Adam Y. Liu, "Authoritarian Markets: The Politics of China's Banking Explosion" (Cornell UP, 2026)

Could you start us off, please, by introducing yourself a little bit and tell us why you decided to write this book? What kinds of questions did you want to ask and answer?

Sure.

Hi, everyone.

My name is Adam Liu.

I'm an assistant professor teaching now at the Lee Kuan Yew School of Public Policy, National University of Singapore.

I started off this project about 10 years ago when I was a PhD student.

And one of the key motivations for writing about this is that You know, in the conventional political science, political economy literature, people say that, you know, in authoritarian countries, the government tries to sort of limit entry into the banking market because they want to just make sure that there are a few large state-owned banks that control everything so that the government and the large banks can share rents with each other.

But what happened in China was deeply puzzling in the past 20, 30 years in the sense that not only did the Chinese government allow hundreds and thousands of banks enter the industry, the banks have been competing with each other really ferociously.

And so I wanted to sort of understand why that's the case.

What explains this sort of market development without a limited government? Because in the conventional wisdom, this sort of market development really depends on a limited government that protects private property rights, and then there should be independent judiciary and so on and so forth that can foster markets.

But China doesn't have any one of these.

So how has this happened? So that's really the puzzle of where the motivation for me in terms of writing this book.

Yeah, puzzles are always very intriguing.

So I'm not surprised you wanted to investigate this.

And of course, puzzles also need answers and kind of ways of thinking through the complexity.

So can you talk us through the theoretical framework that you propose to answer these questions?

Basically, in a nutshell, I don't see what happened in China was a story of financial liberalization or marketization.

I see what happened in China as the result of deliberate political bargaining and political competition among all the political elites between the central government and the local government.

So basically, in a nutshell, Market entry was used by the central government as a way to co-opt local governments.

So I should say that most of these banks that has entered the Chinese banking market were owned or directly controlled by lower level governments.

They were not private banks.

So it was a story of political appeasement.

And they've been competing ferociously with each other because the bosses behind the banks, that is the local governments, have been competing with each other ferociously during the reform of Europe because that's how they get evaluated.

And the way the government has been regulating these banks was not through professional regulation in the sense that when I speak to...

I did a lot of interviews with actual bank regulators in China.