Global Market Integration and Central Political Control: Foreign Trade and Intergovernmental Relations in China

Abstract

Prevailing economic theories predict that world market integration unleashes centrifugal forces from within and undermines domestic central political authority. Reversing the conventional bottom-up, demand-side approach, this article highlights the incentives of national-level political actors. It suggests that when institutionally empowered vis-à-vis the subnational units, the center will seek to enhance political control over regions thriving in the global market to extract revenues, remedy interregional disparity, and maintain central rule. Through analyzing pooled cross-sectional, time-series data for Chinese provinces during 1978 to 2002, it shows that the Chinese political center has manipulated its personnel monopoly power within the ruling Communist Party to exert a tighter grip over provincial party secretaries, the top officials in the provinces more exposed to the international market. Furthermore, provinces overseen by more controlled party secretaries actually received less favorable terms during fiscal contracting, implying their greater revenue submission to the center.