Market transition, state connections and internet geography in China

China Review

Volumn 6, Issue 1, 2006, Pages 93-123

  Zhang, Jun ^a  

^a UNIVERSITY OF MINNESOTA DULUTH   (United States)

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EID: 33646175773     PISSN: 16802012     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (126)

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4. See, for example, Benjamin Compaine, The Digital Divide: Facing a Crisis or Creating a Myth? (Cambridge, MA: MIT Press, 2001).
5. Mitchell L. Moss and Anthony M. Townsend, "The Role of the Real City in Cyberspace," in Information, Place, and Cyberspace, edited by Donald Janelle and David Hodge (Berlin: Springer-Verlag, 2000), pp. 171-86;
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7. Matthew A. Zook, The Geography of the Internet Industry (Malden, MA: Blackwell Publishing, 2005);
8. Shane Greenstein, "The Economic Geography of Internet Infrastructure in the United States," in The Handbook of Telecommunications Economics, Volume II, edited by Sumit Majumdar, Ingo Vogelsang and Martin Cave (Boston: North-Holland/Elsevier, 2006, forthcoming).
9. For example, Castells argues that in the new mode of development "the action of knowledge upon knowledge itself" is "the main source of productivity." Manuel Castells, The Rise of the Network Society, Vol. I (Malden, MA: Blackwell Publishers, 1996), p. 17.
10. Maryann P. Feldman, "The Internet Revolution and the Geography of Innovation," International Social Science Journal, Vol. 54, No. 1 (2002), pp. 47-56;
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14. Zook (Note 4).
15. See, for example, Alice Amsden, Asia's Next Giant: South Korea and Late Industrialization (New York: Oxford University Press, 1989);
16. Alice Amsden, The Rise of "the Rest," Challenges to the West from Late-Industrializing Economies (New York: Oxford University Press, 2001);
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18. Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, NJ: Princeton University Press, 1995).
19. Ann Markusen, "Fuzzy Concepts, Scanty Evidence and Policy Distance: The Case for Rigour and Policy Relevance in Critical Regional Studies," Regional Studies, Vol. 33, No. 9 (1999), pp. 869-84.
20. See for example, Cindy C. Fan, "Of Belts and Ladders: State Policy and Uneven Regional Development in Post-Mao China," Annals of the Association of American Geographers, Vol. 85, No. 3 (1995), pp. 421-49;
21. George C. S. Lin, "State, Capital, and Space in China in an Age of Volatile Globalization," Environment and Planning A, Vol. 32, No. 3 (2000), pp. 455-71;
22. Yehua Dennis Wei, Regional Development in China: States, Globalization, and Inequality (London and New York: Routledge, 2000).
23. Eric Harwit, "Telecommunications and the Internet in Shanghai: Political and Economic Factors Shaping the Network in a Chinese City," Urban Studies, Vol. 42, No. 10 (2005), pp. 1837-58;
24. Yifei Sun and Hongyang Wang, "Does Internet Access Matter for Rural Industry? A Case Study of Jiangsu, China," Journal of Rural Studies Vol. 21, No. 2 (2005), pp. 247-58.
25. Barry Naughton, Growing Out of the Plan: Chinese Economic Reform 1978-1993 (New York: Cambridge University Press, 1995);
26. Victor Nee and Yang Cao, "Market Transition and the Firm: Institutional Change and Income Inequality in Urban China," Management and Organization Review, Vol. 1, No. 1 (2005), pp. 23-56.
27. Barbara Krug and Judith Mehta, "Entrepreneurship by Alliance," in China's Rational Entrepreneurs, edited by Barbara Krug (London: RoutledgeCurzon, 2004), pp. 50-71.
28. See You-Tien Hsing, Making Capitalism in China: The Taiwan Connection (New York: Oxford University Press, 1998);
29. Yi-min Lin, Between Politics and Market: Firms, Competition, and Institutional Change in Post-Mao China (Cambridge and New York: Cambridge University Press, 2001);
30. Krug (ed.) (Note 14).
31. Lin (Note 15)
32. Richard F. Doner and Ansil Ramsay, "Competitive Clientelism and Economic Governance: The Case of Thailand," in Business and the State in Developing Countries, edited by Sylvia Maxfield and Ben Ross Schneider (Ithaca and London: Cornell University Press, 1997), pp. 237-76.
33. Evans (Note 9).
34. Ibid.
35. Ding Lu and Zhimin Tang, State Intervention and Business in China (Cheltenham, UK and Lyme, US: Edward Elgar, 1997), p. 87;
36. János Kornai famously coined the notion of "soft budget constraint," which means that an enterprise or organization can be expected to be bailed out in case of financial trouble. Soft budget constraint often goes in parallel with soft authority constraint. János Kornai, "The Soft Budget Constraint," Kyklos, Vol. 39, No. 1 (1986), pp. 3-30.
37. See Jeffrey D. Sachs, Wing Thye Woo and Xiaokai Yang, "Economic Reforms and Constitutional Transition," Annals of Economics and Finance, Vol. 1 (2000), pp. 423-79;
38. William P. Alford, "The More Law, the More ... ? Measuring Legal Reform in the People's Republic of China," in How Far Across the River? Chinese Policy Reform at the Millennium, edited by Nicholas C. Hope, Dennis Tao Yang and Mu Yang (Stanford, CA: Stanford University Press, 2003), pp. 122-49.
39. See Hsing (Note 15).
40. Lin (Note 15), p. 6.
41. Andrew G. Walder, "Sociological Dimensions of China's Economic Transition: Organization, Stratification, and Social Mobility," Working Paper (2003), available online at http://iis-db.stanford.edu/ pubs/20208/Walder_Sociological.pdf, accessed 12 November 2004;
42. Tieh-chih Chang, "Growth, Corruption and State Capacity? China in Comparative Perspective," Department of Political Science, Columbia University, mimeo (2004).
43. See, for example, Gabriella Montinola, Yingyi Qian and Barry R. Weingast, "Federalism, Chinese Style: The Political Basis for Economic Success in China," World Politics, Vol. 48, No. 1 (1995), pp. 50-81.
44. Yingyi Qian and Barry R. Weingast, "Federalism as a Commitment to Preserving Market Incentives," Journal of Economic Perspectives, Vol. 11, No. 4 (1997), pp. 83-92.
45. Chang (Note 24).
46. Andrei Shleifer and Robert W. Vishny, "Corruption," The Quarterly Journal of Economics, Vol. 108, No. 3 (1993), pp. 599-617.
47. Xiaobo Lü, "Booty Socialism, Bureau-preneurs, and the State in Transition: Organizational Corruption in China," Comparative Politics, Vol. 32, No. 3 (2000), pp. 273-94;
48. Jane Duckett, "Bureaucrats in Business, Chinese-Style: The Lessons of Market Reform and State Entrepreneurialism in the People's Republic of China," World Development, Vol. 29, No. 1 (2001), pp. 23-37;
49. Lin (Note 15).
50. Ibid.
51. This Chinese style "state entrepreneurialism" in the reform era is to be differentiated from the East Asian "developmental states," since the former is charactelized by direct profit-seeking and a certain degree of risk-taking in an uncoordinated and bureaucratic, while the latter is aimed at augmenting (Amsden, Note 9), or governing the market (Wade, Note 9) indirectly.
52. For a discussion, see Duckett (Note 28).
53. Lin (Note 15), p. 99.
54. Xiudian Dai, "ICTs in China's Development Strategy," in China and the Internet: Politics of the Digital Leap Forward, edited by Christopher R. Hughes and Gudrun Wacker (London and New York: RoutledgeCurzon, 2003), pp. 8-29.
55. Zixiang Tan, "Regulating China's Internet: Convergence toward a Coherent Regulatory Regime," Telecommunications Policy, Vol. 23, Nos. 3/4 (1999), pp. 261-76.
56. See Dai (Note 31).
57. See, for example, Dai (Note 31);
58. Tan (Note 32);
59. Nina Hachigian, "China's Cyber-Strategy," Foreign Affairs, Vol. 80, No. 2 (2001), pp. 118-33;
60. Gudrun Wacker, "The Internet and Censorship in China," in Hughes and Wacker (eds.) (Note 31), pp. 58-82.
61. Gerald A. McDermott, Embedded Politics: Industrial Networks and Institutional Change in Postcommunism (Ann Arbor, MI: University of Michigan Press, 2002);
62. Krug (ed.) (Note 14).
63. There is a huge body of literature on this. See, for example, Mayfair Mei-hui Yang, Gifts, Favors and Banquets: The Art of Social Relationships in China (Ithaca, NY: Cornell University Press, 1994);
64. "The Resilience of Guanxi and Its New Deployments: A Critique to Some New Guanxi Scholarship," The China Quarterly, Vol. 170 (2002), pp. 459-76;
65. David Wank, "The Institutional Process of Market Clientelism: Guanxi and Private Business in a South China City," The China Quarterly, Vol. 147 (1996), pp. 820-38;
66. Lin (Note 15);
67. Thomas Gold, Doug Guthrie and David Wank (eds.), Social Connections in China (Cambridge, UK: Cambridge University Press, 2002).
68. See, for example, Josephine Smart and Alan Smart, "Personal Relations and Divergent Economies: A Case Study of Hong Kong Investment in China," International Journal of Urban & Regional Research, Vol. 15, No. 2 (1991), pp. 216-33;
69. Chi Kin Leung, "Personal Contacts, Subcontracting Linkages, and Development in the Hong Kong-Zhujiang Delta Region," Annals of the Association of American Geographers, Vol. 83, No. 2, (1993), pp. 272-302;
70. Hsing (Note 15);
71. Henry W. C. Yeung, "Local Politics and Foreign Ventures in China's Transitional Economy: The Political Economy of Singaporean Investments in China," Political Geography, Vol. 19 (2000), pp. 809-40.
72. Martin Jones, "Spatial Selectivity of the State? The Regulationist Enigma and Local Struggles over Economic Governance," Environment and Planning A, Vol. 29 (1997), pp. 831-64.
73. Ibid.
74. Barry Naughton, "How Much Can Regional Integration Do to Unify China's Market?" Working Paper No. 58 (2000), Center for Research on Economic Development and Policy Reform, Stanford University;
75. Chong-En Bai, Yingjuan Du, Zhigang Tao and Sarah Y. Tong, "Local Protectionism and Regional Specialization: Evidence from China's Industries," Journal of International Economics, Vol. 63, No. 2 (2004), pp. 397-417.
76. Chong-En Bai et al. (Note 40).
77. See Wank (Note 36).
78. Ibid.
79. For a full treatment of the spatial factors and dynamics affecting Internet development in China, see Jun Zhang, "Market Transition and the Spatial Dynamics of Internet Development in China" (Unpublished Ph.D. dissertation, University of Minnesota, 2005).
80. For example, Matthew A. Zook, "Internet Metrics: Using Host and Domain Counts to Map the Internet," Telecommunications Policy, Vol. 24 (2000), pp. 613-20.
81. See Zook (Note 45);
82. Tony H. Grubesic and Alan T. Murray, "Geographies of Imperfection in Telecommunication Analysis," Telecommunications Policy, Vol. 29, No. 1 (2005), pp. 69-94.
83. In 2003, a new licence track of telecom value-added services was started. It is either parallel to or overlapping with the ICP licence system, differing across provinces. Websites licensed under this track have also been incorporated into the dataset.
84. Alexa is the most authoritative independent worldwide Internet traffic information provider, its ranking system is based on a combination of the aggregate visitors attracted by a website and the average pageviews of each visitor. Although there are some loopholes in the Alexa system, it is the best one available and has been widely used in academic studies.
85. A website ranked by Alexa at 100,000 at the end of 2004 generally has a daily average number of visitors in the hundreds, and aggregate pageviews in the thousands, which is basically a break point for any meaningful Internet business. It is important to note that what I identified was the identity of the principal founder of the companies owning the websites, rather than the identity of the companies. This was purposely done to examine the initiatives of various actors in China's transitional process.
86. The list can be accessed at http://www.ciweekly.com/ciweekly/html/ www100/wwwl00.shtml, last accessed 18 October2005.
87. Min Dahong, "Zhongguo hulianwang meiti fazhan licheng: 1995-2001" (Chronology of Internet Media Development in China: 1995-2001), available online at http://it.sohu.com/97/83/ column204638397.shtml, accessed 15 October 2003.
88. Personal interview no. 1, Beijing, 2002.
89. Personal interview no. 2, Beijing, 2002.
90. Personal interview, no. 1, Beijing, 2002.
91. Ibid.
92. Peter Nolan and Xiaoqiang Wang, "Beyond Privatization: Institutional Innovation and Growth in China's Large State-Owned Enterprises," World Development, Vol. 27, No. 1 (1999), pp. 169-200.
93. See Yingyi Qian, "Enterprise Reform in China: Agency Problems and Political Control," Economics of Transition, Vol. 4, No. 2 (1996), pp. 422-47;
94. Edward S. Steinfeld, Forging Reform in China: The Fate of State-Owned Industry (Cambridge: Cambridge University Press, 1998);
95. Stoyan Tenev and Chunlin Zhang, Corporate Governance and Enterprise Reform in China: Building the Institutions of Modern Markets (Washington, DC: World Bank/IFC, 2002).
96. Becky P. Y. Loo, "Telecommunications Reforms in China: Towards an Analytical Framework," Telecommunications Policy, Vol. 28, Nos. 9-10 (2004), pp. 697-714.
97. Bing Zhang, "Understanding China's Telecommunications Policymaking and Reforms: A Tale of Transition toward Liberalization," Telematics and Informatics, Vol. 19 (2002), pp. 331-49.
98. This figure is somewhat under-represented, because there are some telecom-owned portals with a large volume of Internet traffic which have been ignored due to their lack of independent domain names. For example, there are many telecom-run portals under the domain of www.cninfo.net, which makes it rank 252 in the Alexa system. However, there is no such website as www.cninfo.net, only provincial or local sub-sites.
99. In this paper, unless specifically stated otherwise, I use China Telecom to refer to the aggregate of telecom carriers owned by the state.
100. BDA China, Internet Development in China, mimeo (1999).
101. Fu Yang, "263 de shengcun faze" (263's Law of Survival), IT jingli shijie (CEO&CIO), January 2001.
102. This is not to deny the quality of their services in any way. Nevertheless, such payment advantage had been a threshold resource without which profitable service was almost out of the question.
103. Personal interview no. 3, Guangzhou, 2002. 102
104. Personal interview, no. 4, Shenzhen, 2002.
105. Personal interview, no. 5, Beijing, 2002.
106. Li Kui, "Dixia dianxin yunyingshang neimu: weihe dianxin gongsi yuanyi kaixiaozao" (Inside Story of Underground Telecom Carriers: Why State Telecoms Are Willing to Make Exceptions), Shuzi shangye shidai (Digital Business Time), 11 January 2005.
107. Ibid. This was also confirmed by several informants during my interviews. This was also confirmed by several informants during my interviews
108. "Lucent bribery allegations highlight business risks in China," 12 April 2004, available online at: http://asia.news.yahoo. com/040411/afp/040411034923business.html; accessed 22 October 2004.
109. Ibid.
110. Wang Yichao and Zhang Fan, "Langxun Zhongguo 'huilumen'" (Lucent's Corruption Scandal in China), Caijing (Finance), 20 April 2004.
111. Ibid.
112. Wacker (Note 34).
113. Lei Zhonghui, "Guandian dianxin hubu shentou, Zhongshi xie wangluo dianshi taru jinqu" (SARFT and Telecom Mutually Exclusive, ICCTV Steps Into the Forbidden Zone with IPTV), 21 shiji fingii baodao (21st Century Economic Report), 25 December 2004.
114. Ibid.
115. Like many others, it is a "fanpan gongsi" (overturning-plate company); that is, one administrative unit changes its plate to a business company with basically everything else intact. Chen Xiaoning, the chairmen of the new company, was the director of the previous Centre.
116. Personal interview, no. 6, Beijing, 2004.
117. http://www.gxzb.com.cn/gx.htm, last accessed 15 December 2004.
118. http://www.chinabidding.com.cn/zbw/main/gywm.jsp, last accessed 15 December 2004.
119. http://www.chinabidding.com.cn/zbw/main/gywm.jsp, last accessed 12 October 2003.
120. Wu Kunpeng and Chen Xuedong, "Shi shui tongchi le Guangdong 'xiao xiao tong' shichang?" (Who Swallowed Guangdong's "Xiao Xiao Tong" [school online] market?), IT shangye zhoukan (IT-Business Weekly), November 2002.
121. Capinfo IPO Prospectus, http://www.capinfo.com.cn/ tc_8157pro-20011217chapl8.pdf, last accessed 21 March 2002.
122. See Harwit (Note 12)
123. Zou Yiping, "Chanyehua yunzuo shi shixian dianzi zhengwu youshi de guanjian" (Industrialized Operation Is the Key to Achieve the Advantage of E-Government), Tongxin xinxi bao (Correspondence Information Newspaper), 23 January 2003.
124. Liu Ren, "Shanghai meiyou Zhongguancun" (There Is No Zhongguancun in Shanghai), Zhishi jingii (Knowledge Economy), May 2002.
125. Michael Storper, The Regional World (New York and London: Guilford, 1997).
126. Karsten Giese, "Internet Growth and the Digital Divide," in Hughes and Wacker (eds.), (Note 31), pp. 30-57.