The political effects of ideas and markets on China's economic reforms: The case of electrical power

This study examines factors influencing contemporary economic policy-making and reform in China's electric power industry. Results of the study suggest that there is an ongoing paradigm change in China's policy-making. However, institutional resistance to changes in the policy process is strong. Policy outcomes in the case of electric power reforms reflect the interaction of both dynamics.; In the early 1990s, the central government in Beijing began to consider restructuring the electric power industry to introduce competition and establish markets for electricity supply. Until then, economic policies had resulted from a process of deliberation within the upper echelons of the Communist Party. Although the Party considered the interests of dominant economic actors, particularly the large State-owned sector, its channels for participation in the policy process were closed to most economic actors. Central bureaucratic and provincial interests largely governed policy processes, leading observers to describe the Chinese State as bureaucratic authoritarian. Bureaucracy's heavy role in the economy led to what some called a corporatist State, whereby organs of government infiltrated most aspects of the economy. This institutional arrangement perpetuated bureaucracy's influence in policy-making.; This study hypothesizes that transformation in domestic financial markets poses a threat to the entrenched institutions of the electric power industry. The integration of China's economy with foreign firms and markets enabled actors outside of the dominant State-owned economy to improve their positions vis-à-vis the state-owned sector, and eventually to play a role in the policy process. At the same time, Beijing's adaptation of foreign-designed restructuring policies threatened the deep-rooted institutions. The study analyzes the behavior, statements and channels utilized by those actors affected by power sector policies. Based on interviews conducted between 2000 through 2002, documents and reports from various power industry actors, and available academic literature analyzing current developments in the industry, I analyze the process of making deregulatory policies in electric power. Specifically, I ask whether or not the developments described above resulted in a shift in the relative power of contending actors in the industry, and consequently influenced policy outcomes.