The interrelationship between state, capital, and space is central both to the debate on globalization and to various interpretations of the changing nature of the Chinese political economy. This study of China's economic performance against the recent Asian financial turmoil suggests that the Chinese central state has played a crucial role in the growth and restructuring of the national economy. The immediate impact of the financial crisis on China has been limited although the long-term effects remain uncertain. China has so far narrowly escaped the crisis primarily because of a state-led capital injection in mid-1998 to stop economic downturn, an austerity program that led the overheated economy to ‘soft-land’ prior to the crisis, and stringent state control of capital flow into and out of the country. Contrary to the ‘end of the nation-state’ claim made by many globalization prophets, the Chinese socialist state has remained an active agent interacting with global market forces. The interplay between the socialist state and transnational capital has been a place-specific phenomenon despite the pervasive assertion of ‘the end of geography’. A dialectical approach is needed for analyzing the triangular nexus of interaction between the central state, local state, and global market forces in China in the current age of volatile globalization.
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