Scholarship on the institutional foundations of Chinese-style capitalism emphasizes the impact of liberal reformers and China's participation in international organizations, devolution of economic decision making and local experimentation, and the proliferation of market actors to explain their origins. This article investigates distinct patterns of sectoral variation in market governance in China today, examining the extent and scope in which dominant forms of market coordination and distribution of property rights reflect variation in national goals of economic power, security, and growth; structural sectoral attributes; and the path-dependent effects of institutional arrangements. The reinforcement of state coordination and the dominance of state ownership and shareholding in strategic industries, such as telecommunications, and the relinquishment of state control and the dominance of market stakeholders in nonstrategic sectors, such as textiles, characterize the rise of bifurcated capitalism in the period before and after China's accession to the World Trade Organization.

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In recent years, China and India have extensively liberalized their economies. They have departed from the East Asian developmental states, which have restricted foreign direct investment (FDI) to protect domestic industry, and the liberal FDI strategy of Latin America during a similar stage of development as they have eschewed dependent development. Instead, they have taken a "liberalization two-step," which follows liberalization with reregulation that varies across industrial sectors. Country and sectoral case studies demonstrate the perceived strategic value of a sector, sectoral characteristics, and the organization of state institutions shape the ways in which reregulation varies. Insulated from political pressures, the Chinese state shifts from universal controls on the aggregate level to selective controls at the sectoral level and adopts a bifurcated strategy in its reregulation. In India, the government liberalizes FDI according to state goals but reregulates as a function of sectoral interests arising from the legacy of its postindependence economic strategy.