Government–Industry Relations in China: A Review of the Art of the State1

Scholars of state–business relations in China over the last couple of decades have focussed on the retreat of the state. Nevertheless, while state control may have gone, the state remains central to the working of the Chinese economy. This is partly because the state remains in control of what used to be widely referred to as ‘the commanding heights of the economy’, and can thus shape the nature of the market that non-state actors operate in. To understand the changing nature of state–enterprise relations, we also need to rethink what we mean by ‘the state’. It conjures up images of a unified effort — a single central state agency planning, owning, and controlling economic activity. But in China, the state has different fragmented sources and centres of power which can at times compete with each other in the market. Furthermore, state entities are often removed from direct involvement in the market; either through indirect relations with private actors or through the establishment of secondary ‘marketized’ entities, or both. In combination, this suggests that while economic reform in China has created a market system and increased the space for market actors, the state remains a key player.