Politics of Scale: Decentralization and Centralization of Oil Exploitation Right in Northern Shaanxi, China

Abstract Background: The impact of oil exploitation on local economy is often subject to the national resource management system. Monopolistic vertical resource management often makes local struggle ineffective. However, there is a successful local oil economy in China. This paper focuses on the formation of a special oil economy and reallocation of resources, power, and capital in Northern Shaanxi, China. This is a typical case of competing interests across multiple scales. It presents a typical case of the reconfiguration of resources, power, and capital at multiple scales.Methods: We introduce the ‘politics of scale’ to analyze the decentralization & centralization of oil exploitation rights, and the game among the government, state-owned enterprises, private enterprises and residents.Results: There are three findings. First, driven by fiscal interests, governments as the actual owners of the state capital, were directly involved in the politics of scale. Second, the interest conflicts among local state-owned enterprises, local governments were concealed owing to the strict administrative hierarchy and authority of the power, and they became a unified whole of interests and won the battle for oil resources with the central state-owned enterprises. Third, governments’ behavior strategies were simple and crude in scaling-down, mainly by hierarchical control and administrative orders. Private capital's behaviors were more diversified in scaling-up, but were completely suppressed and eliminated by the government agencies.Conclusions: We argue that politics of scale is an effective framework to explain multi-scale regulation, and is also a strategy of power competition among all practice parties.