ECONOMIC TRANSITION UNDER A SEMIFEDERALIST GOVERNMENT - THE EXPERIENCE OF CHINA

We propose to see China as a four sector economy under a semi-federali st government. The four sectors are agriculture, state industry, semi- state rural industry and private industry. The four sectors are divide d and grouped under the jurisdictions of increasingly more autonomous local governments. The economy faces challenges that, first, as a deve lopment problem, agricultural labor needs to be transferred to industr y. Second, as a reform problem, the efficiency of state-owned enterpri ses needs to be improved and ownership in township and village enterpr ises needs to be restructured. Third, government power needs to be str uctured to ensure a check-and-balance between the central and the loca l governments to offer protection to property rights. China's experien ce suggests a model of development featured by multiple types of organ izations under a modified nondemocratic government. JEL Classification Numbers: P26, K11, and P21.