This paper is an attempt to provide an explanation for the socioeconomic foundation which underlies China’s economic miracle. As suggested by the theory of interlinked contract, the transition from a planning economy to a market economy is a multifaceted process. In terms of market dynamics interlinking markets replace specialized markets, while in terms of governance dynamics, interlinked contracts give way to formal contracts. A good match between the markets structure and contractual structure is key to the success of transition. In particular, some China-specific institutions, like TVEs, the financial system and the restructuring of SOEs can be better understood within this framework. Broadly, the whole reform package in China also is in good accordance with the spirit of interlinked contract.
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Wang thanks Project 985 of Fudan University, China Social Science Foundation Project (05CJL014), the MOE Project of Key Research Institute of Humanities and Social Sciences at Universities (07JJD790130 and Shanghai Leading Academic Discipline Project (B101) for financial support. Thanks also go to Sam Bowles, Sujian Guo, Peter Zeitz and anonymous referees for their helpful comments. Errors are solely ours.
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Wang, Y., Li, M. Unraveling the Chinese Miracle: A Perspective of Interlinked Relational Contract. J OF CHIN POLIT SCI 13, 269–285 (2008). https://doi.org/10.1007/s11366-008-9027-5
- Interlinked Contract