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The State-Constituted Market Economy: A Conceptual Framework For China’S State–Market Relations, Isabella Weber, Hao Qi

Economics Department Working Paper Series

Scholars increasingly conclude that China has created a distinct economic system. Yet despite a growing literature with valuable contributions on the institutional arrangements under ‘capitalism with Chinese characteristics’, the economic mechanisms underpinning China’s state–market relations remain undertheorised. In this paper we develop a conceptual framework of what we call China’s state-constituted market economy. We argue that the Chinese state ‘constitutes’ the market economy by not only creating new markets through industrial and innovation policies, but by continuously participating and steering markets for essentials in order to stabilise and guide the economy as a whole. Essential is thereby defined as ‘systemically …