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China's transition to markets: market-preserving federalism, chinese style

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  • Yingyi Qian
  • Barry R. Weingast

Abstract

This paper studies the relationship between decentralization and the success of reform in China. We argue that a particular form of decentralization—called market-preserving federalism Chinese style—provides the critical foundations for market success. China's form of decentralization has served the critical purpose of creating markets at a time when political resistance to economic reform remained strong and when the durability of the reforms was important. Nonetheless, federalism, Chinese style, lacks some national public goods, and the new system needs to be institutionalized. We also highlight some parallels between the United States under the Articles of Confederation (1781-1787) and those of modern China.

Suggested Citation

  • Yingyi Qian & Barry R. Weingast, 1996. "China's transition to markets: market-preserving federalism, chinese style," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(2), pages 149-185.
    • Handle: RePEc:taf:jpolrf:v:1:y:1996:i:2:p:149-185
    DOI: 10.1080/13841289608523361
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