Understanding China’s Economic Success: “Embeddedness” with Chinese Characteristics

This study attempts to provide a framework for understanding the role of the “embeddedness” in China’s economic success reflected by a unique embedded integration of state-market-society relations. “Embeddedness with Chinese characteristics” is the central concept of this study for analyzing how cultural and political uniqueness influences economic activities and shapes distinctive institutional forms. In order to grasp the factors behind the Chinese economic success, it is important to understand how the disembedded forces of marketization and commodification were balanced by the embedded forces of socio-cultural and political structures. These historically and culturally shaped structures, such as the active role of the state and local governments, the variety of forms of property and business ownership, the traditional culture of clientele-based social relations, etc., provide rich empirical context to explain and analyze the “embedded” hegemony in transitional China. The first part of the this paper provides a conceptual framework for understanding socio-cultural and political embeddedness in China and the second part analyzes some characteristics of the state-market-society embedded process during its economic development in the past decades. The conclusion is that China’s economic reform and success manifest a long and innovative grinding-in process of state-market-society relations.