ABSTRACT
This chapter reviews the major changes in investment policy since 1978, and examines the policy outcomes in the relationship between central and local governments. It introduces cycles of excess local investments and austerity policies from the center as a key aspect. The chapter discusses the method of measuring the balance of power between central and local governments in investment control. Both the central and provincial governments retain strong investment control but in different proportions. Recurrent policies of expansionary investment and austerity programs have shaped somewhat consistent patterns of decentralization and recentralization in governing the investment regime in China. Investment control during the post-Deng period presents a "recurrent pattern" of state regulation. The chapter also explains how administrative control over investment activities has been decentralized, while political control has remained central. Several factors have impeded or facilitated Beijing's capacity to rein in local discretion in investment.
