular growth and poverty reduction. However, China's institutions look ill-suited to achieve such a result, and they indeed suffer from serious shortcomings. To solve the “China puzzle,” this paper analyzes China's institution—a regionally decentralized authoritarian system. The central government has control over personnel, whereas subnational governments run the bulk of the economy; and they initiate, negotiate, implement, divert, and resist reforms, policies, rules, and laws. China's reform trajectories have been shaped by regional decentralization. Spectacular performance on the one hand and grave problems on the other hand are all determined by this governance structure. (JEL O17, O18, O43, P21, P25, P26)

Citations

• The Nature of the Firm
• The Effects of Privatization and Ownership in Transition Economies
• An Essay on Fiscal Federalism

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