Governing the Chinese Economy: Regulatory Reform in the Service of the State


Margaret M. Pearson is a professor in the Department of Government and Politics at the University of Maryland, College Park. Her current research focuses on China’s regulatory state and behavior in the World Trade Organization. She is the author of two books: China’s New Business Elite (University of California Press, 1997) and Joint Ventures in the People’s Republic of China (Princeton University Press, 1991), as well as numerous journal articles.


Pursuant to its extensive program of market reforms, China’s government tried to restructure itself to support a market-dominated economy. Reform efforts have included elements that are familiar to scholars of public administration: streamlining government, strengthening bureaucratic capacity, distancing government from firms, and establishing independent regulators. But how deep have these reforms been, and with what ultimate goals? This article examines a crucial segment of the economy—China’s so-called lifeline industries—to show how reforms to China’s economic governance system have been mapped onto an existing system characterized by extreme institutional fragmentation and an inability to imbue new governmental bodies with authority. Moreover, for these key industrial sectors, the Chinese party-state’s strong interests in ownership, revenues, and social policy dictate that it use a variety of tools to protect these interests.