The state, foreign capital and privatization in China

Abstract

From a dependent development perspective, the role of the state and foreign capital in China's privatization has been crucial. Four approaches to conceptualizing the Chinese state can be identified: developmental state, corporatist state, entrepreneurial state, and market‐facilitating state. While the Chinese state does exhibit some features of developmental state in inviting foreign participation in the country's privatization, there have also been signs of dysfunctional development. The corporatist model has limited relevance to our case. In comparison, the market‐facilitating state model, which combines the ideas of the developmental state and the entrepreneurial state, provides the best description of the role of the Chinese state in the sales of state assets to foreign investors. Foreign investors have not actively lobbied for the relaxation of state control over foreign participation in privatization; the pressure for change has come mainly from domestic rather than international sources. Hence, contrary to classical dependency analysis, there is no indication that the Chinese state has become a mere agent of the capitalist centre.