Paradigm Shifts and Time-lags? The Politics of Financial Reform in the People's Republic of China

Abstract

This paper assesses the political implications of financial reform in the People's Republic of China from the key reforms of 1994 to China's entry into the World Trade Organisation. It argues that the reforms implemented after 1994 in China shows a watershed in the evolution of economic reform. While the period before 1994 was dominated by dismantling the old system, subsequent reforms represent the attempt to build a new structure. But while the incomplete nature of reform provides the rationale for reform, it also provides the main obstacle to successful reform. Financial reform provides a case study of how the old and new economic systems are clashing with each other — and how the political interests associated with the old economic system are conflicting with those interests associated with the emerging new system.