The Dynamics and Progress of Competitive Liberalization in China

Abstract

When post-Mao reforms began, few, if anyone, foresaw the rapidity and depth of China’s economic liberalization. Using a model of competitive liberalization, this paper explicates the dynamics and consequences of induced policy disequilibrium, namely the introduction of preferential liberal policies in some regions of the country. The model accounts for the spatial extension of preferential policies, and its predications are empirically substantiated. Finally, the implications of competitive liberalization for macroeconomic control and interregional relations are discussed.