Political economy of the advancing state: the case of China's airlines reform

In: The China journal: Zhongguo yan jiu, Heft 69, S. 64-86

Abstract

This article traces the circuitous route of China's airlines industry into the ranks of China's strategic sectors. Although the airlines industry now belongs to a small group of industries characterized by oligopoly among state-owned enterprises, its initial reform pathway in the post-Mao era hinted at a different future. In the early years of the reform period, a decentralist approach to developing the industry laid the groundwork for an open market structure with a comparatively low degree of state intervention. Why was this trajectory of gradual state retreat abruptly reversed in 1997? In that year, regulators began a bold retrenchment leading finally to an administrative restructuring of the industry around the "Big Three" state-owned carriers. This article argues that this policy reversal was shaped by the state's increasing emphasis on developing a team of state-controlled national champions. (China J/GIGA)