The Making of an Integrated National Grain Market in China

Abstract

A market economy will not emerge from a redistributive economy automatically once the state abolishes a redistributive system. Because of the cognitive incompleteness of market actors in post-redistributive societies, and also because of the conflicts between the state and local interests and among local interests, selective state interventions are inevitable and necessary for a successful market transition. This paper examined the evolution of market pattern in the new market transition economies based on the emergence of an internal grain market under market reform in China. I found that local markets, tightly "protected" by local officials, tried to curtail long-distance trade beyond local territories and thus were not starting points of an internal market in China's national grain market. The approximate internal grain market at the beginning of the 21st century in China is the result of deliberate actions of the reform-oriented state.