DOMESTIC STRUCTURE AS A SOURCE OF CHINESE POLICY MAKING

What explains the path taken in China to cope with the challenges presented by the MFA in textiles and GSC in shipbuilding? In an effort to construct an explanation that incorporates both the structuring impact of external forces and the mediating influence of internal forces, this chapter will rely heavily on the concept of state capacity, drawing upon the rich body of work developed by scholars in fields as diverse as comparative politics, foreign policy studies, and international political economy. Specifically, three critical aspects of domestic structure are identified from the case studies – the organizational structure of the state, the nature of government-industry relations, and the transitional nature of China's economy during the 1980s and early 1990s – to show a policy “fit” between the particular challenges posed by the outside world and the relatively market-oriented solution for industrial adjustment that emerged in the Chinese textile and shipbuilding industries. In keeping with the book's main theme, Chapter 2 focused conceptually on the catalytic role of the outside world, paying only passing attention to the mediating (but vital) role of domestic structure. Drawing on the case-study material, this chapter attempts to redress that imbalance by examining in detail how the specific capacities of the Chinese state shaped the range of adjustment strategies available in responding to the MFA in textiles and GSC in shipbuilding.