This paper assesses the political implications of financial reform in the People’s Republic of China. It argues that the reforms implemented after 1994 in China shows a watershed in the evolution of economic reform. While the period before 1994 was dominated by dismantling the old system, subsequent reforms represent the attempt to build a new structure. But while the incomplete nature of reform provides the rationale for reform, it also provides the main obstacle for successful reform. Financial reform provides a case study of how the old and new economic systems are clashing with each other – and how the political interests associated with the old economic system are conflicting with those interests associated with the emerging new system
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