The Role of Social Capital in Institutional Change—On the Governance Mechanism of The Chinese Government

Social capital encompasses norms, networks of reciprocity, trust, and cooperation, while civil society comprises NGOs, non-profits, and informal groups. However, social capital is often reduced to institutional determinism, which overlooks the influence of elite groups and the dynamic nature of social capital. In practice, social capital regulates policy-making, decentralization, and values, bridging gaps between market and government, central and local, and individual and state. It acts as an intangible asset that connects societal structures and elements, influencing governance and the role of social organizations. Chinese governments at various levels focus on mobilizing social capital to address issues, especially when there is a lack of flexibility at lower levels, creating a “bridge” mechanism. Unlike mainstream economic “economic rationality,” China’s public policy emphasizes “village community rationality” at the local level, shaping a unique national system.