Jean C. Oi

Fiscal Reform and the Economic Foundations of Local State Corporatism in China

In the 1980s fiscal reform in China provided localities with strong incentives and a heightened capacity to pursue industrial growth. As a result, local governments have responded vigorously to economic reform, managing rural collective-owned enterprises as diversified corporations, with local officials performing the role of a board of directors. This article analyzes the incentives that have led to the development of this form of local state corporatism and rapid rural industrialization, and it describes the ways in which local governments coordinate economic activity and reallocate revenues from industrial production. These developments are important for two reasons: they show that local government involvement in the economy does not necessarily decline with the expansion of market coordination; and they offer a successful model of reform that serves as a counterpoint to privatization proposals.

The Role of the Local State in China's Transitional Economy

All states have a role in development, but this varies widely. The spectrum is defined at one end by the laissez faire minimalist state whose role is limited to ensuring a stable and secure environment so that contracts, property rights and other institutions of the market can be honoured. At the opposite end are the centrally planned Leninist states that directly replace the market with bureaucratic allocation and planning. Between these two extremes are the capitalist developmental states of Japan and the East Asian Newly Industrializing Countries (NICs) that are neither Communist nor laissez faire , but exhibit characteristics of both. The state plays an activist, rather than a minimalist, role; there is planning, but it is geared toward creating maximum competitive and comparative advantage for manufacturers within a market economy.

Property Rights and Economic Reform in China

1. Property rights in the Chinese economy: contours of the process of change Andrew G. Walder and Jean C. Oi Part I. Enterprise Ownership in Village Communities: 2. Collective enterprise and property rights in a Sichuan village: the rise and decline of managerial corporatism Gregory A. Ruf 3. Local institutions and the transformation of property rights in Southern Fujian Chih-Jou Jay Chen 4. The role of local government in creating property rights: a comparison of two townships in Northwest Yunnan Xiaolin Guo 5. The evolution of property rights in village enterprises: the case of Wuxi Kung James Kai-Sing Kung Part II. Rural Shareholding Reforms and Their Impact: 6. Shareholding cooperatives: a property rights analysis Eduard B. Vermeer 7. Local elites as officials and owners: shareholding and property rights in Daqiuzhuang Nan Lin and Chih-Jou Jay Chen 8. The regional evolution of ownership forms: shareholding cooperatives and rural industry in Shanghai and Wenzhou Susan H. Whiting Part III. The Transformation of Public Property in the Urban Economy: 9. Backyard profit centers: the private assets of public agencies Yi-Min Lin and Zhanxin Zhang 10. Bargained property rights: the case of Chinas high-technology sector Corinna-Barbara Francis 11. Producing property rights: strategies, networks, and efficiency in urban Chinas nonstate firms David L. Wank Notes Index.

Two Decades of Rural Reform in China: An Overview and Assessment

Chinas countryside has been the target of dramatic change since 1949. The CCP directed redistribution in land reform, the transformation away from private farming to collectivization, and, most recently, the move back to household production. Throughout the PRCs 50 years, agriculture and peasants have paid for the regimes ambitious programme of industrialization, as the price scissors consistently favoured the urban over the rural producers. The state struggled with its food producers over the grain harvest, using ideology and organization to maximize both the production and extraction of the surplus from the countryside.

Communism and Clientelism: Rural Politics in China

Despite its widespread currency in political science, the concept of clientelism has rarely found its way into the literature on communist systems. Students of communist politics regularly note the importance of personal ties, and many recognize the significance of informal bonds in economic and political spheres at all levels of society. Some even apply the term “clientelism” to the political behavior they describe. Yet these studies are generally limited to elite-level politics, to factionalism, career mobility, recruitment patterns, and attainment of office at the top- to middle-level echelons of the bureaucracy. 2 Few have considered clientelism as a type of elite-mass linkage through which the state and the party exercise control at the local level, and through which individuals participate in the political system.

Reform and Urban Bias in China

Income inequalities between urban and rural areas remain high in China, but the gap has begun to narrow. Peasant incomes have increased dramatically since the post‐Mao reforms. Rural areas have new power, but this is a consequence not a cause of the reforms. The improvement in rural conditions reflects a change in the central states development strategy and ideology, and the local response to incentives embedded in Chinas reforms. The impetus for these changes is self‐preservation of the state and the Chinese Communist Party. The failure to close decisively the income disparities between the urban and rural areas similarly stems from concerns of regime stability and preservation of the party‐state.

Shifting Fiscal Control to Limit Cadre Power in China's Townships and Villages*

In contrast to its decentralized political economy model of the 1980s, China took a surprising turn towards recentralization in the mid-1990s. Its fiscal centralization, starting with the 1994 tax reforms, is well known, but political recentralization also has been under way to control cadres directly at township and village levels. Little-noticed measures designed to tighten administrative and fiscal regulation began to be implemented during approximately the same period in the mid-1990s. Over time these measures have succeeded in hollowing out the power of village and township cadres. The increasing reach of the central state is the direct result of explicit state policies that have taken power over economic resources that were once under the control of village and township cadres. This article examines the broad shift towards recentralization by examining the fiscal and political consequences of these policies at the village and township levels. Evidence for this shift comes from new survey data on village-level investments, administrative regulation and fiscal oversight, as well as township-level fiscal revenues, expenditures, transfers (between counties and townships) and public-goods investments.

Peasant Households Between Plan and Market: Cadre Control Over Agricultural Inputs

The issue of cadre power has been addressed in a number of writings on the Third Plenum reforms. Those interested in the legal and structural changes have described how the agricultural bureaucracy has been trimmed, cadres relieved of their positions, old, uneducated cadres replaced by new, technically trained ones, and how peasants now enjoy increased autonomy and freedom to leave the farm, engage in nonagricultural jobs, and participate in the dramatically revived free markets. The commune has been replaced by the responsibility system; the power of the collective has been reduced and individual peasants have gained more autonomy in production. The household is the unit of production and accounting; land and production have been contracted to the household. The prognosis is that the collective is dying and with it the power of its local cadres, particularly at the team level (see, for example, Hartford, 1985; Unger, 1985-1986; Shue, 1984; Watson, 1984-1985).l Some analysts worry that the reforms have succeeded so well in destroying the power of local cadres that the peasants’ only &dquo;protective buffer&dquo; against the state has been eliminated. Others worry that collective activity and spirit will suffer as the collective loses power to extract contributions from individual peasants (Hartford, 1985; Zweig, 1983; Watson, 1984-1985; Shue, 1984, 1985).

Will Demographic Change Slow China's Rise?

Chinas 2010 census revealed a population of 1.34 billion, 50 percent urban, 13.3 percent above age sixty, and with 118.06 boys born for every 100 girls. In this article, we discuss how gender imbalance, population aging, and their interaction with rapid urbanization have shaped Chinas reform era development and will strongly shape Chinas future. These intertwined demographic changes pose an unprecedented challenge to social and economic governance, contributing to and magnifying the effects of a slower rate of economic growth. We organize the analysis according to the proximate determinants of economic growth: first, labor input and its productivity; second, capital investment and savings; and finally, multi-factor productivity, including social stability and governance. We argue that the economic, political, and social context that turns labor and capital inputs into economic outputs is perhaps the most important and least understood arena in which demographic change will shape Chinas rise.

Development Strategies and Poverty Reduction in China

While there is some dispute over the the exact number of Chinese citizens who have been lifted out of poverty,2 regardless of whether one uses old or new measures of poverty, the reduction of poverty in the 1980s under Deng Xiaoping’s reforms is phenomenal. At a minimum, more than 200 million people were lifted out of poverty as per capita grain availability reached levels comparable to those in developed countries (Rozelle, et al., 2002; Naughton, 2007: 212–14; and Zhang, 1993). The decrease in rural poverty has been especially pronounced in the late 1970s and into the 1980s (Ravallion and Chen, 2007).