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Issue 49 (January 2003)
The Price of Competition: Pricing Policies and the Struggle to Define China’s Economic System
Today the Chinese are struggling over the appropriate norms of competition, an issue that has long been the subject of controversy in capitalist systems. Some believe that firms, business associations and the government should all promote unfettered competition, while others advocate a combination of competition and cooperation, both among firms and between firms and the government. The intensity of the debate was heightened by the attempt in 1998 to mobilize business associations to organize price cartels to check pervasive deflation. Some also hoped the effort would strengthen weak industry associations. The formal policy was adopted largely due to pressure from inefficient firms, but was then overturned because of complaints from more efficient ones. The vast majority of cartels failed to stem deflation, not because of weak associations as was commonly believed, but because of low industry concentration levels across China’s economy. In addition to demonstrating the continuing conflict over how to define China’s economic system, the cartels saga also highlights the depth of the influence of large companies on public policy, despite the weakness of associations, and how such influence has magnified the fragmented nature of the policy process.
Benjamin L. Read
Democratizing the Neighbourhood? New Private Housing and Home-Owner Self-Organization in Urban China
Much evidence from China has called into question the commonly held idea that economic reform and the rise of private ownership within socialist systems will promote autonomous associations and democratization; members of the emerging wealthy social strata have been found to be politically and organizationally inert in many settings. But this preliminary study of new commercial housing in Chinese cities shows a more assertive side of these relatively affluent individuals. Well-off home-owners can be vociferous in banding together, electing leaders and demanding the right to control how their housing complexes are run—largely in reaction to perceived abuses by developers and property-management companies. Recent central government policies affirm such a right in principle, yet local authorities often back a quieter, quasi-corporatist approach to the governance of their areas. Though it is unclear whether home-owners will ultimately be allowed to organize independent groups on a widespread basis, the cases of home-owner self-organization and empowerment that have emerged so far present a sharp contrast with the Party-state’s established ways of administering older neighbourhoods.
Dorothy J. Solinger
Chinese Urban Jobs and the WTO
China’s entry into the World Trade Organization in December 2001 was hailed in the Chinese and Western press as a “win-win” deal. But this can only be the case if the former state-employed workforce is ignored. A number of factors have already caused high unemployment in urban China since the late 1990s. Thus, entering the World Trade Organization will not by itself create joblessness. Still, entry will contribute to the intensification of a number of trends underway—by heightening competition, the growing insolvency among state firms; and by demanding higher quality labour, underlining the unsuitability of the largely unskilled and middle-aged original urban workforce for the employment on offer, leading to their replacement by upgraded machinery and the movement of better educated, younger employees into newly created slots. Moreover, given ambiguities and the dire results from surveys, it may not be inaccurate to estimate that about 50 million people have been let go from their jobs so far—certainly enormous numbers, whose fate is probably to stay unemployed. Finally, the article challenges five frequently encountered optimistic assumptions about the connections between China’s WTO entry, on one hand, and job loss and creation, on the other.
Scott Rozelle, Jikun Huang and Vincent Benziger
Continuity and Change in China’s Rural Periodic Markets
The goal of the article is to understand the continuity and change of rural periodic markets in contemporary China. Specifically, it attempt to see if the markets in China today are related to those that were so prevalent in rural China during pre-modern times. Based in part on a unique set of primary data from a nearly national representative sample of villages that we collected in 1996, we show that periodic market activity operates much like that of earlier times. Unlike the predictions of some scholars, we find marketing activity during the 1990s is intensifying and is only slowly being replaced by more modern marketing institutions. On the basis of our analysis, we offer several explanations as to why periodic markets have not disappeared and why their growth has been so robust. We also develop a framework that offers a more complete analytical approach to understanding market emergence and persistence during China’s reform era.