INTERREGIONAL COMPETITION AND LOCAL ECONOMIC INITIATIVES IN CHINA - SHANDONG IN THE REFORM YEARS

In the process of China's economic reforms, the local state has come t o the forefront and played a more and more active role in pushing econ omic development. What is behind such local state's activism? This pap er attempts to answer this question by focusing on the mechanism of in terregional competition. It argues that with the emergence of uneven e conomic development between regions, local leaders have become increas ingly aware of the competitive environment and have felt enormous pres sures and challenges from other regions for fast economic growth. Back ward regions are anxious to close the gap between them and advanced re gions, whereas more richly endowed regions are worrying about being ov ertaken by newcomers. Such a keen sense of competition (or competition mentality) has compelled local leaders To take the initiative in sear ch of new strategies (e.g., developing high-tech industries and new fo rms of industrial organization such as enterprise groups) in order to increase their regions' comparative advantages in the economic arena. Accordingly, local lenders' efforts to cope with interregional competi tion have facilitated the transition to a market economy.