From Click to Boom: The Political Economy of E-Commerce in China

Abstract: 

A central question in political economy asks: how do developing states build market-supporting institutions (e.g., secure property rights, contract enforcement, and the rule of law)? Too often, political obstacles prevent developing states from adopting strong formal institutions. I propose that China has devised a novel solution to this political problem: institutional outsourcing. I argue that, with weak rule of law, the state has outsourced part of its institutional functions to key private actors, which I call, private regulatory intermediaries (PRIs). Using as the context China’s e-commerce market, where 514 million active users generate more than 70 million transactions per day, I show that online trading platforms (e.g., Alibaba’s Taobao.com and Tmall.com) have begun to serve as PRIs. More specifically, platforms privately supply market-supporting institutions to enforce contracts, prevent fraud, and settle disputes. Not only do platforms enforce rules, they also assist the state in creating and reforming formal institutions through institutional experiments. In this talk, I will discuss how and why China's e-commerce boom affects state-business relations, household welfare, and the stability of the authoritarian regime in general.

Speaker Biography

Professor Lizhi (Liz) Liu is an Assistant Professor in the McDonough School of Business at Georgetown University. Lizhi's research interests include the political economy of development, Chinese politics, the politics of e-commerce and digitization, and market reforms. Her research has been funded by various institutions including the Bill and Melinda Gates Foundation, Weiss Family Program Fund, the Clausen Center of UC-Berkeley, and the Stanford Institute for Innovation in Developing Economies (SEED). Lizhi was the Bradley Fellow and Huoshui Young Scholar of AliResearch. Currently, she is a guest researcher and the deputy director of the Alibaba Research Center for Rural Dynamics. Lizhi holds degrees in Political Science (Ph.D.), Statistics (MS), and International Policy Studies (MA) from Stanford University and International Relations (LLB) from Renmin University of China.