ABSTRACT
In previous chapters, we have identified the market logic of China's urban development. The key theme of post-reform urban transformation is the commodification of the built environment. This chapter begins to examine the role of the state in the development of market institutions. The state has not totally retreated from urban life; rather, the functions of the state have become more sophisticated because it is by no means an easy task to establish a market economy within a primarily non-market society. The market creates externalities beyond traditional state regulatory power. This necessitates the reorientation of governing tactics from central totalitarian government to local governance.
