State, Business and Market Governance in Eurasia: China and Russia Compared

• In Event: Evolving Patterns of State-Society Relations Across Post-Communist Eurasia

Abstract

Existing scholarship has debated the relative significance of sectoral and coalitional interests, global market and ideational forces, and domestic political systems for explaining varied national patterns of economic liberalization. In response to major economic shocks, such as the financial crises of 1997/8 and 2008, Eurasian states seem to have engaged in a “liberalization two-step,” which features liberalization followed by efforts at re-regulation. This paper investigates the reformulation of old rules and the creation of new ones so as to maintain state control and enhance state-business relations in the process of preserving established patterns of market governance. The paired comparison of two Eurasian powers, China and Russia, reveals how values and identities of political and economic elites, structural attributes of sectors, and the existing organization of state institutions combine to generate cross-national and within-country sectoral variation in patterns of re-regulation and market governance. In authoritarian China, the dominant patterns reflect sectoral variation in the perceived strategic value for national goals of global ascendance and economic power, security, and growth. Perceived global pressures and threats and social/political stability and party legitimacy notwithstanding, previous rounds of decentralization and Xi Jinping’s recent centralization efforts interact to shape market governance in both strategic and nonstrategic sectors. In Russia, a semi-competitive hybrid regime, markets governance in capital-intensive and labor-intensive industries reflects the interaction between the perceived strategic value of industries, which reflect the legacy of the USSR's emphasis on high-tech security-oriented sectors, and the organization of institutions as a function of state-led re-centralization efforts under Putin to both enhance personal power and counter the fragmentation associated with Gorbachev’s reforms and the turbulent first decade of transition. In both cases, there is evidence of the reinforcement of state coordination in some sectors and the partial relinquishment of state control in nonstrategic sectors, while “new” private economic actors find themselves partly empowered and partly constrained – with the mix varying according to the relative significance of particular sectors within the respective national economic frameworks.

Author

• Roselyn Hsueh, Temple University