1. Current Political Economy Regime in China’s Mainland
Combination of liberalization and authoritarianism

2. Political economy regime
Combination of economic liberalization and political authoritarianism
regime of political economy
public policy profile
market-oriented reforms and political grip
political and economic institutions
strong reformist state retreats from economy
socioeconomic coalition base
co-optation of newly-emerged social sectors

3. “Reforms & opening up” Deng Xiaoping’s reforms since 1978
economic liberalization
break the monopoly of state sector
“socialist market economy”
political authoritarianism
the “four basic principles”
last one is the key: “leadership of the CCP”
allow no organized opposition to the party

4. Deng’s handpicked successors
First two
were selected as economic reformers
were purged for political liberalization
Hu Yaobang
CCP General Secretary from
Zhao Ziyang
CCP General Secretary from

5. Deng’s handpicked successors
Last two
were selected as technocrats
politically “reliable”
economic reformers
Jiang Zemin
CCP General Secretary
Hu Jintao
CCP General Secretary

6. From Jiang Zemin to Hu Jintao
CCP General Secretary (2002)
16th National Party Congress
Hu Jintao replaced Jiang Zemin
PRC State President (2003)
10th National People’s Congress
Hu Jintao replace Jiang Zemin
the first peaceful and orderly leadership succession in PRC history

7. Crack down political dissidents
CCP has allowed no organized opposition to the Party leadership
Waves of pro-democracy movements
late 1970s: “democracy wall” movement
late 1980s: Tian’anmen Square protests
late 1990s: China Democracy Party
late 2000s: Charter ’08 and Liu Xiaobo
each followed immediately by suppression

8. Broader programs of reform
Separate Party from government
halted after 1989 Tian’anmen
Separate state from economy
market mechanism
de facto privatization

9. Broader programs of reform
Separate government from enterprises
reinforced after 2001 WTO
introduce competition
deregulate industries
increase role for law
limit corruption

10. Price adjusted by market
Economic liberalization accelerated since 1990s
More than 97% of prices of commodities and services are now determined by market rather than by government

11. State management of economy
break down bureaucratic interests that have fostered economic paternalism
1998: industrial ministries were reorganized as bureaus
2000: industrial bureaus were eliminated
2003: State Development Planning Commission was reorganized as the State Development and Reforms Commission

12. State management of economy
Further restructuring of state institutions
2003: State Economic and Trade Commission was eliminated
2003: the Ministry of Foreign Trade and Economic Cooperation and the Ministry of Internal Trade were merged into the new Ministry of Commerce
foster professionalism within government

13. Competition and deregulation
Introduction of competition into formerly monopolized industries
telecommunications industry
electric power industry
railway industry
airline industry
break down bureaucratic interests that have fostered economic paternalism

14. State retreats from economy
State sector continues to shrink
downsized, privatized, or go bankrupt
non-state sector continues to grow

15. Potential challenges
Potential challenges to the current regime of political economy
globalization
demographic changes
political instability

16. China Joined WTO in 2001
Culmination of 15 years of the PRC government’s efforts

17. Impact of WTO Expansion of trade & foreign investment
trade volume $0.6 trillion for 2002
22% increase from 2001
direct investment US$55 billion for 2002
13% increase from 2001
Economists estimate WTO membership would add 1.5% to China’s annual growth rate after 5 years

18. Impact of WTO weed out inefficient SOEs erode local protectionism
curtail industrial monopolies
urban-rural divide
regional differences
unemployment
social unrest

19. International Covenants
In October 1997, PRC government signed the International Covenant on Economic Social and Cultural Rights
In October 1998, PRC government signed the International Covenant on Civil and Political Rights