Governmental Embedment in Profit and Non-Profit Sectors: Case of China

China has enjoyed thirty years seemingly unstoppable high speed economic growth. During the new Xi Era, Chinese government starts a reform aimed at anti-corruption and contractionary welfare provision policy to combat economic and social challenges. This paper seeks to explain why different types of government embedment in two provinces results in different societal and economic reaction to the reform. By examining Guangdong and Liaoning, two provinces in China, this paper concludes, that a state-in-society embedded mode is the key for economic development and societal betterment, that the extent of governmental embedment with the society in private for profit sectors, must balance the level of embedment in non-profit sectors. A highly embedded for profit sector without strong embedded non-profit sector would create social tensions. A highly embedded non-profit sector without strong embedded for-profit sector would create non-sustainable economy and fiscal failures.