Legacies of Liberalism: Political Agency and the Making of Regional Economies in China

Qin Huang, Northwestern University

Economic stagnation in China has led many to describe the current era as "the garbage time of history," often contrasted with the 1980s, referred to as "the golden time of history." During this period, Deng Xiaoping's decentralization policies empowered local governments to develop their own economic strategies. This decade-long critical juncture maximized the agency of local politicians, some of whom seized the opportunity to liberalize their regions' economies, while others did not. This article examines why some coastal provinces successfully developed market economies while others, despite enjoying the same central government policies, struggled. It explores the long-lasting legacies of 1980s policy decisions on the political economies of Chinese provinces. Through a historical comparative analysis of eight coastal provinces, I argue that key provincial leaders' distinct choices in the 1980s led, through self-reinforcing sequences over three decades, to fully developed market economies in Fujian, Guangdong, Jiangsu, and Zhejiang, while Liaoning, Shandong, Guangxi, and Hainan remain entrenched in less successful transitions to market economies. Drawing on macroeconomic data, oral histories, memoirs, archives, Communist Party histories, and one year of fieldwork, this analysis highlights the role of localized agency in driving successful economic reforms. Specifically, I argue that four provinces actively crafted market institutions and fostered resilient, private-sector-driven economies, while four others preserved state-centric models or pursued laissez-faire approaches without supporting institutions. The successful provinces enabled grassroots capitalists to thrive, building infrastructure, formal rules, and robust labor markets that reinforced market-driven development, industrial upgrading, and long-term economic resilience. In contrast, the other provinces that either maintained socialist institutions or adopted laissez-faire policies without market infrastructure suffered from state domination, weak markets, massive unemployment during privatization, and overreliance on centralized, debt-fueled growth with limited industrial diversity. These divergent early policy decisions shaped distinct economic trajectories, with lasting legacies in regional economic governance.

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 Presented in Session 136. Economic Growth and Sovereignty