Local Tinkering, Global Integration, and the Rise of Tech Entrepreneurship in China

Yan Xu, University of Chicago

Tech entrepreneurship has been growing rapidly in China, whose tech startup sector is now the world’s second largest and an important source of the country’s economic and technological development. This paper examines the historical process through which a political economy initially hostile to private business was transformed into one where the state both supports and actively harnesses tech entrepreneurship. Drawing from the constructivist, pragmatist tradition, the paper highlights the role of local tinkering of existing institutions and the embrace of transnational networks of venture finance. I show how local actors creatively recomposed or reoriented existing institutions to foster tech entrepreneurship when private business faced various restrictions and discrimination. A burgeoning tech startup sector in cities like Beijing and Shenzhen attracted overseas venture capital, which poured into China with the state’s embrace. The inflow of transnational capital spurred entrepreneurship particularly in the internet-based new economy, forged new interests, and helped to strengthen the coalition advocating for a more favorable institutional environment for tech entrepreneurship. At the same time, China has created unique institutions of venture finance. With the tech startup sector booming, the state increasingly seeks to harness entrepreneurial initiatives and through local experiments devised new arrangements that allow the state to be active in the venture finance market in a way that combines public and private efforts and renders them mutually supportive. By demonstrating how actors can creatively foster tech entrepreneurship and recombine state and market, this paper contributes to the literatures on institutional change, capitalist diversity, and the adaptability of China’s political economy.

No extended abstract or paper available

 Presented in Session 68. Institutions and Elite in China