ABSTRACT
The post-Mao reform era that began in 1978 represented a rupture in the political system that had defined the Maoist period (1949–1978), and it changed the patterns of social development dramatically. During the era of post-Mao reform, the emerging market forces have challenged and gradually diminished the importance of state influence in the patterns of social development through the introduction of new mechanisms of resource allocation and the alteration of the opportunity structure that was monopolized by the party-state (Nee 1989; Zhou, Tuma and Moen 1996; Zhou 2004; Nee and Opper 2012). According to market transition theory, state and market represent two fundamentally different systems of resource allocation. Market transition theory suggests that the rise of market institutions in the era of post-Mao reform creates alternative sources of rewards not controlled by the state institutions, and such a shift reduces dependence on the state (Nee 1989, 1991, 1996 and 2005; Nee and Matthews 1996; Nee and Opper 2012). Moreover, this theory suggests that as power—control over resources—shifts progressively from state institutions to market institutions, there will be a change in the distribution of rewards favoring those who hold market rather than state power (Nee 1989, 1991, 1996 and 2005; Nee and Opper 2012).
