Regulating Market Order in China: Economic Ideas, Marginal Markets and the State

Authors:	Ferchen, Matthew
Keywords:	China political economy market order informal economy state capacity political legitimacy
Issue Date:	3-Jan-2008
Abstract:	Both inside and outside of China, debates rage about the capacity of the state to effectively govern the economy. In the West, those who claim that the Chinese state is rapidly improving its ability to effectively regulate the expanding market economy face off against those who insist that economic liberalization has ushered in a period of deteriorating state capacity to control those very market forces the state itself has unleashed. Within China, a similarly contentious debate over how the state should best govern the economy pits neoliberal champions of naturally orderly market forces against New Left critics who call for strong central state authority to rein in unregulated markets. I argue that any understanding of Chinese state capacity remains incomplete unless the crucial role of ?market order? as a concept of governance is taken into account. Market order refers to the balance between markets as the primary engine of economic growth and the maintenance of economic, social, and political stability. Any measure of state capacity must be judged relative to the goals the state itself promotes. I argue that the state?s capacity to maintain market order, especially over certain markets within the so-called ?informal economy,? involves unexpected combinations of strength and weakness. Furthermore, because maintaining market order is promoted as one of the state?s key goals, it is key to state legitimation efforts. The very ambiguity of market order makes it a powerful tool of governance at different levels of politics and the economy. However, that same ambiguity played a part in one of the state?s own regulatory institutions becoming a threat to these larger legitimation efforts. This dissertation also presents detailed empirical evidence of Chinese state-economy relations based on the relationship between street vendors and the local City Appearance Administration in the city of Nanjing. The findings presented in the dissertation are based on three years of field research in China, including over 250 formal and informal interviews with government officials from central ?Leading Groups? all the way down to local ?street offices,? with academics and leading intellectuals, and with street vendors and small business owners