3. Governance in China
3.2. Measurement and evaluation of governance in China
3.2.1. Worldwide Governance Indicators (WGI)
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3.2.1. Worldwide Governance Indicators (WGI)
One way to measure governance is to rely on existing indicators and studies on topics related to governance issues such as corruption. The World Bank started back in the 1990s with the Worldwide Governance Indicators (WGI) project, a long-term research program that measures governance in three dimensions (selection/monitoring, efficiency and respect) with the six key indicators: „voice and accountability‟,
„political stability and absence of violence‟, „government effectiveness‟, „regulatory quality‟, „rule of law‟ and „control of corruption‟.169 What makes the WGI an interesting approach is that it is designed as a set of indicators of different aspects of governance. Each of the indicators takes account of different facets of governance theories. Another interesting point is the nature of the indicators. The World Bank uses primary not only data but also indicators. The resulting governance indicators are an aggregated index of about “33 data sources produced by 30 different organizations worldwide.”170 The result is an indicator encompassing more than 200 countries. The WGI is a useful tool to discover where the Chinese government is in its effort to reform the country and maintain its ability to sustain effective and efficient governance. In the publication accompanying the annual update of the WGI, Kaufmann and Kray (2007) begin by stating the main problem encountered in every effort to measure governance:
All governance indicators have limitations, which make them imperfect proxies for the concepts they are intended to measure. The presence of measurement error in all governance indicators that this implies is central to the rationale for constructing aggregate indicators.171
The WGI is composed of six different governance indicators and can be seen in three dimensions:
169 The World Bank, "Managing Development: The Governance Dimension", (
170 The International Bank for Reconstruction and The World Bank, A Decade of Measuring the Quality of Governance - Governance Matters 2007 (Washington: The World Bank, 2007), 1.
171 Kaufmann and Kraay, "Governance Indicators: Where Are We, Where Should We Be Going?," 18.
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country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free mediaSelection, accountability and replacement of authorities
2. Political Stability and Absence of Violence (PV) – measuring perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including domestic violence and terrorism
3. Government Effectiveness (GE) – measuring the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation and the credibility of the government's commitment to such policies
Efficiency of institutions,regulations, resourcemanagement
4. Regulatory Quality (RQ) – measuring the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development
5. Rule of Law (RL) – measuring the extent to which agents have confidence in, and abide by, the rules of society, and in particular the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence
Respect for institutions,laws and interactions among players in civil society, business, and politics
6. Control of Corruption (CC) – measuring the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as the "capture" of the state by elites and private interests
Since the World Bank supports countries with loans to improve their development efforts, it is not surprising that the method it uses to measure governance has a strong bias toward the concept of good governance. But as stated above, in order to evaluate governance it is a pragmatic approach.
The WGI itself consists of six different aggregated indicators of governance. Beside China, indicators are available for more than 200 countries. One of the advantages of the WGI is that the data is standardized, which allows for a comparison of the results
172 Kaufmann, Kraay and Mastruzzi, "Governance Matters VI: Governance Indicators for 1996-2006", 2-3.
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among these countries via a defensible method.173 Every indicator aggregates data from different studies and from different organizations. For instance, the control of corruption indicator uses 13 different data sources174.175 The following results are not absolute values. This means that a higher value does not mean that China has improved the particular field of governance, but a higher value does mean that compared with the other countries, it has improved its relative position.
Table 5: Governance indicators for China (1996, 2006 and 2008) - Country's percentile rank (0-100) 176
Source: The World Bank (2010): WBI Governance & Anti-Corruption177
The changes in the last twelve years regarding China are very interesting in terms of direction. Detailed results are offered in the appendix.
173 Shantayanan Devarajan, "Two Comments on "Governance Indicators: Where are we, where should we be going? by Daniel Kaufmann and Aart Kraay," International Bank for Reconstruction and Development, (2008), 31.
174 Business Environment Risk Intelligence Business Risk Service, Business Environment Risk Intelligence Financial Ethics Index Economist Intelligence Unit, Freedom House Countries at the Crossroads, Global Insight Business Conditions and Risk Indicators, Global Insight Global Risk Service, Rural Sector Performance Assessments, Institute for Management and Development World Competitiveness Yearbook, Merchant International Group Gray Area Dynamics, Political Economic Risk Consultancy Corruption in Asia Survey, Political Risk Services International Country Risk Guide, World Bank Country Policy and Institutional Assessments, World Economic Forum Global Competitiveness Report. Source: World Bank Institute, "Country Data Report for CHINA, 1996-2006", (
175 Kaufmann and Kraay, "Governance Indicators: Where Are We, Where Should We Be Going?," 18.
176 A value of 50 means that 50% of all countries in the sample at the corresponding indicator having a lower rank. For the full data, see Annex.
177 Kaufmann, Kraay and Mastruzzi, "Governance Matters VIII: Governance Indicators for 1996-2008", The World Bank, "WBI Governance & Anti-Corruption", (
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Voice and Accountability: The low percentile rank of 5.8 is not as astonishing as the low value may imply. Per definition, this indicator has a strong bias toward democratic values. The fact that 95% of the other countries in the surveys have a higher value tells us that China is definitely not a democracy, keeping in mind that the repressive capacity is essential to a “Leninist political machinery.”178 The low values are without doubt very low, but a closer look at the data may lead us to reason slightly differently. The data for 2000 for instance has a value of 12.5. In addition, considering the standard error of the sample the values need to be slightly adjusted. What is inescapable is that governance (not only in terms of „good governance‟) is China‟s weak point. It is important to note is that the low values change dramatically if we compare China with the regional average. China‟s relative rank jumps from the 5.8 to the 49.9 percentile rank in 2008.
Table 6: WGI (China): Voice and Accountability - country's percentile rank (0-100)
Source: The World Bank (2010): WBI Governance & Anti-Corruption.
Political Stability: The data are more or less stable over the time period; values vary from a high of 43.3 (1998) to a low of 32.2 (2006) and 33.5 (2008). The percentile rank of 59.4 (2008) reflects Chinas best position in the regional average.
178 Steve Tsang, "Consultative Leninism: China's new political framework," Journal of Contemporary China, Vol. 18, No. 62 (2009), 878.
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Table 7: WGI (China): Political Stability - country's percentile rank (0-100)
Source: The World Bank (2010): WBI Governance & Anti-Corruption.
Government Effectiveness: This indicator fluctuates over time. The value dropped between 1996 and 1998 almost 20 points from 64.5 to 46 points. In the following years, China‟s rank continually improved and by 2008 it reached more or less its starting value. Although we lack an explanation for the massive drop, we may conclude that over time China‟s record on government effectiveness massively improved at least for the last ten years.
33.5 32.2
35.6 38.5
41.3 34.1
39.4 41.3
43.3 38
0 10 20 30 40 50
2008 2007 2006 2005 2004 2003 2002 2000 1998 1996
Political Stability
Percentile Rank (0-100)
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Table 8: WGI (China): Government Effectiveness - country's percentile rank (0-100)
Source: The World Bank (2010): WBI Governance & Anti-Corruption.
Regulatory Quality: In terms of regulatory quality, the data indicate an interesting development. China started from a relatively good level, reached a low point of 33.2 in 2002, and improved its quality in 2008 continuously to reach 46.4. In the regional comparison, the value of 42.1 points is the lowest of the indicators.
Table 9: WGI (China): Regulatory Quality - country's percentile rank (0-100)
Source: The World Bank (2010): WBI Governance & Anti-Corruption.
63.5
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Rule of Law: The values indicate that in terms of law enforcement, China was stable and its government was able to guarantee a stable environment for the enforcement of the law.
Table 10: WGI (China): Rule of Law - country's percentile rank (0-100)
Source: The World Bank (2010): WBI Governance & Anti-Corruption.
Control of Corruption: Maybe the most significant change is the decline in the control of corruption, with a low point of 32.5 in 2005. But one has to keep in mind that the values may underestimate China‟s effective control of corruption. As a society begins to talk more openly about crimes, it is likely that the rate of these crimes rises because the society has become more aware of it. That means that even if corruption remains at the same level, because the topic has become more public, the value of „controlling corruption‟ can be lowered. In the case of China‟s control of corruption, it is evident that in recent years corruption in China has emerged as one of the „hot‟ topics. In the last surveys, the indicator rose slightly to 41.1 (2008).
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Table 11: WGI (China): Control of Corruption - country's percentile rank (0-100)
Source: The World Bank (2010): WBI Governance & Anti-Corruption.
The data from the WGI allows one to compare the governance indicators with other countries with regional proximity and a similar income level.
Table 12: Governance Indicators for China in comparison (2008) - country's percentile rank (0-100) 179
Source: The World Bank (2010): WBI Governance & Anti-Corruption
179 A value of 50 means that 50% of all countries in the sample at the corresponding indicator having a lower rank.
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Regional Average: The most important difference in the global and regional comparison can be found in the index of voice and accountability. China jumped from a level of 5.8 to 49.9 percentile rank. That means that China‟s performance in Asia is about average. Half of its neighboring countries‟ records are even worse than China‟s.
Furthermore, except for government effectiveness, every indicator is much better. The perception of an unfavorable governance performance in China is not really justified when the focus is on Asia.
Income Category Average180: If we compare China to countries with a similar income average, the results are leveled similarly to the regional average. The levels are between a very small range of a percentile rank of 37.8 and 39. It is important to mention that the value of the voice and accountability is much higher in a global comparison. The difference between a global and an income category average is the highest of all variables.
Selection of Countries: India has some similarities to China. Like China, it has an immense population and a booming economy rising from a relatively low level; the biggest differences are its political system and history as a colony. It is not surprising that voice and accountability are much higher in India (58.7 compared to 5.8) than in China. But its political stability is considered much lower than in China. The other values differ only slightly. Russia, a former socialist state with a much more highly developed economy, has a higher value only in terms of voice and accountability. But with a value of only 21.6, it remains at a relatively low level. Perhaps surprisingly, China‟s rule of law value is more than double that of Russia‟s. And finally in Italy, a country from the developed world and a member of the European Union, all values are much higher than in China, as might be expected from a highly developed country and a founding member of the European Union.
My reasons for using the WGI to elucidate China‟s governance record are twofold.
On the one hand, the WGI shows clearly where China has it strengths in terms of (good) governance. It has a relatively good governance effectiveness record, including public services and also policy implementation. Its biggest governance deficit is
180 The regional average (East Asia) includes the following countries: American Samoa, Brunei, Cambodia, China, Cook Islands, Fiji, Guam, Hong Kong, Indonesia, Kiribati, Laos, Macao, Malaysia, Marshall Islands, Micronesia, Mongolia, Myanmar, Nauru, New Caledonia, Niue, North Korea, Palau, Papua New Guinea, Philippines, Reunion, Samoa, Singapore, Solomon Islands, South Korea, Taiwan, Thailand, Timor-Leste, Tonga, Tuvalu, Vanuatu, Vietnam
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undoubtedly related to democratic issues. The WGI can help to “identify the nature of the „governance problem‟ in a country.”181 On the other hand, even with the ranking of the WGI, the underlying reasons remain unclear. Devarajan182 discusses the limitations of measuring governance with the example of Bangladesh. Although the WGI indicates a poor governance capacity, the country was able to improve the Bangladeshis‟ social conditions much more than countries with better indexes. He uses this example to show that “governance indicators such as the WGI do not capture the multifaceted ways in which governance affects development in a particular country.”183
181 Devarajan, "Two Comments on "Governance Indicators: Where are we, where should we be going?
by Daniel Kaufmann and Aart Kraay," 32.
182 Ibid.
183 Ibid., 33.
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