Market Visions: The Interplay of Ideas and Institutions in Chinese Financial Restructuring

In studies of transitional systems, negative economic outcomes are often associated with ‘partial’ or ‘stalled’ reform – a reform that signifies an institutional departure from standard market operation. Such departures are often traced to socio‐political contestation or political preferences. Focusing on China's intertwined financial and enterprise reforms, this paper challenges that approach on two fronts. First, it argues that institutional change and resultant economic outcomes are driven less by contestation than by societally held assumptions regarding the nature of economic causation in market contexts. The analytical lenses that actors employ to understand their environment shape expectations about how markets function, influence the manner by which economic problems are diagnosed, and profoundly affect the ultimate institutional evolution of the system. Second, such lenses are necessitated by substantial uncertainties at the theoretical level regarding market function – uncertainties that make characterizations of economic behavior as ‘irrational’ highly problematic.