Central-local relations: Explaining trends through processes

1. Central-local relations:Explaining trends through processes Linda Chelan Li City University of Hong Kong HKPSA Conference 2009

2. Outline • Trends of developments in C-L relations over 60 years: main features and characteristics • Changing trajectories as outcome of a confluence of co-evolving processes; with pluralist actors, contingencies, and unintended consequences

3. Persistent salience A chronology of major events in pol system changes of PRC: c-l relations as one of the 8 level-1 categories in the Index • Party leadership system • State administrative system (NPC/demo parties/judiciary, etc.) • Govt administrative system (adm mgt) • Military • Cadre personnel system • Central-local jurisdiction demarcation • Speeches of party/state leaders • others

4. Persistent salience • Liu (2008) 23 counts of calls for adjustment in c-l relations are found in govt reports submitted to NPC during 30 years of 1978-2007. • 2008 ‘mega-ministry’ administrative reform: ‘perfecting a (adm) system in which the fiscal capacity and expenditure responsibilities of govts of various tiers are aligned’.

5. Trends: 3 phases • 1950s-1980s: cycles of centralization and decentralization • 1980s-1990s: state and market, adjusting roles • 2000s: demarcating responsibilities over public service provision

6. Centralization-Decentralization • Type 1 (economic) decentralization: from govt (central branch agencies) to enterprises • Type 2 (administrative) decentralization: from central branch agencies to local govts • Predominance of Type 2 after 1957 • Cycles of decentralization and recentralizations: diminishing returns of repeated recentralizations

7. Adm decentralization in 1980s • Fiscal federalism or federalism, Chinese style • Domestic debates over the relative merits of adm vs econ decentralization in the context of reform in 1980s: differing assessments in literature

8. State-market (1980s-90s) • Post-Mao (Dengist) economic reform focused on ‘freeing up’ the enterprises from govt control and development of the market • Long gestation: ‘socialist market economy’ coined and legitimated only in 1993 • Much expansion of the market during the1980s was NOT attributable to a coherent national policy to promote type 1 decentralization, but was an unintended consequence of administrative decentralization which was still the prevalent form of decentralization

9. Adm and econ decentralization: interactions • local govts with enhanced delegated powers were keen on fostering the market in order to protect itself from its adm superiors. Guangdong and Zhejiang govts in the 1980s • Role of adm decentralization in a market-oriented reform process? • The transition of c-l politics from one over resource allocation to one over jurisdiction – power to regulate • 1994 fiscal (tax-sharing) reform: old or new c-l politics?

10. Responsibility over public service provision (2000s-) • Market-oriented reform demands a redefinition of state roles – provider of public goods [market failure] • 1998 ‘public finance’ discourse • Increased attention on filling the services deficit: financing; management; regulation • Which level of govt to be responsible for each and every specific service

11. Processes Central-Local Trajectory External influences Centralization decentralization cycles Time Developmental efficiency Political survival / career advancement State (plan) Vs market National integration state building Public services provision Processes underlining the c-l trajectory

12. National integration and state-building • A recurrent theme from early 1950s • 1950s: structural changes [establishment and abolition of the Regional Govts 1949-1954]; ferocious purges of individual ‘localist’ leaders • 1980s: economic ‘fiefdoms’ rekindled the fear for national disintegration and threatened central authority • 1990s onwards: state building as new focus – e.g. fiscal management rationalization reforms • Huang (2008): 1990s reforms as recentralization

13. Developmental efficiency • Starting point: a high degree of centralization in 2 dimensions is necessary for developmental efficiency • Between central and local levels of govt • Between state and the society • A perceived need to adjust the centralization balance at times: ideological constraints against decentralization of state to society before economic reform resulted in a reliance on Type 2 decentralization for invigorating a second source of enthusiasm.

14. Political survival, career advancement • Landry (2008): decentralized authoritarianism: central govt able to maintain an upper hand over localities thro’ powers to hire, promote, and fire. • Zhou (2008): local authorities led into tournaments by the centre who monopolized the power to define objectives and lay out incentives and penalties • How useful are these beyond a rebuttal of the disintegration/popular participation thesis? • Nomenclatura control as last resort or a major instrument of central control to solicit local compliance?

15. The c-l puzzle in the eyes of the Chinese players… • Within China there is high consensus over the superiority of central power over local authorities. • The burning puzzle in China is how to adjust the central-local power balance and division of duties to best serve the needs of state building, efficiency, etc… • A question that cannot be answered by the emphasis on central personnel powers.

16. External Influences • Soviet influences (type 1 and 2 decentralizations) • Western influences since 1980s -- generalized adoption or selective (active) learning? - how to identify existence of learning? [Does assemblance nec imply learning? Does lack of it nec imply absence of learning?]

17. Thoughts: What happened, and future trends • Cyclical movements still operating? 1990s recentralizing, 1980s decentralizing? • shifting grounds of adm decentralization, due to changes in state-market relations since 1980s • Indicator: increased specificity in the adm decentralization discourse since late 1990s; local lobbying for institutionalized powers rather than a larger share of resource allocation • Domestic-external processes: close up look into learning processes required