‘Two hands, multiple fingerprints’: how ideology and politics shaped China’s water market reforms (1998–2021)

Water markets in China have received ample scholarly attention, but less is known about the political, ideological, and international influences that shaped their evolution. Using institutional analysis and a power-centered approach, we trace three Australian-funded projects (2005–2019) alongside domestic policy shifts to analyze how market ideas were institutionalized. We show how policy entrepreneurs embedded water trading within China’s governance system by drawing on ideological principles—including politics at the centre, ideological pragmatism, and economic decentralization—to bind market instruments to Party legitimacy. We also examine variation across pilot sites, showing how China’s water markets evolved through distinct institutional pathways—from collective trading among Water User Associations in Gansu to corporate purchases in Inner Mongolia. These findings contribute to debates on state – market relations, ideational power, and institutional change in one-party states, while also opening new research avenues on group-level property rights and community-based environmental markets in China and beyond.