FROM LOCAL INNOVATIONS TO NATIONAL REFORM
By Ann Florini Hairong Lai Yeling Tan
BROOKINGS INSTITUTION PRESS
Copyright © 2012 THE BROOKINGS INSTITUTION
All right reserved.
Chapter One China at a Crossroads
SRL Leather was upsetting its neighbors. Leather processing is not the cleanest business, and SRL Leather, like tanneries everywhere, was prone to emitting noxious odors and waste gases. The problem got so bad that exasperated residents filed multiple complaints with the local government in the early 2000s. The town's Environmental Protection Bureau responded by listing the company as a pollution standards violator from 2004 to 2009 and ordering the company to rectify the problem. SRL Leather undertook some measures to mitigate its pollution, but they were not sufficient and were not communicated to the residents—and so the complaints and unhappiness continued. In April 2009 an environmental nongovernmental organization (NGO), Friends of Nature, helped a resident to file a lawsuit demanding that the company disclose its environmental data, as required under national environmental disclosure guidelines. When SRL Leather took no action, a group of environmental NGOs called the Green Choice Alliance sent another letter again requesting that the company disclose its emissions. And when the company again failed to respond, two of the NGOs in the alliance took their complaints to the CEO of the international shoe company Timberland, one of SRL Leather's major clients.
Under this combined onslaught of citizen, government, NGO, and commercial pressure to stop its polluting activities, SRL Leather finally acted. In July 2009 the company disclosed its emissions records. Two months later, the CEO sat down with residents, representatives from Timberland, and the local media to listen to community complaints, and organized an open house for residents to visit the factory. A community representative was appointed to engage with the company regarding future environmental issues, and a direct hotline was established for pollution complaints. In addition, SRL Leather started publishing daily data on its wastewater discharge and was audited by an environmental NGO to confirm that it had indeed taken corrective actions to address its polluting practices.
To North American and European readers, for whom NGOs and lawsuits are par for the course, all this sounds quite ordinary. But these events took place in Dachang, a township in the sprawling, bustling metropolis of Shanghai. China is seen by most Westerners as a very different kind of country, ruled by a Communist Party in power for more than sixty years, not a place where lawsuits and citizens groups hold sway.
Headlines about China usually tell three sorts of stories. One set focuses on China's roaring economic success over the past thirty years—and indeed, the transformation of cities such as Shanghai and Shenzhen, China's new economic clout on the world stage in forums from the International Monetary Fund (IMF) to the G-20, and the explosion of Chinese-made products in the world's marketplaces are visible for all to see. A second set of stories peers inside the country to catalog the social and environmental costs this sweeping economic transformation entails, from the tens of thousands of protests and demonstrations every year to the multiple suicides at the Foxconn iPhone factory in 2010 to the notorious pollution that had China ranked at number 121 out of 163 countries in a recent assessment of environmental performance. Finally, headlines on the governance front lead abundant accounts of arbitrary arrests, censorship, and covering up of widespread official misbehavior, seeming to show a country lacking any effective political channels for feedback, participation, or dissent. Overall, the stories create the widespread impression that while the face of China has changed since Deng Xiaoping's opening up and reform policy of 1978, the political wiring within the system remains largely untouched.
Tales like that of SRL Leather, however, reveal a more deeply buried but extraordinarily important story: the rapid evolution, despite the persistence of the authoritarian one-party state, of multiple channels through which citizens can now—sometimes—express grievances and seek to solve problems. Dachang's residents started by filing complaints directly with the government, and then brought in a network of environmental NGOs. These NGOs were able to use new transparency regulations and an emerging legal system to pressure SRL Leather to improve its practices, and also leverage the international supply chain to raise the stakes on the polluting company. In the end, SRL Leather's problems were resolved not just by using formal policy rules, but through community-based discussion, and by giving citizens a stake in the management of their environment.
This story opens a window to the multitude of complex political developments that have taken place at China's subnational level, beneath the more visible transformations. The opening up and reform policy that Deng Xiaoping launched in 1978 did not simply unleash market forces on the planned economy. It also reconfigured the state's involvement in economic affairs, creating space not just for private entrepreneurship but also for subnational (or local) governments to try out different reforms.
The initial stages of reform led to what has been termed "fragmented authoritarianism"—authority divided both horizontally across different locations and vertically across different agencies and administrative levels. In the ensuing years, the party-state apparatus has also gradually altered the nature of its involvement in the social sphere, allowing for more personal choices and, over time, greater scope for citizens to voice their concerns, participate in public issues, and form associations. The state structure itself has become far more decentralized, allowing for local government initiative and transforming the dynamic between central authority in Beijing and local provincial and subprovincial levels of party and government. And, crucially for a Leninist Communist system where power resides with the Communist Party far more than it does with the formal institutions of government, changes have also taken place within the party system, with the gradual emergence of some mechanisms of checks and balances, as well as restraints on the arbitrary use of power through a slowly developing system of the rule of law.
But this is not a straightforward, linear evolution toward more accountable and effective governance. The evolution of China's governing system is a story buried in layers of overlapping old and new structures, uneven implementation of intended reforms and regulations, and pushback by vested interests. On the one hand, the Chinese Communist Party (CCP) has placed increasingly strong restraints on its power in economic and social affairs and in many ways is moving incrementally toward the rule of law. On the other hand, the party's number one priority is to hold on to its monopoly of political power.
Such complexity makes it possible for observers to argue that an extraordinary range of political futures is possible for China: the triumph of authoritarian-style capitalism; the coming collapse of a nation unable to hold together in the face of rising tensions and contradictions; prolonged stagnation as a result of partial reform; or democratization as a growing middle class gains power and pushes for more rights. Where, in fact, is China heading? What kind of country is China becoming?
Through the Lens of Local Experiments
This book tries to make sense of the multitude of political changes taking place across China. In contrast to other books that focus on the party and/or elite politics, our approach is to delve deeply into China's experimental approach to change at the local level—in townships, counties, and provinces. By taking this ground-level view, we aim to uncover clues about what sorts of foundations are being laid that could support future political transformations.
Local experiments are the hallmark of how China has undertaken all sorts of reforms since the end of the Mao era in the late 1970s. China's massive transformations over the past three decades are the result of multi-layered and incremental change rather than top-down shock therapy-style reform. The Chinese approach is less Big Bang and more "learning-by-doing," an incrementalist spirit often captured as "crossing the river by feeling the stones." This approach is possible both because the center has actively encouraged localities to experiment with different ways of development, and because of the decentralization of fiscal and administrative functions that took place in the late 1970s and early 1980s.
Decentralization brought about sweeping transfers of authority from the center to lower levels across a range of issues. Decisions over social security, health care, education, environmental protection, city planning, and so forth increasingly became the domain of local governments, by default giving local authorities a wider scope in promoting change. While overall policy objectives continued to be set by the center, localities were de facto given greater leeway to explore the specific approaches and possible instruments through which these central objectives could be met.
The benefits of this experimentalist approach are clear: Given the size of the country and the relatively underdeveloped nature of its governing institutions, the repercussions of implementing a policy and getting it wrong are massive, and not easy to correct. The socioeconomic variations across the country also demand flexibility rather than a one-size-fits-all approach. The decentralized, experimentalist strategy allows the center to set an overall objective, but also allows localities to test ideas through pilot projects in different places, to gain experience from the ground up. The pilots that end up being nationalized are first endorsed by central authorities, and their adoption is then promoted through official announcements and press conferences, as well as visits and exchanges with other regions. This style of reform has been called "experimentation under hierarchy," requiring a tricky balance between control and freedom.
In practice, there is great variation in the degree to which successful experiments are the result of national orchestration, which ones end up being scaled nationally by design or simply by default, and how the national policies differ from their local models. In the early 1990s, for example, Jiangsu province started privatizing township and village enterprises (TVEs), while Shandong and Sichuan provinces experimented with the privatization of state-owned enterprises. These successful local practices were eventually endorsed by the center and spread nationwide, with tremendous impact on the trajectory of China's economic growth. However, this development was more a result of central authorities responding positively to local innovations that the former had had no role in fostering, rather than part of a larger economic design.
Continued economic growth over the past three decades has brought about increasingly complex governance challenges, from inequality and growing demands for social insurance to pollution and corruption, creating a demand for broader and stronger institutions. In response, the range of policy innovations being pioneered at local levels has expanded beyond the economic sphere, into administrative, social, and political realms. These experiments are the subject of this book. Through a series of case studies and broader analyses, we investigate how local governments across China, from provincial down to township levels, are actively experimenting with reforms to guide and adapt to, rather than resist, the broader forces of change emerging across China.
These experiments reflect a growing range of approaches to local governance that defy common assumptions about authoritarian rule. Some experiments, such as those in streamlining administrative processes, are aimed at boosting the bureaucracy's efficiency and capacity. Others, such as those dealing with social organizations and NGOs, explore ways of harnessing nonstate actors to deal with social issues and complement weaknesses in state-led approaches. Still others are trials in rewiring the innards of the party, by introducing semi-competitive elections from the township level all the way to the very top of the country's power structure. Finally, the government has experimented with using transparency as a governance tool to curb corruption and improve accountability through the proactive release of information, as well as by allowing citizens the ability to request information.
We explore the motivations for such experiments and their effects, considering how these innovations in local governance may spread, and what the implications of those experiments would be if they did spread. Thus far, the dynamic between local experimentation and central response has been different with each of type of innovation. The reform process has been spontaneous and uneven, with ideas and initiatives from provinces and cities sometimes cohering and sometimes clashing with central government interests.
The key issue we explore in this book is whether these efforts will become entrenched in the ruling regime (even while the nature of its authoritarian rule continues to evolve) or create space for significant political reform. We recognize that there is no immediate prospect for democratic rule in China, in the sense of freely contested multi-party elections backed by fully realized freedoms of press, assembly, and voice. Fundamental protection of citizen rights remains weak, and the state retains control over many aspects of society that it fears could lead to instability. These include intense media policing and control and the explicit use of force to dissipate debate or shut down dissent over a range of issues, from human rights to corruption scandals.
Nonetheless, looking beneath the surface, it is still possible to find important and interesting trends with regard to information flows, participation mechanisms, and accountability mechanisms. Those trends raise questions about what form a more democratic regime in China might take—clearly any democratic structures would necessarily grow out of China's unique historical and sociocultural context. And as the brief description of the experiments already under way makes clear, the very nature of CCP rule and the foundations of the authoritarian regime are shifting and evolving. This means that even if the CCP succeeds in entrenching its rule in the long term, it is likely to do so in ways that challenge conventional understandings of what constitutes authoritarianism. Rather than try to guess at the end state, we are more interested in whether China is developing the necessary institutions and capacity for political reform in the direction of greater voice and accountability.
The repercussions of China's gradualist approach to reform are far from straightforward. The Chinese party-state is actively attempting to address the factors that could lead to collapse, stagnation, or challenges to the party's authority, including via quite deliberate experiments in local governance innovation. We believe that it is too early to know how the extraordinary complex of factors described above may come together. Instead, what is clear is that as the party tries to walk the tightrope to reform and retain its legitimacy while maintaining its monopoly over political power, the range of actors being empowered to act and influence decisions is multiplying, and the competition between these various interests is heating up. Nothing like modern China has ever existed before. The rapidity of sustained economic growth under conditions of authoritarianism, the sheer scale of everything to do with China, and the deliberate (if not always controlled) experimentalist approach to governance all represent conditions that test the limits of social science.
The Massive Challenge of Governing China
A critical question is whether this incremental and experimental approach can sustain China in the face of the country's extraordinarily dire challenges, which would strain the capacity of the best of governments. Sustaining rapid economic development alone requires adjustments from urbanization policies to building more advanced capital markets and reforming state-owned enterprises, as well as harmonizing domestic rules with those of the global trading and financial regimes. All this must be done in the face of daunting social disruptions that the state is struggling to keep up with, from widening income disparities across and within regions, to the rapidly aging population structure, to multiplying health problems. China's economic gains have also come at the cost of catastrophic environmental degradation. Pollution problems are straining not just the long-term sustainability of China's development, but also social stability, as environmental issues increasingly become a daily burden in people's lives.
Excerpted from CHINA EXPERIMENTS by Ann Florini Hairong Lai Yeling Tan Copyright © 2012 by THE BROOKINGS INSTITUTION. Excerpted by permission of BROOKINGS INSTITUTION PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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