Government-Business Relations in Greater China and Challenges for Public Administration

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Government-Business Relations in Greater China and
Challenges for Public Administration
This paper examines the development of government-business relations in China, Hong Kong, and Taiwan and identifies important managerial issues from the Chinese experience. The paper first introduces theoretical concepts about the role of government in economic development and arguments about business promotion and government regulation policies. It then reviews economic development in the three societies and changes in their government-business relations. Three critical managerial issues related to the government-business relations are accountability of incentive policies, effectiveness of government regulation, and anti-corruption of administrative reform. Implications of the Chinese experiences are provided in the conclusion section for future studies of government-business relations. 2

The topic of government and business relations (G-B relations) has recently become one of the major public policy issues for many developed, developing and economic transition countries. For developed countries, the interest in G-B relations is related to the impact of global financial crisis and the need for government intervention in the financial system (e.g., government relieve funds and proposed new regulations). In addition to the problem of financial crisis, developing and economic transition countries emphasize the issue of G-B relations because of their special concerns about economic development. For these countries, it is important for them to reform their governments to establish a sound modern market system and implement good development policies to attract the needed foreign capitals and investment. The study of G-B relations in Greater China is valuable for researchers because of the success of China’s economic reform and the changes of economic environment in Taiwan and Hong Kong.1 Since 1978, China has successfully implemented various reform policies to increase economic growth and to improve the quality of public life. These policies have promoted private business development in China and have gradually changed the Chinese system from a totally government-controlled planning system to a market-oriented capitalist system. The G-B relations in China have changed dramatically since the implementation of development and reform policies. Chinese leaders today have to develop new policies to address many negative problems that are associated with the development changes. For Taiwan and Hong Kong, the G-B relations have also changed after the success of their economic development and miracles since the 1990s. The G-B relations in Taiwan have been influenced by the development of Taiwan’s democratization movement and the changes in Taiwan’s political environment. Unlike the past dominant control of the government over the 3

business through the ruling party of Kuomintang (KMT), business communities and enterprises are now influencing the formulation and implementation of public policies through the contribution of campaign financing to political parties and politicians, especially after the administration of Democratic Progressive Party (DDP) in 2000. The G-B relations in Hong Kong have been affected by recent events, such as the 1997 handover to China, the Asian Financial Crisis, and the 2003 SARS outbreak. Unlike the traditional development policy of positive non-interventionism, the government of Hong Kong Special Administration Region (HKSAR) has played an active role and implemented important public policies to protect public safety and to promote business development.

This paper examines the G-B relations in China, Hong Kong, and Taiwan by focusing on their development experience. The paper consists of three major sections. The theoretical background section introduces important concepts about the role of government in economic development and arguments about business promotion and government...
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