Part III applies the suggested analytical framework at the micro level by delving deep into China’s corporate and capital market development puzzle. It uses the explanatory power of law and political economy to bring more clarity to China’s evolving approach to corporate governance. The purpose is to better understand the role played by formal law in governing Chinese public firms and ultimately in China’s capital market growth and to unpack the political–economic determinants that drove its evolution. The chapters in this part of the book pay particular attention to the creation and efficacy of corporate governance institutions, both traditional and idiosyncratic, that operate in the Chinese market.

This part of the book finds that law and political economy dynamics have produced operational results. They have mobilized market participants (both economic and political) to design and deploy various growth-promoting mechanisms within firms and in the market at large. The analysis shows how such mechanisms at times triggered, supported, boosted, or replaced more conventional corporate governance institutions in ways that eventually marched the market forward.