Varieties of State Capitalism across the Taiwan Strait: A Comparison and Its Implications

Abstract

An increasing body of research focuses on the development of state capitalism across different parts of the globe as a response to the new economic environment brought about by the 2008 financial crisis. The literature has identified various forms of state capitalist regimes, nonetheless it has yet to offer an explanation of why the variations exist. Focusing on state capitalism in Taiwan and China, this chapter finds that resources available to leaders when they engage in the cultivation of the state capitalist regimes condition the main agent of economic development and thus the ownership structures in the domestic markets. The assistance from the U.S. and the commitment to a liberal market explains the prevalence of small-and-medium-sized private firms under Taiwan’s model of state capitalism, while tensions with major powers and state ownership as one of the sources of CCP legitimacy account for the dominance of the SOE sector under China’s state capitalism.