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10 Government Power and its Impact on Pan-Pearl River Delta Regional Cooperation: Cooperative Networks and Regional Governance De Hu and Hailong Ma China’s transition from a planned economy to a market-oriented economy has led to the emergence of ‘local economic dukedoms’. This is reflected not only in the internal organization of production factors and structures, but also in the spatial fragmentation of the regional economy. The situation has produced urban entrepreneurialism based on administrative division, whereby local governments privilege the territorial interests of their own jurisdictions. The regional cooperation pattern is similar, with localities motivated to focus on profit generation and profit sharing. This chapter examines government power in China and its impact on regional cooperation in the Pan-Pearl River Delta (Pan-PRD). It argues that there is an urgent need to develop a coordinated network and stable regional governance in the Pan-PRD. As society and the economy grow, regional cooperation becomes increasingly important. Promoting such cooperation is no longer simply a matter of finding the right cooperative pattern and operational techniques, but rather of determining how to develop a cooperative network and governance structure in a dynamic system. To do so, it is important to better understand the parties involved in regional cooperation (especially local governments) and the regional cooperative environment (economic, institutional, etc.). Pan-PRD cooperation was born in the midst of China’s socioeconomic restructuring. As the country continues to move from a centrally planned economy to ‘socialist capitalism’, the central government’s power is being integrated into the operation of the socialist economy. One characteristic of China’s socioeconomic restructuring is thus the ‘power economy’, in which almost all key issues are related to government power. From the macro-level strategic perspective, these issues are nationwide industrialization, urban-rural division (the household system) and the special zone policy (special economic zones and development zones). From the micro-economic perspective, they are the allocation of production materials, administrative monopoly and power enterprises, and from the spatial-economic perspective, they are the isolation of markets and segregation, competition, and conflict among administrations. 182 De Hu and Hailong Ma Government Power and Impact on Regional Cooperation The logic of power execution by local governments Pursuit of profits The role of local governments has consistently been to ensure the benefits of residents, although their behaviour differs with the opportunities for and constraints on access to profits. Local governments’ overarching role of representing local interests is important to safeguarding their reputation and legitimacy, and it also fits well with the traditional conception of government officials as ‘crowned parents’. It is thus logical for local governments to exercise their power to interfere in social and economic operations to maximize the profits of the locality. The pursuit of profits is initially concerned with ensuring local economic growth. Such growth is the primary responsibility of a local government, and hence, the local government is the key stakeholder of the local economy (Liu 1996). In our study of China’s economic reforms over a 20-year period, we determined that the key factor driving and guaranteeing economic prosperity is neither the policies of the central government nor the demand-driven market, but rather profit-maximizing local governments, which have evolved and continue to grow in the process of power delegation. Although regions differ in terms of such production factors as assets, technologies, infrastructure and market maturity, local governments have tended to ignore high rates of GDP growth and employment, improved living standards and economic structures, and have instead taken the expansion of their regional influence as the prime indicator of local development. Driven by such a short-term goal, when responding to the central government’s economic policies and macro adjustments, local governments pick and choose from among them and implement only those policies that they deem beneficial to their respective economies, generally ignoring those that will not result in significant short-term economic development. Such behaviour on the part of local governments has not only hindered the implementation of policies that would be to the long-term benefit of the nation as a whole, but has also nourished local protectionism and narrow-mindedness. Local officials also pursue profits to demonstrate their local achievements. Even when making public decisions, it is not uncommon for government officials to have their own personal agendas. A local official’s motive to satisfy his or her own political agenda can be seen as almost identical to that of a ‘market economist’, with the important...

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