Managing central-local relations during socialist marketisation - A changing role for the Chinese Communist Party

In the early years of reform, the reduction of the party's power took place alongside decentralisation; since 1993, however, party leadership has been reinforced as part of the measures to strengthen central control. While ma rketisation has sharpened contradictions between socialism and the market e conomy, a paradoxical situation has emerged in which the party organisation has been called upon to assist in the smooth management of the market econ omy. The key issue tvas how to enforce discipline among the localities and economic and financial institutions in the transition. Establishing a verti cal leadership system of the party at the core of the market economy, namel y, its financial system, can be seen as a modern Chinese way of resolving t he contradiction between socialism and market economy.