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Local Political Elite, Partial Reform Symptoms, and the Business and Market Environment in Rural China

Author

Listed:
  • Zhang Qi

    (Northwestern University)

  • Liu Mingxing

    (Peking University)

Abstract

In this article we examine how Chinese local officials impact rural business environment and market development since the late 1990s. If their power is not effectively checked by village elections, local political elite are able to manipulate reform policies in a way to serve their economic and political interests at the cost of villagers' interests. In other words, local officials selectively implement reform policies not only to maximize economic rents available for extraction but also to minimize the risk that may challenge their rent-seeking capacity in the countryside. We draw on a survey data collected by the authors from rural China in 2003 and 2004 to test our hypothesis on the relationship between political control exercised by local officials over village elections and rural business environment & market development. Our analysis shows that if a local government can keep a village elections under its control, then local officials would charge more license application fees from self-employment business owners, put village land re-allocation process under government administrative control, restrict peasants from founding their own professional associations. Local officials' self-serving strategy inevitably deteriorates rural business & market environment and bodes an incomplete market-oriented reform for reformists in the central government.

Suggested Citation

  • Zhang Qi & Liu Mingxing, 2010. "Local Political Elite, Partial Reform Symptoms, and the Business and Market Environment in Rural China," Business and Politics, De Gruyter, vol. 12(1), pages 1-41, April.
  • Handle: RePEc:bpj:buspol:v:12:y:2010:i:1:n:5
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    References listed on IDEAS

    as
    1. Morduch, Jonathan & Sicular, Terry, 2000. "Politics, growth, and inequality in rural China: does it pay to join the Party?," Journal of Public Economics, Elsevier, vol. 77(3), pages 331-356, September.
    2. William L. Parish & Xiaoye Zhe & Fang Li, "undated". "Nonfarm Work and Marketization of the Chinese Countryside," University of Chicago - Population Research Center 95-6, Chicago - Population Research Center.
    3. Loren Brandt & Scott Rozelle & Matthew A. Turner, 2004. "Local Government Behavior and Property Right Formation in Rural China," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(4), pages 627-627, December.
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    5. Deininger, Klaus & Jin, Songqing, 2005. "The potential of land rental markets in the process of economic development: Evidence from China," Journal of Development Economics, Elsevier, vol. 78(1), pages 241-270, October.
    6. Luo, Renfu & Zhang, Linxiu & Huang, Jikun & Rozelle, Scott, 2007. "Elections, fiscal reform and public goods provision in rural China," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 583-611, September.
    7. Cai, Yongshun, 2008. "Power Structure and Regime Resilience: Contentious Politics in China," British Journal of Political Science, Cambridge University Press, vol. 38(03), pages 411-432, July.
    8. Huang,Yasheng, 2008. "Capitalism with Chinese Characteristics," Cambridge Books, Cambridge University Press, number 9780521898102, October.
    9. James A. Robinson & Daron Acemoglu, 2000. "Political Losers as a Barrier to Economic Development," American Economic Review, American Economic Association, vol. 90(2), pages 126-130, May.
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