China’s New Deal: The Emergence of a New Economic Statism in the Transitional 1990s

Mingtang Liu, Johns Hopkins University

Existing literature on China’s reform-era development either emphasizes the continuity of state-led development or highlights a statist resurgence under Hu or Xi. Both perspectives, however, underplay the changing macroeconomic and political contexts of China’s economic policy. Adopting a macro-historical approach, I argue that the mid-to-late-1990s represents a transitional period during which China’s economic policy and growth model underwent a major reset. Beyond the commonly cited factor of China’s accession to the WTO, I argue that this transition was driven by two mechanisms: (1) a feedback loop between deflationary pressures and the necessity of policy response, and (2) a feedback loop between political structures and policy content. Together, these mechanisms produced what I term the emerging “three pillars” policy framework in the late-1990s: (1) upgrading industrial policy toward upgrading and high-tech development, (2) expansionary policy centered on housing and infrastructure, and (3) rural industrial policy aimed at scaled agricultural production. This new form of economic statism has cast a long shadow over China’s economic policies and growth model in subsequent decades. This research offers an alternative account of China’s economic policy change in the reform era. It sheds light on recent policy challenges facing China, including the emergence of a “two-speed” economy, where a dynamic tech sector coexists with a weak macroeconomy.

No extended abstract or paper available

 Presented in Session 85. Macrohistorical Dynamics