Institutions of the Party-State

1. Institutions of the Party-State • Major debate about the capacity of the Chinese state • Where does Pei Minxin stand? • Alternative argument: Yang Dali +

2. Institutions of the Party-State • Major debate about the capacity of the Chinese state • Where does Pei Minxin stand? • Alternative argument: Yang Dali* • China has made significant institutional reforms to improve governance • Critique: strong on policy; weak on implementation *Remaking the Chinese Leviathan • Now let’s look at some empirical evidence to assess the relative merits of each side in the debate.

3. Institutions of the party-state • Fiscal Policy Background:1994 tax and fiscal reforms • Established National Tax Service (collects central and shared taxes under Tax Sharing System) historic! • Budgetary revenue as share of GDP • 1994 10.8 percent • 2005 17.3 percent • Centralized control over fiscal revenue • Center’s share of budgetary revenue • 1993 22 percent • Since 1994 > 50 percent • Continued decentralized expenditure responsibility  Revenue squeeze on local governments

4. Central + provincial shares of total revenue and expenditures (%) 1993 2003 Revenue 35 66 (+31) Expenditure 45 49 (+ 4) Source: Wong 2006

5. Fiscal Policy Background • Further centralized control over fiscal revenue • 2002 reassigned corporate and individual income taxes from local to shared category with center taking 60 percent • Abolished agriculture taxes  burdensome on low-income farmers • After 2002 • No Ag Special Products Tax • No Slaughter Tax • After 2004 • No Agriculture Tax

6. Fiscal Policy Background 6 • Why is central fiscal capacity important? • Is Dali Yang’s optimism justified? p.44

7. Institutions of the party-state • Implications of fiscal policy: fiscal gap • 40-45 percent covered by local and shared taxes • 40-50 percent of fiscal needs covered by intergovernmental fiscal transfers • 5-10 percent of fiscal needs unmet (Wang Yongjun estimate 2006). • High degree of dependence on fiscal transfers • Central gov. sends resources to poorer areas • Reliance on off-budget funds and local gov. debt • Exacerbated by political pressures • Tenure, promotion criteria

8. Institutions of the party-state • Using law to govern (Dali Yang’s argument) • Under Mao, used ideology more than law • During reform era, new role for law • Bring regularity to government operations • Indicate policy direction • Supervise/regulate functioning of state agencies • Key institutions for ruling by law • People’s Congresses • Courts

9. Institutions of the party-state • Hierarchy of authoritative documents • Enactments with the formal status of law —in the sense of being enforceable by courts • Constitution xianfa宪法 • National People’s Congress & Standing Committee  statutes/laws falü法律 • State Council  administrative regulations xingzheng fagui行政法规 • Provincial-level people’s congresses  local regulations difangxing fagui 地方性法规

10. Institutions of the party-state • Problems with the hierarchy of authoritative doc’s • No good system for authoritatively resolving conflicts between different rules • Technically, • Constitution • Law on Legislation • National People’s Congress Standing Committee • May review and invalidate legislation passed by lower-level bodies • NPC not known to have overturned a single administrative or local regulation (Chen 2004:114)

11. Institutions of the party-state • Problems with the hierarchy of authoritative doc’s • Courts • Not allowed to play role of resolving conflicts of law/rules • Not allowed to invalidate legislation • Can only either appeal to higher legislative body or apply lower-level rule • Regulations passed by lower-level governments often trump superior regulations • In practice, local governments dominate • Administrative Litigation Law • In principle, citizens can sue in court to force governments to follow only laws already on the books  land ex.

12. Institutions of the party-state • Courts beholden to local party-state • No tenure for judges • Local government controls funding • Local party committee and party political-legal committee (政法委员会) • Have influence over • Court personnel (technically People’s Congress authority over personnel) • Acceptance of cases • Handling of cases

13. Chen Guangcheng, “blind lawyer” • Sought to enforce “2002 Population and Family Planning Law” • “Family planning shall be practiced chiefly by means of contraception” Article 19 • “informed choice” • Led lawsuit by rural residents of Linyi against local government practices • Sterilization • Forced abortion

14. Chen Guangcheng, “blind lawyer” • Beijing University Law Professor, Zhan Zhongle, who helped draft the “2002 Population and Family Planning Law” re: Chen’s challenge • “By suing the government, Linyi peasants are merely asserting their legal rights. Whether the courts accept the case, and how they handle it, will be a test of China’s Justice system and of whether China can govern according to law.” (Source: Washington Post, 8/27/05)

15. Institutions of the party-state • Local People’s Congresses • In principle, new supervisory role over local governments (Dali Yang, p. 49) • Must approve work report of government • Must appraise local official’s performance • Must approve local government budget • In practice, very limited • Lack authority to actually punish local governments • Only party performance appraisal matters • Party group steers People’s Congress Standing Committee • PC lacks adequate data or staff to meaningfully supervise budget

16. Institutions of the party-state • Local People’s Congresses • Examples of real attempts at supervision (reflects what PC deputies hear from local citizens) • Hubei, Shiyan PC vetoed work report of government to highlight misappropriation of poverty relief funds • Hubei, Wuhan PC vetoed work report of government to highlight poor implementation of employment re-training project for laid-off workers • What really happens • Governments ignore • PC signal sent to higher level party apparatus—it then can choose whether to take action

17. Institutions of the party-state • Questions for discussion: • To whom are local cadres accountable? • What aspects of the system promote effective policy implementation? • What are the structural obstacles to effective governance?

18. Questions for discussion Why has the passage of significant environmental legislation and the building of an extensive environmental regulatory framework not led to improved policy implementation or reduced environmental degradation?