State Intervention, and
Regionalization in East Asia
A central issue in the globalization debate concerns state-capital relations. Some suggest that the regulatory capacity of national states is radically weakened by the process of globalization, resulting in the emergence of a "borderless world" dominated by "footloose" transnationals. 1 Others argue that instead of being weakened in their regulatory capacity, states indeed actively adjust their economies to globalization by regulating for deregulation. In doing so, the state is helping to impose a global market discipline on the domestic economy. 2 A middle ground position emphasizes that states can no longer direct investment decisions, they can only negotiate such decisions with private capital. At the same time, transnational capital also has to seek alliance with national states to enhance its capacity to compete in the world market. 3
This chapter looks at how state-capital relations in East Asia shape and are shaped by global economic restructuring. East Asia is an interesting case because states in the region are commonly seen as strong and capable of directing economic adjustment or even "governing the market." 4 Yet the recent literature has also described the region as undergoing a "market-induced" economic integration driven not by the state but by private capital responding to global restructuring. 5 This contentious understanding offers a good place to start an inquiry into state-capital relations in the process of globalization.
In order to limit the scope of analysis, I focus on the cases of Taiwan, Hong Kong, and mainland China during the 1980s and the early 1990s. These three are seen as all having strong states while pursuing different