ABSTRACT
A number of developments during the post-Mao period have accentuated cleavages between the coast and the interior regions. Specifically, the introduction of a limited market sector alongside materials allocation by planners has served as a poignant reminder to interior leaders that, under central planning, interior producers were not adequately compensated for exporting resources at state-set prices. Adding insult to injury, the central government has switched from an interior-oriented development strategy to one that favors the economically more advanced coast by adopting a series of preferential policies for the coastal region while reducing the share of investment funds allocated to the interior. To cope with the changing policy environment, leaders of interior provinces have engaged in policy panbi, lobbying central leaders for the extension of preferential policies to the interior. In the meantime, interior localities have taken matters into their own hands by processing the raw materials in situ.
