Central-local relations:Explaining trends through processes

Linda Chelan LiCity University of Hong Kong

HKPSA Conference 2009

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

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

(1) Party leadership system (2) State administrative system (NPC/demo

parties/judiciary, etc.)(3) Govt administrative system (adm mgt)(4) Military(5) Cadre personnel system(6) Central-local jurisdiction demarcation(7) Speeches of party/state leaders(8) others

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’.

Trends: 3 phases

• 1950s-1980s: cycles of centralization and decentralization

• 1980s-1990s: state and market, adjusting roles

• 2000s: demarcating responsibilities over public service provision

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

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

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

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?

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

Processes underlining the c-l trajectory

Central-LocalTrajectory

Centralization decentralization cycles

State (plan) Vs

market

Public services provision

Time

Externalinfluences

National integration state building

Developmental efficiency Political survival / career advancement

Processes

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

Developmental efficiency

• Starting point: a high degree of centralization in 2 dimensions is necessary for developmental efficiency

1. Between central and local levels of govt2. 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.

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?

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.

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?]

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