How has China's emerging market economy affected popular reliance on networks to bypass state administrative procedures in pursuing ends? Debate on this question has focused on the consequences for guanxi practice – the manipulation of normative obligations in personal ties – which became a widespread strategy in the prior planned economy for citizens to cope with its shortages and inequalities by influencing officials' allocation decisions. One view, expressed by Mayfair Yang (1994), sees guanxi practice as adapting to and expanding in the market economy by the intermingling of normative obligations with new monetary values. A competing perspective is advanced by Doug Guthrie (1998a). He first criticizes Yang's argument by noting that among other things, her claim that guanxi practice expands through commodification contradicts her definition of guanxi practice as the production of obligated indebtedness because the quid pro quo character of monetary transactions erases indebtedness (Guthrie 1998a, p. 261). He then argues that the emerging institutions of the market transition erode guanxi's significance as intensifying market competition values efficiency over obligations while legal norms delegitimate personal ties to subvert procedures.

This chapter reflects on the debate over guanxi practice in the evolving market economy. I concur with Guthrie that new market players are coming to rely less on guanxi practice as efficiency considerations become increasingly important and new laws alter perceptions. But I take issue with Guthrie's claim that this indicates the declining utility of networks to maneuver around standard state procedures at local levels.