From Mao to Market: Rent Seeking, Local Protectionism, and Marketization in China (Cambridge Modern China Series)

This book argues that economic reform in China succeeded because government failed to prevent local officials from forcing prices to market levels. In the 1980s, reformers opted for a hybrid system of price controls wherein commodities had both fixed and floating prices. Depressed fixed prices led to "resource wars," as localities vied for control over undervalued commodities while inflated prices fueled an investment boom that saturated markets and led to import barriers. Although local rent seeking and protectionism appeared to carve up the economy, in reality they had cleared the way for sweeping reforms. Read more...
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