The End of the Suzhou Model

Author: Xin Wang
Publisher:
Publish Date: 2005-09-09
Features: The economic model of Southern Jiangsu is a pattern that has grown from the land of Southern Jiangsu, but it has become a burden. The end of the Southern Jiangsu model does not mean the end of the economy of Southern Jiangsu. When the government is freed from economic affairs, the productivity of the private sector is also liberated. The essence of the former "Southern Jiangsu model" was essentially a model of excessive government intervention, local government corporatism, performance-driven economy, and cadre capitalism. This is a collective property rights system where politics and business are not separated. Its inherent risks led to defects in the governance structure of township enterprises, resulting in severe low incentives and negative incentives. Ultimately, 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 two levels of rural government forced reform to become the only choice. The reform process is essentially the government completely pushing enterprises into the market, reducing or eliminating government control and intervention over enterprises, establishing private property, and implementing privatization and marketization. However, reform remains an top-down performance project for cadres, and some non-standard practices or even black box operations cannot be ruled out during the reform. First, state-owned banks became the largest 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—the community residents and enterprise workers were consistently absent from the negotiation table of this movement-style reform and distribution-style reform.