Abstract China's local governments were saddled with unprecedented levels of debt after the collapse of the real estate sector. Recent economic data indicates that the outlook for China's growth is gloomy, as multiple provinces missed their GDP targets last year. Yet, despite this downturn and debt, some provinces maintained high rates of growth. What explains their success? Based on recent fieldwork in China, this study presents new findings and raises questions about strategies, both domestic and international, that Chinese counties and cities are employing after the breakdown of land finance. Localities are building integrated production parks to promote new industries. Some used the Belt and Road initiative to obtain funds and approval to build the parks. Most unexpected is that local government financing vehicles have been transformed into VCs that provide “patient capital” to fund startups in the integrated production parks. What do these findings imply about the evolution of China's development model? Local state corporatism has been used to describe the behavior of local governments acting as entrepreneurs to spearhead local state development. What is the fate of the new local state development? What incentives shape cadre behavior as the upper levels push the development of new productive forces but localities face ever greater challenges, amid shifting domestic and international contexts?
Jean C. Oi (Wed,) studied this question.