Urban Governance in Transition [1st ed.] 9789811570810, 9789811570827

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Understanding China

Hongshan Yang

Urban Governance in Transition

Understanding China

The series will provide you with in-depth information on China’s social, cultural and economic aspects. It covers a broad variety of topics, from economics and history to law, philosophy, cultural geography and regional politics, and offers a wealth of materials for researchers, doctoral students, and experienced practitioners.

More information about this series at http://www.springer.com/series/11772

Hongshan Yang

Urban Governance in Transition

123

Hongshan Yang School of Public Administration Renmin University of China Beijing, China

ISSN 2196-3134 ISSN 2196-3142 (electronic) Understanding China ISBN 978-981-15-7081-0 ISBN 978-981-15-7082-7 (eBook) https://doi.org/10.1007/978-981-15-7082-7 Jointly published with China Renmin University Press The print edition is not for sale in China (Mainland). Customers from China (Mainland) please order the print book from: China Renmin University Press. © China Renmin University Press 2021 This work is subject to copyright. All rights are reserved by the Publishers, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

We are living in an era of rapid urbanization. In recent years, more than 10 million rural people have relocated to cities and towns for work every year across the country. With the increasing urban population, the role of urban governance in local governance is becoming increasingly important. As early as two thousand years ago, the ancient Greek sages noted that the aim of building city-states was for a better life. This is because city can provide more complete, convenient and better public services. From the perspective of public services, the “city” in this research is defined as a geographical space with highly concentrated high-quality public services and provides a new angle for understanding the nature of city, the mission of urban governance and institutional evolution. The mission of urban governance is to: (i) provide high-quality public services and supporting utilities so as to attract more businesses for investment and meet citizens’ needs for higher-level public services; and (ii) establish a sustainable, financial system for constant improvement of public services. This book mainly, in terms of urban governance in China, discusses some hot topics, such as institutional arrangements of urban governance, explanatory framework of governance models, city–county relationship, cross-regional governance, cross-departmental coordination, sub-district management, provision of community services and municipal performance evaluation to try to clarify some misunderstandings. As some challenges such as traffic congestion and environmental pollution in cities become more pronounced, they have raised great concern to the community, and some reforms are also being launched. To improve urban governance, we should not only innovate institutional arrangements and improve systems and mechanisms, but also attach importance to the theoretical research so as to deepen the understanding of major issues and hot topics. During China’s market-based reform, two coalitions have been created in urban governance. One is a growth-oriented elite coalition which is committed to driving economic development. Since the 1980s, Party and the government have shifted work focus to the economic development, and many entrepreneurs began to rise, making the coalition of government and enterprise an strategy of local governance. v

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In order to attract the investment of enterprises, the city governments introduce policy privileges, simplify administrative procedures, and promote innovative governance. With the implementation of the strategy of rejuvenating the country through science and education, knowledge is more valued than before, so are intellectual elites. In order to make the decisions more scientific and leverage more technical knowledge, governments at all levels set up expert consultation committees to be open to experts’ opinions in the decision-making process. In terms of individual influence, the social elites, who are able to directly communicate with the decision-makers, have a certain voice in policymaking and a greater effect on public opinions. The other is the right-oriented community coalition formed by social members because of self-protection. They protect themselves by organizing collective action to prevent the harm from growth machine. Karl Polanyi commented that the changes in modern society are dominated by a double movement: the constant expansion of the market and its counter-movement. As the market-oriented reform progresses, the elite coalition that restrains the growth-oriented movement is formed and counter-movement against its “wayward” behavior can also be seen in cities. Because of the practices of breaking laws and running against ethnics by market players, the public, triggered by focus events, participate spontaneously in or launch campaigns in an organized way against compensation, salary arrears, environment, and safety to articulate their needs, thus leading to social disorder. Such movements to safeguard their own interests include protests against the nuclear waste project in Lianyungang, the garbage burning project in Xiantao, the arrears of wage by workers at Heilongjiang LongMay Mining Holding Group Co., Ltd., and so on. In terms of power, the elite coalition plays a dominant role in public policymaking process of urban governance in a organized way. To attract investment, urban governments, through “green channel”, streamline the approval procedures and improve the efficiency. In addition, some cities try to improve the business and investment climate to attract and retain investors. The creation of the growth-oriented coalition has injected vigor into urban development and has also greatly changed city appearance. Since the reform and opening up, urban policymakers have, following the principle of “giving priority to efficiency while ensuring fairness”, focused more on elite participation instead of making decision on their own before. They attach more importance to technical knowledge, and make the decision more rational and effective. This kind of elite coalition-led urban governance has made remarkable achievements, which are reflected in good infrastructure, fast expanding urban areas, competitive manufacturing, increasing fiscal revenues, and a larger group of middle class. However, there are also some pronounced problems in this urban governance model, such as public service bias, insufficient public space provision, high housing prices, NIMBY conflict, and civil disorder. One of the important reasons for the widespread public square dancing or guangchangwu in Chinese cities is that there is a lack of community public space, especially indoor public activity space. Except residential buildings, some developers only provide private space for shopping

Preface

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malls, banks, restaurants, greengrocers, intermediary services, and household services, some even do not reserve an office place for neighborhood committee. Therefore, residents can only find open-air places for entertainment. In recent years, the increase in NIMBY conflict and civil disorder contributes to the challenge that urban governance has to face. It is common for policymakers to factor elements of value and fact into public decision-making. Fact inference judgement from people can hardly avoid their empirical truth. Experts have certain professional skills and knowledge, which may qualify them to participate in the decision-making process. However, the judgement for decisions concerning values mostly based on their subjective preference, and they are not qualified to perform value judgement on behalf of the public. From the standpoint of knowledge application, urban authorities should have regard to many elements to achieve good governance, such as expert knowledge, public preference, hard knowledge (technical knowledge), and soft knowledge (local knowledge in a given context). Furthermore, they also need to maximize the function of elite coalition, mobilize entrepreneurs and experts, listen to the voices of the community and balance the needs and desires of citizens. In actual practice for urban governance, government places too much emphasis on hard knowledge, but do not pay enough attention to soft knowledge, which will result in common sense mistakes. For example, urban planners should not only have imagination and technical knowledge, but also possess local knowledge and identify local value preferences and development needs by having urban dweller’s voices heard. Otherwise, failure to listen to their opinions will result in absence of spatial justice, further leading to ill-designed urban planning. As an old Chinese saying goes, “It is easier to know than to do”. Therefore, listening to the voices of communities and leveraging local knowledge are essential in urban governance, which is easy to understand, but hard to put into action. In public decision-making, the elite coalition always tends to deem the value issues as the technical ones. The biggest challenge to urban governance in China is how to build a platform for dialogue between elite coalition and the community coalition, to listen to the interest demands across many communities and to improve the coordination so as to accommodate multiple interests. At present, China is committed to making state governance modernized and urbanized, and improving the urban governance, which entails people-oriented awareness and fairness and justice so as to ensure fair share. In view of this, it is necessary to support urban development, focus on response-oriented mechanism, improve democratic dialogue and build a better urban system. First, urban hotlines need to be integrated to encourage the public participation. Although the city government departments at all levels have set up hotlines, citizens find it difficult to remember them all and to get through. Drawing on foreign experience, it is essential to integrate the hotlines of various departments into two forms: emergency and non-emergency. If it is difficult to work on the former one, they can start with the latter.

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Preface

Second, a dialogue mechanism needs to build between the two major coalitions to promote democratic governance. Urban governance needs to use knowledge and identify preferences from all parts, so collective forum needs to be built to encourage stakeholder participation, to take collective action by making more rational dialogues and building consensus in discussion. The committee system is an effective institutional arrangement to promote democratic governance. However, many committees in cities now are nominal, because they practically handle administrative affairs. Third, municipal government needs to promote holistic governance and resolve the “fragmentation”. A city can be seen as a system, and its planning, construction, and management involve many departments which need to take concerted action. Urban spatial programming, for example, involves development and reform commission, planning bureau, bureau of land resources, environmental protection agency, and other departments. To reduce prevarication and policy conflicts, it is necessary to strengthen holistic governance, promote the reform to establish larger government departments, and improve cross-departmental coordination. Fourth, urban authorities need to improve the municipal performance evaluation and accountability in a bottom-up way. Performance evaluation plays an important role in improving the sense of responsibility, responsiveness, and efficiency in administrative departments. At present, most of the municipal performance evaluation is carried out through internal control-top-down measurement and evaluation of performance. To enhance the responsiveness of the public sector to the needs of society, it is necessary to improve the interaction between the government and society and public satisfaction and to combine top-down and bottom-up evaluation. In a nutshell, cities are the crystallization of human civilization. Thriving cities make a country prosperous, and strong cities make a country powerful. Urban governance is an epitome of national governance. Therefore, good urban governance contributes to good national governance. Cities are the sources of national innovation, and new systems are first implemented in cities then to other areas. In order to practice response-oriented urban governance, municipal governments need to encourage elites and experts participation, improve policy system and consultative democracy, listen to community voices, build consensus through dialogues, and facilitate development in a more inclusive way. Beijing, China

Hongshan Yang

Contents

1

Introduction . . . . . . . . . . . . . . . . . . . 1.1 Problems Raised . . . . . . . . . . . . 1.2 Previous Studies . . . . . . . . . . . . 1.3 Thoughts and Methods of Study 1.4 The Outline of This Book . . . . . References . . . . . . . . . . . . . . . . . . . . .

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The Nature and Governance Mission of the City . . . . . . . . 2.1 Re-recognize the Nature of the City . . . . . . . . . . . . . . . 2.2 Institution and Mission of Urban Governance . . . . . . . . 2.3 Financing System of Urban Public Services . . . . . . . . . 2.4 New Ideas for Improving Urban and Rural Governance References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Institutional Changes of Urban Governance in China . . . . . . . 3.1 Establishment and Evolution of Municipality . . . . . . . . . . 3.2 Institutional Structure of Urban Governance . . . . . . . . . . . 3.3 Institutional Changes of Urban Primary-Level Governance 3.4 Categories of Actors of Urban Governance . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Holistic Governance: An Explanatory Framework . . . . . . . 4.1 The Theory Evolution of City Management . . . . . . . . . 4.2 Types of Urban Governance . . . . . . . . . . . . . . . . . . . . 4.3 Integrated Governance: A New Theory . . . . . . . . . . . . 4.4 Achievements and Risk of Integrated Governance . . . . . 4.5 Institutional Requirements of Collaborative Governance References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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City-County Relationship: Separated or Integrated Governance . . . 97 5.1 Theoretical Dimensions of Urban-Rural Relationship . . . . . . . . 97 5.2 City-County Relationship: A New Explanation . . . . . . . . . . . . . 104

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International Comparison of City-County Relationship . . . . . . . 108 Thoughts of Policymaking on Reform of Province-LeadingCounty System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

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The Institutional Development of American Urban Cross-Regional Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Systems of Organization of Local Government for Urban Governance in the United States . . . . . . . . . . . . . . . . . . . 6.2 Cross-Sectoral Governance Reform in Metropolitan Areas . 6.3 Discussion on the Polycentric System . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Institutional Development of Urban Cross-Departmental Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Challenges for Urban Cross-Departmental Coordination . . 7.2 New Trend of Cross-Departmental Governance in Foreign Cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 The Reform and Innovation of Cross-Departmental Collaboration in China . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Institutional Requirements Toward Holistic Governance . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Reform of Management System for Sub-district Offices . . . . 8.1 Problems of Management System for Sub-district Offices 8.2 New Approaches of Reform of the Sub-district Offices . . 8.3 Practice for Reform of Sub-district Office . . . . . . . . . . . . 8.4 Experiences from the Reform to the Urban Sub-district Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Urban Community Service and Public Space Construction . 9.1 The Concept and Types of Community Service . . . . . . 9.2 Reform on Delivery of Urban Community Service . . . . 9.3 Urban Community Public Space Construction . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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10 Comparison of the Systems of Municipal Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 The Applicable Fields of Government Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 How to Choose Government Performance Evaluation Model . 10.3 Comparison of Practices of Municipal Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 Suggestions on Improving the Municipal Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Afterword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

Chapter 1

Introduction

1.1 Problems Raised Since the reform and opening up, social mobility has increased and the social control function of the work units has gradually declined as the marketization advances. Against this backdrop, the urban governance relies heavily on sub-district offices and neighborhood committees instead of work units, leading to more responsibilities resting with these two organizations. However, it is difficult for sub-district offices to assume the role of social management and service provision due to limited powers and resources available. In order to mobilize social forces and resources, a campaign of community building was launched in the 1990s across the country. During the community building, the market mechanism was introduced, and the government mobilized the various social organizations to provide community services, push ahead with community building and solve problems concerning it. With the rise of business services in community, many developers and property companies expand their business into community, contributing to a shift from totalism governance to partnership between government and enterprise. The market mechanism diversifies services and improves the environment in the community, but it also has brought about problems. Businesses provide community service for profit, which has the “crowding-out effect” on the disadvantaged groups. In recent years, collective protests for safeguarding legal rights and civil disorder happen from time to time, indicating the partnership between government and the private sector can not practically ensure a harmonious urban development. Karl Polanyi argued that modern society was dominated by a double movement: the constant expansion of the market and its counter-movement.1 This theory of a double movement provides both an explanation for protests for rights protection and civil disorder, and channels a direction for urban governance. Urban governance 1 Polanyi

[27].

© China Renmin University Press 2021 H. Yang, Urban Governance in Transition, Understanding China, https://doi.org/10.1007/978-981-15-7082-7_1

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1 Introduction

is not a one-direction action by government, but a process of interaction between the government and market entity and private actors. As the market mechanism is implemented widely, municipalities should not only play a leading role in the urban governance, but also need to allow the social organizations to develop and enhance self-rule capacity of residents. On the basis of some theories, this book describes an explanatory framework of urban governance in China, introduces the background of the integrated governance model with Chinese characteristics, analyzes its operation mechanism, effectiveness and potential risks, and discusses the institutional arrangements in urban governance. In addition, it attempts to correct some cognitive bias by discussing some hot issues of urban management. The book gives the answers to the following questions: what are the differences in fundamental attributes between city and village? What institutional changes has China undergone in urban governance? What are the differences between the current model, the pre-reform model and the Western model regarding the urban governance? Is the current urban governance model effective? Any there any underlying risks? And how to address them? What are the difficulties in cross-departmental operation in Chinese cities? What are the best practices of promoting multi-departmental cooperation in foreign cities? Should sub-district offices be abolished in urban governance? And has the pilot reform of achieved good results? What are the short links in providing urban community services? What are the problems of municipal performance evaluation? And how to improve it?

1.2 Previous Studies China is now experiencing rapid urbanization, contributing to the constant spatial and demographic expansion of urban areas. It indicates that the role of urban authorities in local governance is becoming increasingly important. This book outlines the changes in institutional arrangements and models in China urban governance and pinpoints the existing problems, so as to explore the path of reform. To understand the model of urban governance, it is necessary to pay attention to various actors involved in urban governance and their relationship and interaction among them. The actors of urban governance include the governments, businesses, social forces and so on. Extensive outcomes have already been achieved through many studies on urban governance. 1. A Study on the Rights over Urban Governance Rights over urban governance are one of the key issues of urban politics. It concerns who is in charge of urban governance and how the power is wielded and what outcomes it can produce. American elitists and pluralists, in the 1960s, debated over these issues. Since the 1980s, the Western countries have been relaxing restrictions on economy, making business leaders and social forces increasingly important in urban governance. In addition, theories of growth machine, urban mechanism and others were proposed about the rights over urban governance.

1.2 Previous Studies

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Based on the empirical research, Floyd Hunter argued that the business elite had a dominant influence on urban policy and cities were controlled by the these people.2 Moreover, he concluded that the local representative democracy was virtually a form of disguise for economic interests through its leading role, which triggered a theoretical debate between elitists and pluralists. In the empirical study of New Haven, Robert A. Dahl proposed pluralism, thinking that the city power was divided and decentralized.3 According to pluralism, an urban society can be perceived as an aggregation of hundreds of small special interest groups with incomplete overlapping membership and widely dispersed power and a host of instruments influencing important decision-making.4 In the 1980s, Roggen and Molodchy advanced growth machine theory, arguing that it is the elite groups that are devoted to economic growth drives the urban development. Land resource is the main contributor to city development. Urban growth aims at developing the controlled land or redeveloping the land that has been developed. The growth machine theory is practically an extension of the elite theory and it emphasizes the power of business leaders, identifying entrepreneurs as a key force shaping urban systems.5 The theory of urban mechanism holds that urban politics includes a wider range of participants. Political, economic and social organizations have different resources, but none of them can meet the development goals independently, thus making it necessary to form coalition. Elkin proposed that the urban mechanism was created by the dynamic relation between market forces and political control, and he divided the American urban mechanism into three forms: pluralistic, federal, and entrepreneurial.6 According to the theory of urban mechanism, multiple actors need collaboration in urban governance to jointly promote urban sprawl. Some researchers have conducted studies on the power over urban governance in China. According to Zhou Xueguang, China is still an authoritarian-regime country in which the centralized government communicates its policies to all levels of local governments through strictly-governed bureaucratic agencies.7 He Yanling et al. proposed that from the perspective of central-local relationship, Chinese city governments play three roles: “local state”, “local government” and “bureaucratic organization”.8 After investigating the model of the county governance after the tax distribution system by Zhe Xiaoye, it was found that the local government developed a trinity mechanism of “administration-politics-company” by means of “Land Platform”.9 2 Hunter

[11]. [4]. 4 Polsby [28]. 5 Logan and Molotch [14]. 6 Elkin [6]. 7 Zhou [39]. 8 He et al. [10]. 9 Zhe [38]. 3 Dahl

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1 Introduction

2. Study of Urban Public Governance Since the 1960s, more attention has been paid to the study on public governance due to the suspicion of the traditional public administration theory. In the pursuit of democracy or efficiency, it advocates the introduction of market mechanism and social participation in public services, and use of various governance tools for good governance. After thinking back to the various valuable public governance theories, it can be found that scholars, based on different institutional backgrounds and value appeals, put forward some different governance models, such as polycentric governance, new public management, new public service, autonomy, holistic governance and collaborative governance. Based on the value appeal of democratic administration, Vincent Ostrom et al. put forward the polycentric governance theory, which laid a solid foundation for public governance research. Through the research approach of public choice, they demonstrated that under the “foot-voting” mechanism, a polycentric political system is conducive to catering for citizens’ service preferences and providing a variety of public goods and services.10 The new public management theory advocates the introduction of market mechanism to the public services, draws on the private sector management and competition methods, fosters public-private partnership, and stresses the need for governments to steer not row.11 In addition, it requires a shift from focusing on efficiency to outcomes, carrying out government performance evaluation, improving public service quality and customer satisfaction, and enhancing the responsiveness and responsibility of government departments. The new public service theory, which comes from the criticism of the new public management theory, deems the public interest, civil rights and public service as the core values, and believes that government should not run like an enterprise, but operate democratically.12 According to it, the public managers in managing public organizations and implementing public policies should not steer the government, nor to row it, but to serve and empower citizens. In addition to government and market mechanism, theory of autonomy points out that there is a third kind of governance mechanism for public affairs-self-organization and self-governance. The Elinor Ostrom found that in the management of public resources, consumers can make effective contracts, organize collective action, and achieve sustainable use through self-financing.13

10 Ostrom

et al. [25], McGinnis [18]. and Gaebler [20]. 12 Denhardt and Denhardt [5]. 13 Ostrom [23]. 11 Osborne

1.2 Previous Studies

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The holistic governance works to address the challenges of inefficiency in dealing with complex problems caused by the institutional fragmentation, and aims at integrating public sectors. Furthermore it advocates the cross-departmental and cross-sectoral collaboration to make departments at different levels to work together.14 The collaborative governance is designed to, in terms of addressing crosssectoral issues, build forums, encourage stakeholders participation, facilitate collective decision-making based on consensus, foster partnerships, and organize collective action.15 Collaborative governance operates through partnerships, networks, compacts, allies, committees, alliances, guilds, councils, etc. Managers of public and private sectors work together to develop strategies and provide goods and services on behalf of their respective organizations.16 After studying the public governance literature, it is discovered that scholars have different value appeals. Collectively, there are two value orientations in urban public governance, democracy and efficiency. The former emphasizes open participation and advocates that the representative democracy is complemented with pure and consultative democracy; the latter, results-oriented, puts forward that limited participation is allowed and government should play a leading role in decision-making process and implementation. The study of public governance reveals that the municipalities need to develop cross-sectoral cooperation mechanism instead of adopting totalism approach, so as to maximize the potential of enterprises and social forces. 3. Study of Public Service Provision Based on the division of roles between government and market, the responsibility for government is to provide public goods and services. After distinguishing provision from production by Ostrom and other scholars, they proposed that the production of public goods and services could be carried out by either the private sector or the public sector, or through collaboration to engage private sectors and nonprofit organizations in this process and allow them to compete.17 The public economy is not necessarily an exclusive government monopoly economy. It can also be a mixed economy in which the private sector also participates in the provision of public services.18 Ostrom also pointed out that a series of collective choices involving provision shall be the primary responsibility of the government, and “production” is the technical process of transforming resource inputs into outputs, and both the private sector and the third sector are allowed to participate and undertake some responsibilities.19

14 Perri

6 [26]. and Gash [2]. 16 Agranoff and McGuire [1]. 17 Ostrom et al. [25]. 18 Ostrom and Ostrom [24], McGinnis [17]. 19 Oakerson [19]. 15 Ansell

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1 Introduction

Savas argues that there are three parties to service provision: consumer, producer, arranger. Government is essentially an arranger or provider, a social tool for deciding what should be done collectively, for whom, to what extent or at what level, and how to pay.20 When roles of arranger and producer are played by one party, the government will monopolize the public economy, and the administrative cost will be incurred accordingly. When the arranger and the producer are two different parties, the private sector will intervene in the public economy, and the transaction costs will incur accordingly. The relative value of the two costs determines whether or not to separate the arranger from producer. Salamon has conducted numerous empirical studies of the American nonprofit organizations and found that government cooperation with the voluntary sector has become the backbone of the social service delivery system and that government has become the most important source of revenue for the nonprofit private sector. He put forward “Third-Party Government”-nonprofit organization participation in the governance of public affairs. In addition, he also argued that there some drawbacks of nonprofit organizations, such as lack of capacity to provide sufficient resources, vulnerable to be influenced by the value preferences of the rich and paternalism. However, nonprofit organizations are also well-positioned to provide, to some extent, personalized services according to customer’s needs through competition among service providers. He concluded that the cooperation between the voluntary sector and government is much more beneficial than either of them replacing each other.21 Osborne and Gaeble proposed that it is necessary to distinguish the functions of “steering” and “rowing” in urban governance, with managers in charge of decisionmaking and guidance, and leaving the implementation done by employees. Moreover, the helmsman is supposed to try to see the whole picture, balance competing demands on resources, and the oarsman needs to deal with specific tasks and get things done. Governments need to be adept at developing appropriate approaches to achieve their objectives. However, meeting policy goals at all costs is in fact inadvisable.22 4. Study of Urban Governance in China Since the 1990s, particularly the new century, the outcomes of study on urban governance in Chinese academia have increased significantly. Generally speaking, urban governance involves the debates of the relationship between city government, market and society. From the perspective of management, Zhao Yanjing put forwards that city government can be perceived as an enterprise aiming at managing city, and it needs to introduce market mechanism to provide public goods and services following the rules of enterprises, as a way to establish market-oriented institutional arrangements.23 Liu Shuyan, from the standpoint of stakeholders, points out that the framework of urban 20 Savasse

[32]. [31]. 22 Osborne and Gaebler [21]. 23 Zhao [37]. 21 Salamon

1.2 Previous Studies

7

governance needs to come up with more ways of public participation, and establish a public participation system for the entire process.24 Zhang Tingwei proposes that the central facet of urban management is to build partnership between the government and the market, making the urban public resources be allocated by the market mechanism. In addition, the core of urban governance is the alliance between the government and society, involving marginalized social forces in urban management through public participation.25 With the increasing responsibilities of the urban sub-district offices, the role of them has been discussed by scholars. There are main four viewpoints: (1) establishing the sub-district offices as first-level governments and implementing a new three-level government and three-level administration system,26 and (2) advocating to change the sub-district offices into the grassroots governments and the district-level governments into the dispatched agencies,27 and (3) maintaining the nature of the sub-district offices as dispatched agencies, allocating the functions to sub-district offices in a reasonable way, handing over the power of administration and law enforcement, and strengthening the comprehensive coordination capacity,28 and (4) proposing the abolition of sub-district offices, reducing the district’s jurisdiction area, making the community be directly managed by district government, and implementing a new two-level government and two-level administration system.29 In terms of urban community governance frameworks, there are more academic debates. Lu Feng, Li Lulu, Li Hanlin and other scholars analyzed the urban grassroots management model based on the work unit system.30 He Haibing examined the institutional changes of urban social management from work unit system to sub-district offices then to the community since the founding of People’s Republic of China.31 The bureaucratism still exists in the neighborhood committee under the management of government.32 Some researchers argue that urban government should empower the social organizations, developing the “small-scale government, largescale society” governance framework.33 Others propose a government-community cooperation model, in which administrative responsibilities previously undertaken

24 Liu

[13]. [36]. 26 Wan [33]. 27 Pu [29]. 28 He [9]. 29 Wei [34]. 30 Lu [15], Li and Li [12]. 31 He [8]. 32 Gui and Cui [7]. 33 Lu [16]. 25 Zhang

8

1 Introduction

by self-governing organizations are transferred to service stations in the community to promote the purchase of social services by the government and support the development of community organizations.34

1.3 Thoughts and Methods of Study 1. Thoughts of Study Since the reform and opening-up and the advancement of market-oriented reform, China’s urban governments, in the complex, changing and diversified contexts, have given up the “arranging-all” governance model and monopolizing the provision of public services. Instead, they have introduced market mechanisms and private actors, emphasizing public participation, resource sharing and comprehensive governance in order to enhance the responsiveness and public service capacity, which contributes to a large number of new practices. Through reviewing the practices of urban management reform, it is found that the theory of public governance is valued. It does not negates the leading position of the government and the role of representative democracy, and engages the private sectors and social forces in the management of public affairs and tries to improve the efficiency of public service provision and enhance the participation and democracy in the process of governance. From the perspective of the relationship between government and society, this book, based on the level of cooperation between these two parties and the crosssectoral collaboration, first makes a typological analysis of urban governance, then discusses the new model in China-integrated governance model-and its background, characteristics, mechanism, outcomes and potential risks, and clarify the difference between the new model and the one before the reform and the Western urban governance model, in order to deepen the knowledge of the urban governance with Chinese characteristics. Through a series of institutional arrangements embedded in each other, the integrated governance model strengthens the invisible control mechanism, ensures the unified leadership, and improves the capacity of urban governance and public service delivery. However, there are also risks to the holistic integrated model, and enforcing crosssectoral integration is likely to cause social conflicts and civil disorder. To deal with the risks effectively, institutional improvement is central. This book will explore the institutional arrangements to mitigate the negative impacts of the integrated governance, including the arrangements of mechanism and institutional needs. Furthermore, it also empirically analyzes the city governance in America, examines the mechanism of cross-sectoral and collaborative governance. In recent years, many debates have been carried out on the reform of subdistrict offices, the provision of 34 Xu

[35].

1.3 Thoughts and Methods of Study

9

community services and the management of municipal performance, and this book also aims at clearing up some misunderstandings. 2. Methods of Study To explore the transformation of urban governance in China, it is necessary to develop an appropriate analytical framework which is the fundamental tool for understanding the issues being studied by presenting the basic variables and explaining the relationships between them. Otherwise, absence of variables and analysis framework may cause urban governance research to remain in the stage of descriptive analysis. The study in this book adopts the commonly-used analytical framework 2 × 2 in the typological research to identify two key variables, distinguish four kinds of urban governance, and strive to form cognitive structure. In terms of urban institutional development, this study applies the Institutional Analysis and Development (IAD) framework developed by the Elinor Ostrom.35 Based on viewing institutions as independent variables and the action arenas as dependent variables, it seeks to explore how incentives are produced by particular institutional arrangements and exert an impact on the behaviour of actors, with a view to predicting and assessing the outcomes of these actions. On this basis, the framework of improving the institutional arrangements could be developed. The action arenas of IAD framework include two groups of dependent variables: action situation and actor. The former enables the analyst to explain the relationship between behavior and outcome and possibly improve them from the perspective of the institutional arrangements which produces incentives. The latter may be either individuals or organized groups. What makes the actor choose strategy choice in any particular situation depends on his own understanding and estimation of the possible outcomes from various strategies. Through the analysis of the action situation, the analyst can predict the interaction pattern and the outcomes of the actors. In the IAD framework, institution refers to the rules, norms and strategies accepted by the actors.36 These institutions provide the basic norms for the actors and their relationships, thus forming a specific action situation, which affects the choice, cost, benefits and outcomes of action by actors. In this study, IAD framework is adopted to the study of urban governance reform in China to develop the analysis flow chart: institutional arrangement-action arenas (action situation)-action pattern-evaluation of outcomes (as shown in Fig. 1.1). This analytical framework primarily indicates that China’s urban governance is based on an array of basic institutional arrangements, and it shows the relationship between the government, market and social subjects. These institutional arrangements constitute the action situation of transition of urban governance and determine the value and reform orientation for transition of urban governance in China.

35 Ostrom

[22], Sabatier [30]. and Ostrom [3].

36 Crawford

10

1 Introduction Physical

/

Material

Behavioral Context

Conditions Community Attribute

Actor

Rules Adopted

Interactive Model

Action Arena

Outcome Evaluation Criteria

Fig. 1.1 Institutional analysis and development framework

The IAD framework emphasizes that the institution determines the action situation and has an important influence on the action choice of the actors. The institution not only provides the basic framework for the government action, but also offers the action incentives to the main market players and social subjects. Under different institutional arrangements, the interaction models and outcomes of the multiple actors are different. The analysis of the interaction model and outcomes of urban governance actor under the current institutions helps to predict the institutional evolution.

1.4 The Outline of This Book The book includes ten chapters. This chapter is an introduction to the main parts in this study, summarizes the theoretical development, relevant literature and representative views of the existing studies, introduces the thoughts and methods of this study, and outlines the main contents of each chapter. Chapter 2 discusses the nature of the city and governance mission. It gives definitions to the nature of city from the perspectives of different disciplines, such as architecture, geography, economics, sociology. After that, from the standpoint of public administration, it sets forth a new notion of the nature of city, expounds the basic mission of urban governance, tries to clarify the cognitive misunderstandings of urban and rural governance, and puts forward new approaches in improving urban and rural governance. From the perspective of public administration, city is the geographical space with high-quality public service resources. In terms of the relationship between urban and rural areas, it is necessary for government to change the mindset of “equality in urban and rural public services”. Although it is incumbent upon the urban authorities to ensure that rural residents can access basic public services, it does not mean that the equality in accessing public services between urban and rural areas can be achieved.

1.4 The Outline of This Book

11

Chapter 3 analyzes the institutional changes of urban governance in China. District-level governments implement a new two-level government and three-level administration system, and the urban governance relies on the sub-district street office and neighborhood community. Since the founding of People’s Republic of China, urban governance has undergone the development from work unit system to sub-district street system, from connecting sub-district street with neighborhood community to separation of neighborhood community from service station, from quasi-community system to community system. According to whether the decisionmaking is mandatory or not, there are two kinds of actors of urban governance: actor with power and actor without power. Based on whether the ruling party has a leading role in operation of an organization, the actors of urban governance are categorized into two types: state organs and public institutions, private organizations. Chapter 4 explains the institutional framework and theoretical evolution of urban governance in China. From the perspective of the relationship between government and society, it discusses four models of urban governance: government-arranges-all, self-governance, holistic governance and collaborative governance. In practice, the integrated governance model was created in Chinese cities, which results from the context where government has decreased resources while assuming all responsibilities. Faced with the unbalance of limited resources and unlimited responsibilities, the city government through its power to carry out integration of the market players and social actors by means of qualification management, seeking resources, elites absorption, setting up Party organs, and project cooperation. Under the governance, the public sectors play a leading role and has achieved significant gains, but some social conflicts also have happened. In order to address the social risks caused by the model of holistic governance, it is necessary, in terms of the cross-sectoral cooperation, to facilitate governance according to laws, enhance consultative democracy and develop the institutional arrangements of collaborative governance. Chapter 5 describes the ideal model of city-county relationship. In view of the problems arising from the “City-Leading-County” institution, there have been many debates about “Province-Leading-County” in recent years. It is necessary to clarify the relationship between city and county in theory in order to promote the institutional reform to “Province-Leading-County”. According to the different value orientations of fairness and efficiency, there are two representative viewpoints about the relationship between city and county in the academia: “city-county competition theory” and “city-county integration theory”. The former argues that they are equal players in competition, suggesting separation of governance, while the latter believes that they are interdependent, emphasizing regional integration. By analyzing these two views, this chapter expounds a mixed model of city-county relationship. It also puts forward, through studying the cases in other countries, some concrete policy framework on the “Province-Leading-County” reform. Chapter 6 studies the institutional development of urban cross-sectoral governance in the United States. The city government system in the United States is diversified, and falls into four categories: strong-mayor, weak-mayor, committee-leader and council-manager. In metropolitan areas, many autonomous cities and towns are independent of each other, shaping the political fragmentation pattern. Despite

12

1 Introduction

constant initiatives to reduce the number of local governments and form a unified metropolitan government, residents continued to vote against it. In order to meet the needs of regional integration while taking into account the interests and demands of the residents, various actors in metropolitan areas carry out collaborative governance by means of alliances, coalitions, committees, councils, partnerships, etc. The practice shows that this kind of collaborative governance model helps safeguard the interests of all parties and achieve inclusive development. Chapter 7 focuses on the institutional development of cross-departmental coordination in Chinese cities. China’s urban governance is based on unitary and centralized systems, with the central ministries and commissions as well as higher-level departments directly guiding the operation of the municipal departments through policy means, thus forming a “honeycomb” governance structure with vertical links between higher and lower level departments. Such institutional arrangements facilitate the rapid implementation of decision-making from higher-level department, but there are more barriers to horizontal operation. This chapter studies the new practice of the cross-departmental coordination in foreign cities and describes the reform framework of the integrated government. Since the 1990s, in response to the fragmentation in regional governance, metropolitan areas in the United States have created various collaborative governance models, and cities in Britain have launched the reform to build integrated government. In recent years, cities in China have also embarked on a integrated-governance-oriented reform regarding the problems caused by sectarianism. This chapter takes Beijing as an example to analyze the reform practice in this regard. There are three approaches to facilitate cross-departmental coordination: technology application, process reengineering and organization integration. Chapter 8 discusses the contentions and framework of reform for urban sub-district street management system. In the process of building community, there is a recognition that the sub-district offices hinder the neighborhood autonomy, the establishment and development of community, so some advocate that the sub-district offices should be abolished and the government should provide public services directly to the community. However, it reveals that this reform fails to achieve its goal after conducting some pilot programs, because some unexpected difficulties and problems have emerged. Some sub-districts in Beijing have more than 10,000 residents, others even exceeding hundreds of thousands of people, the size of small and medium cities in the United States. Therefore, it leads to problems caused by the abolition of subdistrict street offices. To improve the management system of sub-district street office, it is necessary to push forward with local legislation, improve its services, clearly define its responsibilities, promote the separation of community service station and neighborhood committee, strike a balance between the responsibilities of sub-district office and its size of personnel force, facilitate the procurement of public services by the government, and use market mechanisms and social forces to improve the capacity and quality of public service provision. Chapter 9 outlines the urban community service and the public space building. The community service is a kind of concept proposed in China to advance the urban community building. This chapter describes several widely-accepted definitions of community service, and interprets this concept from a new angle of view-regarding

1.4 The Outline of This Book

13

the community services as the mixed services, including the social, governmental and commercial services. In view of the problems in urban community services, it discusses that it is not only essential to deliver public services, but also embed government service in the community and improve the capacity of commercial service outlets. This chapter also proposes to, in terms of the challenges in the public space building within residential areas, build centralized-layout neighborhood centers to improve the utilization rate of comprehensive public space. At present, compared with the grandiose narrative of urban development, insufficient provision is found in the community public space (especially the public indoor space) in the city. Driven by interest, the area of open indoor public space in residential area is often smaller than what it is planned. To build livable community, drawing on foreign experience and introducing a new public space planning management model is pivotal. Chapter 10 discusses the institutional development of government performance evaluation, which has become an important part of innovative urban governance. Some scholars misread the government performance evaluation and are in support of creating a universal comprehensive system of performance evaluation. The government performance evaluation, however, can not practically cover all areas of government functions and only quantifiable indicators in the inputs, outputs and outcomes of public services can be evaluated. Base on analyzing the functions and limitations of internal control evaluation and external responsibility evaluation, this chapter proposes to build a composite evaluation model to improve both the government’s executive power and credibility. Aside from it, this chapter compares the operating models and the outcomes of two practices-the Chaoyang District Grid Management System of Beijing in China and the CitiStat System of Baltimore in United States, and gives some suggestions based on it in the hope to improve the government performance evaluation. China’s urban performance evaluation systems have a significant advantage in improving the implementation, while the ones in America focus on customer satisfaction. To build a livable city and a service-oriented government, it is necessary to create a composite performance evaluation system which strengthens the external responsibility and internal department performance evaluation, use the outcomes to encourage the administrative departments to improve the process, result-orientation, executive ability and public satisfaction.

References 1. Agranoff, R., & McGuire, M. (2007). Collaborative public management: New strategy for local governments (p. 2) (trans: Li, L., & Yin, Y.). Beijing: Peking University Press. 2. Ansell, C., & Gash, A. (2007). Collaborative governance in theory and practice. Journal of Public Administration Research and Theory, 18, 543571. 3. Crawford, S. E. S., & Ostrom, E. (1995). A grammar of institutions. American Political Science Review, 89(3), 582600. 4. Dahl, R. A. (1961). Who governs? Democracy and power in an American city. New Haven: Yale University Press. 5. Denhardt, J. V., & Denhardt, R. B. (2004). New public service: Serving, not steering (p. 70) (trans: Ding, H.). Beijing: China Renmin University Press.

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1 Introduction

6. Elkin, S. (1987). City and regime in the American republic. Chicago, IL: University of Chicago Press. 7. Gui, Y., & Cui, Z. (2000). The system change of city neighborhood committee in the evolution of administration. Journal of Huazhong University of Science and Technology (Social Sciences), (3). 8. He, H. (2003). Social management system changes in China’s urban grassroots: From the unit system, sub-district office system to community system. Management World, (6). 9. He, H. (2007). The main problems and reform trend of urban community management system in China. The Journal of Shanghai Administration Institute, (2). 10. He, Y., Wang, G., & Chen, S. (2014). Political analysis of urban government expenditure in China. Social Sciences in China, (7). 11. Hunter, F. (1953). Community power structure: A study of decision makers. Chapel Hill: University of North Carolina Press. 12. Li, L., & Li, H. (2000). Organizations in China: Resources, power and exchange. Hangzhou: Zhejiang People’s Publishing House. 13. Liu, S. (2010). Public participation-oriented urban governance: From the perspective of stakeholders (p. 23). Shanghai: Tongji University Press. 14. Logan, J., & Molotch, H. (1987). Urban fortunes: The political economy of place (p. 52). Berkeley: University of California Press. 15. Lu, F. (1989). Work unit: A special form of social organization. Social Sciences in China, (1). 16. Lu, H. (2004). China’s urban community governance model. The Journal of Shanghai Administration Institute, (1). 17. McGinnis, M. D. (1999). Polycentricity and local public economy (p. 75). Ann Arbor: The University of Michigan Press. 18. McGinnis, M. D. (2000). Polycentricity and local public economies (p. 4167) (trans: Mao, S., & Li, M.). Shanghai: Joint Publishing (Shanghai). 19. Oakerson, R. J. (2005). Governing local public economy (p. 9) (trans: Wan, P.). Beijing: Peking University Press. 20. Osborne, D., & Gaebler, T. (1992). Reinventing government: How the entrepreneurial spirit is transforming the public sector (p. 1). Reading, MA: Addison-Wesley. 21. Osborne, D., & Gaebler, T. (2006). Reinventing government: How entrepreneurial spirit is transforming the public sector (p. 10) (trans: Zhou, D., et al.). Shanghai: Shanghai Translation Publishing House. 22. Ostrom, E. (1999). Institutional rational choice: An assessment of the institutional analysis and development framework. In P. A. Sabatier (Ed.), Theories of the policy process. Boulder, CO: Westview Press. 23. Ostrom, E. (2000). The way of governance in public affairs (p. 144) (trans: Yu, X., et al.). Shanghai: Joint Publishing (Shanghai). 24. Ostrom, V., & Ostrom, E. (1977). Public goods and public choices. In Alternatives for delivering public services: Toward improved performance (pp. 7–49). 25. Ostrom, V., Tiebout, C. M., & Warren, R. (1961). The organization of government in metropolitan areas: A theoretical inquiry. American Political Science Review, 55, 831842. 26. Perri 6. (2002). Towards holistic governance: The new reform agenda. New York: Palgrave. 27. Polanyi, K. (2007). The great transformation: The political and economic origins of our time (p. 112) (trans: Feng, G., & Liu, Y.). Zhang Zhou: Zhejiang People’s Publishing House. 28. Polsby, N. W. (1980). Community power and political theory (p. 118). New Haven: Yale University Press. 29. Pu, X. (1998). The reform trend of urban management system in megalopolis. CASS Journal of Political Science, (3). 30. Sabatier, P. A. (2004). Policy process theory (p. 56) (trans: Peng, Z., & Zhong, K.). Beijing: Joint Publishing. 31. Salamon, L. M. (2008). Partners in public service: Public-nonprofit organization relations in the modern welfare state (p. 51) (trans: Tian, K.). Beijing: The Commercial Press.

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32. Savasse, E.S. (2002). Privatization and public-private partnerships (p. 65) (trans: Zhou, Z.). Beijing: China Renmin University Press. 33. Wan, P. (1994). The street administration system in China mainland cities. Modern China Studies, (3). 34. Wei, N. (2003). China’s urban community governance model: Evolution and institutional innovation. Journal of Renmin University of China, (1). 35. Xu, Y. (2001). Governance transition and competition: Corporatism. Open Times, (7). 36. Zhang, T. (2004). Neoliberalism, urban management, governance and competitiveness. City Planning Review, (5). 37. Zhao, Y. (2002). From urban governance to management. City Planning Review, (11). 38. Zhe, X. (2014). The new changes of governance model of county government. Social Sciences in China, (1). 39. Zhou, X. (2011). Authoritative system and effective governance: The institutional logic of state governance. Open Times, (10).

Chapter 2

The Nature and Governance Mission of the City

The city, considered as the product of human civilization and the man-made environment created by humans to get out of uncivilization and pursue a better life, plays a pivotal role in economic and social development as well as regional governance. Lewis Mumford, a scholar of urban research, commented that it took more than 5000 years for humans to gain a partial understanding of the nature and evolution of the city, and it might take longer to completely identify more characteristics that have not yet been discovered.1 To understand the law of urban development and improve the ability of urban governance, it is necessary to start with nature of cities and identify the basic mission of urban governance, then clarify the relationship between the urban and rural governance.

2.1 Re-recognize the Nature of the City 1. The Multiple Definitions of the Nature of the City In order to develop a better understanding of the nature of the city, it is necessary to review its definition by different disciplines. Architecture defines the city as a combination of architectural technology and art, highlighting the density of cities’ buildings. Architecture is a kind of discipline that studies the buildings and their surroundings, aiming at summing up the experience of human architecture activities for architectural and landscape design, by which the living environment system is improved. From the perspective of architecture, urban development needs to meet the demands of people both materially and spiritually. In addition, many factors, such as the scale, materials, ventilation, lighting, must be taken into account for urban buildings, so as to provide people with safe, healthy and comfortable places for living, working and entertainment. 1 Mumford

[7], p. 2.

© China Renmin University Press 2021 H. Yang, Urban Governance in Transition, Understanding China, https://doi.org/10.1007/978-981-15-7082-7_2

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Geography describes the city as a type of human settlement system, that is, the human settlement and living place larger than the village and town, focusing on the characteristic of urban settlement. From the perspective of human geography, the human society has undergone the settlement system history of “village-town-citymetropolis”.2 The city, with people mainly engaging in non-agricultural activities, has a large population, dense buildings and complex social structure, which are social characteristics distinctively different from the village. The urban geographers— Richard P. Green and others—stated that cities are more densely populated, crowded, and have higher-level economic activities, more supplies and demands of workforce in a wider area, more complex economic organizations, social characteristics of urbanism and urban value, and more effective and better management.3 Economics designs the city as a gathering place for non-agriculture industries and population, a relatively developed industrial and commercial region, and an economic center of a region or a country, concentrating on the characteristics of urban economic elements. Arthur O’Sullivan defines the city as a geographical area inhabited by a relatively large population in a relatively small area.4 In the limited area of a city was clustered with a large number of companies, families and residents. It is a gathering place for non-agricultural industries such as commerce, industry, finance, real estate and information. In terms of urban economy, the revenue increases accompanied by its scale-up. When the scale of economy expands, the output will outgrow the expenditure.5 As the division of labor becomes more clear-cut and specialized, a diversified industrial pattern will take shape, making the city more dynamic and more gentrified than the rural areas. Sociology describes the city as a residential community composed of different individuals, highlighting the social differentiation and heterogeneity of population. Louis Worth divides social relations into three levels: primary, secondary, and tertiary.6 The main social relation in rural areas is at the face-to-face primary level, while cities where people are surrounded by strangers are dominated by secondary and tertiary relations. Sociology focuses on the diversity of urban social class, nation, and ethnicity. Different social groups not only live in different areas of the city, but also often do different jobs in different places. Sociologists often use some terms to describe the diversity of urban population, such as arena, babylon, bohemian, mosaic, kaleidoscope, labyrinth, village in the city.7

2 Johnston

[3]. and Pick [2]. 4 O’Sullivan [9]. 5 O’Flaherty [8]. 6 Wirth [15]. 7 Knox and Pinch [4]. 3 Green

2.1 Re-recognize the Nature of the City

19

From the discussion aforementioned, it can be seen that different disciplines have different definitions of the nature of cities, and all of them elaborate the attributes of the city. Architecture focuses on the density of buildings, architectural styles, and layout of settlements; geography centers on the humanities, economy, geography, and spatial structure of the city; economics highlights on the size of population and industrial structure; sociology emphasizes on the social differentiation, social life and social issues. Due to the different aspects they concern, these disciplines have their own urban research topics, and develop their knowledge systems respectively. They are different, interconnected, and jointly promote the theoretical development of urban research. Anselm Strauss and Juliet Corbin referred to theory as a set of related concepts that are well-developed through demonstration of relationship, and these concepts constitute an integrated mode that works to explain or predict a phenomenon.8 The commonly-referred theory actually includes one or a set of concepts to explain or predict a phenomenon. Concept, the basic element of theoretical thinking, is a generalization or abstraction of the characteristics of things, showing people’s understanding of the nature of things. For the government management, in order to understand the law of urban development and improve the capacity of urban governance, it is necessary to understand the basic concepts based on the value appeal of public management, to develop the knowledge of city nature, promote the development of theory, facilitate the production and dissemination of new ideas and concepts. 2. New Understanding of the Nature of the City When examining a city, people are more likely to focus on the hardware elements through their visual capture, such as densely-located buildings, well-developed industry and businesses, and convenient transportation, while neglecting the software elements which are difficult to discover, including public management and services of urban planning, security and environmental protection. Understanding the original nature of the city requires to identify the most basic functions of is by looking beyond the complex factors in construction, landscape, economy, and society. By studying the origin and evolution of the city, Mumford proposed that before the city became a permanent place for human beings, it was originally the place where ancient humans gathered. He also argued that these places first served as magnets that attract people together, then functioned as containers.9 Moreover, he thought that the embryonic urban development emerged because of the special “magnetism” of some places, and they became a gathering place for humans. In addition to excellent natural conditions, such places must have some characteristics that make people believe that

8 Strauss

and Corbin [13]. [7], p. 9.

9 Mumford

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2 The Nature and Governance Mission of the City

they could live better and stay longer, thus attracting people from many families or clans back in different seasons.10 The magnetism of the city both depends on the natural conditions and the manmade environment created on them. From the perspective of public administration, this kind of environment is usually referred to as the infrastructure and public services. Early cities, in general, were built with closed walls which served as defensive function. There are some descriptions of the vital role of ancient walls in some monographs, such as “city wall can be used as defense” in Mo-tse Seven Worries, “city wall is a boundary line dividing the city into outside and inside” in Guan Zhong Hydraulics, “the city is built to protect the emperor, and the wall is constructed to prevent civilians from enemies” in Ancient and Modern Notes. In addition to the defensive function, the early cities also were perceived as the places for pilgrimages, holy land, temples, shrines, ceremonies, markets, and warehouses. Based on the discussion above, we can define the city as a geographical space with highly-concentrated high-quality public services. The cities serve to provide highquality public services, upon which urban development can be sustainable. As was stated before, the city has the function of both “magnet” and “container”, of which the former is reflected by high-quality public services that attract people. After that, the population agglomeration forms, which contribute to the division of labor as well as the industrial and business development, further leading to the latter function as a container. As early as more than 2000 years ago, the ancient Greek sages thought that people came to cities for a better life.11 It also can be seen from the theme of Shanghai World Expo “Better City—Better Life”. The reason why cities can improve the quality of life is that they are well-equipped with complete infrastructure, and residents can access to better public services there. However, the cost occurs in the supply of public services. The more diversified, higher-quality and more complete the public services are, the more the public expenditure is. In comparison with the city, the infrastructure and public services in rural areas are much fewer, and the quality of service is not as good as that in urban areas. For remote and backward areas, the public services provided by the government are limited to access to electricity, post office, telephone, radio, television, as well as the livelihood security, such as educational opportunities and basic medical care. Due to the limited capacity of providing public services in the early cities, citizens can only access security, order and rituals. Moreover, early public services were only available for the ruling class, but not for the public. Mumford proposed that the ancient cities were originally concentrations of people under strong, unified, selfdirected leadership, functioned as a tool to rule people and control the nature to make

10 See

Footnote 2. argued that when the city is composed of a number of villages, the society will evolve into a high-level status, where humans can be fully self-sufficient. That is to say, the emergence of city is due to the development of human life, but actually results from the pursuit of a better life [1]. 11 Aristotle

2.1 Re-recognize the Nature of the City

21

the urban community be submissive to gods.12 With the development of the division of labor, the functions of the city continue to expand, such as being places for special events—sacrifices, religions, markets, entertainment, and social communication. As more kinds of jobs came into being, the types of public services increased, making the coverage more extensive.

2.2 Institution and Mission of Urban Governance 1. Institutional Arrangements for Urban Governance Public Policy Scholar John Rennie Short pointed out that cities in modern society are composed of are ever-changing views, various messages and ongoing conflicts of interest, but we can seek an order to put these organized.13 According to him, understanding the city needs to seek for the basic code to the order and enhance the perception of the original nature of cities. It is believed that the essential nature of cities is the highly-centralised high-quality public services, which can provide basic code for understanding urban order and offer new ideas for improving urban and rural governance. Urban governance can be practiced, through urban planning and other means, within a certain geographical space zoned in a city. The municipal government provides a series of infrastructure and public services which develop into the centralised public service system, and collects revenue through taxation or mandatory charges imposed on residents and legal persons there. This kind of practice is, in fact, to create an institutional arrangement where the government provides highquality public services, and the public needs to pay for them. At present, for the urban governance in China, the nature of the land has shifted from rural collective to state-owned through expropriations for urban development and construction. This actually demarcates the boundary of urban construction for government delivery of high-quality public services and resources within the area, and collects considerable revenue for public services through land transfer. Municipal governments are responsible for the production and delivery of public services, and collect revenue by monopolizing the trading of public goods. Unlike voluntary transactions in the market, mandatory taxes and fees for high-quality public services are levied or charged by municipal governments. Residents moving to a city or businesses deciding to invest in a city indicates that they all need to pay for a range

12 Mumford 13 Short

[7], p. 101. [12].

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2 The Nature and Governance Mission of the City

of high quality public services, and the tax or charges paid by them are the cost to access to these services. 2. Basic Mission of Urban Governance There are two basic missions of urban governance.14 First, it aims to provide high-quality public services and complete infrastructure, attract the investment of industry and commerce, and meet the public’s demands for high-quality public services. The public service system mentioned here includes physical infrastructure such as roads, bridges, schools, hospitals, parks, and the non-physical infrastructure, such as education, culture, medical care, social security, public transportation, environmental protection, economic and social regulation. Good urban governance involves city governments building a public service system with complete public services provided for the citizens, enterprises and social organizations. Second, it is designed to establish a sustainable fund-raising mechanism and constantly improve the public services. The stable source of financial revenue is required to underpin the provision of high-quality public services in cities. Urban infrastructure construction entails a huge amount of funds, and characterized by long return period and sunk cost. In addition, the fund can not be used for other purposes once it is used. At the same time, the scale economy effect of infrastructure is significant. After the completion of the project, with the increase in the number of consumers, the operation of it is distinct in cost subadditivity. To meet the future development demands, the government needs to work with social forces committed to economic growth to support industry and commerce development in order to increase fiscal revenues. Under the market economy system, municipal government needs to distinguish between the functions of “steering” and “rowing”. It undertakes the task of provision and decision-making of public services, while the production of public services can be carried out either by the public sectors, or private sector through collaboration between government and the society to engage enterprises and social organizations in this process and allow them to compete. Moreover, the helmsman is supposed to try to find out the problems, balance competing demands, and act as an arranger to make decision on whom to produce for, how much to produce, how to produce, and how to pay for it, while the oarsman need to deal with specific tasks. The delivery of public services involves a series of collective choices and should be the primary responsibility of the government, Oxon said. The production of public services is a technical process during which resource inputs convert into outputs, and both the private sectors and the third sectors can participate in it and take the responsiblities.15 In practice, the specific arrangement of public service production can be carried out directly by the public sector, or accomplished by enterprises or social 14 Yang 15 Oxon

[19]. [10].

2.2 Institution and Mission of Urban Governance

23

organizations through contract, government subsidy, voucher system, franchise, etc. Salamon conducted numerous empirical studies of the nonprofit organization and found that government cooperation with the voluntary sector has become a pillar of the supply of social services and that government has become the most important source of funding for the private non-profit organizations.16 Compared with cities, rural areas are less densely-populated, fewer types of public services are provided by the government, and their services are less centralized. What’s more, the supply of public services in rural areas is not directly related to the contribution of local residents to local finance. In the modern economic system, the agricultural economy is weak and needs the support of policy privilege and financial subsidies from government. In comparison with the municipal authorities, it is more difficult to raise funds for the county-level government. Without the support of fiscal transfers, some poor areas, only relying on local financial resources, are not able to ensure that all residents can access to the basic public services such as compulsory education, medical care, and family planning. If these services are not available to people, their basic rights of livelihood and development can not be guaranteed. The basic mission of rural governance is not to provide a complete range of public services nearby, nor to ensure that rural residents can access the similar quality of public services as urban residents, but to set the bottom line standards for public services to ensure that rural residents have access to essential basic public services. The basic public services refer to the public goods that maintain their dignity, secure their livelihood and development, such as compulsory education, basic medical services, social security, as well as transportation, safety, environmental protection and other livelihood needs closely related to their life. It is a citizen’s right to access basic public services, and it is incumbent upon the government to provide them. As such, the governments need to distinguish between basic public services and selective public services in urban and rural governance, and try to clearly define the scope of basic public services and standards. With the development of economy, the government’s financial power is gradually strengthened, and the standards of basic public services shall also be improved. Selective public services are higher-level services, such as higher education, public parks and plazas, city appearance and environmental sanitation, public security, road cleaning. Not all citizens can access to these, and many services are unlikely to reach vast rural areas. At present, the fundamental issue of urban and rural governance in China is not the gap in the level and quality of public services between urban and rural areas, but the lack of clearly-defined standards of basic public services in rural areas. In some remote and backward areas, the government can not guarantee the supply of basic public services due to its lack of financial resources. To improve the public services in rural areas, it is necessary to balance the spatial distribution of basic public services and facilities, make a list of projects and criteria for the provision of them in rural areas, and clearly define the specific responsibilities of different levels 16 Salamon

[11].

24

2 The Nature and Governance Mission of the City

of government. As such, the state needs to develop plans that set the clear national standards for the building the basic public service systems in a certain period of time. Based on this, the local governments can, according to the specific economic and social development in their own areas, set local standards within their respective jurisdictions, and can even set the standards higher. For backward and poor areas, if the local governments find it difficult to fulfill their responsibilities, the central government shall support by means of transfers. In addition, it is necessary to extend the urban high-quality public service resources into the small towns through policy instruments, so as to make it convenient for rural residents to access to them in the vicinity.

2.3 Financing System of Urban Public Services 1. Financing Model of Urban Public Services Some researchers proposed that cities can be viewed as “a collection of public goods”, and the city government is responsible for producing and providing quality public services and collecting financial revenue through monopoly.17 From the perspective of institutional economics, residents moving to or enterprises investing in a city means they need to buy a collection of high-quality public services. Taxes paid by the enterprises and residents are seen as the fees the governments charge for providing them with the public services. This kind of transaction between the city government and its citizens and enterprises is similar to that of goods and services between seller and buyer in the market. In the market, the seller sells a specific kind of goods and services, while the government offers a collection of public services in a given space. Municipal governments provide public services, which may be produced directly by a public institution or by both governments and enterprises through cooperation, or by social forces supported by government policies. There are also diversified institutional arrangements in the financing model of public services. An effective financing model can increase the supply of infrastructure and public services and accelerate urban development. Under the market economy system, the free flow of talents, capital and other factors of production forms the “foot-voting” mechanism, which leads to the competition among cities and promotes the evolution of financing system of urban public services. This competition is not only reflected in mechanism and the capacity of providing public services, but also in the financing model and the governance system. In the inter-city competition, the effective institutional arrangements are conducive to improving the infrastructure and the public services, and also make them draw on experiences from each other to promote the innovation of institutions. Whereas, 17 Zhao

[23].

2.3 Financing System of Urban Public Services

25

backward institutional arrangements will be eliminated when they do not work out in the difficulty. In order to gain competitive edge, cities with enhanced awareness in drawing on experiences will take the initiative to learn from other cities’ new institutions, mechanisms and experiences.18 2. Financial Institutional Changes in Cities of China Examining the urban financial system of our country, it has undergone the institutional change from “state investment and unified collection and allocation of funds by the state” to “local government investment and land finance”. Under the planned economy, the provision of urban infrastructure and public services depends on transfer from central government, and urban development is the product from state investment. Under this system, the city has inadequate voices in the provision of public services, and was not allowed to collect revenue, which is the result of unified state control over income and expenditure. Since the reform and opening-up, the central government has implemented the policy of “decentralization of power and transfer of profits”, and constantly expanded the autonomy of local governments in the economic and social development. Under the “fiscal responsibility” system, local governments began to invest in urban infrastructure and industrial projects on their own. In general, in the early period of reform and opening up, the state still played a dominant role in the construction of urban infrastructure.19 Due to the lack of effective supply, urban residents had to live in the environment of insufficient public transportation, shortage of power supply and energy, poor communication and inconvenient traveling. In addition, the coverage of water supply, sewage treatment and gas, per capita green area, and indicators of infrastructure such as schools, hospitals, buses, public toilets lagged far behind back then. Since the 1990s, accompanied by the state allowing the transfer of state-owned land tenure, China’s urban governance has ushered in a new era, and a system of “local investment and land finance” was gradually developed. After the reform and opening up, the Shenzhen Special Economic Zone, learning from the best practice from Hong Kong in raising funds, opened up a new way of financing urban construction through land-leasing. Draw on the experience land leasing in Shenzhen, the Constitution and the Land Management Law were amended in 1988, which provides that the state-owned land should be paid for use and the right to use the land could be transferred according to law. This innovative policy has opened up a new path for urban development, and built a new model of urban governance—relying on local investment to provide public services and land finance to raise funds for urban construction as a way to accelerate the development of urbanization and industrialization. As mentioned above, cities are characterized by a set of high-quality public 18 Yang

[18].

19 In the view of infrastructure projects throughout the country, the proportion of central government

investment was over 50% until 1991, but it was only up to 32.5% in 1991, indicating the local government investment playing a leading role in infrastructure construction [14].

26

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services not available in the rural areas. The framework of urban governance not only needs to provide high-quality public services, but also develop a mechanism for collecting ever-increasing fiscal revenue. The downside of the “state investment and unified collection and allocation of funds by the state” system is that the city provides public services, but it can not directly collect revenue. The advantage of “local investment and land finance” system is that the city government can charge fees for the public services for several years at one time through land transfer. In 1994, the reform of tax system brought about an increase in the central government’s tax revenue, but a sharp decrease in the local government’s. This reform, however, enabled the local governments to get the profits from less widely-adopted land transfer policy, which laid an institutional foundation for the model of “local investment and land finance”. With the development of the market economy and the implementation of the “auction and listing” system of land, the city government benefited considerably from the land transfer, contributing to a significant increase in the disposable income of urban government and an acceleration in infrastructure development. Zhang Jun, Gao Yuan and other scholars have found that after the tax reform in the mid 1990s, local investment has become the backbone for China’s infrastructure construction, and self-financing has emerged as the main funding source of infrastructure building. What’s more, the economically developed east China kept building infrastructure, and great gains were achieved.20 Great changes have taken place in urban roads, intercity highways, rail traffic, communication and networks, airports, stations, docks, schools, hospitals, and municipal public utilities such as water, power, gas and heating supply, as well as the public services such as education, culture, medical care, public health, parks, afforestation and environmental protection. Why can land finance give a strong boost to urbanization and industrialization? The reason is that it is an efficient mechanism of fund-raising for the provision of public services in cities. Most of the value of urban land, real estate and other immovables is reflected in the quality of public services in their location. Whether roads, stations, schools, hospitals and other physical facilities, or education, culture, health, environmental sanitation and environmental protection and other public services, the large-scale one-off investment and normal maintenance costs for these are necessary. However, the one-off investment under the planned economy system depends on long-term surplus and accumulation, leading to reducing the investment of largescale infrastructure projects and impeding the urban development. The system of land finance takes the public credit as the mortgage, and then invest the large amount of funds raised through the state-owned land transfer in infrastructure and the public services, so as to attract the enterprise investment and promote the industrial and commercial development. By doing so, it produces the new tax fund, so the virtuous circle is formed.

20 Zhang

et al. [20].

2.3 Financing System of Urban Public Services

27

In 1998, with the advancement of commercialization of housing and the abolition of the welfare-oriented public housing distribution system, land finance policy was adopted even more widely. Across the country, large, medium and small cities, including county-administered towns, pushed ahead with new urban development, and collect revenue through land transfer for financing gap for urban infrastructure and public services. In addition, they were subsidized by the central government to drive the development of industrial zones. With the revenue from land transfer, some large and medium-sized cities not only gradually paid off their infrastructure debts, but even built airports, high-speed railways and administrative centralized office areas. It is impossible, so to speak, to explore the path of urbanization with Chinese characteristics without the institutional arrangement of the land transfer. Cities in Western countries raise funds for public services by issuing municipal bonds and collecting real estate taxes, while in China it acquires lump-sum income for several decades through state-owned land transfer for public services, such as 70 years for residential land, 50 years for industrial land and 40 years for commercial land. The concepts of housing prices in China and foreign countries are totally different— the former with its own public services included and the latter with these services excluded, one researcher concluded.21 It is the innovative system of land finance that facilitates the rapid development and greatly changes the appearance of Chinese cities. Land finance has created an efficient financing model, which makes it a miracle of urban development in a short period of 20 years, but also causes many problems. First, it leads to soaring housing prices, which aggravates the burden of low-income urban households and the migrant workers. Second, it widens the wealth gap between the haves and have-nots, and the house may appreciate a lot for the early property buyers. Third, land finance and land banking mechanism use a large number of land resources, resulting in land set-aside. Fourth, it has the potential of financial risk. Both the practices of land mortgage for financing and developers purchase of land at high prices result from higher housing prices. Once the housing prices plummet, it will lead to a disastrous financial risk. Fifth, land finance may also contribute to deficit and unsustainable development. As the urbanization slows down, there is a decrease in the revenue from land transfer, leading to a shortage of funds for the cities. In order to address these issues listed above, it is necessary to push forward with innovative financial institution. An important institutional arrangement for the modernized urban governance in developed countries is the collection of property tax. It is aimed at housing, other buildings, land and other immovables, also known as “real estate tax”. Property tax is not like the income tax which is easily affected by enterprises and population mobility, nor is it highly related to economic structure and economic cycle like circulation tax, such as sales tax and value-added tax. It can provide a stable and reliable source of income and has less impact on economic 21 Zhao

[22].

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activities. The property tax is managed by the local government, which provides the public services to the taxpayers and secures the real estate value, which gives the local government impetus to provide the public services. With the implementation of property tax, the improvement of government provision of public services is reflected in the prices of state-owned land and attached property. However, some problems arise from the collection of property tax. This kind of tax levied on residents can compensate for the income shortfall from land transfer and reduce the local government’s dependence on land finance, but it can increase the residents’ net expenditure and is likely to cause protests. In order to reduce social conflicts, it is necessary to launch a reform in a gradual way, which breaks down the fiscal and taxation system transformation into several ones, each with small adjustments about interests. As the cites become more urbanized, there has been a gradual shift from indirect taxes to direct taxes.

2.4 New Ideas for Improving Urban and Rural Governance 1. Misunderstanding in Urban and Rural Governance Based on the analysis of the nature of city, the fundamental distinction between urban and rural areas is not the architectural style, population density and industrial structure, but the agglomeration of high-quality public service resources. Compared with the rural areas, the urban areas have more and better public services; compared with the small cities, the large and medium-sized cities have more complete and better public services. The provision of high-quality public services in cities is constrained by the level of economic development and the mechanisms for raising resources. An effective fund-raising mechanism can improve public services, attract investment, technology and talent, and increase revenue, while a bad mechanism will undermine the quality of public services. Because of the mobility of residents and enterprises, urban governments have to compete with other cities in urban governance. In order to improve ratio of output to input, maximize the economies of scale of the public services, attract investment, technology and talents, and increase returns on fiscal expenditure, cities are seeking better governance systems. In the inter-city competition, good institutional arrangements will win out in the competition, and will be widely adopted by learning from each other, while the ill-conceived one will be phased out. From the perspective of urban-rural relation, there is perception of promoting urban-rural integration and gradually equalizing the public services between urban and rural areas.22 Some researchers argue that regional economic integration is an ideal pattern of spatial development after a certain period of regional development 22 Lu

[6].

2.4 New Ideas for Improving Urban and Rural Governance

29

in order to seek a larger space for development, which can avoid the conflicts among the parties within the region.23 Other researchers believe that urban-rural integration is a defining trend in the development of modern urban-rural relations, and also think that in both developed and developing countries, with the progress of social economy and technology, the gap between urban and rural areas is narrowing and the integration of them will not definitely happen.24 In response to the division resulting from urban-rural economic dualism, some researchers proposed to launch a reform to the unequal institutional arrangements to eliminate the differences between peasants and citizens in employment, social security, political status, and so on in order to ensure the urban and rural residents access to equal rights, status, opportunities and public services to gradually realize the urban-rural integration.25 In terms of the meaning, the integration refers to the act combining the independent multiple ones through a way into an integral whole. In terms of public policy, the integration has two goals. One is to ensure the equality of rights between urban and rural areas. Some scholars proposed that the urban-rural dualism is the fundamental cause of the uncoordinated development and the widening gap between urban and rural areas. Only when significant progress is made in the reform of the dualism, the rights of rural and urban residents become more equal, and the urban and rural areas can be integrated. In this way, the problems concerning agriculture, rural areas and peasants can be solved26 ; second, it is to promote the equalization of public services between urban and rural areas. Some researchers argued that the balancing urban and rural development needs integrated planning of them to realize the equalization of public services, so as to achieve the governing goal of “building a people-oriented, fair and just society”.27 Although I have nothing against the equal rights between urban and rural areas, it is impossible for government to eliminate the natural differences in the provision of public services between these two areas. In urban and rural governance, the government needs to optimize the spatial arrangement of public service resources and ensure that rural residents can also access the essential basic public services. But this does not mean that the public service system in between them can be equal. In general, the quality of public services in urban areas is better than that in rural areas, and high-quality public services are generally first allocated to urban areas with higher taxes and fees borne by urban residents. If we follow the principle of equality to provide all kinds of public service resources equally in urban and rural areas, it will not only reduce the utilization efficiency of resources, but also lead to the failure of public governance. Early socialists carried out a host of reforms in order to eliminate the differences between urban and rural areas and establish an 23 Zhang

[21]. and Huo [17]. 25 Xu [16]. 26 Li [5]. 27 Xu [16]. 24 Xue

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ideal society. However, the efforts of both Fourier’s “phalanxes” and Owen’s “new harmony and communal society” to integrate urban and rural public services went unrewarded. Urban infrastructure construction, such as the airport, port, station, subway and other large facilities, requires huge investment. In addition, the funds for it can not be used for other purposes once these projects start. However, the economies of scale of infrastructure investment is remarkable after these projects are completed, and in a given space per capita cost will decrease with the increase in the number of users. Dense urban population, particularly in large cities and mega-cities, makes largescale municipal public service facilities construction viable. The access to municipal public service facilities is non-exclusive. Urban governance is generally practiced by providing municipal facilities and high-quality public services in a zoned area through planning, and levying taxes on residents in the areas according to certain charging standards.28 The city also provides high-level public services to some segments of the population and charges fees for higher education and parks for instance. For rural areas, it will cost the government a lot for the rural residents to access the equal quality of public services as those in the cities because of the sparse population. Even if high-quality public service facilities are provided through transfer, it is hard to maintain them for a long period of time. It can be seen that equality of public service system between the urban and rural areas is difficult to realize, and differences exist even in the basic ones. Therefore, it should not be perceived as the main goal of local governance. To improve public services in rural areas, a more viable policy instrument would be to clearly define the basic public services, clarify the respective responsibilities of central and local governments, develop specific standards and assessment methods, and strengthen incentives and accountability to enable governments at all levels to effectively fulfill their basic responsibilities. 2. The Policy Choice of Good Urban Governance Since the 1990s, China has launched the reform of land system and allowed the land transfer, which contributes to an efficient fund raising mechanism and a new source of tax revenue for public services and infrastructure, in order to attract investment and support industry and commerce development. This institutional arrangement injects momentum into the Chinese urbanization and does wonders for the urban development, but also causes many problems. The land finance has raised the price of housing, increasing the burden of the residents, and it costs migrant workers a lot to become urban citizens. In addition, the government aggregates a large amount of agricultural land in advance, which causes much set-aside land and deficit in land finance.

28 Yang

[19].

2.4 New Ideas for Improving Urban and Rural Governance

31

To improve urban governance, it is necessary to refine local fiscal and taxation system and public service provision mechanism by addressing local needs and avoiding risks. First, it is essential to get rid of the idea of equality in urban and rural public services and clearly define the bottom-line for equity of basic public services and optimize the spatial distribution of basic public services. Based on the new understanding of the nature of cities, it is impossible to equalize and homogenize the supply of public services between urban and rural areas. In a word, it is necessary for regional governance to abandon such equality, set the basic standard, and provide the basic public services in rural areas while ensuring the urban development. Second, it is important to promote the reform of the financial and taxation system so as to continuously provide revenue for urban governance. At present, the proportion of income from land transfer is relatively large in the urban financial revenue. With the cities become more urbanized, the demand for land transfer will dwindle gradually. In view of the problems existing in the land finance, it is necessary to put forward with the reform of the financial and taxation system and levy tax on residents’ housing, so that the provision of public services can be constantly supported by tax income. Third, it is pivotal to improve the public service supply mechanism, introduce market mechanism and social force, and promote PPP operation model. City governments are responsible for providing public services, but the production of them can be outsourced. Since the 1980s, the Public-Private Partnership (PPP) model has been widely used in urban governance. It introduces market mechanism and social force into the public services, establishes cooperation and partnership, focuses on cutting down project cost, improving operation efficiency and saving money. Fourth, it is necessary to improve the municipal performance evaluation mechanism to enhance the accountability, responsiveness and quality of public services. Performance evaluation is an important tool of urban governance. It can improve the allocation of public resources, strengthen process control and improve the quality of public services. 3. Institutional Requirements for Building Beautiful Rural Areas It can be seen from the new understanding of the nature of the city that there are inherent differences in the provision of urban and rural public services, and it is impossible to eliminate them. Decision-makers of urban and rural governance need to realize it and take into account efficiency and fairness. Furthermore, they are not only supposed to meet the demands of higher quality of urban public services, improve urban infrastructure and public service system and make all kinds of public services more complete and better, but also push forward the development of rural areas. Therefore, it is pivotal to, according to the specific economic situation, clearly set the standards of providing the basic public services in rural areas and help with funding support to ensure rural residents’ access to these services.

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Framework of urban governance needs to provide better and more complete public services, while the one of rural governance requires to deliver essential public services for local residents, ensuring sustainable development of farmers, agriculture and rural areas. The gap in the public service system between urban and rural areas will not be bridged with economic development. The state needs to provide the necessary financial and policy support to the county and township governments in order to improve the basic public service system in rural areas and to ensure that rural residents can also benefit from the country’s development. First, in view of the urban-rural relationship, it is necessary to facilitate equal empowerment and guarantee that urban and rural residents have equal property rights and enjoy the same policy privilege. Over the past few years, it has shown that the government failed to narrow the urban-rural gap by subsidizing agriculture financially and helping farmers improve their livelihood. The way to address the problems concerning agriculture, rural areas and farmers is to enable the rural residents enjoy the same policy privilege as the urban citizens by: (1) formulating a unified policy of land use, compensation for land acquisition, and trade of land for construction; and (2) giving farmers the right of mortgage, guarantee and transfer for contractual right of land; and (3) safeguarding the farmers’s right of fair benefit in land acquisition; and (4) giving peasants the proprietary right to their own housing, such as mortgage, guarantee, transfer; and (5) guaranteeing the legitimate rights and interests of peasants in the collective economy; and (6) ensuring that peasants share the collective economic benefits and the land value-added revenue; and (7) reforming the household registration system to guarantee the right of peasants to move freely and allow migrant workers to transfer their household registration to cities; and (8) establishing a social security system covering all residents. Second, it is important to clearly set the basic level of standards in the provision of public services to ensure that urban and rural residents have access to basic public services. Regional development needs to have regard to both efficiency and fairness. In addition, it not only maximizes the efficiency of urban economy, meets the needs of high-quality public services in urban areas, but also addresses the basic public service demands in rural areas, such as providing basic education, medical care to ensure that every village has access to roads, postal services, electricity, radio and television. In recent years, the policy orientation of balancing the urban and rural development proposed by central government includes setting the bottom line for basic public services. Decision of the CCP Central Committee on Several Major Issues Regarding the Overall Deepening of Reform puts forward overall planning of urban and rural infrastructure construction and community construction to promote the equality of urban and rural basic public services. The implementation of this decision needs to make a list of basic public services and set relevant standards at the national level, establish a performance evaluation system, and improve policy implementation and incentive and restraint mechanisms. Provincial governments should create basic public service standards and local policy systems in their regions, and supervise, evaluate and hold accountable the municipal and county governments.

2.4 New Ideas for Improving Urban and Rural Governance

33

The municipal and county-level governments are responsible for the implementation of specific measures and decisions to optimize the spatial arrangement and improve basic public services in rural areas. Third, in terms of financial expenditure, it is necessary to increase the transfer to rural area. After establishing the standard for basic public services, the local governments, whose financial revenues are not insufficient to provide the basic public services in rural areas, shall be subsidized through transfer by the central and higher levels of governments. When governments in poverty-stricken areas, ethnic minority areas and frontier areas have difficulties in fulfilling their duties, the state shall provide support through funding support to ensure that the basic public services are provided. Provincial and municipal government should also provide financial support to the county-level governments according to actual circumstances, and help poor counties to fill the financial gap. Fourth, the goal of village planning needs to improve the distribution of basic public service facilities in rural areas. Rural areas are sparsely populated and it is impossible to allocate all public facilities and resources equally to every natural village. However, in order to enhance the utilization efficiency of public facilities, local governments can implement the strategy to develop the secondary cities. It means planning the small towns as the places where the basic public services for rural areas are delivered through planning instruments, and the government optimizes the distribution of basic public service facilities by matching the population distribution, surrounding environment and transportation with the location and scale of public services, and create the standard of basic public service facilities. By means of policy, the municipal and the county governments can enable the urban high-quality public service resources to extend to small towns and rural settlements so as to ensure the rural residents’ access to these services. For areas that are unlikely to be developed due to poor conditions, the governments can encourage relocation through policy privilege. Fifth, as for the rural governance, local governments need to negotiate democratically, guarantee the citizens’ right to participate, and respect the preferences and choices of the citizens. The process of consultative democracy reflects the value preference of the public, involves the stakeholders in the decision-making of public affairs, establish collective deliberative mechanisms, listen to public voices, respond to public demands, and promote the democracy of public governance. In addition, it requires the institutional arrangements for conversation and consultation, such as councils, board of executors, hearings, to facilitate the communication between the government and the population, so that they reach an agreement in dialogues, come into a consensus in interaction, make collective decision-making and organize a collective activities. Public participation and consultation can gather the knowledge, information and preferences from all parties, identify the real needs of community residents for basic public services, improve the allocation of public resources, and achieve the governance goals.

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References 1. Aristotle. (1965). Political science (p. 7) (trans: Wu, S.). Beijing: The Commercial Press. 2. Green, R. P., & Pick, J. B. (2011). Urban geography (p. 121) (trans: Urban Geography Committee of Chinese Geographical Society). Beijing: The Commercial Press. 3. Johnston, R. J. (2004). The dictionary of human geography (p. 80) (trans: Chai, Y., et al.). Beijing: The Commercial Press. 4. Knox, P., & Pinch, S. (2005). Urban social geography: An introduction (p. 56) (trans: Cai, Y.). Beijing: The Commercial Press. 5. Li, Y. (2009). Towards the integration of urban and rural areas: The transformation of urban and rural system in the 60 years after the founding of the PRC. Journal of Peking University (Philosophy and Social Sciences), (6). 6. Lu, D. (2014). Exploration of the equalization of social security in the process of urban-rural integration: A case study of Suzhou. Jianghan Tribune, (12). 7. Mumford, L. (2005). The city in history: Its origins, its transformations, and its prospects (trans: Song, J., & Ni, W.). Beijing: China Architecture & Building Press. 8. O’Flaherty, B. (2005). City economics (Vol. 12, p. 572573). Cambridge, MA: Harvard University Press. 9. O’Sullivan, A. (2008). Urban economics (6th ed., p. 2) (trans: Zhou, J.). Beijing: Peking University Press. 10. Oxon, R. J. (2005). Governing local public economy (p. 9) (trans: Wan, P.). Beijing: Peking University Press. 11. Salamon, L. M. (2008). Partners in public service: Government-nonprofit relations in the modern welfare states (p. 51) (trans: Tian, K.). Beijing: The Commercial Press. 12. Short, J. R. (2011). Urban order: An introduction to cities, culture and power (p. 3) (trans: Zheng, J., & Liang, J.). Shanghai: Shanghai People’s Publishing House. 13. Strauss, A., & Corbin, J. (1998). Basics of qualitative research: Techniques and procedures for developing grounded theory (p. 15). Thousand Oaks: Sage Publications. 14. Wei, X. (2002). Regional differences in the infrastructure investment in China. Shanghai Journal of Economics, (12). 15. Wirth, L. (1928). Urbanism as a way of life. American Journal of Sociology, 44, 324. 16. Xu, Z. (2016). Urban-rural integration from regional governance to national strategy. Zhejiang Social Sciences, (1). 17. Xue, Q., & Huo, Y. (2010). Study on the theoretical origin and evolution track of urban-rural integration. Economic Geography, (11). 18. Yang, H. (2015). Research on the executive mechanism of innovative policy. Journal of Renmin University of China, (3). 19. Yang, H. (2016). Clarify the misunderstanding of urban and rural governance. Exploration and Free Views, (6). 20. Zhang, J., Gao, Y., Fu, Y., & Zhang, H. (2007). Why does China have good infrastructure. Economic Research Journal, (3). 21. Zhang, K. (2015). Regional economic integration: An ideal win-win pattern. Regional Economic Review, (6). 22. Zhao, Y. Re-examine the land finance. China Business News, 20130513. 23. Zhao, Y. (2009). The original model of the city institutions. City Planning Review, 10, 918.

Chapter 3

Institutional Changes of Urban Governance in China

3.1 Establishment and Evolution of Municipality 1. Establishment of municipality The municipality is a form of local administrative division, mainly used in urbanized areas. In the West, it originated in medieval Europe. Pirenne noted that an important feature of the medieval municipality is the rise of the class of citizen, and a set of special laws and independent urban organization system are developed. Under the special law system, the citizens enjoy privilege which separates them from the rural masses, which constitute substantial majority of the population.1 Residents in the municipality do not earn their living by cultivating land, but by engaging in commercial and industrial business. Another important feature is its autonomy and distinctive laws and institutions. With the development of urbanization, the municipality, has become a common form of local administrative division. Separated governance for urban and rural areas is widely practiced in Western countries, and municipality was designated based on urban administrative divisions. Municipal government is only responsible for urban public affairs, with cities and suburbs as its jurisdiction, excluding vast rural areas. In the jurisdiction, urban authorities have statutory right of autonomy and are not subject to interference by the state or the upper-level government in matters pertaining to autonomy. In Asia, Japan was the first country to introduce municipality. In 1888, Japan designated 36 municipalities for the first time and listed Tokyo, Osaka and Kyoto as special cities. The municipality in China was introduced relatively late, and it evolved from separated to integrated governance of urban and rural areas. China has a long history of urban construction and development, but municipality was established relatively late. It was not until the end of the Qing Dynasty that China followed the Western system of autonomy to implement separated governance for 1 Pirenne

[9].

© China Renmin University Press 2021 H. Yang, Urban Governance in Transition, Understanding China, https://doi.org/10.1007/978-981-15-7082-7_3

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cities and counties and develop the administrative division of “city”. In 1905, the Qing government sent five ministers including Zai Ze to North America, Western Europe and Japan to study the western democratic constitutionalism and local administration. In January 1909, the Qing government formulated and promulgated the Constitution of Local Autonomy of Cities and Towns, which for the first time in history designed cities, towns and rural areas by law. The Constitution provided: (1) areas under Fu (county subdivision), Ting (administrative unit), Zhou (county subdivision), County are defined as “city”; and (2) an area with population of over 50,000 is designed as “town”; and (3) city, town and village are basic level administrative divisions under county. The city is empowered to engage in related business, such as school, health care, road building, agricultural and commercial engagements, charitable activities, public service, and financial business. As for the organization system of the city, the council is the legislature and the board of directors is the executive branch.2 At the end of the Qing Dynasty, the urban regulations were relatively loosely formulated. The Revolution of 1911 broke out in the middle of establishment of city system, but it marked the beginning of the earliest city establishment. 2. Evolution of Municipality As a form of local administrative division, the municipality from the inception in China was the product of the reform in the late Qing Dynasty when it was introduced from Japan, and then converted into autonomy system for city, town and rural areas. In the late Qing Dynasty and the Republic of China, the urban and rural were administered separately, which showed little difference from that in western countries. In the early years of the Republic of China, limited attention was given to provinces by the central government, and therefore the autonomy was performed by respective provinces. In November 1911, Jiangsu Province promulgated the Provisional Administrative System for Urban and Rural Areas in Jiangsu Province, providing that area governed by the county, or with 50,000 residents was designed as “city”, and the original “Cheng (area within the city wall)” and “town” should be collectively referred to as “city”. In 1914, Yuan Shih-kai ordered the suspension of local autonomy, which was replaced by administrative division—city. In July 1921, the Beiyang Government promulgated the Municipal Autonomy System, and in September issued the Regulations for the Implementation of the Municipal Autonomy System, which restored the establishment of autonomous city, and divided it into two kinds-special and normal. 2 According

to Constitution of Local Autonomy for Cities and Towns, the organizational structure includes decision-making body (council) and executive body (board of directors). The members of the council shall be elected by and from the voters of the town, following the principle of withdrawal. That means father, son and brother shall not serve as members of council together. If it happens, sons shall give way to fathers, and younger brother shall give way to elder brother. The speaker and deputy speaker shall be elected by and from the voters after the members elected. The term of office for member of council is two years, with half of them replaced every half a year. And a two-year tenure is regulated for the speaker and deputy speaker who shall be replaced after term limit. There is normally one director general, one to three directors and four to twelve honorary directors elected by the members of council in the town board of directors [14].

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Special cities, at the same level with counties, shall be supervised by the provincial administrators, with the exception of capital by the Chief of the Internal Affairs of the State Council. The normal city, subordinate to the county, have the same rank as township, under the supervision of the county governor. In July 1928, the Government of the Republic of China promulgated the Organic Law of Special Cities and the Organic Law of Cities, which defined the organizational forms of special and normal cities, respectively. In May 1930, the Government renewed and issued the Organic Law of Cities, which divided the cities into the ones under Executive Yuan and the others under provincial government, but both were autonomous areas. In 1943, the Organic Law of Cities was amended to simplify the criteria for the establishment of cities, with districts established under cities and neighborhood administrative system (保甲制度, baojia zhidu) implemented under districts. In 1947, there were 69 cities governed by the Kuomintang (KMT), including 12 Executive Yuan administered cities (Peiping, Tianjin, Shenyang, Dalian, Harbin, Shanghai, Nanjing, Qingdao, Hankou, Guangzhou, Chongqing and Xi’an) and 57 provincially-administered cities (e.g. Tangshan, Taiyuan and Baotou). After the People’s Republic of China in 1949, the institutional arrangements of separated governance for city and county lasted for a period of time. In the 1950s, after the implementation of state monopoly of the purchase and marketing of grain and other goods and the establishment of cooperatives in rural areas, markets and the commodity circulation channels were abolished between urban and rural areas. In order to ensure the supply of vegetables and non-staple foods in large cities, the state has approved the expansion of suburban areas in some large cities and made the surrounding counties governed by cities to provide the vegetables and non-staple food through planned economy.3 In the early 1950s, there were only a few cities with counties under their jurisdiction, such as Luda, Benxi, Nanjing and Wuxi, and most of other cities and counties were not subordinate to each other. After the Constitution of 1954, counties were no longer administered by municipalities. In 1958, under the “Great Leap Forward” initiative, in order to promote mutual support between industry and agriculture and facilitate the allocation of labor resources, the central government implemented the governance model of cityadministering-county. In September 1959, the Standing Committee of the National People’s Congress adopted the Decision on the Municipalities Directly under the Central Government and the Larger Cities to Administer Counties and Autonomous Counties. Since then, the number of city-administered counties was increased. By the end of 1960, there were 48 cities governing 234 counties and autonomous counties across the state, along with 6 county-level cities under their supervision. Therefore, the number of city-administered counties accounts for one eighth of the total number of counties in the country. Faced with economic woes, the central government decided 3 For

example, in August 1948, there were 8 suburbs around Beijing, with a population of 480,000 people and a total area of 654 km2 . By 1958, Beijing had expanded its suburban area by about 8200 km2 and increased its population by about 2 million [4].

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in 1961 to reduce the area of city suburbs, resulting in the significant decrease in the number of city-administered counties. After the reform and opening up, the central government put forth the idea of “city-administering-county” as a way to break down the barriers between urban and rural areas. In 1982, the Central Committee of the Communist Party of China issued Notice on Reform of Regional Institutions and Implementation of the System of City-Administering-County, proposing to abolish regional departments in relatively economically prosperous areas and implement the city-administering-county system, and launch the pilot reform in Jiangsu Province. After that, this reform had been promoted widely across the country.4 As this system was widely adopted, the municipality has become a kind of administrative division with a wide area under its jurisdiction, including both urban and county areas. This kind of administrative division is one of the distinctive characteristics of local governance in China different from the western model.

3.2 Institutional Structure of Urban Governance According to the Constitution and law, there are two types of cities in China: city with district-level divisions (including municipality, sub-provincial city, prefecture-level city) and city without district-level divisions (generally referred to as county-level city).5 At present, cities above the prefecture-level generally have district and county governments. In addition, the two-level government and three-level administration system is being implemented in central urban areas, the three-level government and three-level administration system in suburban areas, and city-administering-county in peripheral rural areas. Sub-district offices and neighborhood committees play an important role in the urban primary-level governance. 1. Two-Level Government and Three-Level Administration According to the Constitution of China, municipalities and larger cities are allowed to divide into districts and counties. In practice, municipalities, sub-province-level cities and prefecture-level cities generally have districts under them, and sub-district offices under the districts are established to undertake the tasks assigned by the government, with two-level government and three-level administration system implemented. However, county-level cities contain no districts, and the local governance of 4 This reform, for example, was launched in Zhejiang province in 1983, and Lishui (county level city)

was elevated to a prefecture-level city in 2000. Until then, the city-administering-county system had been implemented in 11 cities and 59 counties in Zhejiang Province [8]. 5 At present, there are four prefecture-level cities in our country without district-level divisions: Dongguan City and Zongshan City in Guangdong Province, Jiayuguan City in Gansu Province, Sansha City in Hainan Province. But they are given the same legal status and legislative rights as those for the city with district-level divisions. See the Decision on Amendment of Legislation of the People’s Republic of China by National People’s Congress, adopted by the 12th Session of National People’s Congress on March 15, 2010.

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the town is the responsibility of township government, or in town areas the township government is replaced by sub-district offices with system of one-level government and three-level administration adopted. Under governance model of two-level government and three-level administration, district government is first-level government with complete administrative structure and executive power, whereas the sub-district offices can only perform the special executive powers granted by the district government. The district government can be financially independent, while the sub-district offices need to receive funds from the district financial allocation. In order to strengthen primary-level management in cities, large cities began in the late 1990s to shift their management focus to the lower-level divisions, transferring many of the responsibilities previously undertaken by municipal organs to district governments, then to the sub-district offices, leading to increased duties by sub-district offices. 2. The System of Sub-district Offices and Neighborhood Committees Under this system, sub-district offices are set up as dispatched agencies by the city government. They take on the responsibilities allocated by the government and organize residents to establish an autonomous committee for self-management, selfeducation and self-help. Article 68 of the Organic Law of Local People’s Congresses and Local People’s Governments at All Levels of the People’s Republic of China provides that districts or cities not divided into districts may, with the approval of the government at the higher level, set up dozens of sub-district offices as their respective affiliates. Sub-district offices are not first-level local governments and do not have the executive power prescribed by law. Their special power is granted by district government and its community campaigns depend on the transfer or special funding from district government. The first urban sub-district offices was set up in the 1950s. After the founding of People’s Republic of China, the Party and the State began to shift their focus from rural to urban areas. In order to strengthen the political power and maintain social order, some grassroots organizations are created in the cities, such as subdistrict offices, sub-district governments, residents committees, security committees and people’s mediation committees.6 Such organizations are diverse in name, attribute and form. In 1954, the National People’s Congress adopted the Regulations on Urban Sub-district Offices, which developed a unified institutional framework for urban primary-level administration. The Regulation stipulates that the urban subdistrict offices are not first-level government, but the dispatched agencies from cities or district governments, with main responsibilities for handling business for residents assigned by people’s committees of the cities and districts, leading the neighborhood committees and collecting the residents’ opinions. Since the reform and opening up, as the market-oriented reform progresses, the functions such as welfare delivery, social mobilization, and public management gradually shifted from the state to society. In order to avoid the blind spots in social management, the sub-district offices becomes the main actor that take over the 6 Chen

and Xie [1].

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responsibilities from the work unit. With the increase in the number of laid-off, unemployed and migration people, in order to strengthen social management, the district government constantly increases the scope of responsibilities for sub-district offices, contributing to extended work scope and more staff. At present, there are 80– 120 civil servants and up to 200 staff get paid by the State in a relatively larger-scale sub-district office in Beijing. In addition to the jurisdiction of municipal governments, some management committees in main functional area of cities also have sub-district offices, which are responsible for local management and fulfill the functions and powers granted by the committees. For example, under the management committee, Chengdu Hi-Tech Industrial Development Zone contains six subdistrict offices, including Xiaojiahe, Fangcao, Shiyang, Guixi, Hezuo, and Zhonghe. Xiaojiahe subdistrict covers an area of 2.75 km2 , with a total population of 55,300 in 2012, including 29,500 permanent residents and 25,800 temporary residents.7 The neighborhood committee, a primary-level autonomous organization in urban areas, is actually led by primary-level government and its departments. In 1954, the National People’s Congress adopted the Regulations on the Organization of Urban Neighborhood Committees, providing that neighborhood committees are primarylevel autonomous organizations, responsible for handling public welfare matters for residents, focusing on what they want and need, mobilizing them to respond to government calls and comply with laws, leading them on public safety and settling disputes among them. After the reform and opening up, as the reform to the urban economic system progresses, many social functions carried out by units were transferred to the sub-district offices. In practice, a lot of work is handed over from subdistrict offices to the neighborhood committees. In 1989, the Standing Committee of the National People’s Congress promulgated the Organic Law of Urban Neighborhood Committees, which further extended the scope of work of the neighborhood committees, including publicizing laws, regulations and state policies, safeguarding the legitimate rights and interests of residents, handling public affairs and settling civil disputes. The Organic Law of Urban Neighborhood Committees ordains that city without a district-level division, the district government or its dispatched agencies shall provide guidance, support and assistance to neighborhood committees. In practice, the funds for activities, the salary for personnel, and the expenditure of service facilities and community information in the committees depend on the transfer. In August 2010, the General Office and the State Council forwarded the Comments on Strengthening the Building of Urban Neighborhood Committees to further clarify that the remuneration, no less than the local average income of the previous year, for full-time personnel of neighborhood committees and community, should be paid by the local governments at or above the county level. It can be seen that the community neighborhood committees and the city government are closely linked, and urban authorities, 7 Chengdu

Hi-Tech Zone Local Compilation Committee Office [2].

3.2 Institutional Structure of Urban Governance

41

through the neighborhood committees, put the community service and management in place. 3. City-Administering-Country System The system of city-administering-county aims at having the counties around the city under the leadership of it. By the end of 2012, except the 18 regional administrative offices in Xinjiang (7), Tibet (6), Inner Mongolia (3), Heilongjiang (1), and Qinghai (1), the others were all replaced by prefecture-level cities. Nowadays, the system has become a basic system of local governance in China, and most counties have been governed by designated cities. The system of city-administering-county is a kind of reform to address the issues of separation of urban and rural area caused by the planned economy. It renews the relationship between them through administrative approaches to better meet the urban development needs. This system has a positive role in fostering regional economic growth. From the achievements of reforms in various regions, the economic growth rate is indeed faster after adopting it.8 However, there are also some problems in the operation of this system. First, this system leads to the unfair competition between city and county. In addition, the administrative division level between them is unequal under this system. Because municipal government has the power to govern the counties, they may opt to give priority to urban development through administrative means in urban and rural planning, infrastructure construction, community building, and investment attraction. As a result, the counties will hardly “shatter the glass ceiling” due to the unequal status. Second, the prefecture-level cities have limited economic radiation effects on their peripheral counties. The ultimate goal of this system is to leverage the economic radiation effect of central city to drive the county’s economic development. With the exception for a few large cities, the economic strength of most prefecture-level cities is not strong enough, so as not to drive economic growth in surrounding areas. People visually describe this phenomenon as “a small horse draws a big cart”. In the central and western regions of China, some prefecture-level cities are not big and have small-scale industrial agglomeration, but cover relatively broad jurisdictions. As a result, they are not only unable to drive the county’s economy, but sometimes they have to keep part of the government financial grant allocated to the counties for themselves. Third, this system is not clearly defined in the Constitution. According to Constitution of China, municipalities and larger cities are allowed to govern counties, but the system isn’t viewed as a local widely-adopted administrative system. In order to speed up the development of county economy, some provinces have taken the initiative to explore the reform of the city-administering-county system and expand the county-level administrative autonomy. So far, this reform has undergone “expanding power and strengthening county”, “province-administering-county” in “finance and province-administering-county” in administration. Under the premise of not changing the administrative demarcation, the system of “expanding power and

8 Dai

[3].

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3 Institutional Changes of Urban Governance in China

strengthening counties” aims to devolve part of the economic and social administrative power originally held by the prefecture-level city to the county government. The “province-administering-county” in finance refers that province-level financial department directly manages county-level financial department in aspects of inter-governmental revenue and expenditure, transfer payments, capital flow, budget and final accounts, year-end settlement, etc. The “province-administering-county” in administration works to allow province to directly govern county in cadre management, development planning, approval and so on. In the mid-1980s, when the cityadministering-county system was introduced in Zhejiang Province, with the exception of Ningbo, other cities remained to be administered by province in finance. In 1992, 13 counties (cities) with rapid economic development in Zhejiang introduced the system of expanding power and strengthening county, they were given more autonomy in the approval of fixed assets investment and foreign-invested projects. Since then, Zhejiang Province continuously launched this reform to economically prosperous counties.9 Drawing on the experience of reform in Zhejiang, the systems of expanding power and strengthening county system as well as provinceadministering-county in finance were also adopted in Hebei, Jiangsu, Henan and Anhui provinces. In 2009, the Ministry of Finance issued the Comments on Promoting Reform in Province-Administering-Country in Finance after tapping on the reform experiences in different areas, proposing to push forward the reform in an all-round way, except in ethnic autonomous areas. The administrative system of “ProvinceLeading-County” was first put into practice in Hainan Province in 1988. The Hainan provincial government directly has been governing the counties since it is created. At present, Hubei, Jiangsu, Anhui, Henan, Heilongjiang and other provinces are carrying out this system in parts of their areas. Strictly speaking, a municipality is a kind of administrative division only applied in an urbanized area. For the counties on the fringe of cities, the city is relative weak in driving the growth of them. To coordinate the development between urban and rural areas, it is necessary to detach the peripheral counties from cities and transfer them directly under the provincial governance.10 In view of this, municipal agencies need to distinguish peripheral counties from the surrounding ones, and implement the 9 In

1997, Xiaoshan and Yuhang districts in Zhejiang Province were given part of prefecture-level power in economic management, including 11 powers such as fixed asset investment approval. In 2002, the power of other 20 pilot counties (cities) were also expanded by Zhejiang Provincial government in economic management, by devolving 313 management powers previously held by prefectural-level cities to pilot counties. In 2006, the Zhejiang provincial government decided to expand Yiwu’s executive power, giving the city the same economic and social management power as a city with district-level division, in addition to planning and management, the allocation of important resources and the major social affairs handling. At the end of 2008, the system of expanding power and strengthening counties was widely promoted in Zhejiang, devolving 443 powers of approval to counties at one time [16]. 10 杨宏山 [17]. Yang [13].

3.2 Institutional Structure of Urban Governance

43

system in the peripheral counties. For counties adjacent ones, the city-administeringcounty system can keep being used, so as to leave enough space for urban sprawl and make peripheral counties benefit from urban expansion.

3.3 Institutional Changes of Urban Primary-Level Governance From the perspective of the relationship between state and society, this section examines the institutional evolution of urban primary-level governance in China by studying the forms of organizations through which urban residents can access to public and social services. China’s urban primary-level governance has experienced institutional changes in the work unit system, the system sub-district offices and neighborhood committee and the quasi-community system since the establishment of the new regime in 1949. In order to address the problem of being more administrative in the community governance, some cities have, since the beginning of the new century, abolished sub-district offices and committed to supporting the development of community organizations. 1. Work Unit System: Overall Control After the founding of the People’s Republic of China, in order to strengthen state power, our country gradually established the work unit (Chinese: 单位; pinyin: danwei) system in cities. As a distinctive institutional arrangement, the system underpinned an overall control over social order in the planned economy era. The state monopolized almost all the economic and social resources, and distributed and allocated them through the unit from and depending on which individuals could access resources. In addition to the unified allocation and distribution by the government, there is a lack of horizontal connection among the units, making it difficult for resources to flow horizontally and also for people to acquire resources from nongovernmental channels.11 The system provides urban residents with basic materials and social resources, but also greatly limited the rights for residents to choose their own way of life, forming a closed social living space. The social management of work unit system has three characteristics. First, the state controls almost all social resources. During the socialist transformation, the state advocated public-private partnership, gradually abolished private ownership of the means of production, and promoted state-ownership and collective-ownership. Andrew Walder noted that the public ownership of socialist countries is the redistribution system, under which all resources are allocated by the state and the redistribution is carried out via work units, resulting in protective and dependent relationship 11 Lu

[7].

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between them.12 Second, the work units are dependent on the state for access to resources. The work units are a kind of organization form under the state, so the nature, functions, status, activities and power of the units are directly given and regulated by the state. Their heads are appointed by the higher-level units and the resources required are centrally allocated by the state. Third, the state has overall control over the individuals through the work units. Under the system, all formal organizations, whether administrative, economic, institutional or political, are controlled and managed by the Party and the government. The units not only accountable for management and development, but also has the functions of political mobilization and social control. Family planning, ideological awareness, housing and life, employment status, crimes and other violations of the law for a worker of the units are considered as the indicators of their performance evaluation. The emergence of the work unit system is directly related to the economic and social situation when our country was established. Since the late Qing Dynasty, China has fallen into the disintegration of the traditional political system and social order.13 After the founding of the People’s Republic of China, in order to address the disorganization and disorder, most of the citizens were organized into work units, such as political, military, economic, cultural and other work units, to make the entire social well-organized. In the planned economy era, the system not only promoted the development of various undertakings, but also played an important role in political mobilization and social control. Through the highly regimented organization, the resolutions of the ruling party and the government can be quickly passed on to the grassroots organizations, and various kinds of tasks can be easily carried out by the units. The work unit system made the society more organized, but disintegrated the social self-organization system and increased people’s dependence on work units. After the socialist transformation, private sectors were converted into the public sectors and became inferior units of the state organs. So the former three-tier structure of “stateprivate sector-individual” was changed into a two-tier structure of “state-individual”. Under the system, all work units were given administrative levels and accessed to resources from the state, leading to government directly managing the public and lack of self-organization system. In addition, the system restricted the horizontal resource flow between units, resulting in heavy dependence of units on the state and individuals on the units. Therefore, the unit was the only source of income and welfare for workers. Individuals not only got paid by the units, but also relied on the unit for housing, medical care, child schooling, non-staple food subsidies, pension and the like. This top-down approach to resource allocation confined the social activities of the public to the closed space-units, thus shaping the dependent personality.

12 Walder 13 Sun

[11]. [10].

3.3 Institutional Changes of Urban Primary-Level Governance

45

State(Party and Government) Work Units Workers Residents Sub-district Offices Neighborhood Committees

Fig. 3.1 Operation of the system of work units. Note → indicates dominant process; auxiliary process

indicates

The system of work units operates as shown in Fig. 3.1. After the reform and opening-up, and as the economic system reform progresses, the structure of urban ownership has changed, which was reflected in the increased proportion of non-public ownership economy and more social mobility, as well as the fall of the role of work units in social management accompanied by a decrease in the number of the workers in the state-owned enterprises. As the social management responsibilities are gradually transferred from the work units, they have less control over and influence on individuals. As a result, the work unit system, as a social control mechanism, played a less significant role in society and economy over time, especially with the rise of other social management systems. 2. System of Sub-District Office and Neighborhood Committee: Strengthen the Territorial Jurisdiction The system of sub-district office and neighborhood committee, as one of China’s urban social management systems, was created at the beginning of the establishment of the new regime, prevailing after the reform and opening up. In the era of planned economy, the system of work units played a dominant role, so this system only served as a supplementary system accountable for residents who were not work unit persons. After the reform and opening up, under the advocacy of strengthening territorial management, it became dominant in the urban social governance. However, the subdistrict offices do not control all social resources, so they are unable to manage the daily operations of the units in its jurisdiction. The sub-district office performs the functions according to their power granted by government, provides public services to residents and keeps a lookout over suspicious-looking people. After the founding of the People’s Republic of China, some primary-level organizations integrating government administration and economic management with various names were established. In 1953, Peng Zhen, a late Chinese political leader, submitted to Mao Zedong and the Central Committee of the Communist Party of China a report on the Establishment of Sub-district Offices and Neighborhood

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Committees in Cities. In 1954, the fourth session of the first National People’s Congress adopted the Regulations on the Organization of Urban sub-district offices and the Regulations on the Organization of Urban Residents Committees, laying a foundation for the institutional arrangements of sub-district office and neighborhood committee. The former provides that sub-district offices are dispatched organs of the municipal government, with main tasks for handling resident-related affairs assigned by people’s committees at higher levels, leading the neighborhood committees and collecting the opinions of the residents. The latter states that urban resident neighborhood committees are autonomous organizations with responsibilities for providing public services, collecting the opinions and needs of the residents then reporting to the local people’s committee or its dispatching organs, mobilizing the residents to respond to the government’s call and comply with the law, organizing them on public safety and settling disputes among them. In the period of planned economy, most of the urban citizens were assigned to the work units. The sub-district office and neighborhood committee often managed the people who did not work in factories, organizations, schools, institutions and other work units. During the “Great Leap Forward” and the People’s Commune, the sub-district offices were given the first-level power and perceived as economic and social organizations, leading to unprecedented expansion of the power given to the sub-district Party committees and commune. After that, the failure of “Great Leap Forward” resulted in the fall of sub-districts, and the work units continued to play a leading role in the urban grassroots social management. The system of subdistrict office and neighborhood committee only served as a supplementary system, mainly responsible for cooperating with various agencies dispatched by government, including institutions of industry and commerce, city appearance, environmental sanitation, housing management, public security organs. After the reform and opening-up, the social management functions of the work units were gradually shifted to the sub-district offices as the reform of economic system progresses. In addition, they also assumed the new administrative responsibilities. Within their jurisdictions, there were also dispatched organs of the district government, such as industrial and commercial bureau, staple and fool control office, housing management office, police station, office of environment and sanitation, urban planning office and tax office. In the early 1980s, these agencies were vertically managed, so they were literally independent respectively, without being subordinate to sub-district offices. In the late 1980s, there were calls for territorial jurisdiction, and therefore these offices were under the management of both sub-district offices and higher-level division. In order to assist the sub-district offices in performing their functions, more responsibilities rested with the urban neighborhood committees. The system of sub-district office and neighborhood committee operates as shown in Fig. 3.2. With more and more responsibilities taken by the sub-district offices and neighborhood committees, new problems occur in urban social management. First, overload of work is found in the sub-district offices. In economic transformation, the service industry and self-organization system in urban residential areas are underdeveloped, leaving almost all matters pertaining to grassroots social management to

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47

State(Party and Government) Residents Workers Sub-district Offices Neighborhood Committees State-Owned Enterprises and Institutions Fig. 3.2 Operation of system of sub-district office and neighborhood committee. Note → indicates dominant process; indicates auxiliary process

the sub-district offices. Thus they not only perform the primary-level administrative functions, but also assume social responsibilities such as providing social welfare, public services, resulting in overload of work and great pressure. Next, the allocation of power and responsibility of sub-district offices is unbalanced. As the dispatched agencies of governments, the responsibilities assumed by the sub-district offices are increased, but the power and resources they have are limited. Because they are not independently-operating executive body, so the size of personnel force is determined by the higher-level government, and some of the responsibilities are delegated either by the higher-level division, or by the administrative department. Therefore, they lack the revenue sources and mainly depend on transfer. Finally, the neighborhood committees find it difficult to perform their functions. Although they are, from the perspective of nature, resident autonomous organizations of self-management and self-help, they practically go on errand for sub-district offices. 3. Quasi-Community System: Facilitate Multi-Party Participation In 1986, the Ministry of Civil Affairs introduced the system of community for the urban primary-level governance for providing community services, so as to meet the citizens’ demands because the work unit no longer fulfilled the social functions. In September 1987, the Ministry of Civil Affairs held the National Symposium on Community Service in Wuhan, which marked the official launch of community service in China. In 1993, 14 ministries jointly formulated the Comments on Accelerating the Development of Community Services, and added it to the development planning of the tertiary sector of the economy. After that, the city government mobilized the social forces to participate in building the community and provide community services. In 1998, the Ministry of Civil Affairs, based on primary-level regime and division, established the primary-level regime and community offices, aiming at advancing community building. In July 2001, the Ministry of Civil Affairs issued the Guidelines of Demonstration Initiatives for National Urban Community

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Building, providing to enhance the autonomous awareness and capacity of neighborhood committees and residents, mobilize and rely on the masses to establish new modern communities with good management and public order, quality services, enabling environment, closeness to all amenities and harmony. In order to clearly define the community administrative affairs and resident autonomous affairs, Yantian district in Shenzhen took the lead in exploring the “separation of neighborhood committees and community service stations” in 2005. This initiative was aimed at separating the work stations from the neighborhood committees. They are considered as a working platform through which the government expand their public services to the community, and undertake the administrative responsibilities previously assumed by the neighborhood committee. Since 2006 this model has been widely used across the country. The work stations are accountable for administrative affairs, managed directly by the sub-district offices, and the neighborhood committees deal with the resident autonomous business. In view of the relationship between them, some urban communities implement totally separate them in organization, personnel and operation. Yet most urban communities divide the organization into two parts, but keep staff taking on cross-unit responsibilities-two institutions with the same workers.14 After years of community building, China has formed a government-led and participatory urban community service system. Currently, work stations and neighborhood committees are under the leadership of sub-district offices to provide community services by cooperating with property companies and intermediary service agencies. In addition, residents are mobilized to form building committee, interest and hobby clubs, volunteer associations and other autonomous organizations. The community work stations mainly handle the administrative affairs and provide the public services. While the neighborhood committees have both the nature of civil organization and governmental department, and they get funds from the government for daily operation, personnel remuneration, the activities and facilities, and assists the work stations in carrying out the work, and organizing residents to provide services for themselves. Property companies and commercial service organizations apply enterprise-based management and market-oriented operation. Building committees, interest and hobby clubs, volunteer associations and other non-governmental organizations are self-managed and provide public welfare and mutually beneficial services. The operation of quasi-community system is shown in Fig. 3.3. Under the current community management model, in terms of the strength among government, enterprise, and community organization, the government and enterprises are more well-organized. While the non-governmental organizations in community are weak in fundraising, organizational structure, and capabilities and operation. In this sense, we define the current urban primary-level social management model as a

14 Yang

[12].

3.3 Institutional Changes of Urban Primary-Level Governance

49

State (Party and Government) Sub-district Offices Community Neighborhood Committees Enterprises

Such

As

Property

Management Company Community Workstation Resident Committees Community Service Organizations Community Affairs Fig. 3.3 The operation of quasi-community system. Note → indicates dominant process; indicates auxiliary process

quasi-community system. Compared with the system of sub-district office and neighborhood committee, the primary-level social management under this system is not only performed by sub-district offices and neighborhood committees, but also carried out by private enterprises such as property companies and intermediary service agencies. In practice, neighborhood committees are not practically resident autonomous organizations, and they still take on the tasks assigned by the government, because most community workstations and neighborhood committees are not completely separated. The creation of a complete community-based management model requires to promote the separation of government administration from economic management and establish non-governmental organizations such as owners’ committees, community councils, and volunteer associations. 4. Community-Based System: Exploring to Be Less Administrative Since the 1990s, some cities have abolished sub-district offices, reduced administrative levels and provided public services to communities directly by district governments, in order to make the urban community organizations less administrative. After the abolition, the responsibilities of social management and public services previously undertaken by the sub-district offices were transferred to the departments of the district government, which set up a community service centers to provide sites for the governmental departments to deliver public services. Under the communitybased model, the government no longer assigns tasks to neighborhood committees,

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but procures services from social organizations through outsourcing. In this way, government builds a collaboration with the neighborhood committees and private organizations like property companies which are trusted to handle administrative business. The Community-Based System Operates as Shown in Fig. 3.4. In order to advance this reform, an initiative was taken to abolish the sub-district offices in Shijingshan district of Beijing and cities including Tongling, Huangshi and Guiyang, making district governments directly provide the public services to residents through community service center. The reform reduced one administrative level and the number of civil servants. However, challenges that are hard to address emerged in the reform. After the abolition of the sub-district offices, the community service center, directly managed by the government departments, is practically a dispatch agency of primary-level government. In this way, former personnel that previously work at sub-district offices now delegated to the service centers, with their responsibilities almost the same as before. What’s worse, they are removed off the list of staffing of public institutions, leading to demotion and a decrease in income. Therefore, it can be seen that facilitating urban community development can not simply be understood to abolish the sub-district offices. In the urban primarylevel governance, administrative business and resident autonomous affairs are often mixed together, making them difficult be distinguished. Improving the community management not only requires the government to empower the society, but also advocates its procurement of social services and support the development of community organizations.

State (Party and Government) Community Service Center Community

Neighborhood

Committee Enterprises

Such

As

Property

Management Company Community Affairs Community Civil Organization Fig. 3.4 The operation of community-based system. Note → indicates dominant process; indicates auxiliary process

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3.4 Categories of Actors of Urban Governance The forms of organization of political power in China cities are unified. The CPC municipal committee plays the leading role, the municipal people’s congress and its standing committee are established as organs of power, the municipal government is the executive organ, and the municipal court and procuratorate are the judiciary authorities. Both the executive and judiciary organs are created by the municipal people’s congress and its standing committee, and are accountable to and supervised by them. In addition to organizations of political power, urban governance also requires the participation of social organizations, enterprises and citizens. In order to clarify the multiple actors and their status in urban governance, it is necessary to categorize them. 1. Actors with Power and Actors without Power According to whether their decision-making is mandatory, the actors of urban governance can be classified into two types: ones with power and the other ones without power. (1) Actors with Power The power-holding actors include the CPC Municipal Committee (hereinafter referred to as “municipal committee”) and the urban state organs. The municipal committee manages the urban state organs and undertakings, and develops strategic plans and policies for urban development. The municipal committee adopts a system of combining collective leadership with individual accountability. The major issues are discussed by the municipal committee, whose members perform their functions according to the collective decision and their respective responsibilities. The leading position of the municipal committee is mainly reflected in: (1) defining the division of functions and powers for the municipal state organs according to law, and (2) discussing the major issues related to the work of state organs through the standing committee, and (3) recommending cadre candidates of the municipal government, courts and procuratorates to municipal people’s congress and its standing committee, and (4) directing the state organs through the Party groups established in the municipal people’s congress and its standing committee, the municipal government, the municipal courts and the procuratorates, and (5) implementing the decisions made by the municipal committee by the mayor and deputy director of the municipal committee, and (6) directing the administrative departments through some working committees established by municipal committee. The state organs of a city include the municipal people’s congress and its standing committee, the municipal government, court and procuratorate. The members of municipal government, court and procuratorate shall be elected by the municipal people’s congress. According to the Legislative Law, the people’s congress and its standing committee of a city with district-level divisions may, in the light of the actual contexts and needs of the city, formulate local ordinance on such matters as urban and rural construction and management, environmental protection, protection of history and culture if constitution, laws and administrative regulations contradict the local

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ordinance of the province or autonomous region. The municipal government not only implement the resolutions of the municipal people’s congress and its standing committee, but also the decisions and orders of administrative body at higher-level, and obeys the orders of the State Council. The system of holding chief executive accountable is adopted in municipal government. Municipal courts exercise judicial power on behalf of the state, and municipal procuratorates are legal supervisory organs who wield procuratorial authority on behalf of the state. (2) Actors without Power These bodies without power are neither state organs nor public authorities, but they participate in urban police-making processes, assist in maintaining social order, provide various social services, and articulate their own demands and interests through mechanisms of interest expression and aggregation to the public power organizations. This type of actors of urban governance in China includes the Political Consultative Conference (CPPCC), democratic parties, mass organizations, public institutions, private enterprises, community neighborhood committees, social organizations and citizens. The first three organizations communicate with certain social sectors and groups, and are capable of interest articulation and aggregation. The public institutions are responsible for delivering the public services and meeting the demands of social development. The private enterprises, profit-oriented, make their own managerial decisions, assume sole responsibility for their profits and losses and independent accounting. The neighborhood committee is a kind of primary-level resident autonomous organization. Social organizations are social groups established in order to achieve their goals. Citizens are also the main actors of urban governance, and they participate in public affairs and community activities. 2. Political, Economic and Social Organizations According to the property of organization, the actors of urban governance are divided into political, economic and social organizations. (1) Political Organizations Political organizations generally refer to political parties, state organs and political organizations established for political leadership, public management or the public participation. Under China’s governance system, urban political organizations mainly include the CPC municipal committee, urban state organs (municipal people’s congress and its standing committee, municipal government, courts and procuratorates), municipal political consultative conference, democratic parties, mass organizations and the like, which are financed by the state. The municipal political consultative conference is a political consultative organ built on the cooperation between multiple Parties under the leadership of the municipal party committee. It performs the functions of political consultation and democratic supervision by organizing all sectors of society to participate in the deliberation and administration of state affairs. In addition, it is composed of representatives from all political parties, people’s organizations, various sectors of society and people from Hong Kong, Macao and Taiwan. Its members, through communication and exchanges, put

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forward proposals and suggestions to the municipal Party committee and municipal state organs. The cities with district-level divisions generally set up branches of democratic parties, and the county-level cities in economically-prosperous regions also have primary-level organizations of democratic parties launching campaigns under the leadership of the CPC municipal Party committee. People’s organizations are led by the municipal Party committee, including labor unions, the communist youth league, the women’s federation, the association of science and technology, the overseas Chinese federation, the disabled persons’ federation, the Taiwan federation, the federation of industry and commerce, the youth federation and the literary federation. These organizations are not state organs but have a certain administrative level. The leading organs of the mass organization, established parallel with the municipal government departments, assume certain political or administrative responsibilities with authorized strength. (2) Economic Organizations Economic organizations are enterprises that provide goods or services to consumers by using various production factors for profit. Incorporated enterprise is the main organizational form of the modern urban economic organization. In the planned economy era, China’s urban economy is dominated by the state-owned economy and the collective economy, so most of them are organizations of public ownership. As the market-oriented reform progresses, urban non-public enterprises have developed rapidly, including private enterprises, foreign-invested enterprises, enterprises with investment from Hong Kong, Macao and Taiwan, joint-stock cooperative enterprises, private technology enterprises, and enterprises with mixed ownership, all of which also called “new economic organizations”. They depend on land, workforce, capital, technology and other factors of production to carry out production and business activities. In addition, they make their own managerial decisions, assume sole responsibility for their profits and losses and independent accounting. (3) Social Organizations Social organizations are non-profit social groups without powers, organized to achieve the goals of public benefit or mutual benefit. In Chinese cities, social organizations include all kinds of public institutions, community neighborhood committees, owners’ committees, civil organizations and so on. The public institutions are established to promote social welfare and meet the needs of residents in culture, education, science and technology, medical care, health, religion, charity, sports, fellowship and social services. Most of the urban institutions are non-profit and affiliated to the Party and government departments, financed by the state or by themselves. The neighborhood committees are primary-level autonomous organizations with the characteristics of civil organization and governmental department, which not only undertakes the tasks assigned by the sub-district offices, but also organizes the residents to carry out self-management.15 The owners’ committee is a non-governmental organization composed of owners’ representatives in the property management area. 15 Liu

[6].

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It represents owners’ interests, articulates their opinions and demands to all parties in society, and oversees the property management company. Civil organizations are organized by social forces through non-state-owned assets, positioned to carry out non-profit social service activities, including private schools, hospitals, literature and art organizations, research institutes, sports venues, vocational training centers, and welfare institutions. 3. Financially-Appropriated Organizations and Self-Financing Organizations According to the source of funds, the actors of urban governance can be divided into financially-appropriated organizations and self-financing organizations. (1) Financially-Appropriated Organizations The financially-appropriated organizations are completely funded by the government, with the use of funds specified. Financial allocations can be further divided into full allocation and balance allocation. The former form of institutions is supported by the government with full financial allocations, including organs of the ruling party, state organs (people’s congresses, governments, courts, procuratorates), organs of the CPPCC and democratic parties, and people’s organizations, agriculture, forestry, water conservancy, meteorology, library, Party school and other institutions. The latter form of institutions are funded by the state with partial financial allocation, and they have revenue and assume social functions of the government, such as hospitals, vocational education institutions, scientific research institutes, cultural centers, toll parks and other institutions. (2) Self-Financing Organizations Self-financing organizations, including public institutions that manage income and expenditure by their own, social organizations and all kinds of enterprises, receive income by operating or providing services according to law. This kind of pubic institutions are allowed to collect revenue and, in meanwhile, shall afford their expense, neither turning over balance to nor being financially supported by the state, including planning and design institute, survey and design institute, geological survey center, land consolidation center. The social organizations are non-profit, and the non-governmental social organizations raise funds in various ways instead of depending on the transfer. on the finance to obtain the income, raises the funds in many ways. They make their own managerial decisions, assume sole responsibility for their profits and losses and independent accounting. 4. State Organs and Public Institutions and Private Organizations According to whether the ruling party dominates the operation of the organization, the actors of urban governance can be divided into two types: state organs and public institutions and private organizations. (1) State Organs and Public Institutions The state organs and public institutions establish the Party organizations which play a leading role, including political Party organizations, state organs, state-owned enterprises and public institutions, community neighborhood committees, etc. In the cities

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of China, the organizational system of the ruling party is sound and systematized, and its network is widely spread to every level and area. Urban political, administrative and policy-making processes, including interest expression and aggregation, policy formulation and implementation, have been carried out in an orderly manner under the leadership of the CPC. In a word, all the economic and social organizations in which the Party organization plays a dominant role belong to state organs and public institutions, and they are not only institutionally linked to state power system, but also depend on it for access to all or part of the resources. However, there are some with establishment of Party organizations which do not have a leading role to play, and therefore they do not fall into this category. (2) Private Organizations Private organizations refer to non-public organizations that are not directly governed by the ruling party in the aspects of operational management, appointment and dismissal of employees, such as new economic organizations, new social organizations, and families. New economic organizations include private enterprises, foreign-invested enterprises, enterprises with investment from Hong Kong, Macao and Taiwan, joint-stock cooperative enterprises, private science and technology enterprises, individual business, mixed ownership economic organizations and other nonstate-owned collective capital-dominated economic organizations. New economic organizations are of non-governmental nature, including social groups and private non-enterprise organizations, which are independent of the government,16 and neither represent government nor operate depending on national resources or financial allocation from state. In Chinese cities, new economic organizations and new social organizations are referred to as “Two New Organizations”, some of which have Party branches (committees). These Party organizations, however, are not in the leading position, and their role is to organize and educate Party members and handling affairs related to Party.17 In an open society, family action is not directly controlled by Party organizations.

References 1. Chen, H., & Xie, S. (2002). Urban residents committees in early years of founding of the People’s Republic of China. Contemporary China History Studies, (4). 2. Chengdu Hi-Tech Zone Local Compilation Committee Office. (2013). Chengdu hi-tech zone yearbook 2013 (p. 358). Beijing: Xinhua Publishing House. 3. Dai, J. (2000). System of designated city in China (p. 149150). Beijing: China SinoMaps Press. 4. Han, G., & Yin, J. (1987). Formation and change of urban suburbs in Beijing. Urban Issues, 5, 5859. 5. Lin, L. (2009). On the party building in the two new organizations. CASS Journal of Political Science, (5). 16 Yu

[15]. [5].

17 Lin

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6. Liu, Y. (2005). Re-discussion of the autonomous nature of the neighborhood committee: Comparison of autonomy between the neighborhood committee and the owners’ committee. Chinese Public Administration, (5). 7. Lu, F. (1989). Work unit: A closed social organization form. Social Sciences in China, (1). 8. Lu, Y. (2004). From “city-administering-county” to “strengthening counties by expanding their power”: A logical analysis of the causes of the rise and fall of the system of “cityadministering-county” in Zhejiang Province. The Journal of Yunnan Administration College, (6). 9. Pirenne, H. (2006). Medieval cities (p. 134) (trans: Chen, G.). Beijing: The Commercial Press. 10. Sun, L. (1993). Free flowing resources and activity space. Probe, (1). 11. Walder, A. G. (1996). Communist neo-traditionalism: Working environment and authority structure in Chinese industry (p. 5) (trans: Gong, X.). Hong Kong: Oxford University Press. 12. Yang, C. (2013). Logic and reform dimension for separation of neighborhood committees and workstations. Public Administration and Policy Review, (3). 13. Yang, H. (2014). The reform of the province-administering-county system: Separated or integrated governance of cities and counties. Journal of Beijing Administration Institute, (1). 14. Yi, H. (2005). A brief analysis of autonomy in town and country in Late Qing dynasty. The Social Science Front, (2). 15. Yu, K. (2006). Chinese civil society: Concept, classification and institutional environment. Social Sciences in China, (1). 16. Yue, D. The system of expanding power and strengthening counties widely promoted in Zhejiang (p. 20090522). Xinhua News Agency. http://www.gov.cn/jrzg/200905/22/content_1322272. htm. 17. Yang, H. (2014). Province governed by county system reform: the division of cities and counties or a mixed model? Journal of Beijing Administration Institute, (1).

Chapter 4

Holistic Governance: An Explanatory Framework

4.1 The Theory Evolution of City Management There are many actors of city management such as governments, enterprises, social organizations and residents, with different objectives and operation mechanisms. The governments, based on public value, operate mainly through top-down management—submissive mechanism. The enterprises are profit-oriented and runs under the market mechanism. Social organizations are managed in a self-organized manner and in the interests of the community. Residents are not only individual participants, but also play a role in an organized way. The researchers present different theoretical models for understanding the roles of these actors in urban policy decision-making and public service delivery. 1. Elite Theory The elite theory, based on the concept of social stratification, focuses on the issue of urban sovereignty and posits that the social structure of a city is like a pyramid, with the people who have broad power at the top and those who don’t at the bottom. The origin of it can be traced back to the ancient Greek. The formation of modern elite theory is closely related to the Italian school. Elite theorists such as G. Mosca and V. Pareto argued that human history is not class struggle, but that the organized minority rule over the unorganized majority.1 The classical elitist theory takes the state as the basic unit of analysis. Gradually, some scholars employed the elitist theory to analyze the city politics and conducted the empirical research on the city. American scholar Freud Hunter has carried out pioneering research in this area and found out that urban society is dominated and controlled by elites. In the textbook of policy science, policy making is defined as the process by which elected representatives translate public expectations into public policy. However, Hunter indicated after his study of Atlanta that it is not realistic, because policy making is practically performed outside the government system and 1 Mosca

[35], Pareto [42].

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business elites have a dominant influence on the process. He also argued that if the economic interests of them do not change, nor does the Atlanta’s ruling order.2 Based on this, Hunter concluded that the representative democracy is just seeking for economic interests in disguise. This argument has led to a theoretical debate between elitists and pluralists. The pluralists note that the empirical approach employed by Hunter is inappropriate and his approach to the list and define the community influencers predetermines the findings. Critics also argue that there is no strong evidence that those with prestige and power will use the right to control in certain circumstances. Most of the research on the policy-making by pluralists focuses on the government decisions on the controversial or conflict of interest issues. They identified the individuals most influential in decisions from a wide range of policy areas and revealed that they have different roles in different cases. The research approach has also been questioned by new elitists who proposed that real power holders may have removed the issues from the agenda long before they were debated to avoid them being discussed publicly.3 Logan and Moloch presented the Growth Machine Theory to understand urban politics from the perspective of urban growth, and further broaden the research field of elite theory. The theory focuses on the power of business circle, arguing that activism of entrepreneurs has been a key driver of urban systems and urban development is driven by alliances dedicated to promoting economic growth.4 In addition, they also pointed out that the rentiers, at the heart of urban development, often raise rents and maximize their own revenues by strengthening the use of property (land, buildings) or exploring higher-level use values. What’s more, these people cannot achieve their goals on their own, and they have to collaborate with other actors working to promote growth. Land owners, for example, do not have the technology and resources to create companies, but they can persuade developers to invest and make profits via land rent. It can be seen from the growth machine theory that the growth alliance of urban politics includes core members, non-core members and auxiliary supporters. Core members benefit directly from the development process, including developers, landowners, financial institutions, etc. Non-core members make profits from the provision of products and services for development projects, such as local politicians, local media and public companies. Auxiliary members are associated with the local community and derive some benefits from local development, like universities, cultural institutions, clubs, private firms and retailers. 2 Freud

Hunter categorizes influential people into business, government, community, and social groups, and defines those with a prominent status as powerful social elites. Based on his personal knowledge, social communication and a list provided by local organizations, he compiled a list of the four categories of elites who were ranked according to their prestige by people. After that, the top 40 were investigated further to determine who was the most powerful [18]. 3 Judge et al. [21]. 4 Logan and Molotch [30].

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2. Theory of Pluralism According to the theory of pluralism, urban power is in fact divided and decentralized, and all groups have certain resources to express their own demands, even if the government cannot address their needs. Robert A. Dahl gives an account of the power structure of pluralism in his book—Who governs: Democracy and Power in American Cities.5 In a study of New Haven, though Dahl agrees that decision-making is controlled by the minority, he insists that electoral politics is not so bad as what Freud Hunt described. He indicates that elected policymakers still play a key role in shaping policy issues, and cities are still managed under democratic creeds and constrained by the public.6 It can be seen from the theory of pluralism that under the democratic system, urban politics is permeable, the policy process remains open and transparent, and the social groups that are organized and want their voices to be listened to can influence the decision-making through some approaches. For pluralists, urban society can be recognized as hundreds of small special interest groups with partially overlapping personnel, a widely broad-based power base, and a wide range of means to influence important decisions.7 Robert Dahl believes that this characteristic exists in most urban politics including New Haven in the United States, although it is far from meeting the requirements of an ideal democracy. Pluralism regards the autonomous social groups as the foundation of democratic politics, and it does not explain how the pluralistic subjects operate to facilitate fairness and justice. In this sense, as Grant Jordan comments that pluralism is nothing more than an anti-theory, and what it opposes outweighs what it itself establishes.8 Faced with criticism from sceptics, Dahl also agreed that inequality in influence characters almost all political systems, no matter when or where, which is selfevident, and indicated that pluralists, including him, never believed all groups are equal in the political system.9 Under the Western political system, pluralists emphasize that the political system governed by a cohesive group has been replaced by the one co-ruled by many different groups with different political resources. Simply put, it is the multi-subject system. If this system is far from oligarchy, there is a long way to go for the political equality advocated by democratic philosophers.10 After the 1980s, some researchers presented the urban regime theory, arguing that the operation of public control in modern cities is largely the result of the division of labor between government and the market,11 which further extends the application of pluralism, also known as “new pluralism”. According to urban mechanism 5 Dahl

[4]. [5], p. 182183. 7 Polsby [44]. 8 Jodan [20]. 9 Dahl [5], p. 184. 10 Dahl [4], p. 86. 11 Elkin [8]. 6 Dahl

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theory, the means of production in cities are owned and controlled by the private sector, and public sector officials share responsibility with these private controllers for improving the well-being of citizens, but these officials are only able to instruct the economic performance instead of managing it. In doing so, the government must take into account the different social forces and establish coalitions among the diverse forces to facilitate decision-making. Therefore, there is a need for coordination and cooperation mechanisms among governments, enterprises and associations, one of which is the institutional arrangement of this division of labour.12 The urban regime mechanism was first developed by the Feinstein and his wife, who summarized three more typical American urban mechanisms after World War II: regulatory mechanism, authorization mechanism, conservative mechanism.13 In the study of Atlanta, Stone proposed four types of urban regimes, including sustainable regime, developing regime, middle class progressive regime, lower-class opportunity expansion regime.14 According to the urban regime mechanism, political, economic and social organization have different resources, and neither side can realize the goal of urban development independently. Therefore, the coalition of multiple subjects is necessary. 3. Theory of Public Governance The rise of the theory of public governance is closely related to the ideological crisis and real challenges that the politics-administration dichotomy faces. Wilson put forward the politics-administration dichotomy, which laid the academic foundation for the development of administration. Based on it, the typical administrative theory holds that administration is the process of implementation of national will and policy, and emphasizes that the purpose of public management is efficiency. As early as the 1940s, Waldo pointed out that, although the efficiency is important to administration, it is neither the core value of it, nor the ultimate goal, and that good public management should promote the interaction between government and the public through communication and dialogue.15 Since the 1960s, the research on public governance has been developing and expanding, which results from challenging the theory of public management. Grounded in the value demands of democracy or efficiency, it proposes to involve the businesses, social organizations and the public in public management, and leverages a variety of governance tools for good governance and better governance. Looking back on the various theories of public governance, scholars developed, from the perspectives of different institutional environment and value demands, an array of theoretical models, like polycentric governance, new public management, new public service, self-governance, collaborative governance, holistic governance and campaign governance. 12 Stone

[53]. and Fainstein [10], Fainstein et al. [11]. 14 Stone [54]. 15 Waldo [59]. 13 Fainstein

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On the basis of the value appeal of democratic administration, Vincent Ostrom put forward the theory of polycentric governance, making him the pioneer in the study of public governance. After examining the public service provision in metropolitan areas of the United States, he demonstrated the feasibility of the polycentric governance system.16 There are many independent public institutions, including those of the federal and state governments, as well as counties, municipalities, towns and special zones, which perform their respective functions while competing and cooperating. Under this system, the jurisdictions of multiple autonomous agencies overlap, but the coordination is performed through a variety of institutional arrangements, including mutually beneficial trades and agreements, competitive confrontation, dispute adjudication and limited powers.17 Because of the existence of multiple authorities, combined with their limited powers and capabilities and the possibility of using the powers of others, collaborative production is viewed as an institutional arrangement for the provision of public services.18 The new public management pays attention to marketization, decentralization, customer orientation, performance evaluation, as well as market mechanisms and social forces employed in the public services. Moreover, it also proposes that “governments should steer more and row less”, and suggests to build public-private partnerships.19 Hood puts forward the seven key points of the new public management: professional management, performance indicators and evaluation, output control, divisions within the public sector, public service competition, private sector management methods, discipline and retrenching expenditure.20 By distinguishing the functions between “steering” and “rowing”, “providing” and “production”, Savas, after studying the diversified institutional arrangements for public service delivery, pointed out that the public services, in addition to being provided by government, can also be delivered through intergovernmental agreements, contractual outsourcing, franchising, government subsidies, voucher systems and voluntary services.21 The new public service, deriving from criticism of the new public management theory, views public interests, civil rights, and public services as core values, and argues that urban governments should not operate as corporations, but democratize their operations. According to Dunhart, the new public management places too much emphasis on executive authority, but neglects the civic engagement and pointed out that the administrators bear a responsibility to listen to the voices of citizens and to be responsive to what is said. He also argued that in the process of carefully listening, they join themselves and society in a reflexive relationship.22 As a theory of democratic administration, the new public service emphasizes the importance

16 Ostrom

et al. [41]. [39]. 18 Ostrom [40]. 19 Osborne and Gaebler [37]. 20 Hood [15]. 21 Savas [49]. 22 Denhardt and Dunhart [6], p. 70. 17 Ostrom

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of the governance process and thinks that the public interest is achieved through a specific process that allows the interests to be aggregated, balanced or mediated.23 The self-governance is oriented by the value of citizenship and strives to integrate the public management into the democratic operation. Based on a large number of case studies, Eleanor Ostrom proposed that in addition to government and market mechanisms, there is a third governance mechanism in public affairs, namely autonomous organization and self-governance, and analyzed the principle of institutional design of self-governance.24 Richard C. Bochs put forward the theory of civil governance, advocated the establishment of a small local government, and introduction of public management into democratic process and services delivery.25 Lester M. Salamon empirically analyzed non-profit organizations in the United States, proposed the theory of third-party governance, and revealed the active operation mechanism of non-profit organizations.26 The collaborative governance aims at handling public affairs beyond administrative jurisdiction and capacity by integrating stakeholders into collective forums and making collective decisions based on consultation and consensus to collect information and opinions from all sides, so as to build partnerships to improve governance performance.27 According to collaborative governance, the stakeholders can be the public sector, private sector, civic organizations or individuals. In addition, multiple actors will not, in public governance, build partnership by themselves, so it is necessary to create governance structure or mechanism for cooperation among different departments, regions, or public-private organizations.28 The holistic governance is a theoretical construction which is developed in response to the inefficiency of addressing the complicated challenges caused by the fragmentation and decentralization of the administrative departments and to seek integration mechanism for public sector. Holistic governance improves the capability of public institutions to share information, work together, and provide overall public services by building collaborative mechanisms across sectors, regions and administrative levels.29 Perry Hicks argues that holistic governance is an innovative approach to solve administrative fragmentation, aimed at increasing the interdependence of actors.30 In addition, the theory also suggests to build the policy network, establish the large sector system, and provide the “one-stop” service by means of institutional reorganization, process re-engineering and technology application.31 23 See

Footnote 6, p. 51. [38], p.144. 25 Bochs [3]. 26 Salamon [48]. 27 Ansell and Gash [1]. 28 Emerson et al. [9]. 29 Goldsmith and Eggs [13]. 30 Perri 6 [43]. 31 Hu and Tang [16]. 24 Ostrom

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The campaign governance, a public governance model with great impact based on the local context of China, is characterized by temporarily suspending the regular operation of the bureaucratic system in which everyone fulfill their own functions, and mobilizing resources and social forces via top-bottom large-scale mobilization to accomplish a specific task.32 The public management mainly relies on the bureaucratic mechanism, which will lead to organizational failure and governance crisis. As a coping tactic, campaign governance is often adopted in China’s public management, and it depends on large-scale organizational mobilization to address the dilemma of normal governance to some extent.33 As long as the centralized and central executive-led institution does not change fundamentally, campaign governance will exist. In addition to the above-mentioned theories, there are some policy instruments, such as network governance, electronic governance, digital governance and grid governance. These approaches focus primarily on the technologies, tools and instruments of public governance and it is unnecessary to go into details here. After studying the literature on public governance, it can be seen that what role the government plays in public governance, how to view the relationship between efficiency and democracy, and the differences in the value demands of different scholars. Generally speaking, there are two value orientations of democracy and efficiency in public governance. The former emphasizes open participation and argues that direct democracy and deliberative democracy can fill the gap left by representative democracy, while the latter is results-oriented and advocates limited participation and government-led decision-making process, organization and implementation. According to the democracy-oriented governance, the notion of public interest is far less important than the way to realize it, and the foundation of good governance is the public participation and self-rule. Under the representative democracy, the control over administration is primarily exercised by political institutions. Even if administrative decision-making deviates from public values, the public lacks the instruments to correct it. In order to address it, some scholars propose conversational democracy34 by establishing open forums to facilitate participation and exchanges, build consensus during the process and employ consultative democracy to improve public governance. The right thing in a democracy, Denhardt argues, is to engender more participation which helps strengthen government accountability, improve the quality of public policy, enhance the effectiveness of policy implementation, and build trust in government and establish a new kind of partnership.35 Efficiency-oriented public governance does not exclude citizen participation which, however, is limited within a certain range. The public always wants to be involved in policy-making progress and requires the government to move fast. In a

32 Zhou

[72]. [57]. 34 Dryzek [7]. 35 Denhardt and Denhardt [6], p. 51. 33 Tang

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4 Holistic Governance: An Explanatory Framework Self-Governance New Public Service Polycentric Governance Collaborative Governance New Public Management Holistic Governance Campaign Governance Decrease Increase The extent of power exercised by the authorities

Fig. 4.1 The theory of public governance

highly complicated social environment, the public does not have sufficient information and capacity to participate in the discussion of tricky issues. If public participation is totally open, the authorities will have to spend a lot of time and energy in building consensus in policy-making, which is bound to lead to slow action and possibly missed opportunities. Efficiency-oriented researchers argue that governments must balance the needs for timely decision-making and public participation, and lay down regulations on the method, scope and time of participation.36 For how to address the conflicts in cross-boundary affairs, necessary power and judicial decisions are suggested by these scholars. The theory public governance is shown in Fig. 4.1.

4.2 Types of Urban Governance 1. Two Dimensions of Dividing Types According to the typical public administration, the executive branch is the only actor to implement political decision and public policy, and the government not only steers but also rows, and operates through the top-down bureaucratic system, while the social forces, as the counterpart, can only passively accept the results 36 Guy

Peters [14].

4.2 Types of Urban Governance

65

of public administration. However, with the development of economy and society, public affairs are increased. The actors of public management not only include the public sector, but also the private sector and the third sector, such as enterprises, social organizations and volunteers. They extensively involve in the provision of public service and play an important role in the operation and production of public services.37 The public governance maintains the knowledge of the new developments, operations and mechanisms of public administration. Based on the local context of different countries, it provides various theoretical models to deal with the pronounced challenges and issues of public governance. In different political and economic systems, the role of government in society is different, so is the model of cooperation between government and society. In the aforementioned representative theories of public governance, polycentric governance, new public management, new public service, self-governance, collaborative governance and holistic governance are all new models of public governance based on the background of Western countries and actual practices. Due to the differences in the basic institutional arrangements of state governance, some assumptions of the above theories are different from the actual situation in China, so using Western theories to explain and predict the changes of urban governance in China is more like an attempt which fails to seek an effective solution. The polycentric governance, for example, proposed by Ostrom is premised on federalism and competitive elections. However, things go quite different in China, and therefore it is impossible to employ this theory to analyze China’s urban governance. Campaign governance is a theory based on China’s local context. It reveals the large-scale organizational mobilization mechanism in China’s public governance by distinguishing between conventional operation and unconventional mobilization, which develops the overall understanding of Chinese governance.38 This theory also has its limitations, because it is difficult to make a convincing explanation for the transformation of China’s public governance since the reform and opening up. Campaign governance is neither a new model of public governance after the reform and opening up, nor a new practice after the founding of the People’s Republic of China. Some studies show that it can be traced back to ancient China. The “relieving famine policy” for natural disasters in the Qing Dynasty was promoted directly by the emperor, which put an end to the bureaucratic mechanism and made emergency mobilization by way of campaign.39 In the early reign of Emperor Qianlong, “calling soul back”, a kind of sorcery, spread rapidly among the people in 1768, caused great panic throughout the country and was judged as rebellion by Emperor Qianlong who launched an investigation against it nationwide. It took more than half a year to control the situation through emergency mobilization and campaign methods.40 It 37 Stoker

[52]. [71]. 39 Wei [63]. 40 Zhou [72], Kong [24]. 38 Zhou

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4 Holistic Governance: An Explanatory Framework

Table 4.1 Four models of urban governance Cooperation between government and society Consultation of government intervention in society Low

High

High

Holistic governance

Collaborative governance

Low

Totalism government Self-governance

Source Yang [67]

can be seen that the campaign governance model can not generalize the new models of China’s public governance transition since the reform and opening-up, and it is also difficult to predict its development trend. In order to clarify the model evolution of urban governance, it is necessary to make a typological analysis based on certain logical dimensions, and to study the institutional context and mechanism of each type of governance model. From the perspective of the relationship between government and society, this book provides a theoretical analysis model for the changes of urban governance in China since the reform and opening up. As the market-oriented reform progresses, the remarkable change of urban governance in China is that the proportion of economic and social resources controlled by the government has dramatically decreased. However, the government still takes full charge of not only the provision of infrastructure and public services, but also ensuring economic growth and social stability. Under the complicated and changeable external environment, the government has changed the past totalism governance model in order to enhance the responsiveness and public service capacity. In addition, it introduces the market mechanism and social forces, and encourages cooperation and collective responses instead of monopolizing the production of public service. According to the two dimensions—cooperation between government and society and the consultation of government intervention in society, four urban governance models are presented (see Table 4.1). The degree of cooperation between government and society refers to the scope of cross-sector cooperating in urban public management. This kind of cooperation is restricted by both the government’s function and role and the extent to which the social forces are organized. It will not exist if there is complete centralization of state power or totalism governance model by government, highly-advanced administrative system, citizens’ total submissiveness to authorities, and impossibility to form organized social forces. It also will never be active if the public are capable of self-governance without government intervention. Examining the development of human society, the government’s role and function are different in different times, and the cooperation between government and society also varies greatly. In the natural economy, the government had unlimited power and highly controlled the citizens, and the family was considered as the basic unit of production. Moreover, they rarely cooperated and mostly separated. In the era of liberal capitalism, “The best government is best which governs least” was advocated, and the government at that time only handled affairs related to violence, theft, cheating and breaking a contract.

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67

A large number of public affairs were dealt with by community and through selfgovernance, and the cooperation between government and society was rarely seen. Under the planned economy system, the government power involved in the economic and social fields in all respects, and the public sector replaced the social forces, and no cooperation between them appeared. Under the market economy system, government, enterprise and social organization are separately from each other, there is a rapid rise of the private sector and the third sector and the extensive cooperation is build between government and society. The consultation of government intervention in society refers to the degree of equality in power and status between the two parties and the democratic degree in consultative process. There are two value orientations—democracy and efficiency— in the urban governance action involving multiple actors. The democratic value orientation emphasizes public participation and consultation, advocates giving equal voice to stakeholders, and promotes consensus in communication and consultation. Efficiency orientation requires limiting public participation to a certain extent so as to avoid indecision, tardiness and missed opportunities. In cross-boundary cooperation, decisions on major issues of public concern need to be made on the basis of a broad range of views and the greatest common divisor; while for general matters of less concern, more efficiency is required to save time and cost. In different political systems, the consultation of government intervention is also different. Generally speaking, in the context of local autonomy and democratization, government intervention in society places greater emphasis on dialogue and consensus-based decision-making; while in authoritarian systems, governments, dominant in public governance, can exert potential influence on enterprises and society using the power, authority and resources at their disposal, and may use political mobilization to urge social forces to take cooperative action. 2. Four Models of Urban Governance From the relationship between the government and the society, the government represents the unified power and the society stands for independent power. According to the cooperation between the two parties and consultation of government intervention mentioned-above, urban governance models include four kinds: totalism government, self-governance, holistic governance and collaborative governance. (1) Totalism Government Model Totalism government model refers to the government monopolizing the economic and social resources. The public sector provides all kinds of social services covering every corner of social life, and all enterprises and social organizations rely on the public sector as an extended system of it. Under this model, the public sector is top-bottom organized and allocates manpower, materials and financial resources in a unified way to achieve the government’s goals, with all included in the public system by breaking the lines between the government and the society. All organizations are under the control of public power. This will give rise to the least private space, forming the “strong government, weak society” pattern. As a result, all decisions and

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policies on urban development are developed by the public sector. Society has little room for self-organization other than the family. Individuals are highly dependent on public sector for access to resources, and they can not live on their own without it. In 1949, after the founding of the People’s Republic of China and the socialist transformation of the means of production, the totalism government model was established. Under public ownership and planned economy, the city has a monopoly on economic and social resources, and all social organizations, known as work units, whether political, military, administrative, institutional or economic, are controlled and managed by the Party and the government, with Party organizations, administrative systems, trade unions, the communist youth league, women’s federations and other mass organizations established. All work units were grouped into the ownership of the whole people and collective ownership, with administrative level, and could access to the planned allocation of resources from government. Almost all urban workers were dispatched to various work units, with social identifies like cadre, worker or farmer. The city government also launched mobilization through ideology, political propaganda, political movement and other means to control public opinion and change personal ideology. Under this governance model, the government allocated social resources through the work units, which have the functions of political, economical and social welfare, and only upon which could the workers access to all kinds of resources. The work units not only paid their staff but also provided services such as housing, medical care and kindergarten education for their children. Some of the larger units even offered canteens, business services, primary and secondary education for their children.41 Under this system, individual social status and career opportunities are closely related to the units. Therefore, high administrative level of work units could bring high social status. In this way, the government controls the unit which controls the individuals, leading to highly organized society. Furthermore, status hierarchy was established between the urban and rural Hukou (household registration system), the cadre and the worker, making it hard for social mobility. (2) Self-Governance Model Self-governance model does not rely on government intervention or its resources, and it is the social organizations that make rules and handle public affairs through independent choice, self-organization and collective action. Under this model, crosssector cooperation between government and society is not commonly seen. The Elinor Ostrom, after studying a large number of empirical cases, found that there exists an self-governance model to manage public affairs in addition to government and market. That is the collective action through collective choice by interdependent actors.42 In spite of the uncertainty of this governance model and the possible problems arising from its operation, it is widespread. Some self-governance organizations have been in operation for hundreds of years, and one of them even lasted over 41 Li

[29].

42 Ostrom

[38], p. 8687.

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69

1000 years.43 Practice has shown that interdependent individuals can provide system development, credible commitment and mutual supervision required for collective action through self-governance. In fact, even in the period of planned economy, there was also the mechanism of self-governance in Chinese cities, such as family governance. However, it was suppressed and did not dominate. With the development of market-oriented reform, enterprises have the increasing autonomy in production and management, and the self-governance keeps being widely applied in the community-level management. The Organic Law of Urban Residents Committees, issued in 1989, provides that neighbourhood committees are resident community-level autonomous organizations of self-governance, self-education and self-help. In order to make the neighborhood committees less administrative, some cities set up work stations in communities which undertake the administrative affairs handed over by the sub-district offices, promoting the separation of neighborhood committees and work stations, and the development of community autonomy.44 In addition to neighbourhood committees, autonomous organizations such as owner’s committee, volunteer association, interest and hobby association and neighborhood mutual aid association are also booming. In the urban governance of our country, outcomes of self-governance is often not satisfactory. For example, conflicts of interest happened in 2006 between the owner’s committee of Haidian District Meimeiyuan community in Beijing and property company due to self-governance, leading to sudden withdrawal of the property company and the cut-off of water and electricity in the residential area. Therefore, the government had to intervene to address it, and it is a typical case.45 Ostrom commented that some institutional arrangements should underpin the sustainable operation of self-governance. They include the clearly defined boundaries, regulations on the possession and supply based on local conditions, institutional arrangements of collective choice, monitoring mechanisms, grade of penalty mechanisms, conflict resolution mechanisms, minimum recognition of organizational rights, inter-imbedded organizational arrangements.46 (3) Integrated Governance Model Market mechanism and social organization are prerequisites to integrated governance model. The government plays a leading role in building the relationship between public sector and private organizations, launches the cross-sectoral integration of enterprises and social organizations using policy instruments and mobilizes multiple resources to achieve government objectives and provides public services. Under this model, market mechanism and social autonomy are legitimate, but to what extent the power of government shall be exercised is not clearly defined. In addition, the government is handling cross-sectoral affairs, and the multiple actors do not have 43 See

Footnote 2, p. 93. [27]. 45 Mao and Chen [32]. 46 Ostrom [38], p. 144. 44 Li

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an equal footing in consultation and cooperation. Governments can initiate the integration of businesses and social organizations by capitalizing on their authority. In practice, the government is not only the initiator of it, but also the planner, participant and leader, and other actors are the subjects that are integrated by it.47 The holistic governance model combines the government resources with those controlled by the social forces, and brings into play the role of the multiple actors and mechanisms, which helps to fulfill the duties that the government is unable to perform alone. Since the reform and opening up, integrated governance model is adopted in our country as the market economy develops. The market-oriented reform makes the proportion of private organizations in economy larger and more economic and social resources available outside the government. As a result, the proportion of government resources has dwindled and the government’s ability becomes limited from “omnipotent”. Because of one-party rule in China, the ruling party is accountable for solving all economic and social problems and assumes responsibility for governance. As such, the government’s capacity is relatively weakened, but its responsibility remains the same, leading to the paradox of “limited ability” and “unlimited responsibility”. In order to address it, city governments explore a series of new operating mechanisms in practice, such as the establishment of social cooperation and the use of social resources to achieve government goals. On the one hand, under the integrated governance model, the government recognizes the otherness of the market mechanism and social organizations, and devotes itself to establishing cooperation with private organizations; on the other hand, the unequal status exists in the cooperation due to the leading role of government. Integrated governance no longer seeks organizational integration, but visibly control the private organizations through mandatory, exchange of interests or mutual benefit mechanisms, to ensure that the government has the greater capability in mobilization, influence and execution. (4) Collaborative Governance Model Collaborative governance is premised on the autonomous right of multiple actors and engages the stakeholders in cross-sectoral collaboration through the establishment of public forums or platforms for dialogue, in which they can build the consensus and make collective decision through dialogues for collaborative actions. Collaborative governance no longer only achieve government goals, but also protect the interests of stakeholders and listen to their voices. The key to advancing collaborative governance is to build the public forums, identify shareholders and develop consultative dialogue mechanisms.48 There are conflicts of interest among different actors, and trust and cooperation can be enhanced through consultation and dialogue on an equal footing to share knowledge, information and resources. Consultation and dialogue do not necessarily eliminate differences, but can enhance communication. As long as stakeholders can have their voices heard and communicate with each other, collective discussion is likely to produce better results. 47 Kang

and Xu [22]. and Gash [1].

48 Ansell

4.2 Types of Urban Governance

71

In the view of institutionalism, the systems of human society can be divided into two types: external system and internal system.49 Some systems are internally generated in human society, and are the outcomes of balance from self-enforcing due to the strategic interactions of social game players50 ; other systems are externally developed, and carefully designed by the government and its agents and are imposed on society for top-down implementation.51 According to this classification, the selfgovernance and collaborative governance models fall into the category of the internal system, and they are the system of rules formed in the interaction of the actors; the totalism government model is a kind of the external system, dominated and designed by the government and top-down implemented; the integrated governance, characterized by both the internal and external systems, is a kind of institutional arrangement developed by the government, in which social interaction also plays a role. As the market economy develops, the share of resources owned by private sector (private enterprises) and social forces have been increasing. In this context, it is necessary to maximize their roles and properly use their resources to constantly improve the urban public services and make these services complete. In the practice of urban governance in China, as the rule of law and the democratic system are unsound, the city government integrates the multiple actors and their resources from state organs and public institutions and private organizations, through its power in public governance and cross-sectoral cooperation means such as coercion, reciprocity and persuasion, and therefore the integrated governance model is formed. This not only includes the cross-sectoral integration of multiple actors, but also of the operation mechanisms, so as to improve urban public services by capitalizing on their resources. In this process, the government is not only a participant, but also the initiator, planner and leader in collaboration. Although other actors participate in the process, they can only choose to agree or disagree and can not question the integration mechanism established by the government. Unlike the totalism governance model in the period of planned economy and cooperation model between government and society in the West, this is a new model of urban governance developed in a specific political and economic context.

4.3 Integrated Governance: A New Theory 1. Background of Integrated Governance Integrated governance model is formed in the process of national governance reform from total domination to technological governance. After the founding of the People’s Republic of China, the totalism regime was established, so the ruling party and 49 Li

[26]. [2]. 51 Ke and Shi [23]. 50 Aoki

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4 Holistic Governance: An Explanatory Framework

government monopolized almost all important resources and took overall control over national economy through ideology, institutions, cadres, and political mobilization.52 Under this system, the influence of state power is everywhere. The Party and the government mobilize all kinds of human resources, materials and financial resources to achieve the national goals through the national organizational system such as the work unit system, the identity system and the household registration system. Some researchers name this total domination.53 Since the 1980s, as the priority of the Party and the government has focused on economic construction, the central government has issued a series of new policies, committed to fostering market mechanisms, separating government functions from enterprise management, and supporting the development of private economy, foreign-funded economy, communities and organizations, expanding their power and giving their autonomous rights, thus gradually changing the totalism model. Local governments have gradually created a new public governance model—integrated governance model—by building cross-sectoral operation mechanisms and developing indirect, invisible and technical control methods. (1) Decreased Proportion of Resources of the Government In the 1980s, the central government began to introduce the reform of “replacement of profit delivery by taxes” through a contract system, allowing after-tax profits to be retained by enterprises, which expanded the operational autonomy of stated-owned enterprises.54 In the reform, local governments were also given limited decisionmaking power in investment. In order to drive economy and increase the fiscal revenue, local governments started to set up enterprises to collect tax revenue and extra-budgetary revenue. In 1992, the 14th CPC National Congress set the goal of establishing the socialist market economy system. Since then, the government gradually relaxed the price control, making a shift from a dual-track price system to the free market price system. The reform of tax system in 1994 not only changed the financial relationship between the central government and the local governments, increasing the proportion of the central government revenue to the total financial revenue,55 but also altered the relationship between local governments and enterprises. The reform declared the value-added tax as a shared tax for the central and local governments, with 75% of tax revenue given to the central government who did not bear any operational risks. Therefore, the local governments not only encountered the problem of the decreased income from the investment, but also had to take the risk alone. In addition, the state was responsible for the collection of valueadded tax, so the local governments did not have the power to introduce privilege policies to protect local enterprises, which discouraged the local governments to 52 Sun

et al. [55]. et al. [47]. 54 Zhang and Zheng [69]. 55 In 1993, the state revenue accounted for 22% of total fiscal revenue. After tax reform, it rose sharply to 55.7% in 1994. However, after the reform, the proportion of central and local financial expenditure still maintained a thirty-seventy ratio [28]. 53 Qu

4.3 Integrated Governance: A New Theory

73

invest in enterprises. After the tax reform, encouraged by the policy of “invigorate large enterprises while relaxing control over small ones”, local governments began to launch large-scale reform to enterprises, transforming township enterprises and some state-owned enterprises into joint-stock or private enterprises. After that, the functions of local governments have been separated from those of the enterprises, but they provided public services and collected revenue through taxation and charges. As the reform progressed, the property rights of enterprises have become diversified, and the proportion of the resources directly controlled by local governments has decreased significantly. In addition, the totalism governance model shifted to limited control model and the government performed the supervision according to law. For nongovernment-owned economic resources, the government no longer has the power to dispose of that which is in their possession. It can only oversee the businesses according to law and is not allowed to intervene or expropriate any resources. (2) Rapid Development of Private Organizations In the era of planned economy, all kinds of organizations and individuals in the city were brought under the control of the state. Almost all urban residents belonged to one of these work units, becoming “work unit person”.56 As the market-oriented reform progresses, the social functions previously undertaken by the unit have been constantly handed over to the urban community-level authorities. As the migrant population increased, they were unable to meet the social welfare and livelihood needs of people. Against this backdrop, the Ministry of Civil Affairs proposed to build communities in cities, calling for the gradual shift of responsibility for providing social welfare from the state before to state, community and individual, and all of them can provide community services through a variety of means. In response to the call, the sub-district offices began to build community service centers, activity centers, service outlets for residents. In addition, the communities also cooperated with companies and migrant workers to provide various services.57 In the process of community building, the group of actors to provide social services has expanded from the state organs and public institutions in the past to new economic organizations and various kinds of social organizations. Anyunali Community of Asian Sports Village Subdistrict Office in Chaoyang District, Beijing, for example, had 3751 households, 7200 permanent residents and 3800 migrants in August 2013. In the community, there are organizations such as Chinese Cultural Federation, the National Olympic Sports Center, the National Wushu Sports Administration Center, the National Doping Control Center, the Asian Sports Village Subdistrict Office and the police station. In addition, there are also supermarkets, restaurants, greengrocers, real estate agents, home appliances maintenance, housekeeping services and other service outlets for residents. Moreover, a number of social groups of hobbies and interests have been set up, without being registered but some of them filed on record 56 Lu

[31]. and Luo [58].

57 Tang

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4 Holistic Governance: An Explanatory Framework

in the sub-district office. Among them, the elderly choir, community dance team, fitness association, calligraphy association are more popular, with many activities organized. (3) The Logical Paradox of Urban Governance The widely promoted market-oriented reform leads to a decrease in the finance and resources controlled by city governments and an increase in the economic and social resources owned by private organizations, resulting in significant reduction in the proportion of resources owned by the government in total amount. On the one hand, a large number of state-owned enterprises have been transformed into jointstock companies or private enterprises, leading to increasing economic and social resources not allocated by the government; on the other hand, all types of enterprises operate independently in accordance with the law, and the government intervention in enterprises have been reduced, contributing to growing social forces. So to speak, the market-oriented reform has decreased the proportion of economic and social resources directly controlled by the government, relaxed the government’s direct control over society, and limited the power of the city government. Under one-party leadership and governance, despite the decline in the capacity of urban government to control resources and mobilize society, it still takes full responsibility and needs to deal with all economic and social issues. Moreover, in the party-government integration system, the party’s authority and credibility need to be supported and maintained by the government’s effectiveness. Therefore, the performance assessment becomes essential to the government governance, and the top-down performance appraisal has emerged as the indicator to evaluate government work. According to Kang Xiaoguang, in the Chinese political background, the great dream of national rejuvenation and the political culture of “paternalism” is also important ideological resources that sustain the “unlimited responsibilities” of the local governments.58 In order to solve the contradiction of “limited capacity” and “unlimited responsibility”, city governments have to innovate their governance methods, vigorously develop public-private partnership while separating separate government functions from enterprise management and separating the government administration from economic management, and enhance cross-sectoral governance capacity to achieve the governance objectives. 2. How the Integrated Governance Model Operates Since the 1980s, the reform of economic system has liberated the market mechanism. With the reform widely promoted, the influence of the market mechanism has been expanding, resulting in more and more economic and social resources in the society, changing the totalism governance model by the Party and government, rapidly-developed non-state-owned enterprises and growing social forces. In spite of the relative decline in the capacity of the government, the government still takes full responsibility and solves all problems, which leads to the paradox of “limited 58 See

Footnote 47.

4.3 Integrated Governance: A New Theory

75 Integrated Governance Qualification Management Resource Support Absorption of Elites Party Organization Embeddedness Cooperation in Project Invisible Control

Fig. 4.2 How integrated governance model works

capacity” and “unlimited responsibility”. Since the grand goal can not be achieved only with government’s resources, it is necessary to mobilize social resources.59 As the law-based and accountable government still needs to improve, market and social forces are unable to restrict the excessive intervention of local governments, making local governments capable of leading the cross-sectoral collaboration. In order to meet the challenges caused by marketization and socialization, local governments have developed a host of new methods and created an integrated governance model—integrating the multiple actors and their resources by the government for local development and social stability. The integrated governance model practically works as shown in Fig. 4.2. (1) Qualification Management The qualification management refers to the activity that the administrative department examining and reviewing the basic requirements for certain business activities or occupations in order to enhance the sense of responsibility of market players and social organizations and the awareness to cooperate with the government. Its objective is to manage the corporate capacity and the individual capacity for business, so it is actually a kind of management of the powers given to organizations and individuals. In the economic sphere, the system makes the private enterprises depend on the support of the government to some extent to obtain the access to specific industry and qualification, which makes the government-business alliance become a common enterprise operation model. In the social field, the government carries out this activity through registration to make social organizations sensitive about it and work with the government to provide social services. Since the reform of “streamlining administration and delegating powers” in 2013, the government has relaxed the registration management of social organizations, but the activity is still conducted 59 See

Footnote 47.

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strictly. In addition to the registration management of legal person, the government department also gives the certification exam to individuals. The governments, in any countries with market economy, always carry out qualification management to market players and social subjects. In a sound legal environment, such activity is mainly characterized by the issuance of qualification certificate to those who meet the requirements after examination according to the law. As a kind of credit guarantee system, the assessment will be carried out by the governmentauthorized bodies. Enterprises which meet the prescribed standard or requirement are deemed to have the qualification to be engaged in a certain industry. In the local governance of our country, the qualification management features the administration. One example of this is the initiative of “Taking Three Responsibilities” (sanitation, greening, social order) in Beijing. Under the system of two-level government and three-level administration, the sub-district office is responsible for a large number of management and service affairs, such as environmental protection, maintenance of city appearance and social order, property management and supervision, co-management of floating population, family planning and civil mediation. However, the sub-district offices are understaffed and it is difficult to assume all these above-mentioned duties. In the early 1980s, some sub-district offices launched campaign to call for businesses along the street to participate in the management of the city environment and social order and the “Taking Three Responsibilities” mechanism60 was developed. The practice was praised by the municipal government. In 1985, the municipal government issued the Regulation on the System of Taking Three Responsibilities. In 1999, it was revised, providing that the organs, organizations, troops, private enterprises and public institutions, markets, construction sites, parking lots and individual businesses should implement this system. In practice, some sub-district offices made fulfilling the responsibilities as a requirement of acquiring qualification for units and individual businesses along the street. After vising the area in Asian Sport Village of Chaoyang District, we know that the sub-district office and the community property management company have signed an agreement on the System of Taking Three Responsibilities, defining the responsibility area and asking property management company to assist in managing the market, convenience stores, restaurants, stalls in the community. After that, the property management company also signed a contract on responsibility with the units and 60 The initiative of “Taking Three Responsibilities” first promoted by Chongwen District of Beijing. At the beginning of 1980s, with the market booming, there were many problems such as the disorderly parking of motor vehicles and unlicensed vendors in Qianmen Street. In order to improve the city appearance and social order, every seven enterprises along the Qianmen Street were divided into a group, with each group managed by a supervisor, making them jointly participate in the management of city appearance, sanitation and traffic. This move is called “seven enterprises with one supervisor”. In 1982, the initiative of responsible for sanitation, greening, social order was launched in Qianmen Street. It was promoted in 1983 by the Beijing municipal government which introduced the Regulation on the System of Taking Three Responsibilities in 1985. The practice quickly inspired other cities to follow suit, producing policy diffusion effect [19].

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enterprises within responsibility area. To make life more convenient for residents, many stalls were allowed to set up on the roadside in communities of Asian Sport Village, and the vendors who rent a stall can sell fresh vegetables and fruits and provide services such as vehicle repair, shoe repair and recycling of waste. However, they can obtain the certificate of qualification only by taking the “three responsibilities”. Vendors cooperating with community and fulfilling their duties is an important indicator in the next round of scrutiny of qualification. In Anhuili Community of Asian Sport Village, a migrant worker contracted from the property company to collect waste in three residential buildings. The two sides agree that contractor can only pick waste from trash cans and is not allowed to collect waste in and enter the residential area. This agreement entitles the contractors to operate under qualification, prevents them from entering residential buildings, and enables them to earn some money. In addition, the contractor also assumes the responsibility of maintaining social order in the community, which makes them motivated. Vendors not only need to fulfill their responsibilities, but also cooperate with sub-district offices and communities to maintain social order and protect environment and, if necessary, they should close business temporarily during big events. Because the Asian Sport Village is adjacent to the main stadium of the Beijing Olympic Games, many communities inform vendors to close their business to create a better environment during major events, such as the 60th anniversary of the founding of the People’s Republic of China, the APEC leaders’ summit and the National People’s Congress and the Chinese Political Consultative Conference. (2) Resource Support The development of enterprises and social organizations requires the necessary resources such as land tenure and privilege policies from the government. In practice, local governments support enterprises and social organizations in organizing their activities by means of negotiating land prices, providing venues, financial subsidies and privilege policies, so as to encourage the private sector to actively respond to government mobilization and assume social responsibility. The government support the enterprises in a cooperation way. In the building of development zones, for example, local governments provide privilege policies in land price, seven accesses and site leveling, procedures of affairs handling and public services to attract investment. This kind of policy provides the resources support, which helps the enterprises to cut their production and operation cost, making them more competitive in the market. To drive the social development, local governments support the social organizations by providing funds, venues and props for activities. According to the survey in August 2012 in Fengtai District of Beijing, there were 1931 registered social organizations, of which 1917 were mass organizations and 14 were private non-enterprise organizations. Three of them registered with the civil affairs department, accounting for 0.16%, 920 were filed on the record in the sub-district streets, accounting for 47.6%, and 980 filed on the record in the community accounting for 50.8%. In order to strengthen the management of social organizations, the Social Work Committee of

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the Fengtai District Committee in 2012 designated seven mass organizations (Federation of Trade Union, District Committee, Women’s Federation, Association for Science and Technology, Disabled Persons’ Federation, Overseas Chinese Federation and Red Cross Society in Fengtai District) as key social organizations to be responsible for management of social organizations that are not qualified for registration. Through the purchase of social services, local governments provide financial support to the seven organizations, which are accountable for contacting with other organizations and providing support in activities, funds and venues, to strengthen the invisible control over the social organizations in the community. In the provision of community services, in order to maximize the roles of market players and social forces, sub-district offices support the commercial service outlets and community organizations through financial subsidies, fee reduction and exemption, provision of venues and incentive mechanism. In the Anhuili community in Asian Sports Village of Chaoyang District, an example, there is a two-story vegetable market, which is rented by the sub-district office to vendors to sell vegetables, fruits, meat and eggs and other agricultural and sideline products. In addition, there are also more than 20 temporarily set up roadside stalls, mostly contracted by migrants. If market pricing is adopted, the rents of the stalls in the market will be higher than those on the roadside, making it difficult for the community market to operate. According to what we have learned, the rent for the agricultural product stalls on the first floor of the market has always been lower than that of the daily necessities stalls on the second floor with the same area and location. This act just like providing subsidies to the agricultural product stalls. (3) Absorption of Elites The elite absorbing mechanism attracts the social elites, including private entrepreneurs, cultural elites, philanthropists, new media leaders, and grass-roots elites by honoring them or giving them status in the state organs and public institutions. With their own efforts and resources, the social elites succeed, make contributions to the society and have social impact in their respective fields. In order to maintain social stability and avoid disorder from the elites in the private organizations, it is necessary to establish a certain mechanism of absorbing the elites to provide the platform for and manage them. In the urban governance, local Party committees and governments absorb elites into state organs and public institutions such as the National People’s Congress, the Chinese People’s Political Consultative Conference, the Federation of Industry and Commerce, and people’s organizations, and provide certain positions, honors and opportunities for them to participate in the deliberation and administration of state affairs, to enhance the interaction between the ruling party, the government and them, reach consensus, eliminate differences and promote cooperation between the government and society. In the community-level governance, the government also recruits, supported by the state transfer, social well-educated people into community such as excellent talents and college-graduate village officials to improve community governance and service capacity.

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(4) Party Organization Embeddedness As market-oriented reform is widely promoted, private, foreign-funded and jointstock enterprises develop rapidly, social mobility has increased significantly, and nonpublic enterprises’ contribution to economy and employed persons keep growing.61 With the development of socialization, new social organizations also develop rapidly, leading to expanding social self-developed space. In order to consolidate the status of ruling Party and increase its influence on the new economic organizations and new social organizations (Two New Organizations), a new model of integrated governance was created—establishing Party branches and mass organizations in Two New Organizations. In the 1990s, some large-scale non-state-owned enterprises began to push forward with the establishment of Party branches and mass organizations in the enterprises.62 In recent years, under the leadership of central government, large and medium-sized cities have been promoting the initiative and setting up Party branches, youth league committees, women’s federations and trade unions in larger Two New Organizations. In addition, they also establish party committees in development zones and parks where non-state-owned enterprises are densely located.63 In the Two New Organizations, the Party organizations do not in the leading position, so they can not have the final say on their decisions. Their responsibilities include organizing and educating Party members, playing a political leading role, assisting and supporting the development of the organization and reporting to the Party organization at a higher level on major issues. The party organization embeddedness has developed an approach of integrating the non-public sectors and improved the capacity of political mobilization, which maintains the social stability. Two New Organizations, characterized by being owned by the people, run by the people and privately operated, are difficult to be integrated because they are not affiliated to the state organs and public institutions. Urban local authorities practically provide necessary support for the development of them through the establishment of the Party branches and the mass organizations, which, in return, strengthens the invisible management of them. In recent years, many cities have also established Party branches in communities with large migrant populations and mobile Party 61 According

to statistics, the people employed in the urban non-public sector accounted for 0.2% in 1978, up to 74.8% in 2008. By the end of 2012, there were 499,000 NGOs, an increase by 8.1% over 2011. The number of social organizations has increased to 271,000, the number of private non-enterprise units has reached 225,000, and the number of foundations nationwide has grown to 3029, an increase of 15.9% [17]. 62 The central government began to promote the establishment of Party branches and mass organizations in the enterprises after setting the goal of creating market economic system in 1992. In 1994, the Third Plenary Session of the Fourteenth Central Committee adopted the Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning the Strengthening of Party Building, which provided that the number of newly established economic and social organizations was increasing and it was necessary to set up Party organizations and launch relevant campaigns according to the actual conditions [50]. 63 General Office of the Communist Party of China [12].

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members, as well as in buildings and shops. The neighborhood Party organs are responsible for organizing these Party branches and members to carry out activities. (5) Cooperation in Project Cooperation in project means that the government takes the lead and provides funds to integrate some enterprises and social organizations which are run by themselves. In order to maximize the efficiency of enterprises, the public-private partnership (PPP) operation model was created in the late 1990s in some cities, in which the government provided activity space, necessary equipment and financial support, and enabled the enterprises to manage the public service programs. In the new century, the cooperation between government and enterprises in programs has developed rapidly mainly in the ways of outsourcing, franchising and financial subsidies. On the outsourcing, the government pay the enterprise for the production of the public services. Franchising means giving a grant to an enterprise or social organization for the provision of public services in a particular area by means of bidding. In addition, the government also funds the enterprise in running urban public transport, performances for public good, cultural and sports programs. In recent years, the government has intensified the efforts to purchase public services through open tendering, targeted entrustment and outsourcing. It helps to improve the efficiency of public service supply and the capital efficiency, and better meet public needs. In December 2014, there were 114,000 permanent residents in the Asian Sports Village of Chaoyang District, including 87,000 registered permanent residents and 37,000 non-permanent residents. According to the third national economic census, there are 3520 legal entities, 674 establishments and 70,096 employees in legal entities in this area.64 In addition, there are also 10 communities which are newly built, each with about 3000 households, and 12 departments and 6 public institutions are established with a total of 98 civil servants and 42 staff of public institutions. In order to fulfill the responsibility, 231 social workers were employed by the sub-district office and its affiliated units. Moreover, 100 security personnel were recruited by the sub-district office through cooperation with the security company, and about 130 temporary workers were hired by public institutions and community organizations. Government procurement of services leads to the number of social worker twice as that of staff in public institutions. The sub-district office also pays attention to cooperation with the government and social organizations with regard to tasks assigned by the higher authorities, such as the “dinner for the elderly”. In order to solve the problem of the elderly cooking dinner by themselves, Beijing required the community to provide the “dinner for the elderly” service in 2010. 64 The legal entity refers to organizations that engage in socio-economic activities independently and has the legal capacity to assume obligations, incur and pay debts. Establishments, an integral part of the legal entity, is characterized by being engaged in or mainly engaged in a kind of social and economic activity in one place, relatively independent in production and business, able to handle the businesses related to income and expenditure. Data referenced in Chaoyang District’s third national economic census (No. 1), 20150121.

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Through outsourcing to catering enterprises and encouraging enterprises’ canteens to open to the community, the Sub-district office of Asian Sports Village has been providing the services paid by three parties—government, enterprises and the elderly, making the initiative well implemented. Since the beginning of the new century, urban governance has also developed a top-down “program-based” operation model, in which the government integrates all sectors through mortgage of state-owned land use right, special transfer and other means.65 According to Zhe Xiaoye, the local government established the integration mechanism of “administration-politics-company” through “Land Platform”, improving its capacity.66 This mode effectively addressed the issues of shortage in funds and resources needed for public services, enhanced the capacity of government, and provided support for urban development. However, there are also some problems, such as too much intervention of government, poorly implemented single program, the need to constantly provide programs. In addition, the over-rapid reconstruction of old cities and the construction of new cities and development zones have become the source of social problems and worsened the conflicts. The principle of only working on one program at a time was adopted at the beginning. However, some other programs need to be designed to support the single program when it is poorly implemented. In this way, the local government integrates the enterprises, communities and various public utilities by using the power on allocation of special transfer to acquires the capital, information and authority.

4.4 Achievements and Risk of Integrated Governance 1. Achievements of Integrated Governance Integrated governance model operates under the authoritarian regime. The city government, through its leading status, integrates multiple actors of non-public ownership across the sectors and their resources to accelerate economic and social development, and establishes a visible control mechanism to maintain social stability and order. In this process, the government is the initiator, planner and organizer, and other social actors need to cooperate with the government to carry out the campaign. The public participation is also included, but government plays the leading role and make the final decision. The cross-sectoral operation is not based on the agreement of actors. It can be seen from the results of integrated governance that some achievements are made in infrastructure construction, public service supply, social governance and control. First, integrated governance emphasizes the market mechanism and autonomous governance, and a governance system where government plays a dominant role and multiple actors participate is formed. With the expansion of urban size, urban affairs 65 Qu

[46]. [70].

66 Zhe

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tend to be difficult to handle, and it is hard to deal with them effectively by government alone. Therefore, it is necessary to maximize the functions of social actors and operation mechanisms and leverage various resources to achieve good governance. The integrated governance accepts the “otherness” of market mechanisms and social organizations, promotes the separation of government functions from enterprises administration and the separation of the government administration from economic management. In addition, it no longer includes the social forces into the government system, but enables the government to handle the public affairs, the market players to deal with competitive matters, the social organizations to address autonomous business, thus unleashing the economic and social potential. Second, integrated governance promotes cross-sectoral cooperation and improves the efficiency and supply capacity of public services. Since the reform and opening up, there are more and more resources owned by the private organizations with the development of marketization and privatization, making the society more autonomous. The totalism governance model of city government has also changed, and its capacities have become limited. In order to respond to the challenges and accomplish various tasks, the authorities have to alter the past governance model, mobilize, utilize, integrate multiple actors and resources, and establish a cross-sectoral operation model. Integrated governance accepts the “otherness” of private enterprises and social organizations and does not change their nature and operation model. Various kinds of cooperation between the government and them, such as outsourcing, franchising, subsidies, voucher system, voluntary service, encourage the actors of private organizations to take cooperative actions and take responsibility on their own initiative. Such cooperation combines vertical management of governments with collaborative operations of private sector and social organizations to get the tasks done that an actor alone cannot accomplish. The government, for example, cooperates with private enterprises in infrastructure construction through PPP (Public-Private Partnership) to improve the capacity of infrastructure supply in many ways, including BuildOperation-Transfer (BOT), Build-Transfer (BT), Build-Transfer-Operation (BTO), Reconstruction-Operation-Transfer (ROT), Build-Own-Operation (BOO) and BuildOperation-Subsidy (BOG). The efficiency and capacity of public service supply has been improved through pushing forward with the government procurement of services. Third, the alliance of government and enterprises has promoted inter-regional competition and accelerated urban economic development. Under the “promotion tournament” mechanism, urban policymakers strive to attain and use a variety of flowing capital due to limited resources of their own and inspired by their strong sense of achievement in political career. Growth machine theory argues that activism of entrepreneurs has always been a key driver of urban systems and that urban development is driven by alliances of forces dedicated to economic growth.67 In order to attract the investment of enterprises, many privilege policies are provided and 67 Logan

and Molotch [30].

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some means such as financial subsidies, negotiating land prices, improving infrastructure are adopted to support enterprises, thus producing the subsidy effect on the extraterritorial investment enterprises. Encouraged by development privilege, privilege policies and profit, enterprises tend to collaborate with government in regard to decision-making and development planning. The coalition between governments and enterprises has promoted inter-regional competition and sped up local economic development. To attract investment, urban governments provide “green channels” for investment enterprises which meet certain requirements to go through procedures in “one-stop” office halls where procedures of approval are simplified and streamlined. In addition, some cities try to create an enabling environment to attract and retain the investors, and even set up offices to handle investment affairs on spot. Fourth, a host of invisible control mechanisms have been formed through innovative means of integrated governance. The heterogeneity of urban society is reflected in residents of different age, occupation, class and industry. Because they have different preferences and values, demands of public service vary. Led by the government, the integrated governance has employed cross-sectoral operation approaches such as qualification management, resource support, financial subsidies, elite absorption, establishment of Party organization and cooperation in projects, and created a visible control mechanism. The government establishes legal entities in cooperation with social forces or develops cooperative relations with social organizations by providing privilege policies, funds, resources, organizations and support for projects. Through invisible control means, it also can address more conflicts and challenges, maintain social stability and defuse disagreements. 2. Social Risks in Integrated Governance Integrated governance came into being in the process of reform in marketization and privatization. With the advance of the reform of state-owned enterprises, the city government will no longer directly operate the general economic entities, and the private enterprises spread into the areas of construction, manufacturing, garden, medical care, training, catering and sales. In integrated governance, public-private partnership (PPP) is developed relying on the power and leading status of the government, the authority of approval and the distribution of scarce resources. In addition, different resources and operation mechanisms are adopted to drive urban development, improve the supply of public services and enhance the capacity of urban governance. However, this kind of governance model is actually a source of social issues. First, integrated governance places too much emphasis on government leadership and tends to lead to rent-seeking behavior and corruption. Led by the government, policymakers are likely to develop industrial policies. Therefore, different policies are provided to different industries in terms of market access, taxation and subsidies, financing and credit, land use, import and export license, and privilege policies are offered to the industries that the government pays attention to. Because they are profitable, some entrepreneurs try to curry favor with government officials to attain the privileges, and some of then even make false documents or collude to get subsidies. Due to inadequate law enforcement and oversight, power-for-money deal can

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be found in the outsourcing, franchising and PPP related to projects of urban public services directed by the local government. Second, the public interests are likely to be damaged by the government-enterprise alliance formed by the integrated governance. A level playing field in the market economy is necessary for the enterprises and social organizations to access to rights and opportunities for development. This kind of alliance is easily transformed into a group seeking certain privileges for enterprises. Some of big companies are fighting not for equal rights, but for privileges. They ask the government to take measures that benefit them, even at the cost of breaking laws, such as the case of an explosion accident in Tianjin Binhai New Area. The alliance, between the government for revenue maximization and enterprise for profit maximization, is bound to infringe upon the interests of society and citizens if there is no strict accountability mechanism. Third, the qualification management is carried out to the social organizations in the integrated governance, resulting in negatively affecting their development. Furthermore, the nongovernmental organizations are required to be registered, but sometimes the strict requirements impede their development. It is found that the number of NGOs per 10,000 people in China is much smaller than that in developed countries, as well as in developing countries such as Brazil, India and Egypt.68 Under the operation of integrated governance, the government usually impose compulsory measures to force the social organizations to take some responsibilities, making them more administrative. Many social organizations rely heavily on government departments for basic resources such as personnel, funds and office space. Fourth, the lack of cross-sectoral consultation in integrated governance could easily lead to social conflicts and an increase in the number of civil disorder. The government, who plays the leading role in this kind of governance, is not only the initiator, but also the planner, participant and leader in the process. Other actors are subjects to be integrated. In order to speed up major projects, some officials often use mandatory methods to force shareholders to cooperate. In the urban management, the incidents of mandatory relocation and land expropriation, approval of projects that do not go through all procedures and suppression of petitioning have become the sources of civil disorder. Generally speaking, the civil strife does not burst out suddenly. If citizens’ participation can not safeguard legitimate rights and interests and disagreement can not be defused, it may cause social combustion triggered by bombshell, leading to social conflicts.69 In recent years, protests such as the farmers protesting against dam construction in Hanyuan of Sichuan Province and the antipollution protests against JinkoSolar Company in Haining of Zhejiang Province have shown that blindly suppressing disagreement is likely to result in civil disorder. The root cause of the problem in the integrated governance, even leading to severe social conflicts and disorder, is the lack of institutional platform for collective dialogue. Even if the cross-sectoral operation goes off the track of the public values, it 68 Wang 69 Xie

and Liu [60]. and Wu [64].

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is hard for stakeholders to correct it. In the integrated governance model, the boundary between government and society is blurred, and people are used to placing all the responsibility of governance on the government, and the government on the ruling party. To address this issue, it is necessary, in cross-sectoral governance, to establish consultative platforms and develop a dialogic democracy in which communication, discussion and debate shall be carried out to lay restraints on the executive power.70 According to Denhardt, the right thing in a democracy is to engender more participation, which enhances the awareness of government responsibility, improves the quality of public policy and effectiveness of policy implementation, increases trust in government and develops a new kind of partnership.71 In a dialogic democracy, crosssectoral cooperation presupposes the consent of the stakeholders, rather than forces them to do something. Government may play a greater role in the dialogue process of multiple stakeholders, such as launching and planning cross-sectoral programs and setting up collective forums, but it is no longer the one that controls this process. Because the stakeholders have the right to participate in this activity and decide whether to engage in collective action. 3. Framework of How to Defuse Risks Simon’s distinction between facts and values in decision making provides an analytical angle to the problems of urban governance in China. Every public decisionmaking involves ethical and factual elements. In the process, the evaluation criteria for correctness of the two elements differs. The former is only meaningful in the subjective value of human beings, while the latter may be validated by empirical tests. As Simon argues the main reason of existence for democratic institutions is that they can serve as a procedure for validating value judgement. Since there is no science or expert law on value judgment, experts with any kinds of professional skills and knowledge are not qualified to perform the function of value judgment.72 The power of value judgment is granted to a few political elites elected by citizens through the institutional arrangement of representative system in modern politics. As public representatives, these political elites hold consultations and public debates in the legislature (parliament), exercise their power to value judgment through collective decision-making, and formulate laws and regulations to limit the executive power. As the public affairs become more complicated, the scope of government responsibilities has been expanding, and it is more difficult to handle the administrative affairs. In order to reduce decision-making mistakes, legislatures often avoid well-defined policies and leave the job to the administrative departments. Since the twentieth century, with the rise of the administrative states, the government has made more regulations. Administrative control is not so much rule of law as the rule of regulation.73 70 Dryzek

[7]. and Denhardt [6], p. 70. 72 Simon [51]. 73 Wang and Zhang [61]. 71 Denhardt

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The administrative staff are not completely neutral and rational, as described in bureaucratic theory, who also have their own values and expect the departments to function according to their wishes and even resist the policies of the legislature. As a result, the administrative democracy has been put on the agenda and gathers more attention. In the administrative decision-making process, public participation has been considered an essential part. Supporters of democratic administration argue that the core function of government is serving but not steering, especially creating a democratic environment. The public interest reaches people through a particular process that allows interests to be aggregated, balanced, or reconciled. It is the duty of the administrators to listen to the voice of citizens and to respond to their demands, and the administrator, in this process, joins himself and society in a reflexive relationship.74 In light of this, the outsourcing of public services shall not only involve the cooperation between the public sector and the contractors, but also engage the receivers of services. In addition, it is necessary to establish a regular and institutionalized collective forum among the contractors, developers and the public. Similarly, cross-sectoral operation also premises the participation and consent of stakeholders. Therefore, it is necessary for urban governance to break down the selfish departmentalism, develop consultative democracy, and create the cooperative governance model between government and society. Under the condition of existence of multiple actors, the key in urban governance is to change the “center-edge model” and get rid of the arrogance in administration.75 This demand is to recognize and respect the right of autonomy of economic and social subjects, and foster the cross-sectoral cooperation which shall be based on the consent of multiple actors and can not be built only by political authority or by stressing that government domineers over others. Conceptually speaking, collaborative governance involves four aspects, consultation, agreement, collective rules and cooperative action. Consultation herein refers to a dialogue to solve problems and a way to find solutions to issues under certain conditions. In this process, preferences are expressed and individuals may change their value preferences while trying to persuade others. Agreement is the result of consultation, and all parties, in this process, reach consensus and make collective decisions on the basis of negotiation and debate. Collective rule is the outcome of collective decision-making, and it provides rules for collective action. Cooperative action is a concerted action taken by multiple actors in accordance with collective rules. Urban governance is the process in which policies are implemented and the public values are distributed by authority in jurisdiction. As the decision-making of government involves a large number of value preferences and interest demands, decision makers shall respond to the diversity of social values before making value judgment. The starting point of urban governance is to protect public interests and provide public services. Public interests can be clearly defined and identified only when 74 Denhardt 75 Zhang

and Denhardt [6], p. 70. [68].

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different interest demands are fully expressed and consultation is held. Therefore, insufficient interest articulation and interactive consultation will fail to aggregate interests, making it hard to set up a clear framework of urban governance. Without discussion and consultation, urban governance can be off track of actual demands due to prejudices. So debate and negotiation can not only contribute to good urban governance, but also underpin a more practical cross-sectoral cooperation. The collaborative governance mechanism in urban cross-sectoral cooperation entails the recognition of diversity of interests. Decisions are made by multiple shareholders through collective consultation rather than by the government alone. Collaborative governance requires the establishment of collective forums to seek rules for cross-sectoral cooperation through consultation and communication. Collective negotiation does not necessarily eliminate disagreement, but it allows for the expression of diverse value demands, bringing in new information and knowledge to help people find the cause and probably reach consensus.76 Collective debates can yield better results as long as stakeholders have their voice heard and communicate with each other. The process of dialogue and consultation in urban cross-sectoral cooperation aims to enable state organs and stakeholders to think twice before making decisions. This kind of governance that seeks consensus through consultation shares a common value demand with the democratic theory of consultation—taking citizen participation in decision-making as the core value of good governance. The consultative democracy theory holds that a democratic government is based on reasoning and debate, not only on voting and power, and the consultative democrats oppose that the government operates on referendum. They seek to build constitutional structures that create pure republicanism rather than a direct democracy. They want to establish a system to ensure that people are aware of different views, including those they are opposed to or have little interest in.77 The superiority of consultative democracy is that it shifts focus of democratic governance from the election to the decision-making and supervision, showing the importance of public participation for good governance and providing a new theoretical basis for the cooperation between government and civil society.

4.5 Institutional Requirements of Collaborative Governance 1. How the Collaborative Governance Model Operates In view of the social risks of integrated governance, it is necessary to break the government departmentalism and develop the consultative democracy, and create the cooperative decision-making mechanism among the government, market players 76 Yan

[65]. [56].

77 Sunstein

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Collective Forum

Cross-Sectoral Collaboration State Organs

Trust

Social Actors

Commitment

Shareholders

Dialogue

The Public

Consensus

Supervision And

Mutual Benefit

Punishment Collective

Leadership and

Decision-Making

Persuasion

Collective Action

Fig. 4.3 How collaborative governance model works

and social actors. Collaborative governance needs to recognize the autonomy of market player and social actors, and cross-sectoral governance operates through a collaborative platform where stakeholders make collective decisions after communication, consultation, commitment and consensus, and take concerted action according to an agreement (see Fig. 4.3). In comparison with integrated governance, participants in collaborative governance are on an equal footing, and they try to reach consensus, make collective rules and take collective action by negotiating on the basis of equality, coordinating positions and interests. After studying the development of cross-sectoral cooperation, Michael McGuire argues that collaborative governance is not an old method that has been applied for many years, but a new model of public management that is important to successful collaboration among organizations.78 The mechanisms of collaborative governance include: (1) Dialogue Mechanism For any governance models, consultation and dialogue mechanisms shall be established to promote information exchange and social interaction. Unlike common social consultation and dialogue, collaborative governance views the participants of dialogue as direct stakeholders and clearly defines what kind of people are allowed to participate. Despite the ordinary citizens have the opportunity to engage in the collective forums, they can not make final decisions. This makes the dialogue mechanism 78 McGuire

[34].

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89

different from others, forms a new voices-heard system and make the dialogic democracy more feasible. Collaborative governance needs to identify the stakeholders, involve them in the collective forums and break down the barrier that hinders communication and efforts for win-win outcome through face-to-face dialogue mechanisms to make shareholders more prudent, transparent and accountable in cross-sectoral decision-making. (2) Trust Mechanism With regard to cross-sectoral cooperation issues involving multiple actors, it is common that the shareholders do not trust each other when one gives a proposal. In the process of collaborative governance, reaching agreement through negotiation and building trust mechanisms among stakeholders are all required. A comparative study on performance of democratic system in different areas of Italy by Patnam proves that social capital is a decisive factor for democratic progress.79 For the successful cooperation in the past, it would build social capital and enhance mutual trust to make more collaborative actions happen. The past conflicts and deadlocks, however, discourage trust, leading to mutual mistrust and dishonest exchanges. After studying some cases, it is found that the adversaries are likely to make concession and look for alternatives and solutions when gridlock costs both sides dearly.80 (3) Commitment mechanism In the process of commitment mechanism, reciprocal regulations are formulated for building consensus by providing the most basic rules and principles. Based on studying the collaborative groups in the United States and Australia, Richard Margerum found that commitment of members was the most crucial factor in promoting collaborative governance.81 Participants of collective forums may be public sector, private sector, social organizations and individuals and each of them have different opinions, values, interests, information and knowledge. In order to reach consensus, a number of commitments or agreements of principle shall be made. Kirk Emerson and other scholars point out that the establishment of commitment mechanism is a process of collaborative learning, which includes discovery, definition, deliberation and decision. In this process, perception is developed among stakeholders concerning the goal of cross-sectoral cooperation, including equal footing, open and inclusive communication, balance of interests, the way to address issues, scale of collective action.82 (4) Reciprocity Mechanism In any contexts, reciprocity is an important way to facilitate social trust. Essentially it is a highly productive social capital and can more effectively constrain speculation 79 Putnam

[45], p. 2132166. [62]. 81 Margerum [33]. 82 Emerson et al. [9]. 80 Weber

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and solve problems of collective action.83 A study on small-scale public resource management by Ostrom shows that the awareness of reciprocity by vast majority of people is one of the preconditions for collective action.84 Collective action by multiple actors is more likely to occur if people believe that mutual trust can be rewarded without being misused. The development of reciprocity will also be encouraged by the game playing between the actors. (5) Consensus Mechanism The dialogue mechanism between the government and stakeholders is designed to build consensus on collective action. Consensus reaching is not a process of mechanical calculation of rules in collective consultation, but of assessment of uncertain benefits and costs. After collective dialogue and discussion, the majority of participants will realize that their interests would be undermined if collective action was not taken, thus agreement will be reached on specific plans and decisions for collective action will also be made to improve common well-being. Such a consensus could be a shared vision, a mission, or a clear common goal or program of action. Leadership is also one of the key drivers for the cross-sectoral cooperation in the policy agenda of collaborative governance. This governance model is not necessarily planned or launched by governments, but strong leadership and persuasion, combined with both formal and informal leadership mechanisms, are essential for cross-sectoral action. All depends on excellent leadership, such as making basic rules. Building trust, promoting dialogue, collecting opinions and seeking win-win solutions. Lasker and Weiss suggest that collaborative governance requires leaders to have the capabilities of encouraging extensive participation, influencing the majority, galvanizing the public and advancing the process of dialogue.85 The more pronounced imbalance between power and resources leads to increasing mistrust among stakeholders and more dependence on mobilization, coordination and persuasion of leaders in collaborative governance. Leadership also can strike a balance of powers to empower or represent the disadvantaged stakeholders to voice their claims. 2. Institutional Arrangements of Collaborative Governance From the standpoint of the society, the role of the government is to assist in social governance and remedy the shortcomings of social autonomy, rather than to replace social communities and include society into the system of government. Pushing forward with collaborative governance requires integrating the consultative democracy into cross-sectoral cooperation, which enables multiple actors to enhance understanding through communication and to take concerted action on the basis of commitment, trust and consensus. This operational mechanism involves at least four institutional arrangements: 83 Putnam

[45], p. 202. [38], p. 306. 85 Lasker et al. [25]. 84 Ostrom

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91

(1) Empowering Society Collaborative governance presupposes social autonomy, and most social issues are addressed by means of self-governance. Only in the case of societal collapse will people turn to state organs for help. In the government-led institutional context, people are used to placing all the responsibility of governance on the government, and the government on the ruling party. This thought blurs the boundary between government and society and even equates social governance with social management. Social management and social governance fall into different categories. The former implements the state decisions through administrative decision-making and program implementation; the latter, a kind of autonomy, represents the capabilities of selforganization and self-management of society.86 Laying too much emphasis on social management will result in expanding public power, reducing the social autonomy, and undermining the right of social autonomy. Strictly speaking, social governance needs to be premised on the self-governance of people, rather than includes the social and community organizations into state system, becoming the dispatched organizations of the governmental departments. The key to shifting the integrated governance to collaborative governance is to empower the society and support social autonomy. In addition, space for activities, autonomous rights and available resources should underpin it. Therefore, in order to make the social autonomy work, it is necessary to reform the registration system of social organizations, lower the threshold for registration, strengthen the supervision, introduce the competition mechanism and encourage the social forces participation. (2) Establishment of a Multi-Level Consultation Platform Because of nonfeasance of government, market and society, people increasingly rely on multiple actors to solve problems through cooperation among them. The increase in the number of such actors leads to the disagreement of interests. In order to realize common interests and take concerted action, collective consultation mechanisms need to be established to safeguard the rights of stakeholders to participate, make basic rules of procedure and listen to the voice of all parties. There are many forms of collective forums, such as hearings, symposia, meetings, councils where people have equal rights to speak, communicate with each other, and negotiate through dialogue. In collaborative governance, the participation of stakeholders in the consultation process is pivotal, and public interests are realized through the process of interest expression, aggregation and coordination. When there are fewer actors in cross-sector cooperation, it is relatively easy to hold collective consultations. With the number of them increasing, it is essential to select representatives, establish consultative system as a way to improve the efficiency of collective consultation. (3) Basic Rules for Reciprocity In the process of public-private partnership, different opinions concerning interests often lead to endless disputes. Olson notes unless there is coercion or some other 86 Yan

[66].

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special instruments to make individuals act in their common interest, rational, selfinterested individuals will not take steps to achieve their common or group interests.87 If cross-sectoral collaboration involves a large number of stakeholders, many different interests often will result in many disputes. In order to address it, it is necessary to exercise the governmental power in an appropriate way, make the leadership and persuasion work best, and provide the basic rules of reciprocity for collective consultation. Despite the disagreement between them, the cognitive pattern provided by the basic rules makes it easier for most people to realize that non-cooperation harms their own interests and cooperative action contributes to their own interests, thus changing their attitudes and positions. (4) Establishment of a System of Collective Supervision and Punishment Even if rules have been developed through collective forums, not all individual will follow them. They may promise to do so in the process of dialogue and consultation, but they may fail to keep it afterwards. To ensure that all people involving in cross-sectoral cooperation obey the rules, oversight and punishment mechanisms need to be in place to examine whether they fulfill their duties in accordance with collective agreements and to impose appropriate sanctions or penalties on those who violate contracts and rules depending on the specific circumstance and severity of the violations. Such measures can be carried out by multiple actors or authorities. In a nutshell, collaborative governance takes the participation of stakeholders as the core value of public governance, and views the consultation and consensus on an equal footing as the drivers to catalyze cross-sectoral cooperation, which provides a more perfect theoretical model for understanding public governance. It not only aims to achieve the government goal, but also seeks the win-win outcome. The key to building a collaborative governance model it to create collective forums, identify stakeholders and establish a mechanism for consultation and dialogue. Although conflicts of interest exist among different actors, equal empowerment, participation in dialogue and exercise of power in a minimum way can enhance trust and cooperation, and finally contribute to collective decision-making. For the urban governance in China, an approach to deal with the problems and challenges of cross-sectoral cooperation is to develop consultative democracy and improve the institutional arrangements for collaborative governance.

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31. Lu, A. (2011). The evolution path and experience of community building since the founding of the People’s Republic of China. Lanzhou Academic Journal, (6). 32. Mao, S., & Chen, J. (2008). Community governance and sustainable development: A sustainable approach to self-governance from Meiliyuan case. Chinese Public Administration, (3). 33. Margerum, R. A. (2002). Collaborative planning: Building consensus and building a distinct model for practice. Journal of Planning Education and Research, 21, 237253. 34. McGuire, M. (2006). Collaborative public management: Assessing what we know and how we know it. Public Management Review, 66(s1), 3343. 35. Mosca, G. (1939). The ruling class. New York: McGraw-Hill Book Company Inc. 36. Olson, M. (1995). The logic of collective action (p. 2) (trans: Chen, Y., et al.). Shanghai: Shanghai People’s Publishing House. 37. Osborne, D., & Gaebler, T. (1992). Reinventing government: How the entrepreneurial spirit is transforming the public sector (p. 1). Reading, MA: Addison-Wesley. 38. Ostrom, E. (2000). Governing the commons (trans: Yu, X., et al.). Shanghai: Joint Publishing (Shanghai). 39. Ostrom, V. (1991). The meaning of American federalism: Constituting a self -governing society (p. 225). San Francisco, CA: Institute for Contemporary Studies Press. 40. Ostrom, V. (1999). The intellectual crisis in American public management (p. 78) (trans: Mao, S.). Shanghai: Joint Publishing (Shanghai). 41. Ostrom, V., Tiebout, C. M., & Warren, R. (1961). The organization of government in metropolitan areas: A theoretical inquiry. American Political Science Review, 55, 831842. 42. Pareto, V. (1935). The mind and society. London: Cope. 43. Perri 6. (2002). Towards integrated governance: The new reform agenda. New York: Palgrave. 44. Polsby, N. W. (1980). Community power and political theory (p. 118). New Haven: Yale University Press. 45. Putnam, R. D. (2001). Making democracy work (trans: Wang, L., & Lai, H.). Nanchang: Jiangxi People’s Publishing House. 46. Qu, J. (2012). Program-based system: A new system of state governance. Social Sciences in China, (5). 47. Qu, J., Zhou, F., & Ying, X. (2009). From overall domination to technological governance: A sociological analysis based on China’s 30-year reform experience. Social Sciences in China, (6). 48. Salamon, L. M. (2008). Partners in public service: Government-nonprofit relations in the modern welfare state (trans: Tian, K.). Beijing: The Commercial Press. 49. Savas, E. S. (2000). Privatization and public-private partnership (p. 66). London: Chatham House Publishers. 50. Selected works from literature after the 14th national congress (1997) (p. 966). Beijing: Central Party Literature Press. 51. Simon, H. A. (2013). Administrative behavior (p. 56) (trans: Zhan, Z.). Beijing: China Machine Press. 52. Stoker, G. (2006). Public value management: A new narrative for networked governance? American Review of Public Management, 36(1), 4157. 53. Stone, C. (1993). Urban regimes and the capacity to govern: A political economy approach. Journal of Urban Affairs, 15(1), 3. 54. Stone, C. N. (1989). Regime politics: Governing Atlanta: 1946–1988. Lawrence, K.S.: University Press of Kansas. 55. Sun, L., Wang, H., et al. (1994). Changes in China’s social structure since the reform. Social Sciences in China, (2). 56. Sunstein, C. R. (2006). Designing democracy: What constitutions do (p. 6) (trans: Jin, C., & Liu, H.). Beijing: Law Press China. 57. Tang, X. (2009). Selection of policy tools and the ability of the government to mobilize society. Study and Exploration, (3).

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Chapter 5

City-County Relationship: Separated or Integrated Governance

5.1 Theoretical Dimensions of Urban-Rural Relationship In recent years, the relationship between urban and rural areas has been one of the hot topics in the domestic academia of public administration, economics, sociology and geography. It is practically shaped by socio-economic development, government intervention and a series of institutional arrangements. 1. Representative Theory of Urban-Rural Relationship Based on the attitude toward government intervention and the value orientation of efficiency and fairness, representative theories of urban-rural relationship are listed below (see Table 5.1). (1) Natural Development Theory This is a theory of urban-rural relationship, which removes governmental intervention and institutional arrangements. It emphasizes the importance of division of labor, and holds that urban-rural relationship is a naturally formed order by market forces. Adam Smith first discussed the natural order of urban-rural relationship in Nature and Causes of the Wealth of Nations. He argues that supposing that the human system does not disturb the natural development of things, the growth and expansion of urban wealth in any kinds of political societies is ascribed to the development of rural farming and improvement based on which it grows.1 He also notes that according to the natural development of things, the capital of a progressive society is invested primarily in agriculture, followed by industry, and then the foreign trade, which is very natural.2

1 Smith 2 See

[18]. Footnote 1, p. 349.

© China Renmin University Press 2021 H. Yang, Urban Governance in Transition, Understanding China, https://doi.org/10.1007/978-981-15-7082-7_5

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Table 5.1 Theories of urban-rural relations Non-intervention

Intervention

Natural development theory (division of labor and market)

Urban bias theory (efficiency-oriented) Rural bias theory (fairness-oriented) Coordinated development theory (trade off between efficiency and fairness)

Source Yang [28]

Followed by Smith, theories, such as von Thünen’s location theory,3 Alfred Weber’s theory of industrial location,4 Walter Christaller’s Central Places and Peripherals Areas,5 all discuss the rules of urban and rural industry and urban planning. According to the natural development theory, there is an objective law that does not change with the human will in the relationship between urban and rural areas— urban development relying on the surplus of agricultural production and urban areas providing retail and service for agricultural areas. If people are aware of this natural order and create one based in it, the relationship between urban and rural areas remains sound, or they stay in an unhealthy relationship. According to the natural development model, the urban and rural development needs to follow the natural order. In addition, it should follow a principle that urban expansion shall be proportional to rural and agricultural development. (2) Urban Bias Theory This theory introduces the governmental and institutional elements in urban and rural development, and focuses on how to drive the economic growth and improve the economic efficiency through institutional arrangements and policies. The representative theories of it mainly includes growth poles theory and center-periphery theory. After finding that the economy often starts to grow one or more central cities, French economist Francois Perroux pioneered the growth poles concept, arguing that economic growth is usually driven by one or more growth centers and gradually expands to other regions.6 After that, the widely influential growth poles theory was developed after this concept was renewed by the geologist Budeville and economists Gunnar Myrdal and scholars like Albert Otto Hirschman.7 The theory holds that economic growth is not uniform over an entire region, but instead takes place around a specific pole. Regional economic development can be divided into discrete, polarization, diffusion and integration stages. In the early stage of industrialization, regional 3 von

Thünen [22]. [25]. 5 von Böventer [21]. 6 Perroux [15]. 7 Wang and Chen [23]. 4 Webb

5.1 Theoretical Dimensions of Urban-Rural Relationship

99

economy mainly produces polarization effect, then the diffusion effect. Economic development was reflected in the aspect that the capital, technology, talent and other factors of production flow to cities. At the end of industrialization, the diffusion effect will be enhanced, and production factors begin to flow from growth poles to periphery. According to the growth poles theory, developing countries can increase investment in cities and promote the development of growth poles through a top-down management system. On the basis of the growth poles theory, American economist John Friedman developed the center-periphery theory in 1966 to give an in-depth discussion about the disparities about the urban and rural development.8 Friedman noted that development goes through a discontinuous, cumulative process of innovation, and it originates from a small number of core regions located at the points of highest potential interaction, where innovation expands from the core regions to the periphery which depends on the core regions for development. He also argued that the core area plays a vital role in the spatial framework and its innovative activities are active. Therefore, they become the drivers of regional development and have the resources and powers that make the peripheral areas submissive and attached to. Friedman also pointed out that with the development and maturity of the core regions, the economic gap between the core regions and the peripheral areas is widening and, if improperly handled, the cultural, psychological, political and other challenges will become acute. (3) Rural Bias Theory Like the urban bias theory, the rural bias theory also attaches the importance to government involvement in urban and rural development. The difference is that the latter gives priority to rural development. The former has obvious advantages in promoting economic growth, but it makes rural areas attach to it, leading to disparities in development. To criticize this city-oriented development strategy, American scholar Michael Lipton put forward the urban bias theory,9 attempting to clarify that the conflict between rural and urban areas is most thorny issue in poor countries. He argued that the inequality between urban and rural areas is the root cause of rural poverty, and the essence of urban-rural relationship in developing countries is the flow of social resources into cities by urban people using their own political power. Due to the conflicts between urban and rural areas caused by urban bias theory, some scholars developed the theory of spatial development with rural bias, such as Agropolitan Development and Selective Spatial Closure since the 1970s. The former suggests increased government investment in rural areas to improve infrastructure, public services, transport and communication, and strengthen rural natural resource development, make rural areas urbanized, and transform rural settlements into town-in-the-rural area or city-in-the-fields.10 In the 1980s, influenced by the 8 Friedmann

[3]. [10]. 10 Friedmann and Douglass [4]. 9 Lipton

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5 City-County Relationship: Separated or Integrated Governance

attachment theory, Walter B. Stöhr and D. R. Fraser Taylor proposed Selective Spatial Closure.11 They advocated the bottom-top development model instead of the topdown approach, aiming to meet basic needs and combating poverty, give the priority to agricultural development and leverage intraregional resources to boost development and small-scale, labour-intensive companies. Although the rural bias development strategy can solve the problems of cities plundering rural areas of resources, it undermines the radiation and driving effect of the cities on the rural areas. Moreover, it can only address the basic needs of the rural residents, but is difficult to improve their livelihood. (4) Coordinated Development Theory This is a theory of urban-rural relationship that combines efficiency and fairness. Market mechanism and natural order feature efficiency, but they will lead to the economic gap between urban and rural areas. In order to maintain fairness, some researchers introduced the coordinated development strategy of integrating urban and rural socio-economic development. This approach attempts to narrow the urbanrural gap through policy instruments, maximize the efficiency of market economy and support the rural development, as a way to make the production factors exchange equally between the urban and rural areas, improve urban spatial arrangement, give boost to the development of small towns and basic public service system. By doing so, a new urban-rural relationship of industry-driving-agriculture and town-drivingcountry is built so that the fruits of urbanization, industrialization and informationization reach all. The key of the coordinated development is to optimize spatial arrangement and landscape in cities and towns, provide support for their development, improve infrastructure and public services and perform their function as the platform for connecting urban and rural areas. In addition, it is important to make small cities and towns be hubs where rural residents could access to basic public services. Since the Industrial Revolution, humans have been craving for the coordinated development of urban and rural areas, which can be found in the ideal society suggested by the utopian socialists, such as Saint Simon, Fourier and Owen. Some early urban researchers also proposed the integration of urban and rural development, such as, Ebenezer Howard, the founder of garden city movement launched at the end of the nineteenth century which aims to integrate urban and rural areas,12 and urban scholar Lewis Mumford who noted that urban and rural areas should be combined to protect the human settlement.13 These scholars painted a wonderful picture of coordinated urban-rural development, but failed to develop effective institutional arrangements and policy instruments. 11 Stöhr

and Fraser Taylor [19]. [8]. 13 Mumford [13]. 12 Howard

5.1 Theoretical Dimensions of Urban-Rural Relationship

101

The Garden City that Howard envisages includes the town and country. In such context, cities, whose expansion is constrained, are surrounded by farmland, so that the residents can easily have access to the nature and to the fresh vegetables and fruit. This concept, after being proposed, was widely spread to other areas, and many large cities in Europe followed suit. Most of them, however, were disguised garden cities, because they were in fact satellite cities or large-scale residential areas that were closely linked to central cities on economy. Strategy of secondary city development put forward by Dennis Landileri and the regional network strategy proposed by Mike Douglass provide policy instruments that we can learn from to balance the urban and rural development. Landileri argued that the government needs to diversify its investment and establish a system of secondary cities in a decentralized way, with small towns as hubs to coordinate the urban and rural development. It is also important to maximize the economic and administrative roles of small cities in driving the urban and rural development, especially to deepen the relationship between rural areas and small cities, small cities and large cities.14 In view of the disparities between urban and rural areas, Douglass developed a regional network strategy based on the concept of urban-rural interdependence.15 He noted that rural development requires to build a connection with the cities through five types of flows: people, production, commodities, capital and information. To promote coordinated urban and rural development, it is pivotal for authorities, through policy instruments, to improve rural infrastructure and public service and increase the mobility of the five kinds of flows between urban and rural areas. 2. The Path toward the Urban-Rural Coordinated Development (1) Problems of Urban-Rural Relationship Generally speaking, there are four main factors that result in the urban-rural gap: market mechanism, geographical location, resources and institutional arrangement. The first two make most production factors flow to cities, leading to widening gap between them. Lack of resources in rural areas is an inherent disadvantage for their development. Institutional arrangements could play a role either in narrowing or widening the gap. Since the reform and opening up in our country, much attention paid on the economic development makes the local authorities to lean toward the urban bias plan. It gives priority to the urban development and needs of citizens through three institutional arrangements—administrative systems, public policies and public services, leading to an increasing gap between urban and rural areas. First, in terms of the administrative system, the city-administering-county system results in unequal status between them, which hinders the development of counties. In order to accelerate the urban development, China began to implement the system 14 Rondinelli 15 Douglass

[17]. [2].

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5 City-County Relationship: Separated or Integrated Governance

in 1982 in order to make the cities drive the development of counties and rural areas through radiation effects. By the end of 1994, aside from Hainan Province adopting the province-administering-county system and some parts of the western China using the system of prefectural administrative office, the city-administering-county system had been widely established across the state. The system has given a strong boost to the development of regional growth poles, economic efficiency and growth, but its negative effects are also obvious. Urban development is centered on urban areas, and the county development is town-oriented. They both cooperate and compete with each other. Under the city-administering-county system, the municipal government has the right to control the counties under its jurisdiction. In order to improve political performance and especially boost the economic growth, the city authorities practically interfere with the allocation of resources through administrative instruments to prioritize the urban development in urban and rural planning, infrastructure construction, park planning and investment promotion. As a result, the counties will hardly “shatter the glass ceiling” due to the unequal status. To ensure the maximum of the municipal budget, the prefecture-level cities retain part of the transfer from the central and provincial governments, leading to the extraction effect. The social media refers to this phenomenon as “city plundering county”. One of the goals of implementing the city-administering-county system is to drive the economic growth of county through urban resources and radiation effect. However, in the early and middle stages of urbanization and industrialization, economic growth characterized the flow of the production factors into cities and insufficient radiation effect of prefecture-level cities on the counties. In the central and western China, some prefecture-level cities are not big and have small-scale industrial agglomeration, but cover relatively broad administrative jurisdictions. People visually describe this phenomenon as “a small horse draws a big cart”. They are unable to drive the county’s economic development, and sometimes they have to hold back part of the appropriations from the state to the counties. As a result, this system failed to narrow the gap between urban and rural areas, but even widened it due to plundering resources for counties. Second, on the level of public policy, urban and rural factors of production are differentiated by state and applied to different public policy systems, leading to unequal footing of urban and rural areas. Urban land, for example, is state-owned and can be transferred, while the rural land belongs to collective land and is prohibited to be sold by law. It can only enter the land market after it is expropriated and converted into state-owned land by the government. By auctioning off the use right of stateowned land, the city government can collect huge extra-budgetary revenue. The basic social welfare and rights of urban and rural residents, such as the education, employment, housing, medical care, social security and old-age pension, are also different due to different places of household registration. As cities become more modernized, there are more than 200 million migrant workers in cities, but they can not secure the same rights and interests as the local residents, leading their children to be given equal educational opportunity.

5.1 Theoretical Dimensions of Urban-Rural Relationship

103

Urban and rural dual institutional arrangement prioritizes the development of cities, but it creates rigid institutional barriers in some regions and groups and makes the rural areas an appendage to cities. Martin K. Whyte describes this situation as one country, two societies.16 Finally, the divide between urban and rural basic public service is also great. Under the dual system, regional governance is divided into urban and rural governance, and the government gives priority to meeting the needs of urban development and public services. Whereas, the standards of public services and accountability are not clearly defined in rural areas. In some areas, road building, irrigation and water conservancy services, schools and hospitals and other infrastructure are yet to meet the needs of local residents. In addition, problem of lack of clean water sources and basic medical care system can be found in some rural. (2) Policy Orientation of Balanced Development With the advantage in geographical location and resources, urban development outperforms rural areas in terms of economic efficiency, and urban infrastructure and public service systems are also better. Under the market mechanism, the gap between urban and rural areas can not be eliminated, but even gradually widen and this situation will become worse without government support and intervention. In recent years, as China’s economy becomes stronger, the central government has developed a strategy to balance the development in urban and rural areas, with the aim not to eliminate urban-rural differences, but to help the rural areas through policy instruments and to control the gap within a certain range. To accelerate the overall development, there are some ways as follows: First, it is essential to change the urban bias plan and empower the urban and rural areas equally. At present, state governance includes urban and rural governance, and different public policy systems are implemented according to different governance in terms of land use, industrial development, household registration, education, employment, housing, health care and social security. As our country becomes more urbanized and industrialized, social mobility is increasing and it is necessary to integrate the urban and rural markets, develop a unified public policy system, safeguard the equal basic rights, liberty and opportunities of residents, and facilitate the free flow and fair trade of urban and rural production factors. Second, it is pivotal to optimize the urban arrangement system and network of urban and rural areas. China is in the midst of rapid urbanization, and picking up the pace of new urbanization needs to rely on the economic efficiency of large and medium-sized cities to make central cities more competitive. In addition, it also needs to increase the number of cities, accelerate the development of small towns and upgrade the urban system and public services.17 To this end, institutions of higher learning and medical institutions can be guided by policy instruments to 16 Whyte 17 Yang

[26]. [29].

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5 City-County Relationship: Separated or Integrated Governance

set up branches in small and medium-sized cities, and counties and towns with relatively sufficient resources can be turned into small and medium-sized cities. For small towns, forestry stations and farms far from the cities, it is necessary to improve infrastructure and public services and build them into special towns driving the development of the countryside and surrounding areas. Third, it is critical to drive the development of small towns as a way to enable rural resident to access to basic public services. These benefits are essential basic public goods for personal and local development and the basic requirements for human dignity and social equity. In this connection, they must be put on the top agenda to reduce the urban-rural development disparities.18 In rural areas, it is not possible to allocate resources of public services equally to every village because of scattered population. Drawing on the secondary city strategy and regional networks strategy and taking economies of scale into account, small towns are built into centers to provide basic public services. Generally speaking, the flow of urban production factors to rural areas goes through a gradient process from urban to small towns to rural areas. Rural residents mainly rely on small towns for access to public services such as transportation, education, medical care, radio and telecommunications. At present, there are not sufficient infrastructure and public services in small cities and towns. After studying the cases of urban and rural development in Chengdu and Chongqing, we can set different basic public service standards for primary towns, secondary towns and the dense settlement.

5.2 City-County Relationship: A New Explanation The relationship between city and county is one of the hot issues in the study of local administration reform in China in recent years. In view of the problems existing in city-administering-county system, some provinces have expanded their countylevel administrative autonomy to varying degrees by implementing the “expanding power and strengthening counties” system and “province-leading-county” system in finance. At present, there are still many problems in the relationship between cities and counties. On the one hand, after implementing the province-leading-county system in finance, the counties continue to be administrated by the prefecture-level cities, making communicating more difficult because of having to report to two “bosses”; on the other hand, the city gives priority to meet the needs of the city and the surrounding areas in the allocation of resources, resulting in the widening gap between urban and rural areas.

18 Hong

[7].

5.2 City-County Relationship: A New Explanation

105

1. The Theoretical Debate on the Relationship between Cities and Counties The key to driving the development of county is to develop system about how provinces administrate counties. In recent years, there have been many debates on it. On top of it all, we have to figure out whether the cities and counties are competitive or cooperative with each other. According to the different value orientations of fairness and efficiency, there are two different province-leading-county theories. (1) Theory of City and County Competition According to the theory of city and county competition, they are two different local governments, with the former aiming to address the demands of residents in urbanized area, and the latter striving to respond the needs of residents in non-urbanized area. Both of them provide public services directly to the residents, but they are competitive with each other. In order to maintain the fairness of competition, it is necessary to adopt the separated governance model. Charles M. Tibbert argued that if there are multiple independent local governments, residents can freely move to the places where their preferable governments that can cater for their preferences are located, which would inspire local governments to improve public services and the efficiency of resource allocation.19 Most Chinese scholars criticize the city-leading-county system due to the competition theory. Pu Shanxin noted that binding them together through administrative instruments under this system is bound to create problems, because there is a leadermember relation in administration and competition in allocation of resources between them.20 According to He Xianming, the key of reform to the system of provinceleading-county is to carry out the separated governance of city and county, making the county independent from city so that both of them can follow the rules of market economy and identify whether they are cooperative or competitive with each other through the choices by the market players.21 According to Bo Guili, the essence of the province-leading-county system is to reveal the nature of city and county. The city is an administrative division in urban areas, while the county is an administrative division in rural areas. The separated governance is likely to put their strengths to work.22 (2) Integral Theory of City and County There are also scholars developing integral theory of city and county in view of regional economic growth, to create city-driving county-and town-driving-country development model through urban growth poles theory. The growth poles theory of regional economics, providing logic for the integral theory, holds that growth does not 19 Tiebout 20 Pu

[16]. 21 He [5]. 22 Bo [1].

[20].

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5 City-County Relationship: Separated or Integrated Governance

occur in all places at the same time, and it appears in some growth points or growth poles at different intensities, then spreads outward through different channels, and exerts different effects on the economy of the region as a whole.23 According to the theory, it is essential to implement unbalanced development strategy to boost regional economy, build the medium or large-size cities into the economic growth poles as a way to drive the peripheral backward areas by means of the diffusion effect. In terms of relationship between city and county, the growth poles theory suggests that the integration of political structure can foster regional economic integration—developing city-leading-county system through integration of administrative divisions. In the twentieth century, “One Area, One Government” was proposed for government reform in the American metropolitan areas. The campaign’s promoters believed that there was a strong demand for integrative development in large cities and surrounding areas, but they were defined as different administrative divisions. Consequently, collective action by many local governments failed to serve the public interest of integration and can even lead to conflicts and chaos. Robert Warren argued that welfare in metropolitan areas could be achieved only through an integrated political structure in which municipal decisions fall within the jurisdiction of a single general purpose government.24 In the early 1980s, China introduced the city-leading-county system in order to develop regional economic growth poles. In recent years, some scholars have also pointed out the underlying risk after it being criticized. Liu Shangxi and Li Chengwei noted that as the level of industrialization and marketization increases in China, the economic linkage between the city and the county will be closer. They also argue that the integration of regional economy requires the integration of administrative divisions, and only by doing this can the regional economy develop rapidly, while the province-leading-county system which separates the central cities from the surrounding counties will result in failure of radiation effect.25 Lu Jun also believed that there are many potential problems in this system in the establishment of regional common market, regional public goods production and inter-district policy coordination.26 (3) Comparison Between the Two Theories The theory of city and county competition holds that cities and counties should be at equal footing for competition, while the integral theory argues that they are interdependent. They also have totally different ideas in policies, with the former advocating separated governance and the latter suggesting establishment of a political structure of regional integration. The competition theory focuses on the equality of financial expenditure and the supply of public services on one hand and the same administrative 23 Perroux

[15]. [24]. 25 Liu and Li [11]. 26 Lu [12]. 24 Warren

5.2 City-County Relationship: A New Explanation

107

autonomy one the other hand. Both of cities and counties, however, provide public services to the residents in their respective regions. In this way, this separated governance model contradicts with the integrative development. The integral theory lays emphasis on regional economic growth through growth poles effect of central cities and implements the urban bias development strategy which gives priority to meeting the needs of urban development in infrastructure and public service. However, it hinders the county-level development far from central areas. It can be seen that both theories are one-sided. The competition theory emphasizes the fairness of local development, public investment and public service, while the separated governance can not bring out the efficiency of regional economic integration. The integral theory pays attention to the efficiency of regional economy, but it places city over county in administration, affecting the development of counties. We know that the aim of any administrative reform is to achieve Pareto improvements— improving the fairness and efficiency of public governance. If one reform could do good to one area and not harm others, it would be necessary to launch it. 2. City-County Relationship: A Mixed Model When discussing the relationship between city and county, it is necessary to take into account the fairness and efficiency and to explore institutional arrangements conducive to the Pareto improvement. In addition, the factors that drive the regional economy by cities and the negative effect of the central cities on the development of the peripheral areas all need to be considered. Growth poles have both positive and negative effects on the periphery area. The positive effects are manifested in the diffusion of urban infrastructure, production technology, management style, values and behavioral pattern to the surrounding areas, facilitating the development there; the negative effects are that the growth poles attract migrant population, capital inflows and trade activities from the surrounding areas, thereby accelerating urban development and slowing down the pace of development in the periphery areas. Albert Otto Hirschman describes the positive effects of growth poles on the periphery as trickle-down effect, and the negative ones as polarization effect.27 He argued that the polarization effect is obvious at the early stage of regional economic development, while the trickle-down effect of the growth pole on the backward areas increases over time. According to the influence of growth poles on the peripheral area, the trickle-down effect and polarization effect of central cities on counties often wane and wax with the change of spatial distance. In general, the central city produces more trickle-down effect on the county adjacent to it, and less on those far from them. This characteristic makes it possible to develop a mixed model of the relationship between city and county—distinguishing the adjacent county from the peripheral county. Under this mixed model, authorities need to implement integrated management of adjacent counties and the central city and separated governance of peripheral counties and 27 Hirschman

[6].

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5 City-County Relationship: Separated or Integrated Governance

the central city which are directly governed by government at the next higher level. In this way, there are overlapping and separation of city and county jurisdictions, and there are also two kinds of relationship—competition and integration. Under this model, industry and commerce companies in the city and its surrounding areas are the source of urban government revenue, and more public investments are made there. The public investment of the state and the province is dualistic, both taking into account the economic efficiency and the development of backward areas. Based on a comparative analysis of the polarization effect and the trickle-down effect, Hirschman pointed out that a country striving for driving the development of its backward regions needs to provide some means equivalent to autonomy.28 In terms of the relationship between city and county. The approach to secure this autonomy is to make the peripheral counties independent from the central city in order to ease the marginalization and unlock their dynamism through financial transfer and investments. Giving more autonomy to underprivileged counties and increasing public investment in peripheral counties will not only provide basic infrastructure for backward areas and improve equality of basic public services, but also foster new growth poles in economically backward regions.

5.3 International Comparison of City-County Relationship Because of the different constitutional systems and historical tradition, the legal status of city and county varies greatly. A comparison of the relationship between them in the four countries—United States, Germany, Japan and South Korea—is made to see whether there is a mixed relationship. Among these four countries, federal system is created in the United States and Germany, while Japan and South Korea are unitary states. Cities of these counties are administrative divisions in urbanized areas, while counties are categorized into the administrative divisions that are most inclusive in local governments. In a nutshell, there are three main types of city-county relationship in these four countries. 1. Separated Governance of City and County City and county are geographically separated from each other and their jurisdictions do not overlap. Complete separation of municipal and county jurisdictions is rarely seen globally. In states with or similar to counties in the United States, the separated governance is only implemented in Virginia where there are no overlapping jurisdictions and the autonomous cities take over functions originally assumed by the county governments.29 In both Japan and Germany, this governance model can not be found below the first-level administrative divisions. In the highest administrative divisions 28 See

Footnote 1, p. 181. et al. [14].

29 Ostrom

5.3 International Comparison of City-County Relationship

109

Table 5.2 Second-level administrative divisions of Korean provinces Provinces

Number of Number of Provinces cities counties

Gyeonggi-do

Number of Number of cities counties

27

4

Gyeonggi-do

7

Chungcheongbuk-do

3

8

Chungcheongbuk-do

6

9

Jeollabuk-do

6

8

Jeollabuk-do

5

17

10

13

10

10

Gyeongsangbuk-do

Gyeongsangbuk-do

11

of South Korea, this practice is only performed in provinces. Currently, there are 74 cities and 80 counties in 8 provinces (see Table 5.2). Under this separated governance mode, the municipal government provides public services to urban residents and the county government delivers public services to citizens in villages and towns. They have different jurisdiction, so there is no overlapping in services delivery. Therefore, special services can be offered according to the respective characteristics. It is often difficult for multiple local governments to cooperate to cross-regional provide infrastructure and public services across areas, so they often request for help from a higher-level government. 2. Model of Responsibility Division in City and County In such governance model, their jurisdictions overlap. The city is within the county jurisdiction and mainly provides public services for urban residents, while the county provides public services to both urban and rural citizens. This kind of relationship can be seen in the United States and Japan. States with counties in the United States, except Virginia, have adopted this model of functional division. The county is one executive branch of the state government and is responsible for handling affairs delegated by it, such as birth, death and marriage registration, organization and enforcement of judicial selection and election, law enforcement and public health care. As a dispatched office of local government, the county shall also respond to the needs of the residents regarding various services. Autonomous cities are established to meet the special needs of densely populated and urbanized areas and some taxes are levied on urban and employed persons. Most of them are not large, so they have limited power. Japan’s county is a first-level autonomous administrative division, below which municipality is established. The city and county assume different responsibilities. The city is the basic local autonomous body, while the county is one level higher than it. As of April 1, 2007, there were 782 cities, 827 towns and 195 villages in Japan.30 Cities in the country are categorized into four types, from the highest the designated city, the core city, the special city and the regular city at the lowest. Among them, the highest one is designated by the central government, with a population greater than 30 Isozaki

et al. [9].

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5 City-County Relationship: Separated or Integrated Governance

500,000. A core city is a Japanese city that has a population greater than 300,000 and an area greater than 100 km2 . A special city of Japan is a city with a population at least 200,000. Except the above three types of cities, others are regular cities. As of April 2007, there were 20 designated cities, 35 core cities, 44 special cities and over 600 regular cities. Some autonomy has been authorized to these four kinds of cities by the Tokyo metropolis, circuit, urban prefecture and prefecture. The designated cities have the greatest autonomy, while regular ones are less autonomous. 3. Integrated Governance Model of City and County This model combines city and county to form an integrated political power structure in large cities and their surrounding areas. This development trend can be seen in Metropolitan areas in the United States, Germany, Japan and South Korea. In the United States, in order to meet the needs of the integrated development of metropolitan areas, large cities such as New York, Denver, Honolulu, Philadelphia, San Francisco, Saint Louis and Indianapolis have created a single government structure through the integration of the cities and counties. In Germany, the local government is composed of the county and the township. The township is the communitylevel administrative division below the county. It usually does not have sufficient workforce and revenue, so the county government has responsibilities to assist it in dealing with affairs that are beyond its capability. For medium and large-sized cities, the governance demonstrate a single structure—integrating the functions of the city with the county. These areas are called “urban counties” in Germany where they assume the functions of both. In Germany, there are 323 counties, 14,500 townships and 116 urban counties.31 In addition to urban counties, there are also three urban states, Berlin, Bremen and Hamburg, where neither counties or townships are established. It can be seen that, excluding the city state, the German city and county adopt an integrated political structure, and the city is not only responsible for urban autonomy, but also assumes the function of the county. Cities and counties are not integrated because the county in Japan is an first-level administrative division. In order to meet the need of the integrated development of the city and its surrounding areas, Japan has mainly expanded its cities by combining cities, towns and villages. As for the administrative divisions in South Korea, there are four types: special city, metropolitan city, province and special autonomous province. Except the special city Seoul, there are six metropolitan cities, eight provinces and one special autonomous province (Jeju). South Korea has districts and counties under the city, and the city government co-ordinates urban and county development planning and public services. The model of establishing counties under metropolitan cities is equivalent to “city-leading-county” system in China. The difference between the two is that there are fewer counties in the Korean cities and more counties governed by cities in China. At present, there are 44 districts and 5 counties in the six metropolitan cities in South Korea (see Table 5.3). 31 Wollmann

[27].

5.3 International Comparison of City-County Relationship

111

Table 5.3 Second-level administrative divisions of metropolitan cities in South Korea Metropolitan city

Number of districts

Number of counties

Metropolitan city

Number of districts

Number of counties

Busan

15

1

Gwangju

5

0

Daegu

7

1

Daejeon

5

0

Incheon

8

2

Ulsan

4

1

The following conclusions can be drawn from the comparison of the relationship between city and county in these four countries. First, the relationship is diversified. This kind of relationship in the United States features decentralization, integration and separation. The last two features can also be seen in South Korea. Second, the separated governance of city and county is not a common institutional arrangement. In contrast, the overlapping jurisdictions and the duty heterogeneity are commonly seen. Third, the diversified relationship between cities and counties can not only meet the needs of self-governance in urbanized areas, but also provide a coordination mechanism for handling regional public affairs. Fourth, in order to address the needs of the integrated development in large cities and their surrounding areas, an integrated political structure should be established through the merger of local governments.

5.4 Thoughts of Policymaking on Reform of Province-Leading-County System In order to make the central cities drive the regional economic growth, the Chinese government started to reform the regional system and implement the city-leadingcounty system in the early 1980s. This institutional arrangement has played an important role in speeding up the development of central cities and fostering regional economic growth poles. However, except for the provincial capital cities and the big industrial cities, economies in most prefecture-level cities grow relatively slowly, resulting in their polarization effect greater than the trickle-down effect on periphery areas and serious conflicts of interest. As a whole, in order to balance urban and rural development, it is essential to maximize the efficiency of central cities and support the peripheral counties and those with regional advantage so as to develop new economic growth poles. On this very note, the ideal relationship between the city and county in China is a mixed model— coexistence of city-leading-county system and province-leading-county system. The improvements for latter that should be made are described as below. 1. Promoting the Reform of Province-Leading-County System in Large Peripheral Counties The aim of the reform is to resolve the problem of prefecture-level cities negatively affecting the development of counties, grow their economy, enhance their financial

112

5 City-County Relationship: Separated or Integrated Governance

capacity and improve the public services at the city-level counties. After more than 30 years of development, the economy of the prefecture-level cities has become stronger, and it has witnessed the diffusion effect of the growth poles and the driving effect of the central cities on the development of the adjacent areas. In this context, the benefits of city-leading-county system for the surrounding counties outweigh the negative effects. Then central cities, however, can not effectively drive the economic growth of the peripheral counties. In addition, the system combines them through administrative means, and the prefecture-level authority makes more public investment in the central city and the surrounding areas. Therefore, this system does more harm than good to the economic development of the peripheral counties. In view of this, it is necessary to meet the development needs of the peripheral counties (cities), especially the agriculture-based counties with large population. To make the reform a success, it is better to implement it in large, populous counties with great development potential and build them into new cities. Moreover, considering requirements of counties with great regional advantages and economic agglomeration effects is required. 2. Continuation of the City-Leading-County System in the Surrounding Areas The reform of city-leading-county system needs to mobilize the counties and grow the economy in the central cities. With the development of marketization, industrialization and urbanization, the prefecture-level cities and neighboring counties are becoming more closely economically related. As this relationship deepens, it will produce an industrial diffusion effect. Such effect is not obvious at the early stage of reform and opening up, but it has already spread after several decades of development and it is manifested in the industrial distribution between some central cities and their neighboring counties. In order to support the development of the central cities, the authorities can continue to adopt the city-leading-county system for its surrounding counties. This institutional arrangement can meet the requirements of the integrated development and, more importantly, it does not hamper the economic growth of adjacent counties. In addition, this system will also help to break through obstruction for the reform of province-leading-county system. 3. Abolition of Counties and Establishment of Districts in Suburban Areas With the urban population and industrial agglomeration increasing, it is necessary to create a unified planning of urban and suburban areas to improve the economic efficiency of infrastructure and industrial distribution. In 2009, after the approval of the State Council, Shanghai abolished Nanhui District which was merged into the Pudong New Area, so as to break down administrative barriers, develop unified regional planning and build infrastructure in a larger area. In the same year, Tianjin abolished Tanggu District, Hangu District and Dagang District and set up Binhai New Area, aiming to make the most of the integration. In order to facilitate the integration of urban and suburban areas, large cities are allowed to abolish counties and establish districts in suburban areas as a way to speed up the urbanization and expand the space for urban development.

5.4 Thoughts of Policymaking on Reform of Province-Leading-County System

113

4. Strengthening Overall Planning and Cooperation of City and County After province-leading-county system was implemented, the city governments are no longer responsible for development planning, public investment and infrastructure construction of these counties. Intervention of provincial governments is required for cross-regional infrastructure projects and decision-making on public policy. After the separation of the city from the peripheral counties, the provincial government needs to instruct them in the development planning so as to maximize the utilization of resources and production factors, encourage healthy development and create a level playing field. In order to accommodate the multiple interests, it is necessary to develop a coordination mechanism of regional governance and establish a consultative decision-making system with stakeholder participation. To this end, one approach is to divide the administrative areas in a province, establish regional development committee, and make functional departments including cities, provinces, counties and provincial governments serve on the committee to discuss the regional development planning, infrastructure construction and other issues as well as cooperate to take concerted action.

References 1. Bo, G. (2006). Promoting the system of province-leading-county steadily. Chinese Public Administration, (12). 2. Douglass, M. (1998). A regional network strategy for reciprocal rural-urban linkages: An agenda for policy research with reference to Indonesia. Third World Planning Review, 20(1). 3. Friedmann, J. (1966). Regional development policy: A case study of Venezuela. Cambridge: The MIT Press. 4. Friedmann, J., & Douglass, M. (1975). Agropolitan development: Towards a new strategy for regional planning in Asia. Los Angeles: University of California. 5. He, X. (2009). From strengthening counties and expanding power to expanding power and strengthening counties: Evolutionary logic of province-leading-county reform in Zhejiang province. Governance Studies, (4). 6. Hirschman, A. O. (1991). The strategy of economic development (pp. 169–170) (trans: Cao, Z., & Pan, Z.). Beijing: Economic Science Press. 7. Hong, Y. (2008). Urban-rural disparities and how to eliminate them. Economic Theory and Business Management, (2) 8. Howard, E. (2000). Tomorrow: A peaceful path to real reform (trans: Jin, J.). Beijing: The Commercial Press. 9. Isozaki, H., Kanai, T., & Ito, M. (2010). Local autonomy in Japan (p. 33941) (trans: Zhang, Q.). Beijing: Social Sciences Academic Press. 10. Lipton, M. (1977). Why poor people stay poor: Urban bias in world development. Cambridge, MA: Harvard University Press. 11. Liu, S., & Li, C. (2010). Risk analysis of the financial reform of the province-leading-county system. Contemporary Economy & Management, (10). 12. Lu, J. (2010). Province-leading-county system: Potential problems in the practice of decentralization of local government. Journal of the Party School of the Central Committee of the C.P.C., (3). 13. Mumford, L. (2005). The city in history: Its origins, its transformations, and its prospects (trans: Song J., & Ni, W.). Beijing: China Architecture & Building Press.

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14. Ostrom, V., Bish, R., & Ostrom, E. (2004). Local government in the United States (p. 4) (trans: Jing Min, M., & Chen, H., et al.). Beijing: Peking University Press. 15. Perroux, F. (1988). On concept of growth poles. Collection of Translations of Economics, (9). 16. Pu, S. (2006). Reform research on China’s administrative division. Beijing: The Commercial Press. 17. Rondinelli, D. A. (1983). Dynamics of growth of secondary cities in developing countries. Geographical Review, 73(1), 4257. 18. Smith, A. (2002). Nature and causes of the wealth of nations (Vol. I, p. 347). Beijing: The Commercial Press. 19. Stöhr, W. B., & Fraser Taylor, D. R. (1981). Development from above or below? The dialectics of regional planning in developing countries. Chichester: Wiley. 20. Tiebout, C. M. (1956). A pure theory of local expenditures. The Journal of Political Economy, 64(5), 416424. 21. von Böventer, E. (1969). Walter Christaller’s central places and peripheral areas: The central place theory in retrospect. Journal of Regional Science, 9(1), 17124. 22. von Thünen, J. H. (1986). Isolated state in relation to agriculture and political economy (p. 325) (trans: Wu, H.). Beijing: The Commercial Press. 23. Wang, H., & Chen, L. (2006). Research progress of western urban and rural development theory. Economic Geography, 3, 464. 24. Warren, R. (1966). Government in metropolitan regions: A reappraisal of fractionated political organization (p. 5). Davis: University of California, Institute of Governmental Affairs. 25. Webb, A. (2010). Theory of industrial location (trans: Li, G.). Beijing: The Commercial Press. 26. Whyte, M. K. (2010). One country, two societies: Rural-urban inequality in contemporary China. Cambridge, MA: Harvard University Press. 27. Wollmann, H. (2005). Local government in Germany (p. 27) (trans: Chen, W., & Duan, D.). Beijing: Peking University Press. 28. Yang, H. (2015). Relationship between urban and rural areas and reform of local governance. Journal of Beijing Administrative College, (5). 29. Yang, H. (2016). Promoting balanced urban and rural development based on building secondary cities. National Governance, (18).

Chapter 6

The Institutional Development of American Urban Cross-Regional Governance

6.1 Systems of Organization of Local Government for Urban Governance in the United States 1. The Legal Status of the City Under the American federal system, cities are established by states and are a type of subnational government. In the United States, principle of local self-government is adopted. Local governments there are divided into counties, municipalities, towns, special districts and school districts, totalling over 87,000.1 Local governments are not subordinate to each other. The special districts and school districts assume relatively single administrative responsibilities and overlapping jurisdiction exits among them and other local governments. According to data released by the US Bureau of Statistics in 2012, there are 19,519 cities across the state, including 279 cities with more than 100,000 people (see Table 6.1). Urban areas in the United States are small and metropolitan areas have multiple cities and towns. Regional governance features fragmentation. States of United States are entitled to establish cities as long as they are in compliance with federal law, and criteria for establishment varies. In Ohio, for example, an integrated community of more than 5000 people is treated as a city and a community with a population of less than 5000 is deemed as a village. Some states allow integrated communities with a population of more than 1000 to apply for a municipality. An application for a municipality shall be filed by the residents of community after a majority vote through a referendum, and it will be approved by the state through 1 In US local governments, 95% of cities have a population of less than 25,000 and 74% of counties

have a population of less than 50,000 [3].

© China Renmin University Press 2021 H. Yang, Urban Governance in Transition, Understanding China, https://doi.org/10.1007/978-981-15-7082-7_6

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6 The Institutional Development of American Urban Cross-Regional …

Table 6.1 Distribution of urban population in the United States Number of people Over 1 million 300,000 to