Changes in Economy, CentralLocal Relations, and the Emergence of Civil Society in China

1
Changes in Economy, Central-Local Relations, and
the Emergence of Civil Society in China

• Hairong Lai
• Deputy Director and Senior Fellow
• China Center for Comparative Politics and
  Economics
• CCTB, CC of CCP

2
Overview 30 years of moving away from
totalitarianism

• Changed and Changing
• Smaller State and Bigger Society
• Power distribution within the shrinking state
  power decentralization or devolution
• Emerging Check and Balance
• Institutionalization of peaceful power transfer
• Reconfiguration of the Ideology goals,
  perceptions, strategies, instruments
• Changed citizenry

3
Changes in Economy Marketization and
Privatization

• Absolute withdrawal of the state in intervening
  the economy
• Freeing pricing mid-1980s (dual track pricing),
  mid-1990s (converging to the market)
• Canceling production and marketing plans for SOEs
• Privatizing SOEs and TVEs 1992 on, Upward
  spreading (small to large scale, from county to
  provincial levels, and partial privatization of
  centrally subordinated listed)
• Relative withdrawal Mushrooming of Privately
  Owned Enterprises, Foreign Direct Investments,
  Joint Ventures

4
Accelerated Privatization changing ownership
structure of GDP
5
Remaining State-Owned Industries

• Oil, Railway, Aviation, Telecommunication,
  Electricity (except for hydropower in a few
  provinces)
• Banking (emerging competition) little
  accessibility to small- medium- scale privately
  owned enterprises
• Education, Health Care (emerging competition),
  Traditional Media (weakly emerging competition)

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Increasing Liberty in the Society

• No longer controlled by the state migration,
  education (study abroad), employment, housing,
  transportation, and consumptions
• Emergence and expansion of private sphere
  diversified values, life style, moral codes.

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The Chronologically Changing Battle Fields for
the Interaction between the State and the Society
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Emerging Civil Society

• Civil society organizations 3 millions (gt
  300,000 registered and gt 2.6 millions
  unregistered) (Yu Keping, 2007)
• Two examples A Village Education Charity Fund, A
  Car Club for Tourism
• The citizen resourceful, independent, and
  Internet as a communication platform (1995-2005)
• The State struggling with cooperative/subversive
  perception
• Still very weak, but developing fast
• Unexpected show-up 2008 Sichuan earth quake
  alleviation efforts

9
Political System simplified

• Five levels Center, Provinces (34-3),
  Prefectures (330), Counties (2,600), and
  Townships (38,000)
• Loosely connected to the party-state villages
  (620,000)
• Unitary system directed from top down

10
Decentralization within the Shrunk State Power

• Fiscal federalism from bargaining to
  institutionalization (1994)
• Economic activities administration registration,
  investment projects
• Social life administration social security,
  health care, education, passport granting
• Decision making city planning, public utilities,
  infrastructure

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Increasing Role of Localities in Promoting Reform

• Initiatives taken by localities without central
  plans
• 1)privatization (1992)
• 2)semi-competitive election (mid-1990s)
• Pattern of reform in 1980s (e.g. Special Economic
  Zones) centrally driven
• Pattern of reform since 1990s central
  initiatives local initiatives
• Motivation for local initiatives localitys lack
  of resources to hold responsibility competition
  among localities (private sector promotion, FDI
  attraction).

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Path Dependence of Relatively Decentralized
Command Economy Maoist Version of Stalinization

• 1949-1957 centralization
• 1958-1960 (Great Leap Forward) decentralization
• 1961-1965 centralization
• 1966-1978 (Cultural Revolution) decentralization
  (irreversible)
• 1978-1993 continued decentralization
• 1994 on partial recentralization of fiscal
  revenues, expenditure responsibility and
  accompanying decision-making power further
  decentralized

13
Institutionalization of Power Holding and Transfer

• Before 1990s no terms, no limitations
• After 1997 term of office5 years Limited
  terms2
• Peaceful transfer of highest power
• 1) 1997 (unprecedented in socialist China),
• 2) 2002 (unprecedented in 2000 years of China),
• 3) 2007 (consolidation)
• Real Existing socialist states (party-states)
  either died at office (life-long) or demoted
  through harsh power struggle

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The Magnitude of Peaceful Power Transfer
(generational) since 1997
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Conditions for the Institutionalization of Power
Holding and Transfer

• Elite lessons from Cultural Revolution and early
  disasters
• Critical Actor Deng Xiaoping
• Societal Condition 1)separation of politics and
  economy, 2)separation of state and society
• Power change and the society limited influence
  to each other
• Elite no need to invoke and mobilize the
  society.
• Society little interest to engage the power
  transfer.

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Challenges in China mixture of conflicting
elements

• Inconsistency among norms
• Inconsistency between norms and actual life
• Inconsistency among levels, regions, social
  stratus, different elite
• Biggest Challenge managing the increasing
  participation in political process

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Looking Ahead

• No change was linear and will never be
• Changing values among different generations
• Changing state power and structure
• Strengthening civil society
• Deeper integration into the world community
• Time Matters

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Thanks!

• hairong_lai_at_hotmail.com