Paper short abstract:

This study explores how a state-owned enterprise in Houhai Village, China, extends state capitalism into local development, blending state control with market-driven imperatives and reshaping the power and politics within community.

Paper long abstract:

Globally, private sector actors - particularly businesses - are increasingly recognised as the driving forces behind development. However, this study shifts the focus to local state-owned enterprises (SOEs) in China. In the Chinese context, SOEs are not merely economic entities; they function as political instruments, extending state power into market-driven development while integrating characteristics of both the public and private sectors. This study examines the case of Houhai Village, a rapidly developing coastal tourist destination, to explore how a municipal SOE, established in 2023, exerts control over local development. It investigates how state capitalism, operating through SOEs, reshapes local power structures and developmental trajectories. As an extension of the local government, this SOE enjoys privileged access to operational licenses and resources, fundamentally altering local political and economic dynamics. At the same time, performance evaluations and financial imperatives necessitate adherence to market-driven logics, creating tensions between state control and commercial objectives. Drawing on an 11-month ethnographic study - including four months of participatory action research within the SOE - this research provides new insights into how state capitalism works in a micro context. By embedding itself in governance under the guise of development, the SOE not only restructures local economies but also redefines community agency, revealing the intricate interplay between state power and market forces in shaping contemporary development.