Abstract
In the second half of 2016, a heated debate attracted widespread attention in China. Two eminent economists, Prof. Justin Yi-Fu Lin, former Chief Economist of the World Bank, and Prof. Wei-Ying Zhang, former Dean of the Guanghua School of Management, Peking University, thoroughly debated the effectiveness of industrial policy (reports). Putting this debate in a larger context, it originates from the growing concerns with China’s development strategy. Looking back, China’s economic success has greatly benefited from its heavy state intervention. But looking forward, China is likely to be caught in the “middle-income trap,” given the slowdown in growth rates and draining in production factors in recent years. So, shall China stick to its old state-led development strategy (Lin’s suggestion) or shift to the market-enhancing approach (Zhang’s point)?
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Notes
- 1.
The debate is on the Sina Website, http://finance.sina.com.cn/focus/lyfvszwy/.
- 2.
The development model of these countries is called “Developmental State” which was prevailing between the 1980s and 1990s. See Johnson, MITI and The Japanese Miracle: The Growth of Industrial Policy, 1925–1975; Amsden, Asia’s Next Giant: South Korea and Late Industrialization; Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization; Woo-Cumings, The Developmental State.
- 3.
See Minns, “Of Miracles and Models: The Rise and Decline of the Developmental State in South Korea”; Cherry, “‘Big Deal’ or Big Disappointment? The Continuing Evolution of the South Korean Developmental State”; Pirie, The Korean Developmental State: From Dirigisme to Neo-Liberalism; Radice, “The Developmental State under Global Neo-Liberalism”; Chu, “Eclipse or Reconfigured? South Korea’s Developmental State and Challenges of the Global Knowledge Economy”; Stubbs, “What Ever Happened to the East Asian Developmental State? The Unfolding Debate.”
- 4.
Some scholars hold the same argument, such as Oi, “The Role of the Local State in China’s Transitional Economy”; Leftwich, “Bringing Politics Back In: Towards a Model of the Developmental State”; Unger & Chan, “Corporatism in China: A Developmental State in an East Asian Context”, some don’t agree with us, such as Breslin, “China: Developmental State or Dysfunctional Development?”
- 5.
See Johnson, MITI and The Japanese Miracle: The Growth of Industrial Policy, 1925–1975.
- 6.
See Amsden, Asia’s Next Giant: South Korea and Late Industrialization; Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization; Huff, “The Developmental State, Government, and Singapore’s Economic Development since 1960.”
- 7.
White, Developmental States in East Asia.
- 8.
See Johnson, MITI and The Japanese Miracle; White, “Developmental State and socialist Industrialization in the Third World”; Amsden, Asia’s Next Gian; Wade, Governing the Market; Öniş, “The Logic of the Developmental State.”
- 9.
List, The National System of Political Economy.
- 10.
Amsden, Asia’s Next Gian, 139–155.
- 11.
See Johnson, MITI and The Japanese Miracle; Evans, Embedded Autonomy: States and Industrial Transformation 1995.
- 12.
Lin et al., The China miracle: Development strategy and economic reform.
- 13.
Tsai, “Off Balance: The Unintended Consequences of Fiscal Federalism in China”; Breslin, China: Developmental State or Dysfunctional Development?”
- 14.
Harding, China’s Second Revolution: Reform after Mao; Baum, Burying Mao: Chinese Politics in the Age of Deng Xiaoping.
- 15.
Li and Zhou, “Political turnover and economic performance: The incentive role of personnel control in China.”
- 16.
White, The Chinese State in the Era of Economic Reform; Oi, “The Role of the Local State in China’s Transitional Economy”; Blecher & Shue, Tethered Deer: Government and Economy in a Chinese County.
- 17.
Whittaker et al., “Compressed development.”
- 18.
Zhu, “Compressed development, flexible practices, and multiple traditions in China’s rise.”
- 19.
Zweig, Internationalizing China: Domestic Interests and Global Linkages.
- 20.
Krugman, “The Myth of Asia’s Miracle.”
- 21.
Vestal, Planning for Change: Industrial Policy and Japanese Economic Development, 1945–1990.
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Chen, W., Keng, S. (2019). China’s Developmental State in Transition: In Light of the East Asian Experiences. In: Yu, J., Guo, S. (eds) The Palgrave Handbook of Local Governance in Contemporary China. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-13-2799-5_9
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