Decoding the Governance of State Dominance and Market Instruments in China

China has been renowned for its successful economic reform within the institutional framework of socialist nation. Undoubtedly, land marketization is a most vital component. It is generally argued that the Chinese states have retreated to make the market mechanism dominant in governing economic development. However, there are increasing evidences implying that the Chinese states are still sustaining a strong control over the economic operation. The author thus identifies a different governance form of “state entrepreneurialism” with a salient feature of combing state dominance with market instruments to fulfill economic and political goals. In order to interpret these two seemingly contradictory tendencies, namely state control and marketization, a quantitative method of regression is applied to analyze the market-based transaction of industrial land. Through examining the industrial land market, the study recognizes a negative relationship between competition level of industrial land transactions and local economy as well as municipal finance. These empirical results contribute to demonstrate the proposed governance form of state dominance with market instruments. Moreover, it explains the reason of central-local stance disparity in market-based transaction of industrial land.