Warped Incentives and “Second-Best” Efficiency

  • Mark A. De Weaver


Chinese investment booms since 1978 have invariably been led by local governments—governments at the provincial, municipality, county, township, and village levels—rather than by the central government. They may invest either directly, for example, in public works or through the enterprises they control. They may also act indirectly—by offering incentives to enterprises outside their jurisdictions or to the private sector.


Local Government Central Government Wind Farm Chinese Communist Party Soft Budget Constraint 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Graeme Smith, “Political Machinations in a Rural County.” The China Journal 62 (July 2009): 59, Scholar
  2. 2.
    Zhang Guoyun, “Bu Heli de Touzi Tizhi Daozhi Chongfen Jianshe” [An Unreasonable Investment System Leads to Redundant Construction]. Zhongguo Touzi [China Investment], October 2003, 15.Google Scholar
  3. 3.
    Zhou Li’an, “Jinsheng Boyi Zhong Zhengfu Guanyuan de Jili yu Hezuo” [Cooperation and Government Officials’ Incentives in Promotion Competitions]. Jingji Yanjiu [Economic Research] 6 (2004): 33–40.Google Scholar
  4. 4.
    Zhou Li’an, “Zhongguo Difang Guanyuan de Jinsheng Jinbiaosai Moshi Yanjiu” [A Tournament Model of Local Government Official Promotions]. Jingji Yanjiu [Economic Research] 7 (2007): 36–50.Google Scholar
  5. 5.
    Alec Nove, An Economic History of the USSR (London: Penguin Books, 1992), 365.Google Scholar
  6. 7.
    Chen Guidi and Wu Chuntao, “Target Hitting, Image Projects, and Others.” The Chinese Economy 38, no. 3 (2005): 18.Google Scholar
  7. 10.
    Vivian W. Y. Kwok, “Weaknesses in Chinese Wind Power.”, July 20, 2009, Scholar
  8. 11.
    Yang Yue, “Closer Look: Tilting at Unconnected Windmills.” Caixin Online, April 19, 2011, Scholar
  9. 12.
    Ryan Rutkowski, “China’s Wind Power Has Faulty Connection.” Asia Times Online, June 16, 2010, Scholar
  10. 13.
    Zhang Jiawei, “Wind Power Factories Called ‘Image Projects’.” China, March 10, 2010, Scholar
  11. 17.
    Xu Shousong, Tieben Diaocha: Yige Minjian Gangtie Wangguo de Simang Baogao [Investigating Tieben: A Report on the Death of a Private-Sector Steel Empire] (Guangzhou: Nanfang Rebao Publishing House, 2005), 6.Google Scholar
  12. 20.
    Tan Haojun, “Ba Cheng Minhang Jichang Kuisun Genyuan Hezai” [Why Eighty Percent of Civilian Airports Are Losing Money]., February 26, 2011, Scholar
  13. 1.
    Wang Bixue, “Wang Huaibao Gao Xingxiang Gongcheng Gei Shei Kan?” [Who Is Wang Hauibao’s Image Project For?]., September 2, 2002, Scholar
  14. 3.
    Jamil Anderlini, “China’s Airport Overkill.”, February 28, 2011, Scholar
  15. 4.
    Wang Xi, Jiang Zhipeng, and Li Jia, “Zhuti Gongyuan Shengsi Zhenxiang” [The Reality Behind the Life and Death of Theme Parks]. Liaowang Dongfang Zhoukan [Oriental Outlook Weekly], September 21, 2009, Scholar
  16. 5.
    Zhou Fang and Le Yan, “Zhuti Gongyuan: Cong Yi Hong Er Shang Dao Jiti Daobi” [Theme Parks: From Everyone Rushing in Together to Mass Bankruptcy]., July 23, 2009, C:\Documents and Settings\Mark\My Documents\Book\Local projects\Theme parks IF2009.mhtGoogle Scholar
  17. 7.
    Hu Yongqi, “‘Landmarks’ Smear Image.” China, June 23, 2010, Scholar
  18. 8.
    Olivia Chung, “Beijing Calls Halt to Vanity Projects.” Asia Times Online, March 23, 2011, Scholar
  19. 16.
    Tao Ran, Lu Xi, Su Fubing, and Wang Hui, “Diqu Jingzheng Geju Yanbian Xia de Zhongguo Zhuangui: Caizheng Jidong he Fazhan Moshi Fansi” [China’s Transition and Development Model Under Evolving Regional Competition Patterns]. Jingji Yanjiu [Economic Research] 7 (2009): 26.Google Scholar
  20. 18.
    Jin Sanlin, “Chengben Ruanyueshu Shi Touzi Guore de Zhongyao Yuanyin” [Soft Budget Constraints Are an Important Cause of Investment Overheating]. Zhongguo Touzi [China Investment], June 2004, 37–39.Google Scholar
  21. 20.
    Janos Kornai, “The Soft Budget Constraint.” Kyklos. 39, Fasc. 1 (1986): 4–5.Google Scholar
  22. 21.
    Neill Stansbury, “Exposing the Foundations of Corruption in Construction.” Transparency International Global Corruption Report, 2005: 39–40, Scholar
  23. 23.
    Xie Yanjun, “Henan Jiaotong Ting ‘San Chao Yuan Lao’ Tong Yan-bai Wai Tao Zhi Mi” [The Mystery of Henan Transportation Department Head Tong Yan-bai’s Flight Abroad]. Xinhuanet, February 17, 2004, Scholar
  24. 24.
    Gong Shengli, “Zhongguo Gaotie de ‘Jushi Chuanqi’”[The Myth of China’s ‘World Beating’ High-Speed Rail]. Beijing Spring, July 1, 2011, Scholar
  25. 26.
    Luo Changping, “City Image Building Lines Official Pockets.” cn, October 30, 2008, Scholar
  26. 27.
    Bloomberg News, “China Cities Value Land at Winnetka Prices with Bonds Seen Toxic.”, July 13, 2011, Scholar

Copyright information

© Mark A. DeWeaver 2012

Authors and Affiliations

  • Mark A. De Weaver

There are no affiliations available

Personalised recommendations