3. Governance in China
3.1. Different approaches to issues inherent in the governance framework
3.1.1. Reforms and its impact on the governance framework
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3.1.1. Reforms and its impact on the governance framework
This chapter briefly examines a couple of contentious issues on governance related reforms in China. The question is whether the reforms improved governance capabilities or whether the reforms were not carried out in an appropriate manner.
China is not a unique case, in that it faces challenges similar to those of other centrally planned economies in Asia. Specifically, I will focus on the lack of an appropriate legal framework and skills to challenge the reforms.138
Reforming the civil sector
Given the strong position of the state in China, it is reasonable to consider one particular reform, the civil service reform in China‟s administration. Chinese leaders‟
attempts to improve China‟s governance capability mainly concerned reforms on the civil sector.139 Talking about the civil sector involves some peculiarities; there are no precise numbers available regarding the extent of public sector employees in China.
Estimations show that about half of the nearly 70 million employees are state-owned enterprise employees. The other half are employed by the general government, with most working for the sub-national government in public service units. Burns140 has estimated the spread of civil employees in China as follows:
138 ANTHONY B. L. Cheung, "The Politics of Administrative Reforms in Asia: Paradigms and Legacies, Paths and Diversities," Governance: An International Journal of Policy, Administration, and Institutions, Vol. 18, No. 2 (2005), 259.
139 John P. Burns, "Civil Service Reform in China," OECD Journal on Budgeting, Vol. 7, No. 1 (2007), 58.
140 Ibid., 60.
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As regards governance issues, we can maintain that most civil servants work in local government. They are employed in more than 2,800 counties.142 For instance, the central government‟s core ministries and state bodies are staffed with about 50,000 employees. Another 7.8 million work in the same function but on a sub-national level.
In other words, every central government official has 156 colleagues on a lower level.
The civil service system has been undergoing a reform process for more than 15 years.
The Chinese government has taken significant steps to reform it.143 A civil servant in China is still considered as occupying a prestigious position. The reforms have increased the requirements on the part of government employees.144 At the central level, officials‟ mindset has changed in several important respects. The recruiting process has increasingly aimed to select more competent people (the best and
143 OECD, "China in the Global Economy: Governance in China", 55.
144 Ibid., 61.
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above 80%.145 A further attempt was the introduction of a culture of performance with performance standards, evaluation of performance and performance linked to rewards.146 Another characteristic in this context is the increased awareness of the need to improve the efficiency and effectiveness of public resources.147 The number of public employees has dramatically declined in recent years, mainly as a result of the decline of state-owned-enterprises.148 Of the more than 60 million employees mentioned above, depending on public regulations, “only 4.98 million were formally classified as „civil servants‟ according to China‟s civil service regulations.”149 The resulting improved capacity of the public sector over the past 10 years has not only been achieved by public sector reforms but, in all likelihood, also been influenced by the general improvements in China‟s system of education.150 That said, any attempt to evaluate the performance of the Chinese government‟s reforms must begin with the difficult problem of assessing their results to date. The public sector is a good example. Yang151 has praised the introduction of job-rotations among cadres on the center‟s nomenclature and county magistrates as positive. He argues that the performance rose and corruption fell. Yang underlined the end-of-term audits for such officials, which “have become a crucial link in the enhancement of the cadre disciplinary regime.”152 The same institutional reform can be seen completely differently. Pei described the rotations of cadres as new exit options which reduce the time horizon for carrying out responsibilities. Self-interest and rent seeking became more salient. Pei‟s radically different view has led him to conclude that “the unintended effect of this institutional practice is to turn these officials, literally, into roving bandits.”153 The problem of different interpretations can be found within statistics. Pei sees the problem of overstaffing as a risk inherent in a steadily growing Chinese state with immense costs and the reason why China became a predatory state.
Pei stresses that the problem became worse during the 1990s. In particular, district and township governments employed significantly more employees than officially
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147 OECD, "China in the Global Economy: Governance in China", 40.
148 Ibid., 14.
149 Ibid., 57.
150 Ibid., 69.
151 Yang, "Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China", 181.
152 Ibid., 182.
153 Pei, "China's trapped transition the limits of developmental autocracy", 153.
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authorized. Underreporting and the lack of a standard classification of employees made it even worse. He compared the growth rates of state employees between 1953 to 1978 of 1.8% and 1979 to 1990 of 6.7% and the fact that the official figures for 2002 suggest double the number of employees as in 1978.154 The same statistics can be read and interpreted very differently. Yang155 believes that the Chinese state, at the local level, has recently been massively downsized. The plan to reduce 20% of its staff would firstly affect unauthorized staff. This different perception of the same phenomenon is not only caused by different observation periods (Pei focused on the long term and Yang more on recent events) but also by the difficulties in trying to measure the success of the reforms. Although there is no consensus how the reforms have affected the outcome of the governing process in general, there is some evidence that the reforms have had little effect on containing corruption and developing participative social structures but have, however, improved resource allocation efficiency.
Reforms toward transparency
Beside the difficulties in the public sector reform, there are many other issues affecting governance in China. One significant case in point is the practice of reserving posts in the government for CCP members. In this respect, China does not differ much from past practice in other communist countries. China undertook several reforms which have led to greater transparency. One of them was the publication of these reserved posts.156 This may be seen as minor improvement in transparency, but it shows that minor reforms can help remedy some weak points related to governance.
Reforms directed at transparency are oftentimes related to the issue of corruption.
China undertook several efforts to strengthen and consolidate its instruments, mostly repressive instruments, to curb corruption. The redefinition of several offenses and improving documentation concerning the nature of corruption is another such minor step, which is necessary to improve governance capacity. The OECD conclusion was as follows:
154 Ibid., 136.
155 Yang, "Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China", 47.
156 OECD, "China in the Global Economy: Governance in China", 63.
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A lot remains to be done to complete a national ethics infrastructure and ensure that it functions in an effective and consistent manner. In addition to adjusting existing mechanisms in the public service, key challenges include how to implement and coordinate the new policy instruments.157
The topic of corruption was not in the least related to the employees‟ salary with the benefits of corruption viewed as compensation. This led to a widespread tolerance of corruption, and makes it difficult to implement anti-corruption policies. The complicated CCP-State relationship affects the two dimensions which include the selection process of key-players in the process of policy development and implementation and the issues of corruption and its strong interdependencies.
Institutional reforms
The public sector and civil employees are only one aspect of how reforms have influenced governance in China. Another general problem is related to the relationship between state and society and the development and implementation of policies. The most urgent measures, according to Howell, are “the need for political reform; processes of institution-building such as strengthening state capacity and improving the legal framework; enhancing regime legitimacy through the sharing of power at lower levels and promoting participation and voice through the development of civil society; and managing social discontent.”158 Howell159 identifies the roots of China‟s governance challenges in political, institutional, and economic factors in ways similar to Pei‟s.160 The monopoly of power by the Chinese Communist Power is one of the key political determinants. The governance perspective reveals the imbalance between the incorporation of private entrepreneurs‟ interest and the expanded space for self-organization and expression.161 Although this process harmed the legitimacy and authority of the Communist Party, the CCP has still been able to maintain and increase its membership.162 The institutional problem has its roots in the very beginning of the PRC‟s institutions. The institutions are characterized, like other Leninist institutions, by vertical lines of command that result in insulated ministries
157 Ibid., 128.
158 Howell, "Governance Matters: Key Challenges and Emerging Tendencies", 3.
159 Howell, "Getting to the Roots: Governance Pathologies and Future Prospects".
160 Pei, "China's trapped transition the limits of developmental autocracy".
161 Howell, "Getting to the Roots: Governance Pathologies and Future Prospects", 228.
162 Ibid., 229.
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and agencies complemented by overlapping party and government structures. Mass organizations can be seen as extensions of the state and party with the primary mandate to promote their policies. The problems accumulate due to the lack of autonomous government institutions and an underdeveloped, constricted civil society.
Participation is limited and repressed.163 The economic factor has its roots in the fast economic development of China, which was not accompanied by the necessary reforms and thereby caused an imbalance within the society. Rural migrants, for instance, are poorly covered by the governance mechanism. On the other hand, while economic performance does not necessarily correspond with a better governance record, it may help the state to raise its capacity. Higher tax revenues can be an opportunity to fund existing policies. A comparison with other new post-socialist states puts the problems of corruption, fragmentation of authority, and unevenness of governance reforms, into perspective. Compared with them, the Chinese state is relatively strong and has a long history of state administration.164 In addition, China enjoys relative political stability.165
Nevertheless, the highly fragmented structures in China have resulted in further problems in the decision and consensus making process. The political system makes
“consensus-building central and the policy process protracted, disjointed, and incremental.”166 With respect to governance issues, three particularities need to be kept in mind:
1) Problems tend to get pushed up the system to where supra-bureaucratic bodies can coordinate their response, as they have sufficient leverage to bring together the different parties.
2) The fragmentation of authority means that at each stage of the decision-making process, strenuous efforts have to be made to maintain a basic consensus to move forward.
3) For a policy to be successful, it needs the concerted support of one or more top leaders. This fragmentation is accentuated because the party is no longer able
163 Ibid., 235.
164 Ibid., 235.
165 Ibid., 236.
166 Tony Saich, Governance and Politics of China Palgrave Houndmills, Basingstoke, Hampshire, 2001), 213.
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to perform the vital role of integrating the bureaucracy to improve both the formulation and the implementation of policy.167
Issues pertaining to governance and its outcome in China are not limited to a single, easily identifiable field, but involve much of China‟s political, economic and social landscape. Moreover, research on this topic is still limited: “after decades of research, we still do not really understand how things actually work in China.”168 Governance theories help to identify the important changes in its institutional framework and give with the evaluation of the outcome a tool to trace the changes. The following chapters will consider the evaluation of governance in China from quantitative viewpoint.