Enterprise Reform and Fiscal Reform in China: Overlapping Webs of Interests

This paper investigates the interrelationship between enterprise reform and fiscal reform in China, and illuminates the web of interests which constrains the deepening of system reforms. By analysing the policy processes of the formulation and implementation of 'management contracting' in 1987 and 'fiscal contracting' in the following year, a division is revealed between the financialists and the productionists among the reformers in the central government. While the financialists aim at full marketisation, the productionists, in alliance with the localities, regard that the majority of state enterprises still need protection and guidance of the administrative agencies.