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China's GrowthThe Making of an Economic Superpower$
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Linda Yueh

Print publication date: 2013

Print ISBN-13: 9780199205783

Published to Oxford Scholarship Online: May 2013

DOI: 10.1093/acprof:oso/9780199205783.001.0001

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Conclusion: The Role of the State

Conclusion: The Role of the State

(p.301) 9 Conclusion: The Role of the State
China's Growth

Linda Yueh

Oxford University Press

The mixed state–market model is consistent with China’s gradual transition where the aim is to support economic growth through partially reforming the existing institutions, but not to wholly privatize the economy. China sought to avoid the ‘transformational recessions’ experienced by the former Soviet Union economies of the 1990s and the destabilizing episodes faced by many developing countries when they undertook economic liberalization. As a consequence, the reach of the state is evident in not only overt indicators such as state-owned enterprises continuing to generate some one-third of industrial output, but also more in more subtle ways. Namely, the market is increasingly shaped by laws and policies from which state-owned firms are granted exemptions while continuing to benefit from policies such as financial repression in which the rules governing credit favour state firms over others. As such, the economic borders of the Chinese state are broad, but opaque. How stable China’s growth will be will depend in large part on the transformation of the state. If government takes on the functions of providing security in land, a level playing field, social protection, then the final institutional reforms in China will be achieved. For many, economists and non-economists, this is key to China’s continued development.

Keywords:   role of the state, institutional reforms, government spending, property rights, level playing field, social protection

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