Bringing the party back in: the CCP and the trajectory of market transition in China

The article suggests a conceptual framework for understanding the logic and dynamics of the Chinese Communist Party’s (CCP’s) organizational adaptation to market conditions and the consequences of this process for the trajectory and outcomes of the Chinese reform process. I define the CCP’s adaptation to market as ‘‘entrepreneurial’’ in nature with party cadres and agencies at different levels becoming not only oriented towards the goal of increasing local economic output and productivity but also directly involved in profit-making activities. I also argue that despite increased opportunities for rent-seeking and corruption, the CCP’s struggle for its organizational survival in the process of entrepreneurial adaptation has positively influenced the trajectory of Chinese market transition. By providing its agents powerful incentives to uphold the necessary degree of compliance with central policies, by limiting lucrative ‘‘easy avenues’’ for profit-seeking and value-subtracting behavior, by preventing the formation of powerful interests capable of hijacking the reform process, and by imposing painful but necessary economic rationalization measures, the party became an imperfect but crucial substitute for the lack of institutions necessary to guide the process of creating markets.