Economic transition under a semifederalist government: The experience of China

We propose to see China as a four sector economy under a semi-federalist government. The four sectors are agriculture, state industry, semi-state rural industry and private industry. The four sectors are divided and grouped under the jurisdictions of increasingly more autonomous local governments. The economy faces challenges that, first, as a development problem, agricultural labor needs to be transferred to industry. Second, as a reform problem, the efficiency of state-owned enterprises needs to be improved and ownership in township and village enterprises needs to be restructured. Third, government power needs to be structured to ensure a check-and-balance between the central and the local governments to offer protection to property rights. China's experience suggests a model of development featured by multiple types of organizations under a modified nondemocratic government. JEL Classification Numbers: P26, K11, and P21.