The Entrepreneurial Role of Local Bureaucracy in China: A Case Study of Shandong Province

Abstract

The Chinese local state bureaucracy has been a major promoter and organizer of economic reforms and development in the post-Mao years. In fulfilling its economic functions, it has exhibited profit-seeking orientation, sensitivity to market mechanisms, readiness for risk-taking, and high degrees of rationality and efficiency, all of which are the key characteristics of modern entrepreneurship. Such entrepreneurial qualities are defined in this paper as “local state entrepreneurship,” which partly accounts for the success of post-Mao economic reforms.\nBased on information from cities in Shandong province, particularly Qingdao, this paper distinguishes between two types of local state entrepreneurship: direct and indirect. The former is the entrepreneurial behavior of local governments (e.g., promoting enterprise ownership reform) that directly involves or has an immediate impact on enterprises, whereas the latter concerns local government activities (e.g., infrastructure construction and building a labor market) that indirectly benefit enterprises.