Hindered by Informal Property Relations: A Case Study of Developmental Strategies in Rural Industrialization in China

Why have existing developmental strategies failed to promote rural industrial development more effectively in many regions of China? This question cannot be fully answered by prevailing developmental state theory, which emphasizes the institutional conditions of embedded autonomy, market competition, and enterprise investment capacity, while overlooking the influence of informal property relations within industries. This article’s case study of an industrial township in northern China demonstrates that informal property relations, tied to entrepreneurs’ informal access to labor, land, and environmental resources, have been persistently maintained through socially embedded power interactions. These relations have contributed substantial profits to rural industries and greatly alleviated pressure on entrepreneurs, making them unwilling to reinvest profits into development activities. Instead, profits are allocated to simple industrial expansion or personal consumption. As a result, the developmental strategies fail to achieve their intended effects because of a lack of response from enterprises. Furthermore, this study examines two attempts by the government to formalize these property relations—the construction of industrial parks and more stringent environmental governance—and explains how their impact has been constrained. This research provides valuable insights for late-developing regions with lagging political and economic reforms and deepens our understanding of the substantive view of the economy.