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Did Government Decentralization Cause China's Economic Miracle?

Published online by Cambridge University Press:  13 June 2011

Hongbin Cai  and
Daniel Treisman
Hongbin Cai
Affiliation:
Peking University
Daniel Treisman
Affiliation:
University of California
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Abstract

Many scholars attribute China's market reforms and the remarkable economic performance they have fostered in part to the country's political and fiscal decentralization. Political decentralization is said to have stimulated local policy experiments and restrained predatory central interventions. Fiscal decentralization is thought to have motivated local officials to promote development and harden enterprises' budget constraints. The locally diversified structure of the prereform economy is said to have facilitated liberalization. Reexamining these arguments, the authors find that none establishes a convincing link between political or fiscal decentralization and China's successes. They suggest an alternative view of the reform process in which growth-enhancing policies emerged from competition between promarket and conservative factions in Beijing.

Type
Research Article
Information
World Politics , Volume 58 , Issue 4 , July 2006 , pp. 505 - 535
Copyright
Copyright © Trustees of Princeton University 2006

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References

1 Based on the International Comparison Program, as reported in the World Bank's World Development Indicators Database. In non-PPP adjusted 2000 U.S. dollars, the increase was from $153 to 11, 162.

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95 Victor Shih, “Dealing with Non-Performing Loans: Political Constraints and Financial Policies i n China” (Manuscript, Northwestern University, Department of Political Science, 2005), 17–18.

96 OECD (fn. 74), 43.

97 Qian and Roland (fn. 80), 222.

98 For an interpretation of agricultural reforms that emphasizes local initiatives, see Yang (fn. 29).

99 The specific events on which these classifications are based, along with the sources, are listed in a longer version of the paper on Treisman's Web site at www.polisci.ucla.edu/faculty/treisman/.

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102 Chen (fn. 2).

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