The Political Economy of E-Commerce in China

In merely two decades, China transformed from a digital newcomer to the world's largest e-commerce market, with 800 million users and nearly 50% of global retail sales. In "From Click to Boom," Lizhi Liu unveils the surprising forces behind this extraordinary growth, addressing a key question in political economy: How can states build essential market institutions when formal institutions are weak or lacking? Liu argues that China’s "paradoxical" e-commerce boom reveals a digital path to institutional development, in which e-commerce platforms have built powerful private institutions for contract enforcement, fraud detection, and dispute resolution. The state, rather than opposing this private institutional development, has acquiesced, endorsed, and even partnered in it. By doing so, the state has effectively outsourced certain parts of institutional building and enforcement to digital platforms—a phenomenon Liu terms "institutional outsourcing." Drawing on extensive interviews, original surveys, tens of millions of proprietary data points, and a rare field experiment conducted across three Chinese provinces, Liu further shows how this e-commerce boom has reshaped Chinese economic governance, with wider implications for emerging markets globally.

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Co-hosted with: Princeton Institute for International & Regional Studies, Center on Contemporary China (OWNER)