Varieties of Local Capitalism in Historical Perspective

Abstract

This chapter traces the historical roots of local variation by chronologically and cross-sectionally placing China in a comparative historical perspective. It compares varieties of local capitalism in China across four periods: the late Qing and early Republican period, the Mao era, the post-Mao period, and the globalized era. It explores how the historically entrenched top-down and bottom-up modes of capitalism have conditioned local government preferences, as well as their reaction to centrally driven development initiatives, leading them to attract foreign firms in the globalized era. The narrowly selective development strategies based on top-down capitalism were more effective in the industrial transformation during the preglobalized era before the 1990s. The influx of FDI since then, however, has unleashed new complexity so that cultivating bottom-up, broadly supportive networks with small firms was more likely to provide an institutional environment for the competitiveness of domestic private businesses.