Bureaucrats and Markets in China: The Rise and Fall of Entrepreneurial Local Government

Local government entrepreneurship in China in the reform era is argued to have been, on balance, instrumental to growth and market-oriented reform.¹ Economic factors are emphasized in explaining both its rise and anticipated decline. Undeveloped markets and established local state trading networks favored agencies of the local state in exploiting business opportunities arising from deregulation. However, market development and increasing autonomy of firms are now reducing the advantage of local government business agencies, and they face a diminished and changed role.