Static Electricity: Institutional and Ideational Barriers to China’s Market Reforms

Abstract China’s “economic juggernaut” is often noted to have arisen from successful market reforms carried out in the context of high state capacity. In contrast, we demonstrate that crucial replace central planning with markets stalled as a result major barriers two types: institutional and ideational. Focusing on electricity sector, find pushed by government are hindered deep inefficiencies arise legacy plan “plan-derived” institutions subnational governments grid companies, against which has been largely ineffective. We also uncover fascinating ideational differences nature purpose “markets” show how they envisioned more way extend planner’s “toolbox,” or offer “salvation” for ailing incumbent firms, rather than induce efficiency. Our empirical focus three prominent types “market-oriented” experiments electric power sector clear limits capacity, emanate actors merely industry, despite high-priority goals increasing efficiency, integrating renewable energy, reducing emissions sector.