State Policy and Guanxi Network Adaptation in China: Local Bureaucratic Rent-Seeking

Abstract

Recently, guanxi, or personal networks, has emerged as a sign fIcant factor in explaining business success in Chinese societies. This paper examines the celebrated ”instrumental thesis of anxi”by challenging the term s culturalistfallacy. The argument is that the structure ofrent-seeking behavior is what has generated and reinforced the economic instrumentality ofpersonal networks. Therefore, structural and institutional factors such as state policy and China`s place in the world economy should be duly emphasized. Guanxi works as a convenient too/for investors to work out a cooperation protocol (or conspiracy pact) with local officials. However, when relevant state policies are altered and the space for renting-seeking is trenched, the incentives for actors will change in response, thereby affecting existing guanxi webs and making them unproductive or even deleterious for investors. The study is based on field work conducted in China, Hong Kong, and Taiwan during 1994-96.