The Political Logic of Economic Reform in China [Reprint 2019 ed.] 9780520912212

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The Political Logic of Economic Reform in China

California Series on Social Choice and Political Economy EDITED BY B R I A N BARRY (1981 TO 1991), ROBERT H . B A T E S , J A M E S S. COLEMAN ( F R O M 1992), AND S A M U E L L. POPKIN

1. Markets and States in Tropical Africa: The Political Basis of Agricultural Policies, by Robert H. Bates 2. Political Economics, by James E. Alt and K. Alec Chrystal 3. Abortion and the Politics of Motherhood, by Kristin Luker 4. Hard Choices: How Women Decide about Work, Career, and Motherhood, by Kathleen Gerson 5. Regulatory Policy and the Social Sciences, edited by Roger Noll 6. Reactive Risk and Rational Action: Managing Moral Hazard in Insurance Contracts, by Carol A. Heimer 7. Post-Revolutionary Nicaragua: State, Class, and the Dilemmas of Agrarian Policy, by Forrest D. Colburn 8. Essays on the Political Economy of Rural Africa, by Robert H. Bates 9. Peasants and King in Burgundy: Agrarian Foundations of French Absolutism, by Hilton L. Root 10. The Causal Theory of Justice, by Karol Edward Soltan 11. Principles of Group Solidarity, by Michael Hechter 12. Political Survival: Politicians and Public Policy in Latin America, by Barry Ames 13. Of Rule and Revenue, by Margaret Levi 14. Toward a Political Economy of Development: A Rational Choice Perspective, edited by Robert H. Bates 15. Rainbow's End: Irish-Americans and the Dilemmas of Urban Machine Politics, 1840-1985, by Steven P. Erie 16. A Treatise on Social Justice, Volume 1: Theories of Justice, by Brian Barry 17. The Social Origins of Political Regionalism: France, by William Brustein

1849-1981,

18. Nested Games: Rational Choice in Comparative Politics, by George Tsebelis 19. Information and Organizations, by Arthur L. Stinchcombe 20. Political Argument, by Brian Barry 21. Women and the Economic Miracle: Gender and Work in Postwar Japan, by Mary Brinton 22. Choosing Justice, by Norman Frohlich and Joe A. Oppenheimer 23. Legislative Leviathan: Party Government in the House, by Mathew D. McCubbins and Gary W. Cox 24. The Political Logic of Economic Reform in China, by Susan L. Shirk

The Political Logic of Economic Reform in China SUSAN L.

University BERKELEY

SHIRK

of California LOS A N G E L E S

Press OXFORD

University of California Press Berkeley and Los Angeles, California University of California Press, Ltd. Oxford, England ©1993 by The Regents of the University of California Library of Congress Cataloging-in-Publication Data Shirk, Susan L. The political logic of economic reform in China / Susan L. Shirk, p. cm.—(California series on social choice and political economy; 24) Includes bibliographical references and index. ISBN 0-520-07706-7 (alk. paper).—ISBN 0-520-07707-5 (pbk. : alk. paper) 1. China—Economic policy—1976- 2. China—Politics and government—1976- I. Title. II. Series. HC427.92.S55 1993 338.951—dc20 92-12030 CIP Printed in the United States of America 9 8 7 6 5 4 3 2 1 The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI Z39.48-1984. ©

To Sam, Lucy, and David Popkin

Contents

Acknowledgments

ix

Formal Authority Relations Among Central Communist Party and Government Institutions in the People's Republic of China

xi

PART 1 .

INTRODUCTION

1.

The Political Logic of Economic Reform

2.

The Prereform Chinese Economy and the Decision to Initiate Market Reforms

PART 2 .

CHINESE POLITICAL INSTITUTIONS

3.

Authority Relations: The Communist Party and the Government

4.

Leadership Incentives: Political Succession and

1

3 23 53

55

Reciprocal Accountability

70

5.

Bargaining Arena: The Government Bureaucracy

92

6.

Who Is Enfranchised in the Policy-making Process?

107

7.

Decision Rules: Delegation by Consensus

116

8.

Chinese Political Institutions and the Path of Economic Reforms

129

viii

/

Contents E C O N O M I C REFORM P O L I C Y - M A K I N G

147

9.

Playing to the Provinces: Fiscal Decentralization and the Politics of Reform

149

10.

Creating Vested Interests in Reform: Industrial Reform Takeoff, 1978-81

197

11.

Leadership Succession and Policy Conflict: The Choice Between Profit Contracting and Substituting Tax-for-Profit, 1982-83

221

12.

Building Bureaucratic Consensus: Formulating the Tax-for-Profit Policy, 1983-84

245

13.

The Power of Particularism: Abortive Price Reform and the Revival of Profit Contracting, 1985-88

280

PART 3 .

PART 4 .

14.

CONCLUSION

331

The Political Lessons of Economic Reform in China

333

Bibliography

351

Index

385

Acknowledgments

I am deeply grateful to the many individuals and organizations in China who helped me carry out the field research for this book. My research in China was generously supported by the Rockefeller Foundation International Relations Fellowship, the National Academy of Sciences Committee on Scholarly Communication with the People's Republic of China, and the University of California-San Diego. My colleagues at UC-San Diego provided a stimulating, supportive environment in which to work out my ideas about communist political institutions. Most valuable were my almost daily discussions with Philip Roeder, who was writing his own book on Soviet political institutions; my teaching partnership with Mathew McCubbins, who was eager to reach beyond the United States to figure out how institutions work in other countries; and the patient help I received from Barry Naughton in understanding the Chinese economy. Other colleagues, especially Gary Cox, Francis Rosenbluth, T. J. Cheng, and Peter Gourevitch, cheerfully engaged me in many hours of conversation about the ideas in the book. On other campuses, Christine Wong and James Tong shared information and ideas about the Chinese fiscal system. When I presented parts of the book at the University of California-Los Angeles, MIT, and Harvard, the tough questions helped me clarify my arguments. Robert Bates, Andrew Nathan, Michel Oksenberg, Lee Sands, Dorothy Solinger, and Andrew Walder read the entire manuscript and offered very valuable suggestions. Zhao Suisheng, Michael Tierney, and Christopher Nevitt, graduate students at UC-San Diego, helped by acute questioning of arguments and tracking down sources. Joan Brunn did a fine job of

ix

x

/

Acknowledgments

manuscript preparation. Sheila Levine, Amy Klatzkin, and Dan Gunter at the University of California Press were a pleasure to work with during the publication process. Finally, I wish to thank Beverley Walton, Jaqueline Wheeler, Mary Tschosik, and, most of all, Jeanette Popkin, who took excellent care of my children while I was working on this book.

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