8
“society” in the Chinese context,
18
this basic insight points to an on-going process of mutual
monitoring between central policy makers and local staff of the state, between the official policy
environment and economic actors. That is to say, in this context the Wenzhou model represents
a particular mode of interaction between state and society and central and local governments in
China.
While the above explanations focus on explicating the political sources of localism
among Wenzhou’s cadres and entrepreneurs, the other main approach to understanding the
Wenzhou model among political scientists emphasizes the material incentives underlying its
reliance on private sector development. Specifically, Susan Whiting and Jieh-min Wu have both
observed that in contrast to localities in southern Jiangsu, which inherited well-developed rural
industry based on communes and brigades from the Mao era, localities such as Wenzhou started
out the reform era with a very low level of industrial development and limited land and capital
resources.
19
As a result, when fiscal reforms gave local governments a greater share in locally
generated revenues, local officials faced an incentive to permit economic activities that yielded
the greatest profit. In Wenzhou’s case, the latter took the form of private household factories
engaged in labor-intensive manufacturing processes and a network of traders who marketed and
sold local products throughout the country and abroad.
18
In China, “state-society” is sometimes misused to express “central-local” relations. Moreover, “non-state” activity
does not necessarily imply that it is “societal” in the autonomous sense of civil society. For a Habermasian
discussion of the issue, see Philip Huang, "'Public Sphere'/'Civil Society' in China?" Modern China 19, 2 (April
1993): 216-240.
19
Susan H. Whiting, Power and Wealth in Rural China: The Political Economy of Institutional Change (New York:
Cambridge University Press, 2001); and Jieh-min Wu, “Local Property Rights Regimes in Socialist Reforms: A
Case Study in China’s Informal Privatization,” Ph.D. diss., Columbia University, New York, 1998. I employ a
similar logic to explain the widespread use of informal finance in Wenzhou versus other localities in Back-Alley
Banking: Private Entrepreneurs in China (Ithaca: Cornell University Press, 2002).
Convention