Editor's Introduction

The report that is translated in this and the next issue of >i>Chinese Economic Studies>/i> by Wang Shaoguang and Hu Angang has been one of the most influential and controversial documents written about the Chinese economy in recent years. Wang Shaoguang, professor of Political Science at Yale University, and Hu Angang, a researcher at the Chinese Academy of Sciences, argue strongly that the decentralization that has taken place over the course of the past decade and a half threatens to undermine the future of reform and perhaps even the state itself. Basing their work in part on Joel Migdal's notions about state and society, they argue that reform has undermined state capacity in China. They contend that the state's fiscal revenues, as a percentage of GNP, have declined from 31.2 percent in 1978 to 14.7 percent in 1992, and predict that it will decline further, to only 11.3 percent in the year 2000. This figure would put China in the ranks of the least "statist" societies in the world and would, in the authors' opinion, weaken China's ability to mobilize resources for modernization.