Eger, Thomas; Schüller, Margot --- "A Comparison of Chinese and European-Style Federalism from a Law and Economics Perspective" [2007] ELECD 236; in Eger, Thomas; Faure, Michael; Naigen, Zhang (eds), "Economic Analysis of Law in China" (Edward Elgar Publishing, 2007)

Book Title: Economic Analysis of Law in China

Editor(s): Eger, Thomas; Faure, Michael; Naigen, Zhang

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847200365

Section: Chapter 1

Section Title: A Comparison of Chinese and European-Style Federalism from a Law and Economics Perspective

Author(s): Eger, Thomas; Schüller, Margot

Number of pages: 26

Extract:

1. A comparison of Chinese and
European-style federalism from a
law and economics perspective
Thomas Eger and Margot Schüller

1. INTRODUCTION

China's transition from a planned to a market economy has been very suc-
cessful, although the reforms have been quite different from those proposed
by most Western observers. Despite the fact that property rights were not
well defined or formally secured, and that one party dominated the polit-
ical system, China has become one of the fastest-growing economies in the
world. What are the reasons for this success?
Following the tradition of Hayek, Tiebout and Brennan/Buchanan some
scholars place emphasis on the political decentralization initiated by the
Chinese central authorities and the competition between provinces and
lower level political entities triggered by this decentralization.1 In the EU,
a specific federalist structure has been evolving, whereby the Member
States transferred, step by step, more and more competences to suprana-
tional authorities. One important goal of European integration was to
create a common market and thereby to improve the economic perform-
ance of the Member States.
Two questions arise. First, under what conditions will a federal structure
contribute to economic growth? Secondly, what are the specific features of
the federal structures in the EU and China, respectively, and what are their
social costs and benefits?
In the next chapter, we will briefly present the concept of market-
preserving federalism, which tries to find an answer to the first ques-
tion. Thereafter, we will discuss to ...