An Analysis of the Chinese Qian Rule – From the Perspective of Institutional Economics

29 Pages Posted: 20 Apr 2018 Last revised: 15 Jan 2019

See all articles by Mingxiong Bi

Mingxiong Bi

Ningbo University - Business School

Jim Huangnan Shen

Center for International Development, Harvard Kennedy School, Harvard University

Mushtaq Khan

University of London - School of Oriental and African Studies (SOAS)

Date Written: April 19, 2018

Abstract

The word “Qian rule” (hidden rule) has been known to all Chinese people since the publication of Wu Si's Qian Rule. This paper proposes that the Qian rule, in the economic sense, is the transaction of discretion between the buyer and the rule agent. The meticulousness of the formal rule and the rigorousness of its enforcement mechanism directly determine the generation of the Qian rule. It is attached to the formal rules but simultaneously transcends their value or sometimes even violates them directly. Its essential feature is conflicting with social morality. Qian rule is a special part of the informal system and its counterpart, Ming rule, (transparent rule) covers more than the formal rules. Between the Qian rule and the Ming rule, there is a grey area, which we call the intermediate rule. The existence and popularity of the Qian rule not only violates social morality, but also digests the effectiveness of the formal system. Hence, the challenge that academics and policy makers face is how the Qian rule may be eliminated.

Keywords: Qian rule; Ming rule; formal rules; informal rules; discretion

JEL Classification: P14, P16, P26, P51

Suggested Citation

Bi, Mingxiong and Shen, Jim Huangnan and Khan, Mushtaq, An Analysis of the Chinese Qian Rule – From the Perspective of Institutional Economics (April 19, 2018). Available at SSRN: https://ssrn.com/abstract=3165560 or http://dx.doi.org/10.2139/ssrn.3165560

Mingxiong Bi

Ningbo University - Business School ( email )

818 Fenghua Road
Ningbo City, Zhejiang Province
China

Jim Huangnan Shen (Contact Author)

Center for International Development, Harvard Kennedy School, Harvard University ( email )

One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States

Mushtaq Khan

University of London - School of Oriental and African Studies (SOAS) ( email )

Thornhaugh Street
Russell Square: College Buildings 541
London, WC1H 0XG
United Kingdom

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