Rethinking the state-capital relations under China’s model of governance: A critical dialogue with the new state capitalism framework

This paper examines the reconfiguration of state-capital relations, focusing on China’s model of governance. It brings the new state capitalism framework prevalent in Western scholarship into the conversation. The analysis reveals fundamental differences in the ways the state engages with the market. It emphasizes that new state capitalism embeds the state within the capitalist framework for capital accumulation. However, China demonstrates a model in which the state uses the market rather than being subordinated to the market. This paper argues that China should be understood neither as a variant of new state capitalism nor as an instance of varieties of capitalism (VoC), but rather as a state-constituted market economy, in which the market is reconfigured as an evolving instrument of governance. The state offers the market space for development to achieve its objectives. When the market’s own dynamics result in outcomes that diverge from these objectives, the state continuously reconstitutes the market to align with its strategic objectives, demonstrating a divergent trajectory in the global political economy.