Dancing with the devil : the political economy of privatization in China

From 1978 through the turn of the century China was transformed from a state-owned economy into a predominantly private economy. This fundamental change took place under the Chinese Communist Party (CCP), which is ideologically mandated and politically predisposed to suppress private ownership. __Dancing with the Devil__ explains how and why such an ironic and puzzling reality came about. The central thesis is that private ownership became a necessary evil for the CCP because the public sector was increasingly unable to address two essential concerns for regime survival: employment and revenue. Focusing on political actors as a major group of change agents, the book examines how their self-interested behavior led to the decline of public ownership. Demographics and the state’s fiscal system provide the analytical coordinates for revealing the changing incentives and constraints faced by political actors and for investigating their responses and strategies. These factors help explain CCP leaders’ initial decision to allow limited private economic activities at the outset of reform. They also shed light on the subsequent growth of opportunism in the behavior of lower-level officials, which undermined the vitality of public enterprises. Furthermore, they hold a key to understanding the timing of the massive privatization in the late 1990s, as well as its tempo and spread thereafter. The book illustrates how the driving forces developed and played out in these intertwined episodes of the story. In so doing, it offers new insights into the mechanisms of China’s economic transformation and enriches theories of institutional change. From 1978 Through The Turn Of The Century, China Was Transformed From A State-owned Economy Into A Predominantly Private Economy. This Fundamental Change Took Place Under The Chinese Communist Party (ccp), Which Has Been Ideologically And Politically Predisposed To Suppress Private Ownership. In Dancing With The Devil, Yi-min Lin Explains How And Why Such A Paradoxical Reality Came About. He Shows That Private Ownership Became A Necessary Evil For The Ccp Because The Public Sector Was Increasingly Unable To Address Two Essential Concerns For Regime Survival: Employment And Revenue. Focusing On Political Actors As Major Change Agents, Lin Examines How Their Self-interested Behavior Led To The Decline Of Public Ownership In The Context Of China's Evolving Demographics And Fiscal System. The Constraints And Incentives Associated With These Factors Help Explain Ccp Leaders' Initial Decision To Allow Limited Private Economic Activities At The Outset Of Reform. They Also Shed Light On The Ballooning Opportunism Among Lower Officials, Which Undermined The Vitality Of Public Enterprises. Furthermore, They Hold A Key To Understanding The Timing Of The Massive Privatization In The Late 1990s, As Well As Its Tempo And Spread Thereafter. Dancing With The Devil Illustrates How The Driving Forces Developed And Played Out In These Intertwined Episodes Of The Story. In So Doing, It Offers New Insights Into The Mechanisms Of China's Economic Transformation And Enriches Theories Of Institutional Change. -- Publisher's Description Introduction -- The Changing Fate Of Private Ownership Since 1949 -- Demographic Pressures -- The Evolving Structure Of Public Finance -- Careerism And Moral Hazard In Early Marketization -- Rule Bending For The Necessary Evil -- Fdi And Privatization -- The Tipping Point And Beyond -- Conclusion. Yi-min Lin. Includes Bibliographical References. Chiefly English With Some Chinese. Dancing with the Devil explains why public ownership has declined in post-Mao China. Focusing on the behavior of political actors under changing incentives and constraints, the book illustrates how growing concerns about jobs and revenue have forced the country's communist rulers to change their policies toward private capital.