JOURNAL OF COMPARATIVE ECONOMICS 16, 172-l 73 (1992)
GEORGE T. CRANE, The Political Economy of China’s Special Economic
Zones. Armonk, New York/London, England: M. E. Sharpe, Inc., 1990. x
+ 204 pp., index, $39.95.
This is a neat little book, well crafted, carefully researched, informative,
literate, very useful for those interested in the fortunes and misfortunes,
mainly the latter, it would seem, of China’s Special Economic Zones (SEZs)
and in how the checkered experience of the zones might affect and be af-
fected by the process of economic change in mainland China as a whole.
Apart from a couple of quibbles to be noted presently, Crane’s is, in my
judgment, one of the better overviews and overall assessments of the SEZs to
appear to date. Its approach, reasoning, and methodology demonstrate that
economics can be insightful and enlightening without a single mathematical
expression intruding into the narrative. One does wish, however, that a map
could have been included for the instruction of those less-than-fully diversi-
fied readers who do not know just where exactly Baoan County and Zhuai
are located.
Crane’s explanation of the founding and subsequent zigzag course of the
SEZs is put in a conceptual framework, reflected in the book’s title, which, in
the simplest terms, correctly postulates that politics and economics interact
in the zones, as they do everywhere else, and that political forces have criti-
cally shaped zone development. That is a hands-on, common sense way of
handling the economic history of the zones, and there is no need to prettify it
with crypto-academic curlicues, remnants, one suspects, of the book’s doc-
toral dissertation origins; e.g., “The historical specificity of political-struc-
turalism precludes a more precise definition of state structures and salient
social forces.” But in the next breath the author’s good sense prevails: “Sim-
ply put, the nature of state and society vary from country to country and
from time to time.” (Note 12, Chap. 1).
But these are mere quibbles about what basically is a very good account of
how the economic performance of the SEZs has been and continues to be
shaped by the erratic, particular&tic, personal interest-ridden politics of
China’s “underdeveloped” state where “state policy is hostage to the eco-
nomic and political interests of public office holders [and] graft is the most
obvious expression of such administrative personalization.” The usual two-
way struggle explanations of SEZ politics are just too pat to capture the
multidimensional microcomplexity of the problem. The underdeveloped
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Chinese patrimonial state, and China is not alone in this, is also overdevel-
oped, sprawling in its distented tentacular bureaucracy. This swelling not
only causes economic inefficiencies, but eliminates the differentiation be-
tween economic and political competition: “Personal and political motiva-
tions often overshadow technical and economic criteria in the policy pro-
cess, adversely affecting economic performance.” Marxist-Leninist states,
Crane calls them just Leninist, are particularly susceptible to such bloating.
In the case of the SEZs, the combination of state under- and overdevelop-
ment revealed itself during 1979- 1988 in a combination of political and
economic cyclical fluctuations, diagramatically illustrated on pages 148 and
15 1. The three political cycles represent variations of the salience of SEZ
criticism within the underdeveloped/overdeveloped state, while the eco-
nomic cycles reflect variations in SEZ foreign investment yield per infrastruc-
ture investment with temporal comparison of infrastructural spending and
actual foreign investment in the Shenzhen zone only, for which adequate
data are available.
Crane concludes that while “the SEZs should not be considered unmiti-
gated failures [because] they have helped reintegrate China in the world
economy [and] have been laboratories for structural reform and open inter-
national economic policy, . . . internal state incoherence has hampered eco-
nomic performance [of the zones] as the unsteady regulatory environment
has periodically repelled foreign investors.” More importantly, “zone prob-
lems are rooted in domestic Chinese political economy.” This last statement
seems to me to be the central issue, which Crane does not IIesh out as thor-
oughly as it ought to be. The impression is left that the zones’ tribulations
come mainly from the erratic actions of a self-seeking overweight bureau-
cracy, an intrasystemic disability. But the problem is deeper and more than
that. The Chinese zones are little islands of frustrated market and limited
private property in a sea of administrative command planning and state
ownership. Unlike the export processing zones in developing and newly
industrialized market societies, e.g., Taiwan, Singapore, the Chinese SEZs
function in a systemic environment that is flawed in its intellectual premises
and fundamentally antithetical to the zones’ structural essence and purpose,
no matter how ardent the salience of political support for them among sec-
tions of the party-state bureaucracy may be at various times. Indeed, one
might suggest that the only way the zones can be an effective force for the
modernization of China is for the domestic political command economy to
transubstantiate itself into a market system and for the Marxist-Lenin-
ist state to liquidate itself, on the model of East Germany and many
other places.
JANS.PRYFWL,A
The Pennsylvania State University
University Park, Pennsylvania 16802
