CHINA RESISTANCE TO ECONOMIC-REFORMS

After 10 years of institutional and structural change, expanded economic activity, and subsequent economic difficulties, China adopted an austerity program in 1988. Underlying the ostensible economic reasons for the austerity program, however, was growing political resistance to economic reforms among Communist party members. This paper puts forth two explanations. One is that the leadership misunderstands the market system, and this leads to errors in economic policy. The second explanation is that rent seeking by strategically situated groups is responsible for much of the resistance. Because market‐oriented reform makes redundant both bureaucrats and job slots for apparatchik appointments, strong resistance to reform exists at the micro level. Two scenarios could lead to real economic reform: (i) gradual self‐limitation by the Communist party as economic decline continues and as the costs of maintaining the existing system increase, or (ii) a breakdown of consensus within the ruling stratum. In this paper, the dual thesis for resistance to reform serves to reinforce the latter scenario. Copyright © 1991, Wiley Blackwell. All rights reserved