Studies on the relationship between markets and the state of modern China mainly follow two approaches. One approach stresses the state authority, contending that state power was strong enough to dominate local society and markets. The other approach emphasizes the economic power of markets, arguing that market forces restricted state power, and the development of markets chiefly followed market prices. Both approaches ignore the historical context and the human agents in local society on the one hand, and the role of local society in conditioning the interaction between the state and markets on the other....[ Read more ]

Studies on the relationship between markets and the state of modern China mainly follow two approaches. One approach stresses the state authority, contending that state power was strong enough to dominate local society and markets. The other approach emphasizes the economic power of markets, arguing that market forces restricted state power, and the development of markets chiefly followed market prices. Both approaches ignore the historical context and the human agents in local society on the one hand, and the role of local society in conditioning the interaction between the state and markets on the other.

The development of Hunan's grain market in the modern period is a good case for the study of the relationship between the state and the development of markets. The processes of the state's expansion into local society and its appropriation of local resources resulted in the increase in rice price and the expansion of the rice market of Hunan. Realized that the increase in rice price had led to unrest in cities, the state attempted to stabilize the rice price by means of restricting the export of rice. But the measure, which sacrificed peasants' interests and disrupted the trade balance of Hunan, resulted not only in the recession of Hunan's economy but also the decline of state power in local society.