In the area of economics, Jean OI's focus on loval self government links the political dilemmas of the previous section with the concrete economic problems of the locality in contemporary China. WIth her customary insight and skilful use of field reserach, Oi paints a complex picture of local development.

Reprint from The National Interest (Fall 1996).

There are huge discrepancies between the official Chinese and U.S. estimates of the bilateral trade balance. The discrepancies are caused by different treatments accorded to re-exports through Hong Kong, re-export markups, and trade in services. Deficit-shifting between China, on the one hand, and Hong Kong and Taiwan, on the other, due to direct investment in China from Taiwan and Hong Kong, is partly responsible for the growth in the China–United States bilateral trade deficit. The 1995 China–United States bilateral balance of trade in goods and services, adjusted by both re-exports and re-export markups, may be estimated as US$23.3 billion, a large deficit but considerably smaller than the often-cited official U.S. figure of US$33.8 billion.

What can be said about the social and cultural characteristics of the Asian region as a whole? Are there, for example, traditional similarities that unify the region—something one might label “Asian culture”? Various scholars have seen an Asian-ness in such things as the way authority has been understood in the region 1 or, even more typically, they point to the Confucian heritage common to China and the nations on its periphery as a unifying characteristic. 2 At least one contemporary Asian leader, Mahathir Mohamad, prime minister of Malaysia, has argued for the legitimacy of a distinctly Asian approach to politics and society, one that is at odds with what he infers is a Western cultural hegemony in such matters. 3 Others, certainly the majority of scholars, have expressed skepticism with any interpretive framework that has attempted to embrace the entire region in cultural terms. Are there other ways to think of cultural connections that are not based in traditions or in religious, linguistic, historical, or other origins? Or is the initial question itself misplaced?

In this volume of concise and informative essays, leading specialists examine the nature, impact and prospects of China's post-1978 party±market symbiosis. Criticizing the collapse thesis derived from Eastern European conditions, it argues that economic liberalization has created new forms of interdependency between the state and market in China. The corollary is that party cadres have developed a new and useful role as facilitators of market transactions.

Since China did not take the big bang route to economic liberalization, cadres retain great discretion over the fate of fledgling private enterprise. So, despite their objective economic importance, China's entrepreneurs remain politically passive (Young's chapter). Oi argues that it is naive to assume that the state merely encumbers and preys upon private enterprise. She shows how village businesses are helped by a primitive form of `administrative guidance' commonly associated with Japanese industrial policy (pp. 69±72). From the perspective of property rights and their reassignment, Walder's essay demonstrates the spatial redistribution of power favouring provincial cadres (vis-aÁ -vis Beijing) and local and enterprise level cadres. Owing to her gradual reformism, China has not suffered the scale of social dislocation witnessed in Russia's transition. Nevertheless, within the overall improvement of living standards, reform has produced social discontent from those who have lost status and income, notably public sector employees (see the essays by Ma, Unger and Kent). In playing a facilitating role for market transactions, cadres have derived considerable personal profit. This `visible hand' of the cadres has attracted much popular resentment and undermined the legitimacy of the Chinese Communist Party (CCP) now trapped between its egalitarian roots and the international democratization wave.

While overt opposition has been effectively contained since 1989, economic liberalization has nevertheless created the potential for further social protest. Much will depend on the CCP's readiness to accommodate nascent social forces (with workers, as discussed by Chan, for example) into some meaningful channels of consultation and grievance redress, which in turn raises questions about the future shape of the regime and the role of the party within it