Business Commons^™

The Inevitable And Difficult Transition From Relation-Based To Rule-Based Governance In China, Shaomin Li

Management Faculty Publications

China has benefited tremendously from replying on the relation-based way of doing business and governance, as evidenced in its rapid economic growth up to now. However, further relying on the relation-based governance may eventually hinder China's economic growth and exacerbate inequality, resulting in political instability. On the other hand, given China's cultural heritage and powerful vested interest groups, can China shed its relation-based way? This article argues from logical, theoretical, and empirical perspectives the inevitability and difficulty of China's transition from relations to rules, and discuss the implications of the transition or the lack of it for China.