How a Local Growth Coalition Collapsed: A Case Study of Anti-Confiscation Movement of Private Oil Investors in a Northwestern Chinese County

Peng LU

Lu, Peng. 2018. “How a local growth coalition collapsed: A case study of an anti-confiscation movement of private oil investors in a northwestern Chinese county”, In: Guo, Yingjie (eds). Local Elites in Post-Mao China, London: Routledge, pp.149-169.



In the last three decades, the commonly assumed ‘close relationship’ between China’s local governments and local economic elites, particularly private entrepreneurs, has been considered the key driver of China’s economic miracle (Pearson 1997; Oi 1999; Dickson 2000; 2003; 2008; Goodman 2008; Fu & Lin 2013). Most published research on government policies has been more concerned with the so-called ‘collusion’ or alliance between local governments and business investors (Oi 1992; Lin 1995; Walder 1995; Wank 1998; Chen & Dickson 2008). This close alliance was believed to be built upon the pursuit of a common goal – economic growth. Hence, the alliance is often called the ‘local growth coalition’, the thesis being particularly popular among urban development specialists (Molotch 1993; Zhu 1999; Zhang 2002; He & Wu 2005; Domhoff 2006; Hsing 2006). On the other hand, a burgeoning literature detailing conflicts between local governments and social groups, such as workers and peasants, as the local governments relentlessly pursued local economic development, has cast doubt on the ‘local growth coalition’ thesis. Even more questions are raised about it in the light of a growing number of conflicts between local governments and private entrepreneurs.

To most analysts, the close relationship between the local governments and the local businesses seem to be unbreakable and most entrepreneurs prefer to maintain the status quo (Dickson 2003; Tsai 2007; Walder 2009). In recent years, however, conflicts between local governments and private enterprises seem to be on the rise. In most cases, such conflicts do not turn into public political events; they are more like competitive games between political and economic elites on the economic front (Nathan 2003; Gilley 2004; Kennedy 2008; Lu 2012). But there are disputes which have turned into public events or even take on considerable political significance (Han & Lu 2011). The growing number of such conflicts indicates that the ‘local growth coalitions’ or ‘local growth alliances’ that analysts speak of may have existed only at particular times or in particular places and therefore cannot be regarded as a lasting, general feature of China’s economic development. It is not just a theoretical possibility but also a fact that relationships of ‘lovers’ become relationships of ‘enemies’. The purpose of this chapter, however, is not simply to question the ‘local growth coalition’ thesis but to explore the ways in which groups of dominant local elites work together and compete with each other in economic development. Of particular interest are questions about why conflicts emerge, who benefit and suffer at various stages of conflicts, and how conflicts are eventually resolved. The focus of the chapter is placed on the entrepreneurs’ strategies for protecting their rights vis-à-vis local political elites as well as the processes and mechanisms of their right protection.

The chapter centres on the case of the ‘Northern Shaanxi Oilfield Event’, which took place in 2003, to illustrate the critical stages and analyze mechanisms in place that turned a close collaborative relationship between the government and local business elites into one of conflict. In 2003, under the instruction of the Shaanxi provincial government, county governments in northern Shaanxi confiscated vast oil well assets run by private investors. In order to protect their rights or seek higher compensation, some of the investors engaged in a three-year legal battle with government agencies at different levels of Shaanxi Province, which attracted national and international attention. The Chinese media called it the ‘Northern Shaanxi Oilfield Event’; it will be simply referred to as ‘the event’ in the chapter.

The chapter will be divided into three parts. The first part is descriptive and will provide a general overview of the event. The second will analyze the critical stages of the event, especially the advantages and disadvantages of major strategies implemented by the various parties. In the third and final section, some resolutions will be proposed for similar conflicts in the future.


Download Link: Chapter 8_How a Local Growth Coalition Collapsed