The Rise of Competing Subnational Political Economies in Mao’s China (1949-1978)

• In Event: The Subnational Turn (I): Decentralization and Political Economy

Abstract

In recent decades, the bulk of research on the Chinese political economy has focused on the reform era. Not until very recently did the economic legacy of the Mao era start to gain scholarly attention. My research, through the use of newly available local archival data, shows that even during the coercive planned era (1952-1978), local governments permitted and systematically supported the growth of market and semi-market activities such as horizontal trades and bottom-up rural industrialization in some parts of the country but not in others. My work documents these surprising findings, traces the development paths of two divergent local political economies, and builds a theory for explaining why extensive horizontal semi-market activities that seem contrary to central mandates existed in some regions but not others during the Mao era. This research on the emergence of divergent subnational economic experiences during the Mao era helps explain disparities in China's local economic performances in the post-reform era.

My data comes from two carefully-selected provinces, Zhejiang in the south, and Hebei in the north. The provinces shared many common features before the Communist arrival but experienced different development paths since 1949. Relying on close to sixty interviews and more than ten thousand archival documents (1949-1990) collected at two representative counties of the two provinces, my research traces the contrasting local commercial and industrial policy-making processes in the two counties successive policy episodes marked by shifts in central-directives. I show that while Zhejiang states tried to promote local development through building market infrastructures, Hebei states relied on top-down control and Maoist mass campaigns to achieve the same goal.

To understand Zhejiang and Hebei states' distinct choices, I generate a theoretical model with three key concepts—socialist goals, socialist methods, and market-expansion methods. On the one hand, local cadres were duty-bound to strive towards the socialist goals of improving citizens' livelihoods. On the other hand, they were equipped with socialist mass mobilization methods and centralized state-planning. The central state-imposed dual demands on local states: they asked local states to achieve socialist goals with socialist methods. On the ground, such methods often failed to achieve the goals, forcing local states to make tradeoffs. Hebei adhered to socialist methods to the detriment of the livelihoods of local people. Zhejiang took political risks to adopt market-expansion methods to help them achieve socialist goals. In Zhejiang, this was possible because of the state's deep embeddedness in local society, a factor lacking in Hebei. The divergent choices of the local states have had profound consequences. Today, Hebei continues to resort to the familiar socialist methods to mobilize capitalistic growth, leading to inefficient and exclusive state-led crony capitalism. In contrast, pre-reform experiences helped Zhejiang build important institutional capacities critical to building a vibrant and inclusive market economy later.

My research attempts to make several major contributions to political economy, development, and state capacity. First, it fills the gap in the literature about the subnational political economy of the Mao era. Second, it challenges the prevailing assumption that an episode of exogenous shocks drove the Chinese success. This project argues that local and endogenous institutional change is essential to understanding the Chinese economy's dynamism. Third, the dynamic model that I build based on examining long-term historical trends at the subnational-level of China shows that the Chinese economy and politics should always be viewed as a dynamic process rather than a fixed product produced by certain ideologies. Finally, this research shows that the state's role in promoting growth lies not in pouring in capitals or nurturing stellar industries but in the daily activities of building grassroots-level horizontal market infrastructures. Such efforts require the local state to frequently respond to, communicate with, and coordinate with the local society, which most developing countries still lack today.

Author

• KRISTINE LEE