Understanding of China’s State and Market

  • Yazhuo Zheng
  • Kent Deng
Part of the Palgrave Studies in Economic History book series (PEHS)


This chapter attempts to explain why China’s local government in the Northwest as well as in all the other regions go crazy for urbanisation. It is because of the unique institutional arrangements of China’s party-state, bureaucracy system and semi-market economy. China does not operate an independently functional market economy. Market is a secondary and subordinate force, as a means to serve the government goal, that is GDP, which is the most important assess index in governments’ and cadres’ performance evaluation. And the local government revenue is inadequate for basic expenditure. Local cadres need GDP growth and land-leasing fees for accomplishing their job task. In this chapter we conclude China’s particular economic system as ‘state-run capitalism’ and its urbanisation as ‘farmland urbanisation’.


State Market Government People’s representatives Party secretary Central government Local government Peer pressure Ratchet effect Semi-market economy State capitalism Fiscal arrangement 


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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Yazhuo Zheng
    • 1
  • Kent Deng
    • 2
  1. 1.Beijing Enlightenment Institute for Economic and Social ResearchBeijingChina
  2. 2.London School of EconomicsLondonUK

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