Central State Monopoly, Local State Competition and Global Market Engagement: The Dynamics of the Chinese Tobacco Industry in the Post-Communist Era
China currently faces a critical phase in the ongoing reform of its state-owned enterprises (SOEs). How China chooses to deal with the final sectors that have yet to be reformed will reveal much about China's integration into the global market economy and its continued rise as an economic power. Unlike current studies on SOEs that concentrate on internal reforms focusing primarily on property rights and ownership, the proposed project examines the relationship between SOEs and the state bureaucracies governing them. This study focuses on the institutional transitions occurring for these two bodies during China's market transition. The central hypothesis is that the actual market dynamics of the Chinese tobacco industry have rebuilt the state bureaucracies governing this industry. The vertical bureaucracy (tiao) governed by the central state has been weakened by the horizontal bureaucracies (kuai) under the local state's jurisdictions in the reform era. To test this hypothesis, this project will use quantitative data (survey research) and a range of qualitative data (ethnographic research, interviews and archival research) to explore the market dynamics of the Chinese tobacco industry in the reform era and the changing relationships between the enterprises and the state bureaucracies governing them. This research builds upon dialogues among mainstream economics, economic sociology and political economy and seeks to better understand economic sociology's view of "markets" as social constructs in periods of institutional change. Specifically, the proposed project will explore the long-standing debate about the relationship between states and markets in studies of transitional economies and develop a theory of market-building as state-building to understand market reforms and institutional changes in post-communist societies. Aside from its theoretical contributions, this study will have significant policy implications by suggesting that only the reforms on both the SOEs and the state bureaucracies governing them can substantially transform the SOEs and solve their problems in post-communist societies. Thus this project seeks to drive the current economic advisors at the international institutions to reexamine their orthodoxies of development and transitional economies, offering more practical solutions to the current problems in post-communist societies.
