The End of the Suzhou Model

Author: Xin Wang
Publisher:
Publish Date: 2005-08-01
Features: The economic model of Southern Jiangsu is a pattern that has grown from the land, but it has become a burden. The end of the Southern Jiangsu model does not mean the end of the Southern Jiangsu economy. Freeing the government from economic affairs also liberates the productivity of the private sector. The former "Southern Jiangsu model" was essentially a model of excessive government intervention, local government corporatism, performance-driven economy, and cadre capitalism. This was a collective property rights system where the government and enterprises were not separated, and its inherent risks led to defects in the governance structure of rural enterprises, resulting in severe low incentives and negative incentives. Eventually, due to changes in the external economic macro environment, the decline of the Southern Jiangsu economy was exacerbated, especially the debt pressure faced by the township and village levels forced reform to become the only choice. The reform process was essentially the government completely pushing enterprises into the market to reduce or eliminate government control and intervention, establish private property rights, and implement privatization and marketization. However, reform was still an top-down performance-driven project for cadres, and some non-standard practices or even backroom dealings were not excluded during the reform. First, state-owned banks became the biggest victims of breaking before transforming and defaulting on debts. Subsequently, in the reform negotiations among the five stakeholders—local government, community government, enterprise operators, community residents, and enterprise workers—community residents and enterprise workers were consistently absent from the negotiation table of this movement-style reform and distribution-style reform.