Local Governance and Strategic Groups in Contemporary China: the interaction between local cadres and private entrepreneurs

Working at the lower tiers of the Chinese state, i.e., foremost at county, township and village level we have found it most useful in our efforts to understand the local policy process, or ‘how things are getting done on the ground’ in China, to combine the concept of local developmentalism with ‘strategic group’ analysis. In this project, we focus on the interaction of local governments and private entrepreneurs. We trace the evolution of this interaction since the early 2000s, and particularly, since the 2008 outbreak of the global financial crisis. Preliminary fieldwork has been conducted in 2012, 2013 and 2014 in seven cities or county-level entities in the provinces of Jiangsu, Zhejiang, Hubei, Fujian, Jilin, and Guangdong. More specifically the projects pursues three objectives, i.e.,

• investigating to what extent the local developmental state of today differs from its early counterparts in the 1980s and 1990s, most importantly the local corporatist state, a specific variant of the developmental type, which has been aptly described in the work of Jean Oi and others and serves as an analytical reference point to understand change over time;

• assessing the change of state-business relations in today’s local state  by comparing our data with findings of the earlier literature, for instance in the work of Bruce Dickson and Kelly Tsai;

• analyzing the nexus between the interaction of local governments and private entrepreneurs on the one hand and local policy implementation on the other.

We argue that the relationship between local governments and private entrepreneurs has evolved since the early 2000s and become more horizontal than it has been in the early days of local developmentalism. Private entrepreneurs have arguably gained more autonomy from local governments as market competition has increased and market institutions have matured. Local governments not only face rising difficulties in securing sound private sector development in times of global financial stress and structural change in the Chinese economy, but also in steering private entrepreneurship. ‘Traditional’ local state corporatism and entrepreneurialism have given way to ‘service-oriented government’, with local governments in the more developed parts of China becoming ‘inhibited’ developmental states in the sense that they are increasingly dependent on private entrepreneurs in a relationship of mutual dependency to make ends meet. The latter, for their part, are in a state of flux, slowly accumulating strategic power to keep the local state at bay and exert pressure on local governments. Though not yet recognizable, private entrepreneurs in China are a strategic group ‘in the making’, i.e., a potential strategic group. Even if they do not yet act collectively, their overarching interests and rational behavior may gradually change the dynamics of local politics in contemporary China, resulting in a realignment of local government-business relations that may become the hallmark of a new era of ‘Chinese capitalism’.