chapter  10
23 Pages

Rent seeking and the development of the beer industry

ByYONGPING WU, BIAO JIN

The beer industry constitutes an important example in discussions of rent seeking in China. The beer industry is not a strategic sector for the central government but it is important to local governments. These contrasting positions determine the different policies of the central and local governments toward the industry, giving rise to an industry that is nationally open and competitive, while locally closed and regulated. The differences between the national and local beer markets provide us with a case to explore the issue of rent seeking and to inform our understanding of rent seeking in China. The chapter concerns three questions, namely: how rents are created and distributed by the governments; how rents are sought by firms; and to what extent rent seeking contributes to the special features of the Chinese beer industry.