The political economy of intra-provincial disparities in post-reform China: a case study of Jiangsu province

Abstract

Since 1978, China has introduced economic reforms and open policies for some people and places to get rich first, in the hope of redistributing wealth eventually. In reality, disparities between and within regions, urban and rural areas, and different social strata have increased. This paper attempts to explore the underlying factors of intra-provincial disparities through a case study of Jiangsu Province. Socio-economic and cultural data have shown that Jiangsu Province can roughly be divided into three parts: the developed southern Jiangsu, moderately developed mid-Jiangsu, and poor northern Jiangsu. Historically, southern Jiangsu is the more developed part of the Province. This intra-provincial disparity has enlarged during the post-reform era. The preferential policies for the coastal regions and non-state owned economic sectors have led to the emergence of pluralistic ownership patterns and a faster pace of development in localities along the coast, close to big cities, or having a long history of township-and-village-enterprise (TVE) development. A case in point is southern Jiangsu. Moreover, the transition from a centrally planned economy to a socialist market economy necessitated decentralisation of administrative and economic power. As the decentralisation of power is not fully guaranteed or stipulated by law, local protectionism emerges. Through relations ( guan xi), investors are able to manipulate preferential policies to carry out large-scale rent-seeking activities. The fiscal capacity of the central and provincial governments, however, is weakened, diminishing its ability to redistribute resources for a more even regional development.