Zouping Revisited: Adaptive Governance in a Chinese County 9781503604551

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Zouping Revisited

THE WALTER H. SHORENSTEIN ­A S I A -​­P A C I F I C R E S E A R C H C E N T E R

Studies of the Walter H. Shorenstein ­Asia-​­Pacific Research Center Andrew G. Walder, General Editor The Walter H. Shorenstein A ­ sia-​­Pacific Research Center in the Freeman Spogli Institute for International Studies at Stanford University sponsors interdisciplinary research on the politics, economies, and societies of contemporary Asia. This monograph series features academic and p ­ olicy-​ ­oriented research by Stanford faculty and other scholars associated with the Center.

Zouping Revisited Adaptive Governance in a Chinese County

Edited by

Jean C. Oi and Steven M. Goldstein

Stanford University Press Stanford, California

Stanford University Press Stanford, California ©2018 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press. Printed in the United States of America on a­ cid-​­free, ­archival-​­quality paper Library of Congress ­Cataloging-​­in-Publication Data Names: Oi, Jean C. (Jean Chun), editor. | Goldstein, Steven M. (Steven Martin), editor. Title: Zouping revisited : adaptive governance in a Chinese county / edited by Jean C. Oi and Steven M. Goldstein. Other titles: Studies of the Walter H. Shorenstein Asia-Pacific Research Center. Description: Stanford, California : Stanford University Press, 2018. Series: Studies of the Walter H. Shorenstein Asia-Pacific Research Center | Includes bibliographical references and index. Identifiers: LCCN 2017018398 | ISBN 9781503604001 (cloth : alk. paper) | ISBN 9781503604551 (epub) Subjects: LCSH: Zouping Xian (China)—Politics and government. Classification: LCC JS7365.Z668 Z68 2018 | DDC 320.951/14—dc23 LC record available at https://lccn.loc.gov/2017018398 Typeset by BookMatters in 11/14 Adobe Garamond

For Michel C. Oksenberg (1938–2001) and Shi Changxiang (1936–2015)

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A state without the means of some change is without the means of its conservation. —Edmund Burke, Reflections on the French Revolution

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Contents

Acknowledgmentsxi Preface. Mike Oksenberg and Zouping: An Appreciation

xiii

Steven M. Goldstein

Part One: Introduction Chapter 1  Change within Continuity: Zouping County Government

3

Jean C. Oi and Steven M. Goldstein

Chapter 2  Zouping in Historical Perspective

28

Guy Alitto

Chapter 3  Creativity and Flexibility in County and Township Economic Governance62 Kay Shimizu

Part Two: Bureaucratic Adaptation Chapter 4  Directed Improvisation in Administrative Financing 

91

Yuen Yuen Ang

Chapter 5  The Evolution and Adaptation of Business–Government Relations in Zouping 

113

Martin K. Dimitrov

Chapter 6  Nonjudicial Interpreters of “Legality” and the Development of Law in the Local State Douglas B. Grob

139

x  Contents

Part Three: C  adre Selection and Training to Preserve the Party Chapter 7  The Role of the Organization Department in Political Selection

167

Melanie Manion

Chapter 8  Reforming and Updating Cadre Training in Zouping’s Communist Party Schools

182

Charlotte Lee

Part Four: Concluding Reflections Chapter 9  Institutional Agility and Regime Adaptation

211

Jean C. Oi and Steven M. Goldstein

Contributors

217

Index

221

Acknowledgments

The essays collected in this volume are the result of a project that received support from many individuals and organizations. Smith College provided administrative support to Steve and the researchers at Stanford. The Shorenstein Asia Pacific Research Center was especially helpful to Jean at various stages of the project, particularly Irene Bryant, Adam Martyn, and Patrick Laboon. Smith Richardson funded contributors’ research trips to Zouping and exhibited endless patience as this volume took final shape. Most importantly, we are grateful that Michel Oksenberg and the officials in China—those within Zouping County as well as their superiors at higher levels—had the vision, persistence, and courage to establish Zouping as a research site for foreign scholars soon after China’s reforms opened it up. Special thanks go to the the Zouping Foreign Affairs Office, especially its head, the late Shi Changxiang. Mr. Shi’s support was crucial to the success of the project in too many ways to name, even if we had difficulty understanding his thick Zouping accent. We also thank his talented staff and those who followed after his retirement. Many others deserve our gratitude for making our research in Zouping possible. These include former and current officials, from the party secretaries and county magistrates to bureau heads and leaders of townships and villages. Discussions with these and others in the county have taught us much about China and Zouping. We will forever be grateful for both their insights and their willingness to further our understanding of a changing and complex system. xi

xii  Acknowledgments

Finally, we want to acknowledge all those who gave us such a warm and personal welcome each time that we returned to Zouping over the many years. This was especially important when we brought with us the new generation of scholars, only a few of whom are represented in this volume. We hope that Zouping County will remain open and receptive to new things and that future students of China will take advantage of this rare opportunity.

Preface Mike Oksenberg and Zouping: An Appreciation Steven M. Goldstein

Mike Oksenberg and Zouping County enjoyed a love affair that lasted from the 1980s until Oksenberg’s death in 2001. This book represents the continuing legacy of that affair as well as the fruits of his efforts to start and sustain the project that resulted. As the recent declassification and publication of the documents relating to the administration of President Jimmy Carter amply demonstrate, Mike Oksenberg played a major role in pushing forward the mutual recognition of the United States and the People’s Republic of China.1 Although he had no previous government service, he plunged into the Washington bureaucracy and served from 1977 to 1980 with the same kind of energy and enthusiasm that had made him a successful teacher of Chinese politics. And he did so with the same commitment that drove his teaching—to build ­Sino-​­American relations on a firm base of mutual understanding. Thus, even as he addressed the nature of the evolving political relationship, he sought to use his connections with the Chinese to lay the basis for intellectual exchanges between the two nations. One result of his efforts was an agreement with the Chinese Academy of Sciences to permit American researchers to live in and do research in the county seat as well as a number of “open villages” in Zouping beginning in 1987.2 A broad range of issues related to rural China were permitted, access to archives was granted, and the use of questionnaires and interviews was allowed. American scholars had a research perch (even a specially constructed guest house in a village) from which to observe the dramatic changes that were taking place in p ­ ost-​­Mao China. Most of the first researchers were xiii

xiv  Preface

students of Oksenberg’s who were convinced that rural China was the “real China” and that the only way to truly know it was to live in the countryside. As he put it to one party cadre in Zouping, “I am an American scholar studying China. If you want to understand China, you must understand the Chinese countryside. To understand Shanghai and Beijing is not the same as understanding China.”3 Over time other scholars also began doing research in Zouping. According to one Chinese source, as of 2009 more than two hundred scholars had done work in Zouping.4 However, Oksenberg’s attraction to the countryside stemmed from more than its research value. Oksenberg’s parents were Polish Jews who had fled the Nazis and settled on farms, first in Virginia and then in Florida. He considered himself to be very much a product of—and a part of—the culture of rural America as evinced by his fanatical devotion to country and western music and his surprising knowledge of agricultural economics. This background was reflected in his research interests. His PhD thesis was a carefully detailed study of water conservancy campaigns in China, and much of his subsequent scholarship was focused on the ­nitty-​­gritty of how the Chinese bureaucracy and local leadership were managed. In many ways, his research trajectory followed that of his adviser and intellectual mentor, A. Doak Barnett, who, even while he wrote b­ road-​­brush studies of Chinese foreign and domestic policy, often returned to his roots as a newspaper correspondent to write careful, detailed studies of the Chinese political system. The most prominent of these was Cadres, Bureaucracy, and Political Power in China,5 which is probably the most detailed treatment of the Chinese political system on the eve of the Cultural Revolution drawn from extensive interviews with cadres who had left China. Having played a key role in establishing Zouping as a research site, Mike Oksenberg not only sent his students but he also began his own research project that would eventually bring him back six times in eleven years. Most of these visits were neither ceremonial nor superficial. As the Chinese expression goes, it was not a matter of “viewing the flowers from horseback” (走马观花 ). With visits ranging from two weeks to nearly two months, Oksenberg was able to investigate topics in depth. One has only to read through the more than a thousand pages of notes that he took during his major research visits from 1988 to 1999 to see this. During his stays in Zouping, Oksenberg met with officials at every level, from the county to the village, as well as managers of economic enterprises.

Preface xv

The protocols of these interviews are simply staggering in the amount of detail that they contain. True to his roots as a student of Barnett’s, Oksenberg clearly intended to chart and understand as much as possible about the inner workings of the ­party-​­state bureaucracy. Almost every interview begins with an outline of the organization of the unit being visited and the number of officials currently serving, their age, background, and so forth. There are detailed discussions of the responsibilities of the unit and how they may or may not have evolved as a result of economic and political changes that Zouping had undergone. Having established the basics, Oksenberg would pursue themes that are typical of his other works, such as bureaucratic conflicts, overlapping responsibility, relations with the party, vertical and horizontal authority relations (条/块), and how budgets are set. There was no organization apparently considered too unimportant to be fully explored once he met with it. In an interview with the Cultural Bureau, he discussed the books in the library as well as the selection criteria used (for example, no books on Molotov cocktails would be available).6 Although the coverage is not complete, the notes cover some units or organizations that are visited one or more times in subsequent years, thus providing some longitudinal data. In other cases, one can trace the changing economy or ecology as beer and cotton production begin to emerge or water conservancy projects develop. The important role of township and village enterprises during the late 1980s and the 1990s is chronicled, as are the beginnings of privatization at the end of the twentieth century. There is considerable data on budgets, taxation, and the banking system as well as the development of the village election system. Finally, reading through the notes, one can sense how Oksenberg’s familiarity with Zouping deepened over time, resulting in increasingly probing and substantive questions about bureaucratic behavior. Also, one has the sense that the candor displayed by his interlocutors increased over time, as did his access to what might be considered more “sensitive” organizations such as the Communist Party. In part this was undoubtedly a result of growing mutual familiarity, but it seems also to be the result of Oksenberg’s vigorous efforts to build rapport with his interlocutors and the awareness on the part of officials of the benefits of foreign researchers in Zouping. When Oksenberg arrived in Zouping, his prominent role in ­Sino-​ ­A merican relations and in creating the research site was well known. Yet

xvi  Preface

from the beginning, Oksenberg made obvious efforts to build rapport with Zouping officials. For example, as the Zouping project was taking shape, the head of the county’s Foreign Affairs Office, Shi Changxiang, was told to travel to Beijing to meet with Oksenberg concerning the future project. In a remembrance Shi Changxiang wrote the following: Since he had not met with him before, Shi Changxiang thought: since he was once a high official in the United States, might he not be an arrogant guy? When he saw him, Oksenberg limped over and hugged him tightly, saying, “I am honored to see my new friend,” and slapped him on the back. At that time Shi Changxiang was suffering from shingles and was very sore. This slap made the pain more unbearable. However, because of this action, he felt that Oksenberg was, after all, a good guy. . . . While chatting, Shi Changxiang called him professor. He said, “You don’t have to call me that. . . . I am an American devil (美国鬼子 ) who can speak Chinese.” Such a small joke eased the tension and narrowed the difference between the two sides.7

Oksenberg’s activities reflect similar efforts to diminish the distance between himself and the individuals he met in Zouping. This involved bicycle rides with stops to chat with local farmers (those of us who have been to Zouping marvel that he could understand anything); compulsory banquets accompanied by innumerable toasts; talks on topics such as environmental issues or ­Sino-​­American relations; the proffering of advice on a wide range of subjects ranging from beer manufacturing to waste management to suggested linkages with foreign corporations; and so forth.8 Such advice was, of course, a part of the benefit that Zouping gained from the visits by Oksenberg and other scholars. Deng Xiaoping’s “­open-​ ­door policy” was developing, and the foreign researchers provided a useful window on an unfamiliar world. However, they also provided a vehicle by which Zouping could increase its visibility to, and contacts with, the outside world. At the end of a dinner in 1996, the first party secretary bid farewell to Oksenberg with the request that he “publicize Zouping to the outside world.” Of course, by the time Oksenberg made his final visit, the Chinese media itself had taken up the cause of promoting Zouping. Zouping had gone from a relatively average rural area in China to one of the most prosperous and was touted by the media as such.9 However, Oksenberg didn’t need any encouragement to promote Zoup-

Preface xvii

ing. For those of us who knew him, the descriptions of his tireless research and affection for Zouping reflected in Chinese sources should come as no surprise. His attachment to the county stemmed from more than a proprietary interest in an institution that he helped to establish; this was clearly an emotional attachment that seemed to be rooted in Zouping’s rural environment and its resonance with what Oksenberg felt was the essence of historical China. He considered it to be his “second home” (第二故乡), and the special bond that he seemed to have with the county was apparently reciprocated by those whom he encountered in Zouping who spoke of him with unusual warmth after his death. Thus, it was no coincidence that when ­Sino-​­American relations worsened and the Zouping program was suspended in the wake of the June 1989 events, Oksenberg traveled to Zouping in August despite the temporary suspension of the program. According to Chinese sources, he spoke of the dangers of mutual isolation and misunderstanding, assuring the Foreign Affairs Office that the exchange program would continue the following year.10 It did, and it continued well into the 1990s as Oksenberg actively encouraged graduate students and faculty to travel there and experience the “real China.” At the same time, his commitment to creating an authoritative record of the events of June 1989, which he described as “the most dramatic political struggle in the People’s Republic of China since the Cultural Revolution,” and to offering what he called “a testimony to its tragic climax,” is ­well-​­documented.11 In Zouping, however, he saw hope for the future of ­Sino-​­American relations. However, Oksenberg’s most successful effort at promoting Zouping to the outside world came with the visit of President Jimmy Carter to the county. According to his interpreter, Oksenberg had been asked by officials to assist in promoting economic growth, but he demurred, saying that he was not qualified to do so. Rather, he said he would bring President Carter to Zouping, and he did so in July 1997. Not only did Zouping exploit the visit to publicize its own vibrant economy, but upon his return, Carter wrote an o­ p-​­ed in the New York Times warning against “demonizing China.”12 The most important project that Oksenberg committed himself to was the writing of a monograph that would trace the economic and political development of Zouping during the reform era based on the extensive data he had accumulated as a result of his research trips. However, in the sum-

xviii  Preface

mer of 2000, he learned that he was suffering from a­ dvanced-​­stage cancer and would not live long enough to undertake that project. When Mike broke the news of his illness to Jean Oi, who was by then his colleague at Stanford, his major concern was not for himself but for his inability to see the Zouping volume through to completion. In the fall of that same year, Mike called together Jean Oi, Andrew Walder, and myself to discuss the Zouping project. Walder had already organized one book project that published some of the research findings of the Zouping project.13 Oksenberg hoped that we could somehow continue his project and chart the trajectory of the Zouping political economy during the reform era. It was a request to which it was difficult to say no. But it was equally difficult to see how any one person could recapitulate and advance the ambitious research agenda that Oksenberg’s notebooks reflected. However, Jean Oi had a number of graduate students, some of whom had studied with Oksenberg and served as his research or teaching assistants and who either had done work in Zouping or were on the verge of beginning their field research. In addition, of course, there were some “­first-​­generation Zouping” scholars, such as herself, who had worked with Oksenberg. After distributing relevant parts of the Oksenberg notes to potential paper writers, the outlines of a book project focusing on different aspects of change in Zouping and using the Oksenberg notes for background was planned. While some of the authors in the volume explicitly draw more heavily on the notes than others, for all authors Oksenberg’s notes provided an essential context for understanding the county as it was and as it has evolved. The organizers received generous support from the S­ mith-​­Richardson Foundation for research trips, and the essays in this volume are the product of those researchers’ efforts. For yet another generation of scholars to continue Mike Oksenberg’s work in his beloved county is a fitting tribute to his efforts to establish and maintain this important base for American research on China.

Notes

1.  David P. Nickels, ed., Foreign Relations of the United States, 1977–1980,vol. 13, China (Washington, DC: US GPO, 2013), http://history.state.gov/historical​ documents/frus1977–80v13 accessed September 15, 2013.

Preface xix 2.  Prior to this the Committee on Scholarly Communication with the People’s Republic of China (CSCPRC) sent in two survey teams to assess the research conditions. Thomas Bernstein and Bob Geyer were sent in August 1985, followed by Guy Alitto and Thomas Gold in July 1986. 3.  “Zouping, wo dierh guxiang” (Zouping my second home), http://www​ .sdqb.cn/show_1209.aspx, accessed September 21, 2013. 4.  For more on the background to the project, see “Field Research in Rural China: A Five Year Program,” http://digitalcollections.library.cmu.edu/awweb/ awarchive?type=file&item=59887, accessed September 25, 2013; “Shandong Zouping: Waiguo ren guancha Zhongguo nongcun bianhua di chuangkou” (Shandong Zouping: A window for foreigners to observe changes in rural China), http://www.laozhanyouwang.com/­action-​­viewnews-­itemid-​­1305, accessed September 4, 2013; and “Xiangtu Zhongguo di Bianqian” (Change in rural China), http://wenku.baidu.com/view /57ab6615c5da50e2534d7f0d.html, accessed August 15, 2013. 5.  A. Doak Barnett, with Ezra Vogel, Cadres, Bureaucracy, and Political Power in Communist China (New York: Columbia University Press, 1967). 6.  One of Oksenberg’s interpreters describes his research method in “Aokesenboge yu Zouping kaocha” (Oksenberg and Zouping surveys), http:// blog.renren.com/share /232453794/8748640688, accessed September 15, 2013. 7.  “Shi Changxiang yi Aokesenbaoge” (Shi Changxiang remembers Oksenberg), http://blog.renren.com/share/232453794/8748582552, accessed September 12, 2013. 8.  See Lan Xinchen, “Scholarly Retreat,” http://www.bjreview.com.cn/quotes/ txt/2008–12/23/content_171383.htm. 9.  See ­A nne-​­Marie Brady, Marketing Dictatorship: Propaganda and Thought Work in Contemporary China (Lanham, MD: Rowen and Littlefield, 2008), 164–65. 10.  “Zouping, wodi dierh guxiang” (Zouping, my second home), www.sdqb​ .cn/show_1209.aspx, accessed September 10, 2013. 11.  See Michel Oksenberg, Lawrence R. Sullivan, and Marc Lambert, eds., Beijing Spring, 1989: Confrontation and Conflict: The Basic Documents (New York: M.E. Sharpe), xii. 12.  “Aokesenboge yu Zouping kaocha” and “Women jizhe Aokesenboge” (We remember Oksenberg), http://news.eastday.com/epublish/gb/paper148/20010318/ class014800019/hwz339840.htm. 13.  Andrew Walder, ed., Zouping in Transition: The Process of Reform in China (Cambridge, MA: Harvard University Press, 1998).

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Ch a p t er 1

Change within Continuity Zouping County Government

Jean C. Oi and Steven M. Goldstein

Observers have often pointed out that China has undergone dramatic change in its economic institutions without corresponding changes in its political institutions. On the surface, this seems an obvious point. China remains a o­ ne-​­party state ruled by the Chinese Communist Party (CCP). The institutional structure and the formal organization of the government and party bureaucracies have changed little since the onset of economic reform. Yet the political institutions have so far seemed capable of governing a vastly more complex market economy that has a much more heterogeneous and rapidly changing labor force. Is it possible that China’s political institutions have somehow managed to cope despite remaining basically unreformed, or have there been more subtle and profound changes in the way that the existing organizational structures actually operate? This is the core question pursued in this book. The research collected in this volume suggests that the old organizational structures in fact have come to operate in surprising new ways. Drawing on fieldwork at the lowest levels of the administrative bureaucracy in one Chinese county, this volume offers new insights into the adaptability of this communist o­ ne-​­party system. Such findings also may shed new light on the concept of “authoritarian resilience,” which has gained currency in the political science literature (with the case of China front and center) as many attempt to explain how economic change progresses seemingly without political reform.1 Andrew Nathan’s seminal piece argues that it works through institutionalization, the creation of new mechanisms that address critical issues such as succession, promotion, functional specialization, and 

4  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

increased political participation.2 Kellee Tsai builds on the institutional perspective by showing how new institutions come about, a process that she sees resulting in “adaptive informal institutions,” whereby the rules eventually change regarding actions or groups that were originally outside of the system.3 Ben Hillman takes a different direction to argue that it is in fact informal institutions, specifically patronage networks, that contributes to resilience.4 Others, such as Sebastian Heilmann and Elizabeth Perry, reject the focus on institutions, formal or informal, as too narrow and instead argue that one needs to look at unique policy mechanisms, especially at those that may precede the reform period, back to the Chinese Communist Party’s past.5 They argue that methods inherited from the “guerrilla and revolutionary style of governance” explain China’s success. The search for answers is far from over. Our understanding of authoritarian systems remains incomplete, especially when it comes to China’s ­one-​­party state. While Nathan and Tsai shed light on how new institutions and agencies come into being, and Heilmann and Perry help explain how policy changes are more easily achieved in China than in other countries, both approaches pay far less attention to the adaptive capacities of the existing system. The first perspective is about subtracting or adding to existing institutions; the latter is about policy changes and their implementation. Some important new work is being done on how the state has managed to maintain a smaller core bureaucracy while reducing the size of the larger bureaucracy overall.6 Others worry that township governments have turned into “hollow shells” with fewer and fewer resources.7 Many unanswered questions remain about what has happened within China’s existing institutional structure, inside the agencies of local government, after reductions are made and resources are taken away. This volume looks inside existing institutions of local governance to see if and how they have evolved over time in response to changing economic and political contexts. We examine how a local government has been able to govern within a radically changed economic and political environment while the preexisting Leninist structure remains. The fundamental finding that emerges is that China’s economic reforms and growth have not only affected incomes and quality of life but have significantly changed ways of governance, despite the fact that institutional forms of governance often appear unchanged. Our approach recognizes the importance of informal relations, the ex-

Change within Continuity  5

istence of corruption, and the many problems facing local governments as China develops, but we argue that there is more to the story of governance, one that can easily be overlooked when one focuses only on the problems. That said, while none of the chapters focus on complaints that may lead to protests, a number of the chapters provide new insights into how local governments actually respond to problems and who in those governments are working to find solutions. Some might wonder whether our special relationship with the county limited our research and prevented us from probing informal relations and problems. On the contrary, because of good connections developed over the years, we sometimes gained privileged insights about problems in governance as we will discuss below. We seek to go beyond describing problems to analyze how the system has coped with challenges and adapted to the economic and political changes. This volume describes ad hoc bureaucratic adaptations and accommodations that change the operation, if not the organizational form, of government institutions. In this process, existing agencies play new and unexpected roles. What emerges in this volume is a perspective close to what Martin Dimitrov calls “adaptive institutional change.”8 It is a story of how state agencies, faced with rapid and ­far-​­reaching economic changes that create new demands and challenges, are adapting, sometimes in a creative and entrepreneurial fashion, in the ways they carry out their functions and exercise their authority. The picture that emerges is one of institutional agility, with ongoing political change masked by outward continuity in formal organizations. Local government agencies have changed almost imperceptibly to meet new challenges.

A Window onto China: Zouping County, Shandong Province Almost a decade after the policy of reform and opening was adopted, most places in China remained closed to foreign researchers. As Steven Goldstein’s preface details, through the efforts of Michel Oksenberg, a professor of political science at the University of Michigan who was serving on the staff of the White House National Security Council at the time of diplomatic normalization in 1979, an agreement was reached between the United States and China that provided an open field site for American researchers. That site was Zouping County in Shandong Province. Beginning in the ­mid-​­1980s, American researchers were allowed to conduct research in the

6  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

county seat as well as in a number of “open villages” in Zouping County. Since then Zouping has provided a window on the changes that have been taking place at the local level. At least two hundred foreign scholars have been hosted by the county, and Zouping has been featured or used as a case in numerous studies.9 A representative collection of the first wave of research was published in Andrew Walder’s edited volume on Zouping, Zouping in Transition, almost two decades ago, which focused heavily on economic changes and their consequences during the earliest phase of market reform.10 In Walder’s 1998 volume, Zouping County was described as “unexceptional in either the pace and nature of change . . . or in its historical and geographical endowments.”11 In the late 1980s, the county seat looked like so many others in rural China, with few automobiles, a limited road network, and little commercial development. The county government’s guesthouse had limited modern facilities. A member of the service staff inquired every evening how many buckets of hot water would be needed for bathing the next morning. Each morning, a line of staff members would deliver the buckets of scalding hot water, which would be poured into the large bathtub, where the hot water could be mixed with the cold water from the faucet. International phone calls were possible but had to be placed and received at the front desk. The most imposing building in town was the ­three-​­story ­Russian-​­style concrete government and party headquarters, where the offices were poorly furnished and dimly lit, cooled in summer with fans. Officials, including bureau heads, lived in cramped ­government-​ ­owned apartments. A few lived in larger quarters, but the dwellings were rustic ­single-​­story structures, often with ­tamped-​­earth floors. The few passenger cars that existed belonged to the county or township governments. A few rich villages, like the one where foreign scholars lived when doing research in the countryside, also had cars. But that was the old Zouping soon after the beginning of the reforms. Today, more than three decades later, Zouping is far from “unexceptional.” Its subsequent growth has made it nothing short of spectacular. By 2003 the county was officially ranked as one of the thirty richest within Shandong Province. In 2005 it ranked among the richest 100 counties nationally. In 2008 it became the s­ econd-​­richest county in Shandong and was ranked fifteenth nationally among small- and m ­ edium-​­size cities. The new prosperity is reflected in the development of the county seat. It

Change within Continuity  7

has become a bustling commercial entity with a wide array of shops, modern hotels, and restaurants. The restaurants, which serve a range of local and foreign cuisines, include a branch of a Taiwanese soy milk breakfast shop, a Brazilian steakhouse, and a ­French-​­style bakery that sells freshly made and tasty ­whipped-​­cream birthday cakes, complete with candles. Instead of nearly deserted, dusty roads, the county has an extensive network of ­well-​­lit and ­well-​­maintained asphalt roadways, including a number of ­six-​­lane boulevards. Traffic jams are now common, especially in the city center, as more ordinary citizens have acquired cars and as trucks deliver goods and services throughout the area.12 The government and party headquarters have moved to a gleaming new ­high-​­rise complex of metal and glass, with skylights, brightly lit offices, nicely appointed furniture, greenery inside and out, and central air conditioning.13 Instead of a walled government compound in the center of town, the new combined offices stand on a small hill, anchoring a new development of parks and housing, including those for government staff. Many officials now own their apartments in the new housing development. County revenues have grown immensely. In 1992 total county revenue was a just under 67 million renminbi (RMB).14 By 2003 it had increased to 104 million RMB, by 2011 it reached 1.4 billion RMB, and in 2015 it reached 10.6 billion.15 The scope of the growth is further reflected in the total gross output of the county. Adjusted to constant 1990 yuan, in 1993 total gross output was 4.5 billion RMB; by 2009 it had increased more than tenfold, to 47.3 billion RMB. By 2015 the number amounted to 81.8 billion RMB.16 In light of questions about the reliability of government numbers on revenue and output,17 one can look to proxies to provide further measures of the county’s growth.18 Zouping’s total electricity consumption steadily increased, rising from 3.00 billion kilowatt hours in 2003 to 11.13 billion kilowatt hours in 2011. In 2014 Zouping consumed 15.7 billion kilowatt hours of electricity, of which 15.1 billion was used by industrial production.19 The volume of railway freight has increased considerably as well, almost quintupling from 640,000 tons in 2006 to 3 million tons in 2011. The amount of new loans issued by banks shows a slightly different trend: the annual growth rate is moderate, apart from a drastic jump from 153.29 million RMB in 2004 to 1.6 billion RMB in 2007.20 Growth in government revenues has allowed the county to increase expenditures on educa-

8  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

tion as well as social services. Social insurance per capita more than tripled, from 1.50 RMB in 2006 to 4.65 RMB in 2011. The per capita expenditure on education for the same period rose from 189.33 RMB to 1,311.33 RMB.21 Precisely because it has undergone a dramatic economic transformation, Zouping remains an ideal window on China to help us understand how governing structures have been able to adapt to dramatic economic and social changes with little apparent political institutional change. Moreover, the wealth of earlier research and published works on Zouping provide a rare and invaluable baseline to help us understand exactly how the county has changed, both economically and politically, and to allow us to better gauge the evolution of its institutions of governance. What has transpired in Zouping provides a unique opportunity to examine both continuity and change in great detail. We begin with a detailed overview of the economic transformation in Zouping. The story of the county’s economic development has yet to be told, although bits and pieces have been reported in various publications that have described China’s changes generally in the past two decades. The details of this story are useful for providing a more fi ­ ne-​­grained understanding of how and when economic changes occurred and what political consequences followed. As we will show, the consequences of these economic changes are not limited to revenues or gross domestic product (GDP).

Changing Economic Structure The structure of Zouping’s economy has evolved rapidly along with its growth. The previous edited volume on the county, Zouping in Transition, edited by Andrew Walder, emphasized the early impact of rural industrialization via the township and village owned enterprises (TVEs). Since then industry has continued to grow apace, but it increasingly has had to share prominence with a rapidly growing services sector. Industry’s share of output reached 76 percent in 2003 but declined to 64 percent by 2011 as the service sector almost doubled during the same period. By 2015 industry’s share was only 59.9 percent.22 Agriculture, which still contributed 26 percent of output in 1993, shrunk to less than 5 percent by 2004 and has stabilized at that level. In 2015 agriculture still contributed 4.8 percent to Zouping’s growth. The stabilization of agriculture in Zouping’s economy today has been

Change within Continuity  9

helped by a conscious policy choice made after the 1994 fiscal reforms, which permitted local governments to keep revenues from industries that process local agricultural products.23 The county government started a small factory to produce dried vegetables used in packaged instant noodles. In chapter 3, Kay Shimizu’s details another example of industry based on local agriculture—a township glycerin factory, which relies on locally grown corn (maize), one of Zouping’s primary crops. This factory has become one of Zouping’s most profitable new enterprises. The county’s industrial sector itself has evolved rapidly. During the early 1990s the most important source of tax revenue was the ­county-​­owned brewery.24 By 1995 the brewery had lost its top position, but it was still among the top four ­revenue-​­generating firms in the county as late as 2000. By 2005, however, it was no longer among the top enterprises. The top position was taken over by a factory that was formerly the Number Five Cotton Textile and Cottonseed Oil Processing Factory, which produced cotton yarn, gray fabric, and denim, and even as early as 1992 had been ranked number two in tax contributions.25 This firm, which belonged to the County Supply and Marketing Cooperative, started out as a small factory engaged in cotton and cottonseed oil processing. Then in the 1990s, it was reorganized as the Weiqiao Textile Mill, which went on to become the most important economic entity in the county and eventually one of the largest textile mills in the world. To this day, Weiqiao has remained the key enterprise in the county. As chapters 2 and 3 document, the rise of this one factory changed the fate of a part of the county that was historically the poorest. The decline of Zouping’s brewery reflects the similar fate that hit ­a lcohol-​­related enterprises throughout China in the wake of the 1994 fiscal reforms.26 Under the 1994 reforms, taxes were divided into categories according to which level of government would receive the revenue.27 After this reform localities preferred to promote enterprises whose taxes would belong largely to them. Within this context it is clear why the county might lose interest in growing the brewery. The major tax on the brewery was the consumption tax, which goes exclusively to the center, and the county keeps only a small portion of the ­value-​­added tax (VAT). The Weiqiao Textile Mill, on the other hand, paid the VAT, which is shared between the center and the localities, but it also paid the enterprise income tax, which accrues to the localities. Moreover, in addition to providing a large amount

10  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

of taxes that benefitted the county, Weiqiao Textile was a large, r­ eady-​­made market for cotton grown in the county, and it also provided jobs. The rapid rise of Weiqiao Textile also reflects a change in the scale of firms in the county and in particular the scale of industrial employment. While the percentage of total county revenues from Weiqiao Textile was only slightly more than the old Hubo Brewery’s share in 1992,28 the scale of local firms has increased greatly in the following years. In 1992 the largest firm employed only 3,186 people. Weiqiao Textile’s precursor, the Number Five Cotton and Oil, employed only 1,626. The total employment of the top ten firms in 1992 was 7,880, and the grand total of workers in all the county’s enterprises was 13,181.29 Today, Weiqiao Textile alone employs a workforce of more than 150,000 and operates t­ wenty-​­four hours a day. This factory’s demand for labor has been so great that it has exhausted the local labor supply and must hire labor from outside the county. To accommodate the large number of migrants, the company built massive dormitories and other buildings that have virtually become a new town. In addition to growing in scale, Zouping’s firms have expanded outside the county. Weiqiao Textile has led the county in exports as well as imports. It ranks number one among all factories in China in exports of fabric and yarn, with more than three hundred customers in twenty countries. It also imports large amounts of raw materials from abroad, including h ­ igh-​ ­quality pima cotton from California. Moreover, over the last decade and a half, as chapter 3 details, some village entrepreneurs have opened successful factories in distant provinces, such as Xinjiang, to become major producers of canvas. The county is also bringing in foreign experts. The glycerin factory mentioned above has hired technical personnel from Africa for its research labs. Other entrepreneurs from Zouping have set up factories in Africa. While industry has grown in scale and expanded outside of the county, the recent economic expansion has also been helped by a rapidly growing service sector, the most dynamic and ­fastest-​­growing sector in recent years. Although it accounted for only 15 percent of the total economic output in 1993, the service sector had more than doubled it share, to 31 percent, by 2011. In 2015 it was 35.3 percent.30 In Zouping the development of the service sector was an opportunity to make the most of geographical and ecological constraints, which historically were a major hindrance to development, as chapter 2 describes. Parts of the county remained agricultural and undevel-

Change within Continuity  11

oped even during the height of the development of TVEs in the 1980s and early 1990s. Many of these localities were townships and villages in hilly or mountainous areas. Eventually, the county took advantage of the unspoiled natural beauty and developed them as tourist areas, explicitly prohibiting these townships from engaging in heavy industry. Researchers going to these townships in the 1980s found households growing flowers. Now an increasing number of households run privately owned inns, or more commonly, operate private restaurants where city residents come for the day to enjoy the countryside, walk in the fields and gardens, and dine on the f­ arm-​ ­to-table meals. The popularity of these establishments is another indicator of the increased wealth and urbanized nature of the county’s residents.31

The Shift from Public to Private Enterprise The evolution of the reforms also brought a fundamental change in ownership patterns. The earlier edited volume on the county (Zouping in Transition, edited by Andrew Walder), emphasized the key role of ­government-​­owned and -operated township and village enterprises during Zouping’s early takeoff period—a phenomenon that inspired the term “local ­ id-​­1990s when the limits of the local state corporatism.”32 However, by the m ­state-​­owned model were becoming clear, the county government began to rethink the costs of the ­government-​­directed model and the potential benefits of shifting to private enterprise.33 Zouping’s TVEs, like those elsewhere, were beginning to go into debt, and some failed after the central authorities instituted retrenchment policies to cool the economy; these policies cut off credit for the rapidly growing township and village firms.34 To circumvent the retrenchment policies, the county established t­ownship-​­level financial services offices (nongcun jinrong fuwu suo) to keep TVEs afloat when other sources of credit dried up. Unfortunately, in Zouping as well as in many other places, those financial services offices ended in disaster, with many of them collapsing when large numbers of TVEs failed. Failing and bankrupt TVEs became a leading cause of local village and township debt nationwide.35 This promoted the systematic restructuring of township and village enterprises,36 which radically changed the local property rights regime and had several political consequences. Starting at the end of 1995, the county undertook a ­t wo-​­pronged strategy to “enliven” rural industry. On the one hand, the county started to actively

12  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

support the development of larger private firms. The private sector had already grown rapidly during the first phase of reform, from a little over 7 percent of output in 1985 to almost 37 percent by 1993. This early growth consisted almost exclusively of very small “individual household” firms (个 体户), which numbered more than 5,000 in 1993. While the number of private firms greatly outnumbered the 579 TVEs, their small size limited their ability to generate output and create jobs. Starting in the ­mid-​­1990s, private firms were given preferential treatment, and they grew rapidly in size. Although there were only 69 in 1990, the number of large private firms in the county grew to 528 in 1995.37 The importance of the private sector is also reflected in tax revenues. Using data on the VAT, which is the major tax on industry, table 1.1 shows that in 1994 the nonpublic firms were starting to contribute a good portion of the county’s revenue, although the larger private firms (siying 私营) contributed only 43,000 yuan, a small portion of the total. The small private entrepreneurs (geti 个体户) paid 11.2 million yuan, which was close to the 17.2 million yuan paid by the collective township and village firms. However, by 1995 the tax paid by the large private firms jumped to 1.4 million yuan, while the individual entrepreneurs’ contribution decreased to 7.5 million yuan. This supports our earlier point that firms were growing in scale—the previously small private firms were becoming large enough to be counted in the large private firms (siying 私营) category. While we have the numbers for only the first half of 1996, one can already see that the trend continued as the importance of the private sector greatly outpaced that of the collective sector. For the first five months of the year, the large private firms had already paid 1.5 million yuan, which is more than the sector paid for the entire previous year. An additional 2.3 million yuan came from the individual household firms, while the collective sector for the same first five months paid only 11.6 million yuan.38 The more difficult part of the “enliven” strategy was restructuring existing public firms—both TVEs and ­state-​­owned firms. Given the county’s extremely rapid growth at the time, one might think that finding employment for ­laid-​­off workers would be relatively easy. Nonetheless, county authorities, like the central government, worried about political consequences, especially the reaction of workers who would be negatively affected by the proposed property rights changes of the factories.39 The county eventually did restructure its firms but used a variety of

Change within Continuity  13 Ta bl e 1.1.  Changing Sources of Zouping County Tax Revenue (10,000 yuan) Total SOEs Collective (including TVEs) Siying (large private) Geti (small individual) Other

1994 4,470.4 1,636.7 1,711.8 4.3 1,116.2 1.4

1995 5,380.3 2,267.1 2,201.2 141.1 751.1 19.8

1996 (January–May) 2,336 775 1,163.9 154.3 225.7 6.5

S ou rc e: China Interview 19696.

methods. In some cases it sold enterprises outright, but it also employed less radical measures: sometimes it leased firms to private operators, and sometimes it created shareholding cooperatives, in which the state, township, or village still owned a public share while allowing workers to hold the remaining shares. Some firms were allowed to go bankrupt, but this was done infrequently and cautiously because of the fear of the political consequences.40 In Zouping, like elsewhere in China, firm restructuring decisions—if, when, and how—were made by the state, that is, the local government, not by the firms themselves.41 County government started the industrial restructuring process at the village level. This was the level that needed immediate attention in the wake of the problems caused by the retrenchment policies; it was also probably the safest political choice.42 Those working in TVEs were not state workers; there was no explicit social contract to break. The peasant workers in township and village factories still had land linked to their rural household registration, so there was no question about whether those working in factories would have a means of livelihood. However, even when township or village enterprises were sold, the county tried to institute terms of sale that would minimize political reaction. The new owners of these township or village factories had to agree to keep existing workers for a stipulated period of time. Most of the collectively owned village enterprises were sold in 1995–1996, except for a few of the strongest and most profitable ones. The t­ownship-​ ­owned firms were restructured soon after. By 1997 their number was reduced by more than half of what it was in 1993, leaving 103, and by the year 2000 only 42 t­ownship-​­owned enterprises remained. Like the village collectively owned enterprises, most of the 17 collectively owned township

14  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

enterprises that were sold were purchased by the former factory managers. The 42 remaining t­ ownship-​­owned firms adopted various forms of restructuring, including leasing and shareholding cooperatives, where the township government still held shares.43 ­County-​­owned enterprises were the last to be restructured, in the late 1990s.44 Unlike the township and village enterprises, few ­state-​­owned firms were sold. Following the national policy of “letting go of the small and medium but grasping the large,” the county sold outright only three of its forty industrial enterprises (­state-​­owned enterprises, or SOEs).45 The majority of firms were restructured into limited liability companies or shareholder cooperatives; restructuring allowed workers to hold shares, and minimized the number of layoffs. In Zouping, as elsewhere, shareholding cooperatives was the most common form of restructuring. Table 1.2 shows the change in the number of ­county-​­level firms over time. Because Zouping County officials were most concerned about the reactions of workers to restructuring, especially those who were employees of the firms that were to be sold, they took steps to preempt worker protests and minimize the potential for what they deemed to be “political instability.”46 In some cases firms were prevented from being sold, even when there was a buyer, because a solution could not be found to “resettle” the workers. Local officials stated that they worried that if issues of worker welfare and resettlement were not dealt with effectively, there would be collective protests and other conflicts. While Zouping County officials did not discuss any street protests by ­laid-​­off workers, they stated emphatically that they needed to be very sensitive to workers’ reactions, using the experience of other localities as examples. They said that it was imperative to maintain political stability during this period of restructuring. The county officials remained cautious in this regard in how they carried out the reforms. To ensure that there would be coordination and all relevant parties would be involved in SOE restructuring, Zouping County formed a “corporate restructuring leading small group” (改制领导小组 ), with approximately ­twenty-​­three individuals, which included the county magistrate, vice party secretary, vice county magistrate, along with personnel from relevant bureaus. This group had to craft specific restructuring plans for each of these firms, given that the resources and conditions for each enterprise were different. There was no easy, common solution for any of the firms. In interviews local officials would routinely acknowledge that political

Change within Continuity  15 Ta bl e 1.2  Number of County-Level Industrial Enterprises, 1988 to 2003 Total County SOEs County Collectives

1988 42 20

1993 68 31

1999 64 18

2000 56 18

2003 31 12

22

37

46

30

19

S ou rc e: Andrew Walder, “The County Government as an Industrial Corporation,” in Andrew Walder, ed., Zouping in Transition: The Process of Reform in Rural North China (Cambridge, MA: Harvard University Press, 1998), 66; China Interview 6292005.

concerns, especially those related to the possibility of mass layoffs and job losses, shaped restructuring decisions. For example, one might wonder why the county essentially gave away or sold some firms at very low prices, either to outsiders or to locals. Earlier studies would likely see such examples as illustrations of asset stripping and corruption.47 However, local officials argued that selling at low prices was not corruption but the only way to deal with an economic issue that could have severe political consequences for local workers. Giveaways were meant to ensure future returns, both in terms of jobs and revenue. Local officials attached strings to the l­ow-​­priced sales, including the requirement that the new owners keep workers for a specified length of time.48 Such strings were meant to ensure that workers in these former SOEs would continue to have jobs. These were the same types of strings that were attached to the sale of the township and village enterprises described earlier. In the case of the sale of a firm that had already closed, the new owner of the factory, which sometimes amounted to nothing more than an empty building, had to promise that a new firm would be built and remain in Zouping. This would provide jobs, and in some cases these factories would serve as outlets for agricultural crops such as corn. Another way the county avoided closing firms was by merging stronger and weaker firms.49 Like many areas in China, Zouping County formed corporate groups or “holding companies” (集团). The best companies formed the cores of these groups, under a corporate structure that included a board of directors. It was hoped that this increased size also would provide firms with name recognition and market share.50 This strategy was expanded to fourteen of the county’s best township and village owned enterprises and private firms. This process helps explain the increased scale of firms in Zouping during the past decade and a half, which we noted earlier. The Weiqiao Textile Mill became a holding company in 1997, incorporating nine smaller firms under its corporate umbrella.

16  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

In sum, the development of Zouping has taken some unexpected turns since researchers first arrived in the late 1980s, especially in the past decade and a half. The beginnings of some trends, such as the shift to the private sector, were already clear in the earlier edited volume (Zouping in Transition, edited by Andrew Walder), but few would have predicted the economic transformation that has taken place in the county, both in terms of the sectors and firms that have grown or declined and the parts of the county that would prosper. Moreover, few would have predicted the development in different parts of the county, where there have been a number of surprising changes in economic fortune of different townships. Similarly, firms that prospered in the early years of reform did not necessarily succeed in the long run. This includes ­once-​­successful SOEs and the early TVEs, which started to fall on hard times beginning in the early to m ­ id-​­1990s. By the end of the 1990s, many of the successful and powerful collectively owned TVEs were in decline and were sold to private owners in a process directed by the county government. Yet new firms would rise to become the economic bases of the county.

The Political Consequences of Economic Change Many studies have chronicled the dramatic economic changes in China, but few if any have traced the political impact of that transformation. The change in the economic system described above presented Zouping County’s government with a set of new challenges for which the institutions of governance were not originally designed. The entire economic base of the local economy had radically changed after corporate restructuring. The state continued to hold shares, and ­state-​­controlled firms remained, but in most instances, the state was only one shareholder. Even the Weiqiao Textile Mill, the largest firm and taxpayer, was a “mixed enterprise,” where there were private as well as state shares. The resources that the county or its agents directly controlled were radically changed. The county was now dependent on the success and cooperation of private firms rather than simply administering s­ tate-​­owned or collectively owned enterprises. Having the advantage of following Zouping County over time, the contributors to this volume are able to examine ways in which the local government had to adapt its operations to meet new challenges. We first examine the political consequences that emerged from the economic restructuring.

Change within Continuity  17

In a later section, we will see how the county government itself has had to adapt and change the institutions of governance to deal with the new economic profile of Zouping. Political Fallout from the Demise of Collective Vill age Enterprise

While the restructuring of TVEs may have been easier to implement than that of SOEs, nonetheless, it yielded considerable political fallout. One of the most unexpected turns of events was the demise of the village collective economy and its effect on the power of village leaders. Few studies have been privy to details of what happens in villages after the sale or collapse of the collectively owned village firms. When researchers went back to the once prosperous and industrialized villages after the fall of collectively owned enterprises, they immediately saw that physically and structurally the aura of wealth and dynamism was gone. Even in villages such as Fengjia, which was prosperous enough to serve as a base for foreign researchers, a decade and a half later its lucrative village industry was almost all gone, the village having returned to agriculture and livestock breeding. The only remaining signs of the early prosperity are the rusting remnants of the village factories. Less obvious but more significant are the consequences for governance. Zouping had many examples of the rich, successful industrialized villages, which were models of “local state corporatism.” In the 1980s and 1990s, powerful party secretaries presided over publicly managed village enterprises as unchallenged political leaders, commanding respect and obedience. Their power derived largely from their success as builders of village enterprises. But when their economic basis of political power dissolved with the collapse of collectively owned village enterprises, some of the most successful and powerful of these party secretaries met a fate that few, if any, could have imagined. Starting in the late 1990s, some disgruntled villagers started to turn against once revered and unchallenged leaders. In one village, the party secretary was physically beaten, and his house was burned. In another case, the party secretary escaped physical attack, but peasants protested and petitioned to higher levels to charge him with corruption and cadre abuse of power. In this instance, the upper levels sent work teams to the village to investigate the once invincible cadre. Another powerful and politically as-

18  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

tute village party secretary stepped down from his party secretary position before he could be attacked and tried to regain legitimacy by running for village committee head through the village election. What should we conclude from these examples? On the one hand, the fate of these once powerful bosses suggests that the era of the strongman party secretary has passed. Power built on village enterprises is gone, and those who have become the new leaders seem much weaker, having to deal with different diverse groups within the village. Overall, in villages that have seen the old party leaders pass from the scene, the leadership is much less dynamic and entrepreneurial. In some villages cadres are almost nowhere to be found, with little to do and little interest in promoting development. This has put additional burdens on township and county governments that now provide support for village cadre wages. We should make clear, however, that despite the demise of some of the earlier village party bosses and the decline of the enterprises they managed, the collective economy is by no means dead in counties like Zouping, but it has changed. Some formerly rich industrialized villages may have experienced a decline, but there are now other villages that are engaged in a new type of collective economy. In such villages, cadres, especially the party secretary, are reminiscent of the entrepreneurial party secretaries that led rural industrialization in the 1980s and early 1990s. These new examples of village strongmen underscore the continued importance of control over economic resources as the basis for political power. However, the bases of power of the most successful new party secretaries are rooted in what might be called a new and strengthened “collective.” In these villages, like the most successful villages in the 1980s and 1990s, cadres are using the village’s collective resources, including a modernized industry, to provide new subsidized housing and public goods to residents. The collective, as an institution, continues to evolve and adapt. What distinguishes these newly strong collective economies is that village leaders have taken advantage of the New Socialist Countryside (社会 主义新农村) policies to increase collective resources for development, especially land. In one such village, the cadres promoted the creation of a new village community (农村社区) that moved villagers out of their old courtyard homes and into new, higher density housing, such as apartment buildings or townhouses. The old residential areas, where the peasant families used to live, are then redeveloped for more lucrative use by the col-

Change within Continuity  19

lective, whether for factories or commercial real estate development. This yields the collective as well the village substantial revenues. Some of these villages, like the most industrialized villages in the 1980s and 1990s, are so successful industrially that they need to bring in labor from outside the village. Institutional Adaptation: Changing County Governance

The above descriptions provide some sense of the new economic and political context of governance in Zouping. But what do these changes mean for the actual institutions of governance in the county? Once the county shifted its economy from public to private enterprise, how did the county deal with the fundamentally changed relationship between the state and business? How did Zouping’s government adjust to the fact that most of the key firms were no longer completely or even partially publicly owned? Did the local state come up with new strategies to deal with firms that were now mostly private rather than collectively or state owned? Were new government offices created to handle these new problems, or did agencies get retooled and assigned tasks outside their original scope of work? What happened to the agencies that were set up to manage and develop the TVEs when there were no more collectively owned firms? What about legal measures and regulations? The rapid change in the economy has required a reconsideration of existing legal measures. Who would decide what rules need to be discarded and what new rules should be formulated to take their place? Finally, even though there has been a huge increase in revenues, the county faces many constraints in funding public goods, including schools and hospitals. How and where did the local government get revenues after the 1994 fiscal reforms that allowed the central government to take a much larger proportion of local revenues, radically reducing the revenue surplus left for the county? Moreover, how has the county been able to train and select the right type of cadres for the jobs of government when the economy has become so much more complex? The job of governance, from the village level on up to the different bureaus and agencies, requires new skills and a new group of leaders in the county. Have the old ways of selecting cadres still been sufficient? Can the Organization Department or the Personnel Department handle the new demands put on them? If not, how do they deal with these challenges?

20  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

Entrepreneurial Adaptation inside the Institutions of County Government: Contributions to the Volume The chapters in this volume address the above questions. Part 1 continues with two chapters that underscore the dramatic economic changes in Zouping county over time. These allow us to understand the diversity within the county and to see how the fortunes of its different parts have changed. In chapter 2, Guy Alitto gives a historical overview that highlights Zouping’s earlier status as an experimental county, where the rural reforms of Liang Shuming were implemented during the 1930s. The chapter provides a necessary historical backdrop for understanding the magnitude of current changes and the courses that those changes have taken. Alitto teases out archetypes of development, demonstrating how various parts of the county have been affected by history and ecological challenges, especially those areas along the Yellow River. The chapter traces the changing fortunes of different parts of the county over time. Alitto argues that only in the era of the ­post-​­Mao reforms have certain areas been able to overcome the ecological challenges that had plagued them throughout their history. For example, the historically poorest area of the county, Qidong, is now one of the richest thanks to the rise of the Weiqiao Textile Mill. Kay Shimizu’s chapter 3 pairs nicely with chapter 2 by tracing the changes that have taken place in different townships within the county over the past two decades, including the dramatic change in the historically poor Qidong with the rise of the Weiqiao Textile Mill. She uses the shifting fiscal relationships between the county and its townships—whether a township pays taxes to the county or whether it gets subsidies from the county—to show changing economic fortunes. Researchers in the late 1980s found the county to be quite diverse in terms of levels of development. There were, for example, nine townships that were so poor they were exempt from paying taxes to the county, and some even received subsidies. This detailed knowledge of the county in the 1980s allows us to see how radically things changed a decade and a half later. Shimizu explores the divergent development paths of three townships to understand the change. She shows that some townships prospered due to local development while others have found opportunities outside of the county, in some cases setting up factories in Xinjiang. Having done lengthy and multiple interviews in the county over a number of years, Shimizu is

Change within Continuity  21

able to demonstrate the continued important, but changed, role of local government. Part 2 examines how specific agencies adjusted and adapted to govern in a changed context. In chapter 4, Yuen Yuen Ang shows how the county has managed to fund public goods and services when official government revenues were limited by the 1994 fiscal reforms, which left less revenue in the hands of local officials. The 1980s and early 1990s saw the e­ xtra-​ ­budgetary funds of the county soar, providing it with large amounts of funds that they could use at their discretion. But the 1994 fiscal reform took away much of the ­extra-​­budgetary revenue that helped support public goods, causing many local agencies to resort to s­elf-​­financing. Chapter 4 examines how the county managed to adapt through strategies of creative administrative ­self-​­financing when the county failed to receive sufficient ­state-​­budgeted funds. Using case studies, Ang reveals how schools and hospitals have coped with budget cuts and outdated personnel allocations by using entrepreneurial but legal initiatives. The county public agencies and service providers themselves generated “taxless revenue” (e.g., fees, fines, commercial profits) to meet their expenses. A reason why institutional adaptations of local government are so difficult to gauge is that bureaucracies sometimes play roles outside their formal mandates or places on the organization charts. For example, while one might expect that legal agencies like the courts might be involved in the enforcement of intellectual property rights (IPR), in chapter 5, Martin Dimitrov finds that at the local level, courts play no role. Instead, it is administrative agencies like the Bureau of Sports and Culture and the Bureau of Industry and Commerce that are mainly responsible for IPR regulation. The findings of Dimitrov and others in this volume show that county bureaus and agencies have had to take on new roles, sometimes surprising ones, as the economy has evolved. Moreover, depending on the issue area and importance of the sector to the local state, enforcement exhibits significant variation. In chapter 5, Dimitrov examines regulation within the broader and fundamental question of how relations between government and business have changed as Zouping has been economically transformed. He assesses which of the models of government business relations that have been used in earlier studies best characterize the changed relationship between the state and business in Zouping three decades after marketization began. During an

22  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

earlier period, at the height of local state corporatism, it seemed that the developmental state model best described the relationship. With the rise of the private economy, one might think that the regulatory state model might be more appropriate. Dimitrov explores the different models and the degree to which they apply to the different relationships that the state has had to develop with the different types of firms that now are key parts of its economy. In chapter 6, Douglas Grob turns to a l­ittle-​­studied aspect of local government—the crucial role played by the Legal Affairs Office (法制室). Starting out with the premise that China’s courts are often seen as chronically weak and dependent, he asks whether the “loci of legal development appear elsewhere.” Focusing on Zouping’s Legal Affairs Office, Grob shows “how nonjudicial actors at the local level are charged with ‘legalizing’ the local administrative state.” He demonstrates how this office not only decides which local government rules and other legally binding measures will be kept in effect and which are outdated but also makes decisions about when and how departments should be allowed to issue new legally binding measures on what topics. Such power also opens the door for this office to be a key arbiter of bureaucratic competition within local government. Moreover, the Legal Affairs Office has become a place for citizens to appeal administrative actions. “Not only has the Fazhi Shi adapted as the demands on local government have changed, but by serving as interpreter of legality, gatekeeper in the development of the r­ ule-​­making agenda, and mediator among government departments, it has provided local officials and the departments in which they work room and procedures with which to adapt to local needs and changing circumstances.” Grob provides a m ­ uch-​­needed analysis of the institutionalization of the legal process at the county level by which local government measures and administrative actions are deemed legal (合法). Part 3 turns to the Communist Party itself, both in its selection of cadres and their training. Again, while the institutions remain the same, we see subtle but significant behavioral changes. In chapter 7, Melanie Manion focuses on the Organization Department (组织部 ), which is one of the most (if not the most) powerful departments of the CCP and charged with “identifying suitable, h ­ igh-​­quality officials for leadership which is at the center of Communist Party rule.” This department controls what Manion sees as the “linchpin of Communist Party rule” through the “party’s mo-

Change within Continuity  23

nopoly in all matters of personnel, of which political selection is the most important.” While Manion examines the Organization Department that dictates who gets to receive further cadre training in the Communist Party schools, in chapter 8, Charlotte Lee delves into the operation and changes that have taken place within these institutions and how “cadre training . . . is characterized by new pressures to reform, and diverse responses by local actors.” Lee traces the processes of organizational adaptation and local sources of change within Party Schools while at the same time showing that this institution contributes to the CCP’s continued ability to maintain ­system-​­wide controls in r­ eform-​­era China. What she finds is that the need for entrepreneurial skills to cope with the changing environment has reached into the workings of the Communist Party schools that are officially tasked with cadre training. This institution now must do more than teach ­Marxism-​­Leninism.

Notes

1.  Andrew Nathan, “Authoritarian Resilience,” Journal of Democracy 14, no. 1 (January 2003), 6–17; Martin Dimitrov, ed., Why Communism Did Not Collapse: Understanding Authoritarian Regime Resilience in Asia and Europe (Cambridge: Cambridge University Press, 2013). 2.  Nathan, “Authoritarian Resilience.” 3.  Kellee S. Tsai, “Adaptive Informal Institutions and Endogenous Institutional Change in China,” World Politics 59.1 (2006): 116–41. 4.  Ben Hillman, Patronage and Power: Local State Networks and P ­ arty-​­State Resilience in Rural China (Stanford, CA: Stanford University Press, 2014). 5.  Sebastian Heilmann and Elizabeth J. Perry, “Embracing Uncertainty: Guerrilla Policy Style and Adaptive Governance in China, in Sebastian Heilmann and Elizabeth J. Perry, eds., Mao’s Invisible Hand: The Political Foundations of Adaptive Governance in China (Cambridge, MA: Harvard University Press, 2011), 1–29. 6.  See Yuen Yuen Ang, How China Escaped the Poverty Trap (Ithaca, NY: Cornell University Press, 2016). 7.  Graeme Smith, “The Hollow State: Rural Governance in China,” China Quarterly, no. 203 (September 2010), 601–18; see also Jean C. Oi and Zhao Shukai, “Fiscal Crisis in China’s Townships: Causes and Consequences,” in Merle Goldman and Elizabeth Perry, eds., Grassroots Political Reform in Contemporary China (Cambridge, MA: Harvard University Press, 2007), 75–96.

24  Je a n C. Oi a nd S t e v en M. G ol ds t ei n 8.  Martin Dimitrov, ed., Why Communism Did Not Collapse. 9.  A sampling of work based on Zouping includes Jean C. Oi, “The Fate of the Collective after the Commune,” in Deborah Davis and Ezra Vogel, eds., Chinese Society on the Eve of Tiananmen: The Impact of Reform (Cambridge, MA: Council on East Asian Studies, Harvard University, 1990), 15–36; Jean C. Oi, Rural China Takes Off: Institutional Foundations of Economic Reform (Berkeley: University of California Press, 1999); Andrew Kipnis, Producing Guanxi: Sentiment, Self, and Subculture in a North China Village (Durham, NC: Duke University Press, 1997); Andrew Kipnis, Governing Educational Desire: Culture, Politics, and Schooling in China (Chicago: University of Chicago Press, 2011); Andrew Kipnis, “Urbanisation in Between: Rural Traces in a Rapidly Growing and Industrialising County City,” China Perspectives, 2013, 5–12; Stig Thogersen, A County of Culture: ­Twentieth-​­Century China Seen from the Village Schools of Zouping, Shandong (Ann Arbor: University of Michigan Press, 2002); Jonathan Morduch and Terry Sicular, “Risk and Insurance in Transition: Perspectives from Zouping County, China,” in Masahiko Aoki and Yujiro Hayami, eds., Community and Market in Economic Development (Oxford: Oxford University Press: 2001); and Susan Whiting, “Fiscal Reform and Land Public Finance: Zouping County in National Context,” in J. Y. Man and Y.-H. Hong, eds., China’s Local Public Finance in Transition (Cambridge, MA: Lincoln Institute of Land Policy, 2011), 135–41. 10.  Andrew Walder, ed., Zouping in Transition: The Process of Reform in Rural North China (Cambridge, MA: Harvard Contemporary China Series, 1998). 11. Walder, Zouping in Transition, 2. 12.  Within the last decade and a half, the number of passenger cars per capita has risen from 0.0068 in 2003 to 0.0768 in 2011. The number of trucks per capita has risen from 0.0044 in 2003 to 0.0107 in 2011. 13.  Some of the government bureaus have separate but similarly impressive structures. 14.  Andrew Walder, “Zouping in Perspective,” in Walder, Zouping in Transition, 13. 15.  Zouping government website, http://www.zpxc.gov.cn/mlzp/zpgk/14996. html. 16.  Zouping Statistics Bureau, “2015 nian zouping xian guomin jingji he shehui fanzhan tongji gongbao” 2015 年邹平县国民经济和社会发展统 计公报 (2015 Zouping County Statistical Bulletin on the Development of the National Economy and Society), http://www.zouping.gov.cn/ zgzp/15/22/160809050737606288.html. 17.  On problems with Chinese official statistics, see Jeremy L. Wallace,

Change within Continuity  25 “Juking the Stats? Authoritarian Information Problems in China,” British Journal of Political Science, 2015, 1–19. 18.  The Keqiang Index consists of measures for the consumption of electricity, the volume of railway freight, and the issuance of new loans. This is seen as an alternative and more reliable measure of growth. 19.  Zouping Statistics Bureau, “2014 nian quan xian jingji yunxing qing­ kuang jian xi” 2014 年全县经济运行情况简析 (A brief analysis of the county’s economic operations in 2014), http://www.zouping.gov.cn/zgzp/15/22/​150402111​30894​ 1843​.html. 20.  Zouping Statistics Bureau, Zouping County Statistical Yearbook (in Chinese), various years. 21. Ibid. 22.  Zouping Statistics Bureau, “2015 nian zouping xian guomin jingji he shehui fanzhan tongji gongbao” “2015 年邹平县国民经济和社会发展统计公报” (2015 Zouping County Statistical Bulletin on the Development of the National Economy and Society). 23.  Jean C. Oi, “The Evolution of Local State Corporatism,” in Walder, ed., Zouping in Transition, 35–61. 24.  As listed in Andrew Walder, “ The County Government as an Industrial Corporation,” in Walder, ed. Zouping in Transition, 77. 25.  Walder, “The County Government as an Industrial Corporation,” 77. 26. Oi, Rural China Takes Off. 27.  Some taxes, such as the consumption tax and the income tax on ­central-​ ­level enterprises such as banks and railways, were paid exclusively to the central government. Other taxes were designated exclusively as belonging to the localities, most importantly the local enterprise income tax. A third category of taxes was shared between the center and the localities, the most important of which was the VAT. These designations meant that some types of firms contributed more fiscal benefit to the county revenues than others. 28.  Walder, “The County Government as an Industrial Corporation,” 77. 29. Ibid. 30.  Zouping Statistics Bureau, “2015 nian zouping xian guomin jingji he shehui fanzhan tongji gongbao” “2015 年邹平县国民经济和社会发展统计公报” (2015 Zouping County Statistical Bulletin on the Development of the National Economy and Society). 31.  The official nonrural population of the county has steadily increased, from 24.12 percent in 2003 to 31.00 percent in 2011. 32.  Jean C. Oi, “Fiscal Reform and the Economic Foundations of Local State Corporatism in China,” World Politics 45, no. 1 (October 1992), 99–126. Also see Walder’s related analogy of local government as an industrial corporation in

26  Je a n C. Oi a nd S t e v en M. G ol ds t ei n Walder, “The County Government as an Industrial Corporation,” and his “Local Governments as Industrial Firms: An Organizational Analysis of China’s Transitional Economy,” American Journal of Sociology 101, no. 2 (September 1995), 263–301. 33.  Oi, “The Evolution of Local State Corporatism.” 34.  Also see Lynette Ong, Prosper or Perish: Credit and Fiscal Systems in Rural China (Ithaca, NY: Cornell University Press , 2012). 35.  See Oi and Shukai, “Fiscal Crisis in China’s Townships,” 75–96. 36. Oi, Rural China Takes Off; also Hongbin Li and Scott Rozelle, “Insider Privatization with a Tail: The Buyout Price and Performance of Privatized Firms in Rural China,” Journal of Development Economics 75 (2004): 1–26; and Scott Rozelle and Hongbin Li, “Saving or Stripping Rural Industry: An Analysis of Privatization and Efficiency in China,” Agricultural Economics 23, no. 3 (September 2000): 241–52. 37.  Oi, “The Evolution of Local State Corporatism,” 60. 38.  China Interview 19696. 39.  See Jean C. Oi, “Political Crosscurrents in China’s Corporate Restructuring,” in Jean C. Oi, Scott Rozelle, and Xueguang Zhou, eds., Growing Pains: Tensions and Opportunities in China’s Transformation (Washington, DC: Brookings Institution, 2010); and see Jean C. Oi, ed., Going Private in China: The Politics of Corporate Restructuring and System Reform in the PRC (Stanford, CA: Walter H Shorenstein Asia Pacific Research Center at Stanford University, 2011) for detailed studies of how political concerns shaped firm restructuring. 40.  Fourteen township enterprises and fifteen ­county-​­level enterprises were allowed to go bankrupt. 41.  For a more detailed discussion of corporate restructuring, see Oi, ed., Going Private in China. 42.  Earlier studies have argued that the government has been strategic in how it handles layoffs. In the urban areas, within what are usually thought of as SOEs, there are enterprises that are state owned and others that are collectively owned. As Yongshun Cai points out, people who worked in ­state-​­owned versus collectively owned urban factories were treated better in the restructuring process because of the potential political consequences of worker reactions. See Yongshun Cai, State and L ­ aid-​­Off Workers in Reform China: The Silence and Collective Action of the Retrenched (London: Routledge, 2006); and his “Distinguishing between the Losers: Institutionalizing Inequality in China’s Corporate Restructuring,” in Jean Oi, ed., Going Private in China, 71–94. 43.  A few strong performing enterprises did not go through corporate restructuring; for example, there were four in Changshan Township. 44.  Oi, ed., Going Private in China. 45.  In 2000 of these, only t­ wenty-​­six were industrial enterprises. There were

Change within Continuity  27 an additional forty collectively owned firms in the county, of which thirty were industrial. 46.  In 2000 there were approximately one thousand l­aid-​­off workers in the county. 47.  Ding Xueliang, “The Informal Asset Stripping of Chinese State Firms,” China Journal, no. 43 (2000). 48.  This is an example of privatization with a tail. See Li and Rozelle, “Insider Privatization with a Tail.” 49.  For a discussion of this on a national level, see Jean C. Oi and Zhang Xiaowen, “Creating Corporate Groups to Strengthen China’s ­State-​­Owned Enterprises,” in Kjeld Erik Brodsgard, eds., Globalization and Public Sector Reform in China (London and New York: Routledge, 2014), 144–58. 50.  Depending on their output, holding companies were given one of three designations: national, provincial, or local.

Ch a p t er 2

Zouping in Historical Perspective Guy Alitto

In 1930 Zouping was a completely undistinguished piece of rural Shandong real estate. Because of Confucian holy man Liang Shuming’s experimental county government and his rural reconstruction program located there, by 1934 it was well known throughout China, and it attracted visitors from America and Europe. It was the subject of many books and articles. By 1987 it was again attracting international pilgrims, but of a very different nature. These visitors were eager to study Zouping as representative of rural China, whereas the earlier visitors came to see unrepresentative innovative changes. By the 1990s, it was again the subject of books and articles.1 But how representative is Zouping? When the t­ hen-​­existing Committee on Scholarly Communication with the People’s Republic of China initiated the Zouping research project in 1987, some social scientists, especially more doctrinaire anthropologists, opposed it because, according to the anthropological creed, a research site cannot be chosen “for” the ­observer-​ ­participant. Moreover, given the Communist state’s w ­ ell-​­documented practices, wasn’t it likely that this was a “Potemkin County”? Was it, then, not only a S­ oviet-​­style tinsel exemplar, but also, decades before, had it not been a showpiece for rural reformers? Traditionally, the northern and western districts of Shandong (the present Huimin, Dezhou, Liaocheng, and Heze administrative districts) were poorer than the districts to the east, especially Yantai and Linyi. True, among the ­thirty-​­eight counties of the four traditionally poorest districts, Zouping was one of several “stars” economically and undoubtedly the best 

Zouping in Historical Perspective  29 Gaoqing County

Huimin County

River Yellow He) g (Huan

Gaoqing County Seat

Qidong Old County Seat

Qidong County

Huantai County

Qidong County Seat

N

Xia oq

ing

er Riv

Zouping County Zouping County Seat

Zhangqiu County Old County Borders Contemporary County Borders Railroad Main Road

Changshan County

bo Zi

ty

Ci

Zhangdian (Changshan County Seat) Zhoucun

Zhangqiu County Seat

Mountains 0

5

10 km

Map 2.1. Zouping County Historical and Contemporary Borders

of the eleven counties of Huimin district. Undeniably, Shandong is more prosperous than most of North China, but certainly not more prosperous than areas of the southeastern coast. In the larger national perspective, Zouping was in 1986 by no means distinguished by affluence, or much else, except for having been Liang’s rural reconstruction county. Much like the requirement desired by Liang Shuming, we wanted an “average county.”2 Much like Liang, we wanted a representative piece of China in which we would confront all rural China’s problems, but on a manageable scale. The county that Liang and his colleagues made famous in the 1930s, however, was a very different one from today’s Zouping County, which is made up of the greater parts of three different counties, two of which no longer exist (see map 2.1).3 In the early 1930s, Zouping was composed of 342 (administrative) villages within 483 square kilometers and had a population

30  Gu y A l i t to

of 165,000. Compared to ­present-​­day Zouping, which has 872 (administrative) villages within an area of 1,251 square kilometers and a population of over 650,000, it was quite small. Appendix A summarizes the series of bewildering alterations that Zouping underwent in the early years of the PRC. But Zouping has always contained great diversity: it has had both mountains and plains, both commercial cotton and subsistence millet, both basket weaving and cloth weaving, both bustling trade centers and mountain villages under frontier conditions. Today, Zouping is three times as large as it was in the 1930s and has even greater diversity.4 Nevertheless, within the borders of p ­ resent-​­day Zouping are archetypal areas, which as we will show, illustrate both the continuities and the changing fortunes of different localities. Some of these areas had an ecological handicap while others were blessed with a concentration of resources, which led some to become commercialized while others remained strongly rooted in agriculture. The history of townships and villages provides insights into not only how the past has affected the present but also how the reforms transformed the paths of some of these localities. The fate of different types of locales mirrors developments in Zouping as a whole. This historical baseline underscores how dramatic change has been in different parts of the county and allows us to examine path dependencies that might help explain Zouping’s dramatic rise after the reforms began. While other chapters in this volume examine contributing factors such as the subtle ways in which Zouping’s institutions have adapted to changing policies and circumstances and the shifts in how party cadres are selected and trained to meet the demands of the changing environment, this chapter uses history to understand and underscore the continuities and changes within the county. It reviews the unique social and economic characteristics and conditions of the region to provide a broader context to help us understand recent developments in contemporary Zouping. It addresses the question of whether the county was destined to become successful because of its geographic or resource endowments. It also considers the impact of Liang Shuming’s rural reconstruction work there in the 1930s and asks whether that was a key factor that sets Zouping apart from other counties in China. There is evidence that that legacy created a certain spirit and attitude toward reform that enabled Zouping to respond quickly and well to the new conditions of the reform period.

Zouping in Historical Perspective  31

Historical Legacy and Path Dependence It was during the rural reconstruction era (1931–1937) that the Zouping county seat came by its first trappings of modernization: electric lighting for the major streets, gates, and some buildings; a phone system linking the county seat with the thirteen township offices; some paved streets; the first public schools in the villages throughout the county; and ­large-​­scale water control projects. Although Liang Shuming himself felt that these mere importations of urban technologies were insignificant trifles compared to the work of refashioning the souls of the locals, they naturally left a deep impression on the population. In most of the hundreds of interviews I conducted with elderly residents, the “modern” technologies brought by rural reconstruction were fulsomely praised, even though at the time it was not quite politically correct to do so. Liang’s Rural Reconstruction Institute was multifunctional. It trained ­low-​­level cadres in various techniques of rural organization, education, and reform to be disseminated to other counties of Shandong. It prepared ­high-​ ­level cadres for work throughout China. It provided the laboratory for both groups of students in the county itself. The programs were varied, running a spectrum between the ­quasi-​­utopian “school cum local government” institution that Liang had invented, to workaday technological diffusion and organization of cooperative enterprises. Interviews with a number of Zouping’s aged residents in the late 1980s and early 1990s left an overall impression that rural reconstruction succeeded well and broadly in what it set out to do. Liang’s reforms made the county government more efficient and effective. It made basic literacy and modern knowledge common throughout the county. All interviewees (who represented a broad spectrum of the “masses”) judged the programs to have been of great benefit both to their families and to Zouping. Education, the rural reconstruction program that affected the entire population uniformly, elicited especially high praise. Of all rural reconstruction programs, the dissemination of new products, methods, and technologies through the institute’s agricultural fairs and demonstration farms is the one that left the deepest and most widespread impression as well as laying the basis for key enterprises that would take off during the ­post-​­Mao reform period. Even those who had never raised a pig vividly recalled their first glimpse of the mammoth imported

32  Gu y A l i t to

demonstration ­Poland-​­China hog. People whose families had never raised cotton knew of American Trice. The institute’s agricultural fairs and demonstration farms were obviously quite effective. Interviewees from families that had actually made use of the various new technologies were especially enthusiastic. They praised the dispersal of new technology as the primary aim and value of rural reconstruction. Trice cotton, perhaps because it immediately increased income, was the single most favorably received new agricultural technology. Moreover, as Kay Shimizu discusses in more detail in chapter 3, this cotton became the basis of the Weiqiao Textile Mill, which allowed the county to become one of the richest in China many years later, after the reforms began. The various types of cooperatives (cotton, credit, sericulture, forestry, and so forth) also left deep and favorable impressions. Social and Economic Conditions

One of the ­still-​­lively debates in ­twentieth-​­century Chinese social history is over the existence of a “rural crisis” and “rural immiseration” in the 1930s, which some see as an explanation for the success of the Chinese Communist Party and Mao Zedong’s “rural strategy.”5 Judging from what Zouping people ate and wore, and how they lived, there are no signs of a decline in living standards until the Japanese occupation. On the contrary, living standards and production rose in the 1930s for all classes and in all areas of the county. Certainly, this was the impression of all my interviewees who were surviving natives. Even the worldwide depression does not seem to have affected those cotton farmers producing for international markets. Few people made the transition from coarse to fine grains as staples, but they had begun to eat more wheat immediately before the Japanese war. Between 1938 and 1949, however, living standards and quality of life deteriorated drastically. Many people had less to eat, wear, and use. Old interviewees, especially women, remember eras by what was commonly being eaten in the family, and they thought of the War of Resistance and civil war period as “chaff years.” The causes of the impoverishment were, first, the precipitous decline in labor power during the wars. The great majority of young men were in some military unit (voluntarily or coerced) during at least some part of the wars. The Japanese killed some men and abducted others for labor in Manchuria. Second, the men in arms sometimes did agricultural work, but mostly they required resources and support, which led to onerous tax burdens. During

Zouping in Historical Perspective  33

the Japanese occupation, three separate county governments irregularly taxed most areas of Zouping: a Japanese puppet, the Sixth Regiment, and the CCP. The Eighth Route Army, although struggling continually to enlarge its tax base, had only occasional and faltering access to most areas of Zouping. Because Zouping’s base areas were mountainous, however, it was often forced to make outright grain raids in the bordering plains villages. The Sixth Regiment’s taxes were more regular and always in the form of foodstuffs. Puppet troops or police, when they did venture into the villages, levied the most “irregular taxes” in that they simply extorted or pilfered whatever they could. Although they were the most rapacious, they almost never killed anyone, unlike the Japanese troops, who were less corrupt but more bloodthirsty. The local population perceived a difference, however slight, between the Sixth Regiment/Eighth Route Army and ordinary bandit/soldier extortionists of former times. In most of the county, people felt less resentful about the exactions of the Sixth Regiment because many of their relatives and neighbors were part of it. In the mountains and in the northeastern CCP base areas of the present county (formerly Changshan County), the population felt most comfortable about the Eighth Route Army exactions because their relatives and neighbors were part of it. The puppet and Japanese exactions were universally resented. Third, the amount of pure physical destruction wrought during the Japanese war, and especially during the civil war, was considerable. Buildings, roads, and bridges were destroyed. Crucial parts of the economic infrastructure built during the rural reconstruction years—the phone system, the county seat electrical system, the cooperatives, the mediation committees, distribution systems for new agricultural technologies, and such— were demolished. Even the Rural Reconstruction Institute’s buildings were flattened. In the southern mountains, the Japanese leveled entire villages, in some cases more than once. Fourth, wartime conditions disrupted the market system. The economy was practically demonetized, credit disappeared, and the transportation system was destabilized. Conventional banditry in all forms proliferated. Elites and Mobility (1900–1950)

Zouping had no big landlord families, at least in the twentieth century. At the market, town, and village levels in the 1930s, those families noted for their economic assets had gained them mostly through some form of commercial activity. One landlord family in a mountain village northwest of the

34  Gu y A l i t to

county seat did indeed have a countywide reputation because of the extent of its land holdings, but it too was engaged in trade. There seems to have been little or no tenancy; before the 1950s, the local language literally had no word for “tenant.” Even l­ong-​­term laborers were rare. Landlords relied primarily on the daily market town ­day-​­laborer markets for their needs. (It would appear that individual family holdings never became large enough to make direct management of land unfeasible or inefficient.) The most common family strategy was, after obtaining a certain amount of land, to diversify rather than to concentrate all resources in one form. The two most common modes of diversification were education for some member of the family and petty trade or handicrafts. The Republican period seems to have ushered in an era of remarkably high social and economic mobility. The Zouping case certainly gives credence to the once popular Chinese perception that only three generations were required for a family to complete the ­rags-​­to-­riches-​­to-rags cycle. Few ­late-​­imperial-period “gentry” families of affluence and prestige survived into the second decade of the twentieth century. I have yet to identify even one family of wealth and power in the 1930s that had a degree holder or a degree holder ancestor. Most families of any relative wealth or political influence in about 1945 had emerged sometime in the first thirty years of the Republican period. The wealthiest and most influential families in the county seat area and in the market towns had gained that status in the ­then-​­current generation (usually through trade, officialdom, and/or education). At the village level, the 1,948 families classified as landlord, or even rich peasant, often derived more of their income from some form of nonagricultural activity (which might include work as shamans, brokers, or provision of other personal services) rather than from agriculture. In Republican Zouping, economic status was not tantamount to social and political status. At any time, of course, the two might overlap or one might commute into the other. For example, from the late 1920s to the Japanese invasion, the single most influential political figure in Zouping was a retired military officer who had left the county years before and had made good in the Manchurian army of Zhang Zuolin. He left the military as a battalion commander and returned home in the late 1920s. His status as a ­high-​­ranking officer immediately made him politically and socially important in the local area. Yet it was not until he scored big with a public works boondoggle a few years later (the opportunity for which was due to

Zouping in Historical Perspective  35

his status) that his family became notably wealthy. With the Japanese war and the rise of various new local armies and their leaders, the family sank back into oblivion. The most important factors in any individual’s economic rise or decline were differential reproduction and partible inheritance. Of the interviewees experiencing significant economic decline from their father’s status, 80 percent of them seemed to have become impoverished due primarily to their number of brothers. Drugs and gambling were the primary factor in a small number of cases. These problems, especially the gambling, most often led to a complete disintegration of the family rather than to a mere decline. Many men with gambling debts simply hightailed it for good, abandoning their families to the tender mercies of kin. Kidnappings and shakedowns were significant factors during the period 1911–1930. Even in Zouping, in the core economic area of North China, kidnapping and other forms of outright extortion by bandits, soldiers, or officials tended to check the concentration of wealth. These practices ceased during the experimental county government and the Rural Reconstruction Institute in 1931–1937 but resumed during the Japanese occupation. Other factors having an impact on mobility, although less direct, were education, administrative/military skills, and personal connections. Education or literacy was one of the few common characteristics of individuals who rose to prominence politically during the Republican decades. Basic literacy was surprisingly widespread, reaching somewhere close to 60 percent of all males in 1937 (in those villages of my interviewees, at any rate). A family’s economic resources at the time its children were of school age, its overall survival strategy, and the distance of the village from market towns were all factors in deciding who became literate. Surprisingly, connections seem to have been more important than education. Connections of any kind still determined more of an individual’s future than any other factor. But kin relationships and neighborly relationships aside, most connections were to be had through an outlay of family resources. Therefore, the ­resource-​­poor family was usually the least connected. Finally, throughout most of the Republican period, military skills or administrative skills, together with connections, seem to have been the basis of many ­fast-​­track careers. But skills in traditional Chinese military arts or strategy were not of much use in the Republican period. There were many holders of lower military degrees from the Qing, but none distin-

36  Gu y A l i t to

guished themselves militarily or politically in the Republic. For example, throughout the Republican period, Zouping had a distinguished master of the traditional military arts. Noted throughout the county for his ability to both break and set bones, he even affected some scholarly interests and published a book of excerpts from the classical texts on the martial arts. But he was unable to parlay his reputation into a position of command in either the rural reconstruction militia or in the a­ nti-​­Japanese forces that arose with the Japanese invasion. He was even traditional enough to get himself martyred early in the war during an attack on the Japanese forces outside the west gate of the county seat.

Intraregional Developmental Spectrum of Today’s Zouping The history of Zouping shows a significant amount of diversity, which continues to manifest after 1949. Data do not exist that allow us to partition ­present-​­day Zouping into true historical ecological microregions, but a clear pattern that is pertinent to ­present-​­day economic developments emerges from using data from the three old counties (Qidong, Zouping, and Changshan). The fates and geography also had different destinies in store for the three counties. The wealthier and more urban Changshan (and Zhoucun) would be the foundation for the Chinese Communist base area during the Japanese war, which meant that decisions on resources in the 1950s benefited the Changshan portion of Zouping. The entire area of p ­ resent-​­day Zouping is within the “inner core” (the most commercialized and developed) of the North China region of William Skinner’s marketing and regional systems models (see map 2.2). That is, it is the more urbanized area with higher population densities, higher than average incomes, and a generally higher concentration of resources such as transportation nodes, capital investment, and handicraft development. The population is also relatively “­gentry-​­rich,” with higher education levels and more degree holders.6 Within this inner core, we can further differentiate among the historical three counties that make up p ­ resent-​­day Zouping. One crucial ecological challenge shaped the county—the Yellow River, which is so named because of the enormous amount of loess soil that fills its waters. The sediment raises the riverbed until it is above the level of the surrounding countryside, but enormous differences between the summer and winter levels make it difficult to build adequate dikes and embankments to

Zouping in Historical Perspective  37 Yellow River (Huang He)

0

Jinan

5

10 km

Qingdao Inner Core Outer Core N

Near Periphery Area of Zouping Maps

Map 2.2. Economic Regions of Shandong, Late Nineteenth Century

contain it. The disastrous consequences when embankments have collapsed gave the river its other name, “China’s Sorrow.” During the period 1851–1855 the Yellow River returned from its s­even-​ ­hundred-­year-​­old channel south of the Shandong Peninsula to an unstable northern channel flowing north to the Daqing River and into the Bohai Gulf.7 From that time on, it has flowed by and into northwestern Qidong County. The Xiaoqing River and the Xinghua Canal flow through Zouping, and the former now forms part of its northern border. These waterways too are given to flooding, but not on the same scale, or with the same frequency, as the Yellow River. Note that this subregional c­ ore-​­periphery spectrum does not follow the usual pattern of increasing densities of resources away from a mountain chain to the river valley floor. The three counties present a northwestern to southeastern spectrum, with gradients of increasing densities of resources as one moves toward the mountain chain and away from the rivers. This was the situation in the late nineteenth century, and it remains today. As one moves from the flood plains of the Yellow River southeastward, population density increases (see map 2.3). Per capita incomes, education levels, and infrastructure follow roughly the same pattern. The impact of the Yellow River weighs heavily in the history of old Qidong County, which is an archetype of the ecologically challenged area of Zouping.

38  Gu y A l i t to

River Yellow He) g n (Hua

Old County Borders Contemporary Zouping County Borders 0

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10 km

ing

Riv er

N

Xi a

oq

Population per Square Kilometer 300–450 450–600 600–750 750–900

Map 2.3. Population Densities in Zouping County, 1985

Related but significantly different from the environmentally unstable old Qidong region was the mountainous southern region of the county. A universal characteristic of mountain villages has been poor soil quality and poverty, as well as independence, resilient toughness, and conservatism. In Zouping mountain villages (as elsewhere) the relatively poor agricultural environment led the residents to develop nonagricultural sidelines such as “mountain products” (medicinal materials, epicurean delicacies, furs, certain fruits, and other s­ mall-​­bulk, h ­ igh-​­value goods). By late imperial times, with their increasing populations, many villages were forced by circumstances to export the labor of their surplus male populations. This emigration often took the form of itinerant repairman, or tinkers, often with metalwork specialties. Nonmountain villages with marshland or other poor agricultural environments operated by the same logic. By the time the ­post-​­1979 reforms began, the transportation infrastructure had improved somewhat, and mountain fruit was produced for

Zouping in Historical Perspective  39

market. Because of the old metalworking tinker tradition, some mountain villages established foundries and began exporting products instead of labor or fruit. Continuities are especially clear when we examine the first wealthy households in the county (which appeared in about 1985).8 These households appeared in clusters in the same village. As one would expect, suburban villages of the old county seats have a few clusters, but more clusters appeared in mountainous areas or marshy areas. The enterprises from which these households made their fortunes are often those for which there are traditions, such as the enterprises of foundries and woodworking. There are also innovations such as chicken farming, but again, the continuities are striking.9 One End of the Spectrum—Ecologically Handicapped Qidong

With the shifting of the Yellow River, Qidong became a harsh, unstable environment that was more vulnerable to potentially devastating natural disasters (and less resilient to social upheavals) compared to neighboring Zouping.10 In the 1898 flood, the Qidong county seat itself was literally obliterated, so the county government was relocated in Jiuhu (see map 2.1), the ­next-​­largest market town in the county. Most disastrous storms, especially the sometimes ruinous hailstorms, come from the northwest and travel toward the southeast and strike Qidong more often and with more force. Even though the soil of Qidong’s plains and its rainfall are somewhat better than in Zouping and Changshan, which are mountainous in sections, Qidong never developed large market towns similar to those in Zouping and Changshan. Striking, and typical, is the fact that Qidong also suffered most from brigandage and rebellion, again a classic feature of China’s peripheral areas and precarious environments, as reported in this excerpt from Qidong xianzhi (Quidong County gazeteer): “[Undeveloped commerce] business had begun to recover in 1921. Unexpectedly in 1928 there were several bandit and military occupations one after the other, and so the economy again went into a slump.”11 None of this is strange for peripheral regions during that era, but Qidong was an ­inner-​­core economic area. One of the most savage of the bandit incursions mentioned above originated in Qingcheng County, which surrounded the t­ rans-​­Xiaoqing River part of old Zouping. Yet the bandits did not strike the closer Zouping county seat or its market towns but instead

40  Gu y A l i t to

struck at Qidong. These various depredations were similar to the Yellow River floods in their unpredictability, horror, and apparent relationship to the local ecological arena. The administrative superstructure of the Qing dynasty or the Republic never seemed to take cognizance of its plight, in that it was never designated a ting or an “autonomous zhou.”12 The various scourges of Qidong (and to a lesser extent of Zouping, and still less of Changshan) obviously were all related to the unpredictability of the Yellow River, which could not be tamed for irrigation or controlled for floods. Some of these were directly related to the semioccupied polder lands of the rivers, and postflood lands that produced locusts and thus the high frequency and severity of this plague in Qidong. The low level of commerce and handicrafts, and the consequent low standard of living, must have led to a relatively poor diet and poor sanitation, which in turn intensified epidemics. All this was exacerbated (and partly caused) by banditry and a lack of public security. Such factors discouraged ­long-​­term financial or social investment because it was seen as a risky proposition. These conditions were, to a lesser degree, also true of the areas adjacent to the Xiaoqing and Xinghua Rivers. The importance of the Yellow River project during the reform period is thus easily understood in this historical perspective. These mutually reinforcing factors made Qidong, and some of northern Zouping, generally less resilient to the various natural and social setbacks. A good example is the destruction of Qidong’s largest market town (the county seat) by flood in 1892. Commerce remained depressed until 1921, and with the increase in banditry in the late 1920s, the town went into a decline. Only in the 1990s did Qidong begin to experience a great transformation. Government investment in education and infrastructure played a part, but the chief agent of this change was the Zouping County Weiqiao Textile Company Limited, China’s biggest, and perhaps the world’s biggest, manufacturer of cotton textiles. Here one sees links back to earlier developments and the tradition of cotton cultivation in the county. The rural reconstruction era’s most successful cooperative enterprise was cotton transportation and marketing. Even in the 1980s, there had been ­small-​­scale cotton ginning operations, as cotton was a traditional crop of the area. The Zouping County Weiqiao Cotton Spinning factory, established in 1989, was a small operation involving a handful of workers. It was highly suc-

Zouping in Historical Perspective  41

cessful, along with most industrial enterprises in the county, in the 1990s, but real transformation took place early in the ­t wenty-​­first century with heavy capitalization from private entrepreneurs. Within a short time, the Weiqiao Group was producing 30 percent of the world’s textiles, and Zouping became a f­ ront-​­runner among industrial counties nationwide. Weiqiao Textiles is now a name known throughout the world. Weiqiao is located in the old Qidong County part of Zouping! Investment and industrialization finally overcame Qidong’s ecological handicap. The Other End of the Spectrum— ­R esource-​­R ich Zouping and Changshan

If Qidong was on the peripheral end of the spectrum, on the reverse end, with a maximum concentration of resources and at the center of gradients, is Zhoucun, in the former Changshan County. Unlike Qidong, Zouping and Changshan seem to have been less vulnerable to economic downturns. During the worldwide depression of the early 1930s, the market for silk declined precipitously just as Japan was dumping its production on the world market. This led to economic disaster in many areas of China, primarily in the south. Zhoucun, a center of silk trade and manufacture, however, seems to have been relatively unaffected. In Zouping, which produced raw silk, the effects were also not obvious. Indeed, throughout the 1930s a number of money shops and banks continued to operate in the county seat, and the county’s textile exports, especially cotton exports, increased dramatically. It also seems clear that up until the Japanese invasion in 1937, times were good in Zouping, with the standard of living increasing dramatically, as we indicated earlier.13 For the past few hundred years, Zhoucun had been the major regional city in this area and now is the major part of a flourishing commercial and industrial center called Zibo city. From around the middle of the eighteenth century to the 1940s, Zhoucun was the center of commerce and manufacturing in central Shandong. Since the Zhoucun area itself is quite mountainous to the southeast, it would not appear to be a natural geographic location for a nucleus of vast trade and transport networks. How did Zhoucun develop into the key to the region? Its very name, “Zhou village,” indicates clearly that it was not always an urban entity. By the nineteenth century, most of Chinese society had experienced over

42  Gu y A l i t to

a millennium of rising commercialization, expanding production, and even technological progress. The only disruptions were the periods of the dynastic interregnum in the middle of the fourteenth century (the Yuan and Ming dynasties) and the middle of the seventeenth century (the Ming and Qing dynasties), which devastated and indeed depopulated some areas. A simple and satisfactory measure of intensified commercialization is the increase in the number of periodic market towns. In the area of ­Zouping-​­Qidong-Changshan Counties, there seem to have been two definable periods of m ­ arket-​­town multiplication, from the late fourteenth century into the fifteenth century, and from the late fifteenth century into the sixteenth century. These were also periods of immigration into the area. Especially in the late fourteenth century (the early Ming), the government encouraged migration with programs designed to move populations from one specific area to another. The Zouping area was targeted to receive population. The government provided some immigrants with privileges such as exemption from taxes, or equipment such as seeds and agricultural tools. Although this eastward migration into the Zouping area was minor compared to the overall westward pattern of migration encouraged (and sometimes forced) by the Ming, the influx of population produced a growth of market towns. The heaviest migration was in the first period, notably from Zaoqiang, just across the border in Hebei Province (see map 2.3), and from Hongdong County in Shanxi Province far to the west. The earliest immigrant lineages often resettled the most desirable areas and gained social and political prominence. Some immigrants founded market towns, which increased both their prestige and their sources of income. Some immigrants squatted in marginal, uninhabited lands, which they carved (over several generations) into settled, prosperous villages. A large body of Zaoqiang immigrants, for example, with descendants still residing in today’s Qingyang xiang, moved into the area in the early Ming, when it was just a swamp on the edge of a mountain range. They proceeded to drain and dike the swamp, while clearing and cultivating the mountains.14 Of the various lineages that were part of this migration, most famous was the Li family, emanating from Zaoqiang and settling in various counties in the region of Jinan. The branch that settled in the Changshan County village of Zhoucun became the most renowned. Zhoucun’s development is another example of how history shaped the present.15

Zouping in Historical Perspective  43

At the beginning of the second upsurge of commercialization in the middle of the seventeenth century, the major ­east-​­west traffic from the provincial capital at Jinan to the eastern peninsula ports shifted southward away from the road through the Zouping county seat to a road around Baiyun Mountain. This positioned Zhoucun as the major interior trade center for all of Shandong. Today, the railroad still goes by Zhoucun, but the new ­Jinan-​­Qingdao superhighway (possibly the best such road in all of China at the time it was built) is located closer to the old t­ welfth-​­century route;16 it goes through Zouping and north of Zhoucun. The new ­high-​­speed rail, which is scheduled to be completed by 2018–2019, will go through Zouping via Xidong and Haosheng. Still, for the past several centuries, Zhoucun seems to have been the center of a series of cycloidal gradients of the concentration of resources in the area. By the twentieth century, even such “resources” as foreign missionaries were concentrated there. The English Baptists, for instance, first built a church in Zouping in 1886. In 1903 they opened a ­Western-​­style medical clinic. In 1905 they opened a high school. But in 1913 and 1915, they drew back to Zhoucun. Eventually, however, they did return to Zouping, not only to their church (now a protected national historical site) but also to the countryside in tent revival circuits. The only time other missionaries appeared in Zouping County town was during the period of the Jade Emperor Temple Fair (the annual medicinal herbs market) on Mount Huang, when Zouping town was at least temporarily higher in the hierarchy of central places than Zhoucun.17

Diversity and Continuity at the Village Level A primary conclusion of the above thumbnail review of the different townships is that historical continuities have tended to affect p­ resent-​­day economic developments. The same is true for villages, as we will see below. The two villages of Fengjia and Dongguan, both of which have figured prominently in the research done by American scholars on Zouping, present us with two additional archetypes: the agricultural heartland and the commercialized extraportal (suburban) village. Together, along with Qidong, the ecologically handicapped prototype, their histories constitute a typology of sorts for Zouping localities—of how the past has affected the present. Their fates mirror developments in Zouping as a whole.

44  Gu y A l i t to Fengjia Vill age—An Agricultur al Heartl and Prototype

Fengjia is the rural village where foreign researchers were first allowed to live for long periods. It was not representative of Zouping’s villages in that it had better cleanliness; better housing; more paved surfaces; fewer rats, flies, and mosquitoes; and, of course, better accommodations for visitors. ­More-​ ­affluent villages were available, but none were as clean and well ordered as Fengjia. Nor did any village party secretary have the prestige and power of Fengjia’s party secretary. Foreign visitors to Zouping in the early 1980s (Australians, French, Hungarians, Sri Lankans, British, and Americans) always had their “rural village visit” at Fengjia, no doubt for the same reasons. Fengjia also best represents the agricultural heartland mentality of the area. The village was, and is, dominated by the Feng lineage (close to 80 percent of the population), among an assortment of Zhangs, Zhaos, Mas, Lis, and other surnames. Within that dominant Feng group, however, were distinct, highly competitive branches. Fengjia’s problem after the war was, for want of a better word, solidarity. From at least the 1920s to the late 1940s, the village chief was from a family outside the lineage.18 This ­long-​­lived headman was neither rich nor well educated, but he was repeatedly elected because he was “impartial” (that is, he was strong minded and not a member of the Feng lineage, so he was not bound to the gnarly ties of familial loyalty). The first two village headmen appointed by the Communists were unabashed rogues,19 but they too were from outside the lineage. Before the war, Fengjia, the biggest village in the marketing area, was booming. It was the most populous village in the township and was only 2 kilometers away from the higher periodic market town of Sunzhen (see map 2.4),20 which was the cotton collection depot and site of the rural reconstruction Cotton Transportation and Marketing Cooperative. Naturally, Fengjia produced a large cash crop of cotton. At the time, Sunzhen’s periodic market was as mighty as that of the county seat (Zouping zhen 镇), so Fengjia was in the same position economically as a suburban village to a county town (Dongguan, for instance). A striking example of this economic advantage was a successful side venture. One household of poor peasants had more labor than land, so they decided to go into a sideline business of making wheat cakes (called shaobing), which, because of Fengjia’s location, they could market directly in Sunzhen. The business blossomed into a “brand” that was famous throughout the marketing area.

Zouping in Historical Perspective  45 Majia

Tengjia

Cuijia

Yanfang to Hushanpo to Changshan Dongguan

to Zhoucun

Anjia Huangjiaying

Taishanxingkong Huangshan

County Government Buildings

Major Road

Rural Reconstruction Institute

Cart Road

City Wall and Moat

Footpath

Village Area

Huangshan Mountain

Outlying Buildings 0

1

2 km

Map 2.4. Zouping County Town and Nearby Villages, ca. 1937

A collective popsicle factory provides a more recent example. When I first visited (summer 1986), the ­extra-​­village retail sales force for the village popsicle factory (later discontinued) consisted of a teenager equipped with a bicycle with a box attached on the back. Every hour or so, I would see him return from Sunzhen, load a new box of popsicles, and again pedal back to Sunzhen for more h ­ ot-​­weather sales. Not only cold popsicles but also hot bread could be marketed in Sunzhen from Fengjia. Fengjia’s proximity was also important for personal relations networks that were utilized to arrange apprenticeships for surplus male labor. Fengjia’s innermost identity, however, was that of an agricultural village

46  Gu y A l i t to

with both a solidly traditional mentality and material form. The denouement of the shaobing household story is illustrative. After building up a prosperous business, which provided the family with funds to purchase as much land as it could use and a higher education for the youngest son, the family did not continue to transform itself into a “bourgeois” business family and move to Sunzhen but went out of business and farmed its new land. The mentality of the agricultural heartland is different from that of mountain villages or market towns, despite its proximity to the market town. In 1935 Zouping ­land-​­tenure patterns revealed a diamond shape in Fengjia; there were eleven landless households and thirteen households holding 60 to 200 mu. There were only four natives of the village living elsewhere, and there were no “legal domicile households” (that is, outsiders) in residence at all (unlike in 80 percent of other Zouping villages). This was because Fengjia was at its core a heartland agricultural village with few refugees and no purely commercially minded residents. The ­shaobing-​­making household mentioned above is a perfect illustration. After succeeding in creating a booming commercial enterprise, it never established a separate bakery with nonfamily workers and expanded operations. Rather, after amassing enough money to purchase more land, it returned to farming.21 The Japanese invasion had some unifying effects; besieged on all sides by various hostile forces, the villagers had to act in concert. Again, because of its size and its proximity to Sunzhen, the village became an important stronghold in the area connected with Sunzhen. The village walls were built up and two moats dug around it. Thus, it became a closely fitted component of the old militia network, much diminished and beleaguered, that held old Zouping together against Eighth Route Army expansion from Changshan. From 1939 through 1948, the village, like many others, was engaged in civil war with both the Eighth Route Army and other outside forces. Until the fall of Jinan and the end of the civil war in the area in 1948, the local population considered the various liberations of Fengjia village by the People’s Liberation Army to be invasions by an outside force. At that point nothing was left of the original militia/government structure. The militia had become a junior partner to the larger and b­ etter-​ ­equipped central government forces that had come and gone several times. Leaders who had not already been killed would soon be executed. With three different CCP “liberations” of the village and land reform,22 the village again became an internal cockpit, but combat took the form

Zouping in Historical Perspective  47

of class labeling. Fengjia l­and-​­tenure patterns remained diamond shaped even though some landless and poor peasant households had moved up to ­middle-​­peasant status (which, of course, they would keenly regret), some refugees had arrived, some had been killed, some households had declined, and some had migrated elsewhere. The landlords, of which there were sixteen household heads, were almost all of the Feng lineage, as were the rich peasants. Most telling, as of 1964, after many executions and imprisonments, there were still eight households with living “counterrevolutionaries” and one “reactionary.” Some of these families were infected with counterrevolutionary sins through the distaff side; older women apparently often felt more confident (or were more naïve) in speaking their minds than men. In any case, through the years 1947–1955, the tensions over class labels continued to grow, as did the population. It would require more fundamental change before Fengjia could get back on the developmental track of the 1930s. What was needed was a strong, unifying hand, but one wielded by someone who was unstained by the recent past and who had more legitimacy than a simple party appointment. In the late 1950s, the eventual savior stepped into the village leadership. He finally retired in 1996. Truly made to order for the task, he came from a family that had produced the village’s highest degree holder (albeit a military one) in the late Qing, but precisely because the family was doing so well early in the century, it produced many sons, which left his own father with little land as inheritance. That, together with his father’s drinking and general bitterness, had forced him to leave the village for Jinan as an apprentice in a small mirror factory after the Japanese surrender.23 He returned in 1953, fully proletarianized and looking for a calling—a Feng who had been absent during the “unpleasantness” of the late 1940s and early 1950s, and so not part of the resulting enmities and feuds. He was of good class background yet from one of the village’s formerly most prestigious families. Moreover, he was powerfully built, had a deep and sonorous voice, and definite charisma. Upon his return from Jinan, he was first a member of the village militia, which was his entrée into the political world. Joining the party in 1955, he quite naturally ended up as the party secretary. He kept his nose clean, not dallying with women in other households, and was relatively fair and, of great import, tried not to take directives from the party’s upper level too literally. One other instance of fortuitous timing for him was that

48  Gu y A l i t to

the “Four Cleanups” campaign (1963–1966) work team reached Fengjia village extremely late, in the spring of 1966. Elsewhere in Zouping, party secretaries were taken down by factions during the course of the ­criticism-​ ­self-criticism process.24 By June 1966 the work team knew that something was brewing (namely, the Cultural Revolution), and their minds were certainly not on the business at hand. Instead of staying around to the very end of the process, they quietly disappeared and returned to their unit. Therefore, on the eve of the Cultural Revolution, Fengjia remained tranquil and solidly supported its party secretary. Political conditions in most other villages had been severely destabilized by the Four Cleanups campaign. During the late 1960s, when only 2 kilometers away actual military engagements were being fought among factions, Fengjia remained calm and stable. True, the smashing of the “Four Olds” did proceed, and some ransacking of landlord rich peasant households took place, but the village had indeed finally found its solidarity. Any adolescents from Sunzhen who came over to “make revolution” were given to understand that if there was going to be any revolution, it would first be visited upon their persons. Not many appeared. In the early 1970s, when the Cultural Revolution was still taking its divisive and costly toll in other places, the party secretary utilized the t­ hen-​ ­current line for the village’s own benefit. The unifier had the villagers build the ­labor-​­intensive agricultural and other infrastructure (irrigation and drainage ditches, realigning and leveling of fields, and so forth) upon which its outstanding agricultural success of the late 1970s was built. It became, in miniature, a highly successful authoritarian regime for mobilization, or a dictatorship of development. The village’s standard of living started to rise, along with the secretary’s prestige and connections. In the 1980s there followed construction of uniform and tidy redbrick housing, road paving, TV, and other improvements. Enter the foreign visitors.25 Dongguan—the Commercialized Extr aportal Vill age Prototype

Like Fengjia, Dongguan has achieved its destiny, but one in clear contrast to that of Fengjia. Today, Dongguan is a prosperous “village” that, as the epicenter of industrialization under the reforms, has vigorously flourished; its past has impelled it to its present, much like Fengjia’s has. The total available agricultural land in proportion to the population in Dongguan was

Zouping in Historical Perspective  49

exceedingly limited. This is akin to a mountain village, or a bottomland village with alkaline soil; such villages are often more commercially inclined simply because their agricultural resources are so limited. Because of this, as well as because of its location and the nature of its immigrants, Dongguan was always outward looking, on a continual search for opportunities. Fengjia, as befits a heartland village, was, and is, more inward looking. The first and most obvious factor for Dongguan’s economic success was that it was a suburban village to the county seat. The other highly industrialized villages in 1980s Zouping (the old Changshan county seat’s extraportal villages of Dongguan, Nanguan, and Henan) are also suburban villages of a former county seat.26 Yet the old Zouping’s Dongguan has outclassed the others. Why? There are many different historical elements or continuities. First, there is the simple fact that in 1580 the Zouping magistrate decided that he would rebuild the county seat’s wall for the ages.27 (That stone wall was still in place in the 1950s.) By the late nineteenth century, the population had quadrupled, the area was undergoing rapid commercialization, and, of course, the county seat, contained by the wall, was still exactly the same size. The suburban villages around Zouping took over most of the commercial functions formerly in the county seat. The Zouping town periodic market was held alternately in Dongguan and in the western suburb of Xiguan. The major ­east-​­west road, running through Zouping town and Dongguan (see map 2.4) to Changshan and beyond, was the official imperial post road during the Qing dynasty. The more important, b­ etter-​­built, and wider road, however, was the major ­north-​­south artery that came from Sunzhen and the north, passed east of the county seat hard by Dongguan, and continued on to Zhoucun and the east. In the 1930s, this road was the only motor road in the county. Thus, a most important element in Dongguan’s history was simply its location. Of course, Dongguan could only expand eastward, and had grown into the only major crossroads of the two transport arteries of the area. By the 1930s, it appeared as though the county seat itself was shifting eastward. In 1931 Liang Shuming’s Shandong Rural Reconstruction Institute, and the actual center of authority and government, was sited in Dongguan. Although not as large at that time as its western equivalent, Xiguan, Dongguan stores, stalls, stables, and stands lined the road. Nearer the crossroads were small inns catering to the carters, wheelbarrow men,

50  Gu y A l i t to

tinkers, merchants, and other travelers. Many households lived by weaving (a skill that members had learned as apprentices in Zhoucun), and by “sideline occupations”—petty trade, handicrafts, and other services that were actually their major occupations. Dongguan was outward looking because of the nature of its population as well. Suburban villages typically provided quarters for refugees, itinerant peddlers, and other peripatetic elements of the population. In Dongguan refugees and other immigrants were especially prominent. The refugees were involuntary immigrants, with all the inherent qualities and outlooks of voluntary immigrants greatly intensified. Most were from families totally bereft of resources except their labor power and entrepreneurial intelligence; their experiences had sharpened their survival strategies and instincts. They were perforce h ­ igh-​­risk-taking entrepreneurs. Refugees came into Zouping during the period 1920–1950 mostly from the east, and because of the roads, they often came to Dongguan first. At the successful end of the spectrum were the extremely wealthy business families in Dongguan who had started as day laborers, transport workers, petty traders, or craftsmen (or whose older generations had done so). At the other end were those households that remained at the bottom, or that had dropped off the demographic map entirely. In 1943, for example, a severe drought in Boshan County, east of Zouping, resulted in an influx of utterly impoverished households, many of which were forced to sell their daughters.28 During the period 1927–1934, the influx of refugees to Dongguan came through the offices of one Liu Heiqi (Liu of the Black Seven), a ­bandit-​­militarist boss who literally ruled, and certainly ruined, much of the mountainous area of Laiwu, Yishui, Rizhao, Mengyin, and Feixian Counties. These refugees too came from the east, and might well be considered political as well as economic refugees. It appears that over the first half of the twentieth century, Dongguan’s persistently newcomer population generally did better and better economically. This does not diminish, of course, the bitter suffering that many endured. One sad old resident whom I interviewed in the late 1980s had spent his entire youth wheelbarrowing vegetables between Dongguan and other market towns. Petty trade did not always lead to business empires. There could be no greater contrast to Fengjia than Dongguan. Consider first the agricultural land issue. There simply was no agricultural land left in Dongguan. All the land owned by villagers was chahuadi—that is, sur-

Zouping in Historical Perspective  51

rounded by the fields of other villages. Some of Dongguan’s fields were over two miles away. Land was relatively expensive and of poor quality. Dongguan had the lowest m ­ an-​­land ratio in the old Zouping County, and the highest ratio of landless households. In contrast with Fengjia’s d ­ iamond-​ ­shaped land tenure, Dongguan’s was a definite pyramid, but a short and flat one. In Dongguan’s 202 households, there were 99 landless households, and the two largest landlords held just over 50 mu. In Fengjia, there were no “foreign households” and only 4 native males living outside the village in 1935. At the same time in Dongguan, there were 34 foreign households and 64 natives living elsewhere. There was almost no lineage identification in Dongguan. The sole exceptions were two completely unrelated groups of Zhang households, the “northern Zhangs” (north of the main ­east-​­west road) and the “southern Zhangs” (south of the road). But they were a small minority among the group of unrelated, m ­ ixed-​­surname households. The operational kin unit was not the extended family, much less the lineage branch, but the nuclear family. Another pronounced difference is harder to define but is perhaps related to the absence of lineage. In a way, the class designation system was not taken as “seriously.” Some households were certainly designated as landlord and rich peasant because of the ratio between their landholdings and number of household members, and because they had hired help. Yet the wealthiest households had gained their wealth in business and were not much involved in agriculture. The premier family, the Shangs, had not only a store on the main road but other stores in Zhoucun and Jinan. Their ancestors had come to Dongguan as refugees and had become businessmen on a rather large scale by the 1930s. A comparison of the 1964 household registration books of Fengjia and Dongguan reveals yet another somewhat strange contrast. Fengjia’s book followed the practice of many villages in designating dependents’ class status as the same as that of the household head,29 thus creating the usual class system used in China for three decades. Dongguan’s book tended to not pass the class designation on to the younger generation. Dongguan also had none of the traditional listings for the women: maiden family surnames followed by the character shi and no given names. Individual women’s given names in places like Fengjia were limited to a few, but Dongguan’s women had a great variety of given names.30

52  Gu y A l i t to

Of course, Dongguan did have some households that farmed for a living. They tended to live on what was called the “back street,” away from the roads. Those households near the roads were engaged in commerce, handicrafts, services, and so on, with farming as a sideline. Later, in the 1950s and 1960s, this difference became apparent. Those production teams near the roads had low agricultural production, while the “back street teams” did not do too badly. Like Fengjia, Dongguan returned to its 1930s position in a difficult and uneven way until the late 1970s reform period. When the People’s Republic was founded in 1949, there was almost nothing left of Dongguan (or, for that matter, of the county seat either).31 It had suffered aerial bombing, artillery and mortar fire, and over a decade of constant strife. During the civil war, more than a hundred buildings had been dismantled to provide a field of fire from the Zouping town walls, and Dongguan had, for the first time, a sizable ­out-​­migration.32 In the early 1950s, small business enterprises were still allowed by the new government. The 1956 agricultural collectivization into ­high-​­level cooperatives—openly coercive and encountering almost universal ­foot-​ ­dragging—seems to have had only negative effects and to have led to no rise in living standards. In the late 1950s, government order brought an end to individual household enterprises. The ­A nti-​­Rightist campaign of 1957 took an especially heavy toll in Dongguan. In 1958 the communization movement squelched the village’s persistent entrepreneurial spirit as well as led to the 1960–1962 famine, which was incontrovertibly the worst Zouping experienced in the twentieth century, and probably the worst ever. Older people died in droves and, as obvious from the county’s recent ­age-​ ­distribution statistics, few children were born.33 In organizing the communes, however, the bureaucracy redrew some village boundaries and consolidated their agricultural land. Dongguan, with its high ­man-​­land ratio and its f­ar-​­flung chahuadi, was given 1,900 mu of land from the next village to the west, Qilipu, and 300 mu from the village to its north, Tengjia village. Should the opportunity arise, Dongguan then had space to expand. At this point, the “back street households” were at an advantage. Because of their household traditions, not as many of them starved during the Great Leap Forward famine as did the “front street households.” As one would expect, however, during the short period of political relaxation

Zouping in Historical Perspective  53

of 1961–1964, once again the starving households’ entrepreneurial vitality burst forth into the t­hen-​­permissible sideline enterprises. During the Cultural Revolution, of course, Dongguan’s underlying ethos was once again quashed in a highly dramatic and effective manner, but not extinguished. With the reforms more than a decade later, it reemerged with a vengeance.34 Dongguan also benefited from a savvy unifier in the person of its party secretary, who also possessed a decidedly entrepreneurial cast of mind. It was he who managed the return of Dongguan to its traditional roots during the reform period. Beginning around 1979, people started making the dietary transition from coarse to fine grains. With the galloping prosperity and economic expansion of the 1990s, there has been massive construction of new housing (public and private), roads, and public works such as parks and recreational facilities. It was during this period that Dongguan took off and over time totally outpaced Fengjia as an economic powerhouse, not through agriculture but through rural industrialization, about which much has already been written.35

Concluding Observations When the first group of US academics arrived in Zouping in 1987, they found the three images of Zouping’s past quite intact. The old Qidong County portion was still clearly poorer and less developed than the rest of Zouping County. One participant interested in public health compiled a preliminary epidemiological map of the county, which clearly indicated that old Qidong was still the least healthy area in which to live; third world kinds of disease such as diarrhea were especially prevalent. It contained no economic star villages and no industry. Through the beginning of the ­twenty-​­first century, old Qidong lagged behind the rest of Zouping. Fengjiacun, the foreign academics’ ­long-​­term residence village, was indeed the shining star among primarily agricultural villages. Dongguan was the rapidly expanding industrial and commercial center. All of Zouping county seat area could be viewed from atop Mount Huang, which is located to the south. In 1986 the mountain had neither vegetation nor smog so that the picture below was crystal clear, and very lopsided. To the west and north, there was nothing. Buildings appeared to the east, which was Dongguan. As the years passed, there was more and

54  Gu y A l i t to

more development to the east, while the other areas remained roughly the same, so today the view from Mount Huang still shows the concentration of buildings to the east of the old county seat. During the 1990s, a few other villages to the north did explode industrially, most notably Xiwang village, with vegetable oil production. Obviously, Zouping as a whole also continued expanding and industrializing. Indeed, it was during this period that it gained a national reputation for economic success. One of the factors was Zouping’s location astride the early J­inan-​­Qingdao superhighway. Minor factors included its early contacts with foreigners. Our historical account of the county makes clear the dramatic transformation that has occurred in the county, especially in the three images of Zouping that we used to characterize this particular part of China. While there is obviously tremendous variation nationally, broad changes have taken place as a result of the ­post-​­Mao reforms in Zouping. Agriculture is no longer king. Industrialization is, but even that is changing as suggested in the introduction to this volume. Traditionally poorer areas have been much improved by outside investment. Urbanization continues apace. Of course, as with China in general, this development comes at a cost, and the view from atop Mount Huang has become obscured by smog. While there has been significant change in all parts of the county transforming the three images of the county, the point this chapter makes is that none of these places were necessarily destined to be economically successful during the reform period. The most successful of the townships today, which is home to the world renowned Weiqiao Textile mill, was the most challenged historically and only conquered its ecological handicap two decades after reform and opening up began in China.

Appendix: Administrative Redrawings Because administrative units determine so much of the record of the past (both in memory and on paper), some attention to the redrawings of administrative borders is necessary. Zouping County is now made up of the greater parts of three different counties, two of which no longer exist (see map 2.1). It would appear that the general region was subjected to more major redrawings of administrative borders and rearrangements of administrative hierarchies in the early years of the PRC than most of China during

Zouping in Historical Perspective  55

the same period. Table 2.1 and the list below summarize the series of bewildering alterations that Zouping underwent in six years. •

•

•

•

•

•

•

•

• •

•

In 1953 the old Zouping was divided into xiang (in this case meaning administrative villages) under the old qu (district or wards). Its 356 natural villages were newly divided into five wards (qu) and ­fifty-​­six townships (xiang). Changshan County (to the northeast of Zouping, with more than five hundred villages) was divided into eight wards and ­eighty-​­six townships. Also in 1953, both Zouping and Changshan were made part of the Huimin administrative district. At the same time, the n ­ ow-​­defunct county of Qidong, to Zouping’s west, had its four hundred–some natural villages divided among six wards and twenty townships. In April 1955, the ­now-​­defunct Zichuan County’s sixth qu (today’s Linchi xiang) was made part of Changshan County. The eight villages of the Tanzhang and Yazhuang xiangs (part of Zhangqiu County) were made part of Zouping. In March 1956, all of Changshan County was added to Zouping, and the former was abolished. Also in 1956, Qidong and Gaoqing Counties were combined and renamed Qidong County. In January 1958, the qu were abolished, and the entire county was divided into ­forty-​­three xiang and ­twenty-​­one zhen. The qu offices became xiang government offices. In November 1958, Qidong County was abolished. At the same time, the communes of Qingcheng, Heilizhai, Huagou, Matou, and Weiqiao were made part of Zouping, and the Zouping communes of Mashang, Fangzhen, Zhangfang, and Nanyan (most of which originally had been part of Changshan County) were made part of the newly created Zibo city. Zouping was then reorganized into one zhen and ­twenty-​­one communes. The Huimin administrative district, of which Zouping was part, was abolished and, with the county, was assigned to the new Zibo administrative district.36 In 1960, Huantai County’s Xinzhuang, Fengma, Huma, Qima, and Fangzi villages were made part of Zouping’s Jiaoqiao commune.

At this point, Zouping had reached its largest size in history. It comprised the old Zouping plus most of Changshan (minus the Zhoucun and Zhangdian areas) and most of Qidong. But in October 1961, as one last touch of confusion, the Qingcheng, Huagou, and Heilizhai districts were

56  Gu y A l i t to Ta bl e 2.1  Administrative Changes in Zouping, 1955–1961 Year 1955

Added to Zouping

1956 Tanzhang Yazhuang xiang 1956 All of Changshan county 1958 Qingcheng, Heilizhai, Huagou, Matou, Weiqiao 1960 Xinzhuang, Fengma, Huma, Qima, Fangzi villages 1961

Withdrawn from

Withdrawn from Zouping

Added to

Other changes Linchi from Zichuan to Changshan

Zhangqiu County Defunct Changshan County Defunct Qidong County Huantai County Qingcheng, Huagou, Heili­ zhai xiang

Newly created Gaoqing County

S ou rc e s: Zouping County Gazetteer Office, Zouping County Gazetteer (邹平县志) (Beijing: Zhonghua, 1992 (中华书局); and Zouping Gazetteer 19 zhuan (鄒平縣誌十九卷) (Taipei: Chengwen Publishing Company, 1904, repr. 1933).

made part of the new Gaoqing County. In the end, the county consisted of most of old Qidong, the bulk of old Changshan,37 and all of old Zouping, except for the territory north of the Xiaoqing River (see map 2.1). At the same time, Zouping was returned to the Huimin administrative district. This fulsome agonizing over changes in administrative borders is necessary because the spatial context of the county’s history is indispensable to appraise p ­ resent-​­day economic and social developments. The rapid changes in administrative units in the 1950s affected written documents and statistics, and even old people’s memories. To add to these general difficulties, even a simple historical identification of village units is sometimes problematic, as approximately o­ ne-​­fourth of the villages changed their names or compositions at least once during this period. Many became parts of administrative villages or were broken up into other administrative villages. To make sense of the situation, I compiled a large ­map-​­cum-database that includes all present villages, parts of villages, vanished villages, together with the various names that they had over the last several hundred years, their longitude and latitude, physical and typographic features, and other possibly relevant data. Therefore, although most statistical materials available for the period after 1949 are not usable, all ­village-​­level material for that period is usable.

Zouping in Historical Perspective  57

Notes

1.  How the county of Zouping was chosen as this unprecedented ­long-​­term research site was, of course, complex; it was chosen partly due to its rural reconstruction past but more directly due to its personal relations networks. I was privy to this backstory because the president of the Shandong Academy of Social Sciences (SASS), being an old wartime comrade in arms of the father of one of my graduate students, related it to me in some detail. SASS was the only one of the provincial academies of social sciences to respond favorably to the initial inquiry from the Chinese Academy of Social Sciences in Beijing in 1984 to be a research site for foreign scholars. The president of SASS assigned the matter of finding a suitable village to his ­right-​­hand man, Li Hengzhu, who happened to be a native of Sunzhen. About a mile and a half from Sunzhen is Fengjiacun, already renowned locally because of its powerful and prestigious party secretary, its remarkable land reclamation and agricultural performance, and its new brick housing. When the inquiry was expanded to a larger area and more than one village for study, Zouping had to be the county. 2.  Liang had a definite idea of what would constitute an ideal county for the purpose. “Not too large, or too small, not too rich or too poor, not too isolated, but not on the railway,” and so on. 3.  In the early 1930s, Zouping was composed of 342 (administrative) villages within 650 square kilometers and had a population of 165,000. Compared to ­present-​­day Zouping, which has 872 (administrative) villages within an area of 1,251 square kilometers and a population of over 650,000, it was quite small. 4.  In the 1930s Zouping consisted of 650 square kilometers. 5.  Some of the primary parties to this immiseration debate were Philip Huang and Joseph Esherich; following the argument in the 1930s League of Nations report authored by the Briton R. H. Tawney (Land and Labour in China [London: Harcourt, Brace, 1932]), they argued that there was indeed an e­ ver-​­growing rural crisis in the first half of the twentieth century. This was indeed more or less assumed to be the case by most foreign historians of China (and megasociologists such as Barrington Moore). The chief opponent of this conclusion was the economic historian Ramon Myers. 6.  G. William Skinner, “Regional Urbanization in N ­ ineteenth-​­Century China,” and “Cities and the Hierarchy of Local Systems,” in G. William Skinner, ed., The City in Late Imperial China (Stanford, CA: Stanford University Press, 1977), 211–36, 281–301. 7.  The Yellow River had major shifts six times in recorded history, starting in BC times. The important shifts that concern us started in AD 1035 or so, with the usual break in the dikes. A few years later, the river split into two courses, a northern course that emptied into the sea near Tianjin, and another, which

58  Gu y A l i t to emptied into the sea at the Maxia River (just on the border between Hebei and Shandong Provinces). Around 1090, because of a break in the embankments in Henan, the river poured into Shandong (and formed the famous Liangshanpo of the novel The Water Margin), and again split into two courses. One emptied into the sea in the bed of the Daqing River (where it does today). The other went through Shandong into (and all over) northern Jiangsu to debouch into the sea via the Huai River. The northern branch was always the secondary one, and it was not very long before the river’s flow stopped altogether. In the late 1470s, several embankment projects succeeded in confining the Yellow River to one course through central eastern Henan into Jiangsu, again flowing across that province to debouch into the Yellow Sea via the Huai River bed. In 1855 the dikes broke northwest of Kaifeng, and the Yellow River returned to the old northern course (the Daqing River bed). By the 1870s, it had settled into its present course. In 1938 with the government dynamiting the dikes at Huayuankou near Zhengzhou, Henan, to stop the onrushing Japanese invasion, the river wandered again until after World War II, when it settled into the fixed course it has today. 8.  In the early 1980s, the County Gazetteer Office (xianzhi bangongshi) carried out a massive thorough survey of the villages of the entire county; it was completed in 1985. The categories ranged from household income to longevity of residents to local products (as well as such special topics such as revolutionary martyrs from each village). The survey results served as raw material for the later Zouping County Gazetteer. I made a copy and many of my general observations, such as those on mountain villages, are based upon it. 9.  This phenomenon is but one minute instance of a larger pattern throughout the rural areas of China proper in modern history. Some villages or lineages whose agricultural resources were poor (mountainous, marshy, alkaline or acidic soils, or simply insufficient arable land) adopted to circumstances by export of trained human talent (such as tinkers or mercenaries), by engaging in manufacture, handicraft, or petty commercial ventures. A massive contemporary instance of the phenomenon is Wenzhou in Zhejiang province. Its export of human talent and commercial ventures are now worldwide and world-famous. 10.  Shifting ecological patterns must have also been involved with the wandering of Zouping’s county town through the millennia. 11.  Liang Zhongquan, ed., Qidong xianzhi (Quidong County gazeteer), 504, 370–72, 556–59. 12.  G. W. Skinner has found that these administrative units in the Qing were generally distributed in peripheral areas and near macroregional frontiers where security, rather than revenue, was most important. These units were also distinguished by a narrower span of control (with their upper units having a small number of subordinate offices to supervise) so that (among other reasons) a faster

Zouping in Historical Perspective  59 response could be made to security threats. Qidong had been an ordinary xian in a core area, and indeed did not have the “post designations” indicating high concern with security. It is possible, however, that since Qidong’s new ecology began in the latter part of the nineteenth century, the bureaucracy as a whole had not yet reacted to it. At only one point did Qidong seem to be regarded administratively as an area that should be in a narrower span of control. In 1936 the administrative superintendent (zhuanyuan) system was established. Zouping and Changshan were under the fifth zhuanyuan district, while Qidong was put under direct supervision of the provincial government. During the war with Japan, Qidong was in a different zhuanyuan district than Zouping and Changshan. 13.  The above is based on interviews with Liang Shuming, Qidong xianzhi; Liu Weihan, ed., Changshanxian changtuzhi (Changshan gazetteer supplement) (1907); Luo Zongying, Cheng Guan, eds., Zouping xianzhi (Gazetteer of Zouping County) (1836); Zouping xianzhi (1960) unpublished manuscript and 450 interviews with elderly residents of Zouping County conducted in Zouping, 1986–2006. 14.  Susan Mann, Local Merchants and the Chinese Bureaucracy, 1750–1950 (Stanford, CA: Stanford University Press, 1987), 52–93. 15.  The Lis and other settler lineages from Zaoqiang, in some cases, seem to have maintained some status into the twentieth century in Qidong and other parts of Changshan. In Zouping there seems to be a trace of their former glory in Sunzhen, which has a prominent Li group. The Li surname is also prominent in areas around the Zouping county seat, and the former Changshan county seat. The area of heaviest Ming immigrant concentration is Qingyang xiang, southern Mingji xiang, and the area west of the county seat. In this area, the Zaoqiang and Hongdong emigrants are much in evidence, as well as those from Zhangqiu and Qidong. 16.  The highway is now just the eastern end of the Yinchuan to Qingdao superhighway that runs across northern China. 17.  By at least the 1930s, people said that the missionaries would appear on the mountain shouting as the crowds passed. Other “specialized services,” such as prostitutes, also moved annually from Zhoucun to Zouping for the fair. 18.  For periods during the war, the headmanship did end up in the hands of various Fengs, with untoward results. 19.  The first one was an especially shameless ne’­er-​­do-well (a relatively recent outsider, of course, who had arrived in the village, together with his mother, as a refugee). He had been helped several times by the villagers in the years before liberation. Upon being elevated to the headmanship, he became a vicious despot who brazenly extorted wealth, property, sexual favors, and much else that wasn’t nailed down. He was, unsurprisingly, universally hated, but that did not prevent another villager (of good class background) from going to jail for having “in-

60  Gu y A l i t to sulted” him. More remarkably, this arrest took place in 1954, many years after the degenerate had been removed from his post. The party took care of its own. 20.  The total population was 682 in 124 households in 1935. 21.  I remember quite vividly my conversations with the remaining member of the shaobing household, a relatively highly educated and astute individual. He literally could not mention a reason why the household returned to agriculture, even after our repeated discussions on the topic. Why? I judge that the reason was simply the ethos or mentality of this kind of village. This particular Mr. Feng, in the 1980s the primary school teacher, owed his education to this strategy. Some of the profits of the shaobing business were invested in his education. 22.  The People’s Liberation Army took the village three different times from 1946 to 1948 in the seesaw battle between the Nationalists and Communists in the area. The longtime village head (surnamed Wang) was publicly executed in Jinan in 1953 because of his refusal to give grain to the Eighth Route Army in 1944. He was still quite popular, and his “counterrevolutionary” “historical problem” (lishi wenti) was also an important object of dispute within the village (although not openly). 23.  In such cases the apprentice system was a form of indentured servitude, with the household benefiting because it received a cash payment for services and did not have to support the family member during the period. Such positions, onerous as they might seem, were hotly competed for, so obtaining one usually required household connections. 24.  Our party secretary made his ­self-​­criticism on May 30, 1966. It was, of course, the same c­ liché-​­ridden statement that every village party secretary was making, but by that time he had established deep and solid support in the village, and no faction could have mounted an effort to unseat him. 25.  The above is based upon the following: interviews; assorted handwritten notes and records from the village archives; village household registration records; Fengshi zhipu (Genealogy of the Fengs of Fengjia) (n.p., n.d.); Zouping shiyanxian hukoudiaocha baogao; Liang, Zouping xianzhi. 26.  All county seats, of course, developed the same “extraportal” suburbs of the same name outside of their gates. The Changshan county seat had, as did Zouping’s, a Dongguan (east gate), and a Nanguan (south gate) village. Henan village developed out of Changshan town’s Nanguan. 27.  A heavy stone wall, each side of which was exactly 500 meters long, surrounded the county seat itself. When first built in the late sixteenth century, the stone was imported from ­far-​­off Shanxi Province and was regarded as a marvel of engineering. During this era, suburban (or extraportal) villages developed. The walled county seats of Changshan and Qidong were bigger, but Zouping’s was handsomer. Perhaps because the structures were so elaborate and were built to

Zouping in Historical Perspective  61 last, by the twentieth century the market areas were already outside the eastern and western town gates, with the periodic market alternating between the two. Most of the important commerce was no longer within the town wall. Liang’s Shandong Rural Reconstruction Institute, for instance, was outside the eastern gate in Dongguan. 28.  The price for a girl in her early teens was 50 jin of coarse grain. The buyers were households trying to produce children and therefore requiring a fertile womb, to make an investment for the future. Such girls were sometimes “gifts” for patrons. 29.  There were, admittedly, a few strange “exceptions,” because certain ­younger-​­generation members resided elsewhere and were employed in proletarian or technical jobs. There are two similar cases in which two household heads were clearly landlords, but the “masses” had declared that they should still be treated as poor peasants. 30.  This was partly because the village government at one point simply gave out given names to all village women who did not yet have one. 31.  Even half of the town wall was gone. Except for a single building, there were no nonadobe structures left standing. 32.  The first wartime casualties in Dongguan came with the Japanese bombing. There followed the usual Japanese casual bayonetings and shootings. Some natives took off for greener pastures in Manchuria, leaving their families behind. 33.  The recovery, which lasted from the latter part of 1962 through the great flood of 1964, was swift. Most of the county went under water in the summer of 1964, but relief grain arrived expeditiously, and no one died of the effects of malnutrition. The 1963–1966 Four Cleanups and the 1966–1976 Cultural Revolution had their inevitable consequences economically. 34.  Based upon the following: interviews with Liang Shuming; Zouping shiyanxian hukoudiaocha baogao (Experimental county Zouping household survey report) Zouping, 1934; land reform maps and records of Dongguan; household registration records of Dongguan; Zouping xianzhi (1992). 35.  For details of villages’ rural industrialization, see Jean Oi, “The Evolution of Local State Corporatism,” in Andrew Walder, ed., Zouping in Transition: The Process of Reform in Rural North China (Cambridge, MA: Harvard University Press, 1998, 35–61; and Jean Oi, Rural China Takes Off: Institutional Foundations of Economic Reform (Berkeley: University of California Press, 1999). 36.  Huimin administrative district was subsequently restored and Zouping returned to it. 37.  Minus highly urbanized Zhoucun and Zhangdian and their immediate hinterlands.

Ch a p t er 3

Creativity and Flexibility in County and Township Economic Governance Kay Shimizu

Introduction Since the 1980s, scholars have documented how rural governments in China have played a central role in economic development.1 Such observations in turn gave birth to new models of development such as the “corporatist” form of local government. The first volume on Zouping County (Andrew Walder, ed., Zouping in Transition) further elaborated on these models by closely studying one county in order to understand why and how local governments have so successfully contributed to promoting rapid m ­ arket-​ ­oriented growth. In so doing, the volume added to the growing evidence against l­ong-​­held beliefs about the predatory role of governments in transitional economies. The critical role of the state was evident in many aspects of Zouping’s economic development, both industrial and agricultural, and at all levels of government from the county down to the village. The period studied in the first volume, however, was a time when Zouping’s economic activities remained largely within a ­still-​­limited domestic market. Most economic activity occurred within the county boundaries, and the amount and extent of economic exchange beyond the county boundaries was limited. Local officials focused primarily on local economic growth, and on maintaining good relations with h ­ igher-​­level officials to ensure smooth transactions when necessary. In more recent years, however, rapid economic growth, intense national investment in transportation infrastructure, and the global spread of technology and capital have dramatically transformed the nature of local governance in Zouping. In the early 1980s, shortly after the beginning of 

Creativity and Flexibility in Economic Governance  63

economic reforms, Zouping County was considered an average county, neither wealthy nor poor, a feature aptly coined as its “unexceptional distinctiveness.”2 ­Fast-​­forward two decades, and by 2004 Zouping was one of the 100 “strongest” counties in the nation, ranking 89th out of 2,862 counties nationwide.3 By 2011 Zouping ranked 11th among the country’s best performing ­medium-​­size and small cities and counties, evaluated according to four main criteria: economic development, social progress, environmental soundness, and effective governance.4 Among ­city-​­level counties, it ranked the highest. Zouping’s remarkable economic development is now clearly evident on its streets, where rush- hour traffic, populated largely by privately owned cars, begins and ends every workday. What these numbers and images disguise, however, is the equally surprising diversity and unevenness of the growth trajectories among the townships and villages that make up Zouping County. While some factory towns such as Weiqiao have served as a reliable and steady engine of growth for the county, other towns and villages have prospered more slowly or in spurts, if at all. How then has this county government succeeded in orchestrating the numerous townships and villages it governs and maintaining an even keel toward development and stability while retaining largely the same organizational structure? And what explains this variation in growth trajectories that hides beneath Zouping County’s continued strong economic performance? For us as researchers making regular field research visits to Zouping, these recent changes became evident in the greatly reduced travel time from the provincial seat in Jinan; in the abundance of fresh seafood from Qingdao served at nightly banquets; and in the availability of fast and reliable Internet connections in our private hotel rooms. For local officials, these changes have broadened the scope of their work significantly. In the decade and a half since scholars researched and wrote the first volume, three trends in particular have changed the nature of economic governance in Zouping: urbanization, market expansion, and growing environmental concerns. While the overarching goals of economic growth and political and social stability remain the same, these new trends have challenged local officials to think creatively and act flexibly. This chapter seeks to improve our understanding of how China’s c­ ounty-​ ­level governments manage the diverse economic trajectories of the townships and villages they govern in the t­ wenty-​­first century. Much work has been done on the impact of ­county-​­level governments, but most of these

64  K ay Sh i m i z u

works take the county level as the lowest level of analysis. Few have been able to dissect the relationship between a county government and the townships and villages it governs, in part due to limitations in access. This chapter seeks to better understand China’s rural development in three ways: First, by looking at the county, township, and village levels, the chapter examines variations in development paths at the subcounty levels. Second, the chapter looks at the fiscal relationships between the county and its townships and their change over time as an indicator of the relative changes in the economic dynamics of a single locality. If a township receives fiscal subsidies from its county for several years but then begins to pay increasing amounts of taxes to the county in subsequent years, more than likely this township has increased its fiscal income and is now able to send more money to the county. Data available from Zouping County facilitate this analysis by providing township level data within one county over time. While Zouping may no longer be an “average” rural county in China,5 this longitudinal data spanning two decades at the subprovincial level remains invaluable and difficult to obtain elsewhere. Third, ­in-​­depth interviews reveal details about the process of development and the politics that shaped and managed these processes. Selected case studies illustrate the diverse paths taken at the subcounty level and explore the multiple factors that influence the choice of these paths.

The Makeup of Zouping County In contrast to the Zouping described by Alitto in chapter 2, today Zouping County consists of sixteen ­township-​­level districts, which are divided into twelve townships and four urban districts (办事处 ) covering a total area of 1249.68 square kilometers (see map 3.1). Most of the county lies on flat land or rolling hills, with just Xidong township officially classified as a mountainous area. The largest township, Weiqiao, covers 146.51 square kilometers while the smallest township, Qingyang, covers 49.46 square kilometers; the smallest urban district, Daixi, is just 36.43 square kilometers. Within these ­township-​­level districts are 858 administrative villages (村委会) and 874 natural villages (自然村). Changshan has the greatest number of administrative villages with 110 while Qingyang has just 17.6 These basic numbers already depict a county with much variation among its subcounty units. A more telling sign of the stark dif-

Creativity and Flexibility in Economic Governance  65

Yellow River (Huang He)

Taizi

qi n Xi ao

Matou

gR

i ve

r

Jiuhu Sunzhen Jiaoqiao

Weiqiao Handian Mingji

Changshan Daixi District

Highway to Jinan (Provincial Seat)

Qingyang

Gaoxin District

Huangshan District Xidong

Zouping County Seat Haosheng District

Linchi

0

1

2 km

Map 3.1. Townships and Districts of Zouping County

ferences in growth trajectories, however, may be the availability of modern utilities. By 2011 all of Zouping’s villages had electricity and phone lines, but only 777 out of 858 villages had running water, and just 581 villages had trash collection. Two townships in particular, Changshan and Matou, lag significantly behind the other townships; just 42 of Changshan’s 70 villages and 28 of Matou’s 78 villages have running water.7

Fiscal Indicators of Divergent Paths As the basic numbers from ­present-​­day Zouping show, although China’s countryside has experienced remarkable economic development since the beginning of reforms in the late 1970s, the process of development has been far more diverse and complex than some studies have shown. After decollectivization and the rise of township and village enterprises (TVEs) in the 1980s and their fall in the 1990s, rural townships and villages embarked on

66  K ay Sh i m i z u

a variety of development paths. Localities created their own development concoctions by mixing and matching lessons learned from the days of the planned economy with incentives created by newfound access to markets. Some localities such as Weiqiao township in Zouping embraced industrialization and privatization while taking advantage of the resources and relationships developed during the heyday of TVEs. Many such localities reached beyond their borders to access markets elsewhere in China and even overseas. Other localities remained dependent on agriculture as their main source of income. Some of these localities even reverted back to the period of collective farming by combining household plots to form larger cooperatives, taking advantage of the economies of scale to purchase fertilizer and seeds in bulk and sharing ownership of agricultural tools. Some gradually specialized in cash crops most suited to their environment and market demands. Still others both failed to industrialize and remained dependent on subsistence agriculture and remittances from migrant labor.8 Overall, while some localities have prospered, others have become increasingly dependent on state subsidies and assistance. More often than not, it is county governments that have been left with the task of corralling these widely divergent township and village economies toward prosperity and stability, and Zouping is no exception. The impact of county governments and officials on the economic, political, and social development of rural China has received renewed attention in recent years.9 This is not merely a coincidence, as county governments have been tasked with guiding rural China toward economic prosperity as part of a renewed national effort to close the income gap between urban and rural areas.10 The overall strategy promoted by the central government and implemented by county governments has been two pronged. The first strategy attempts to create incentives for rural areas to prosper by allowing those with lower incomes to keep more of what they earn. Additionally, those facing the most difficulties have received assistance from government coffers. This strategy has been implemented at both the individual and township levels.11 At the individual level, the central government first streamlined revenue collection by eliminating the numerous local fees that burdened villagers, especially after the 1994 fiscal reforms. Beginning in 2001, this ­tax-​­for-fee reform replaced the eliminated local fees with a single agricultural tax. This was also the central government’s effort to put a cap on what was recognized as growing fiscal burdens on

Creativity and Flexibility in Economic Governance  67

the nation’s ­lowest-​­income earners, the peasants. By 2006 the central government had abolished agricultural taxes altogether.12 Households falling below minimum income levels have now begun to receive income subsidies. In real terms, however, the abolition of the agricultural tax did little to ease the economic burdens on poor rural peasants. According to the Ministry of Agriculture, the average annual income of farmers increased just 6 percent between 2004 and 2006 to 3,250 yuan, still less than half the national average. For individual peasants, the real significance lay in a policy aimed directly at them to demonstrate Beijing’s efforts to improve their livelihoods. For townships and villages, however, the effects of this policy were much more varied, with dire consequences for some poorer localities. For China’s overall tax revenue, the abolition of the agricultural tax had little effect. By 2006 when the agricultural tax was officially abolished, agriculture contributed just 13 percent to China’s gross domestic product (GDP). In 2005 the agricultural tax was worth just 1.5 billion yuan or less than 1 percent of total tax revenue. But for some local governments still dependent on agriculture as their primary source of income, the abolition of the agricultural tax emptied their coffers. The root of the problem lay in the 1994 fiscal reforms that transferred financial responsibility for services such as health and education from the central government to localities.13 This shift in responsibilities led local officials to increase arbitrary taxes and fees in an effort to raise the necessary funds. For townships and villages relying heavily on agricultural taxes, the abolition of this source of income further exacerbated their financial problems. Even in a county industrializing as rapidly as Zouping, the change in the average income of peasants between 2000 and 2004 (when the agricultural tax was abolished in Zouping) was quite significant. In 2000 the average annual income of peasants was 3,120 yuan; by 2005 the number had increased by 50 percent to 4,684 yuan.14 But the abolition of the agricultural tax was by no means an equalizer. In Zouping County by 2000, the agricultural tax was no longer a significant percentage of the total tax collected (just 2.8 percent);15 however, for some townships, it was as high as 84 percent (Sunzhen township). Thus, it is not surprising that by 2005, the six townships in Zouping most dependent on the primary (agricultural) sector (over 35 percent of GDP from the primary sector) were also the same townships receiving fiscal subsidies.16

68  K ay Sh i m i z u Fiscal Incentives and Fortunes at the Township Level

At the township level, the most effective programs have combined tax breaks and fiscal subsidies from the county with commitments to these programs kept over a promised period of time. Key to the success of these programs was the guarantee of an adjustment period: townships that were in the “need not pay taxes” category were certain to stay in that category for the promised period even if their revenues increased during this time. This credible commitment by the county government provided incentives for townships to be entrepreneurial. Such fiscal incentive programs are not centrally mandated, and wealthier counties are more able to afford such fiscal schemes for their townships. The existence of such ­county-​­led fiscal programs may also speak to the increase in power and responsibility given to counties as townships have lost key sources of fiscal income through the ­above-​­mentioned programs. However, as the case of Zouping shows, the fiscal relationship between a county and its townships can be much more complex, especially over a period of time, as shown in table 3.1. In 1989 of the seventeen townships in Zouping County, only seven townships actually paid taxes to the county;17 the remaining ten townships were not able to collect enough taxes and instead received subsidies from the county to make up for their lack of fiscal revenue.18 In monetary terms, the seven townships that paid taxes to the county sent up a total of 2,169 thousand yuan, while the remaining ten townships received a total of 1,761 thousand yuan in subsidies from the county. In 1996 there were still seven townships paying taxes to the county, but Lican township was no longer among the seven, and it was replaced by Yuancheng township, a former subsidy recipient.19 By 2005 still only seven of the sixteen townships at the time20 paid taxes to the county while six townships received subsidies.21 The remaining three townships neither paid taxes nor received subsidies. Surprisingly, the number of townships within each category of fiscal status did not change significantly during these years (1989–2005), but the fate of some individual townships changed dramatically. For example in 1989, Handian and Qingyang townships received considerable subsidies from the county;22 Handian township, in particular, was the recipient of the t­ hird-​­highest total amount of subsidies. By 2005 these two townships had reversed their economic circumstances and were now contributing substantially to the fiscal income of the county. In contrast, Linchi township, long one of the wealthiest town-

Creativity and Flexibility in Economic Governance  69 Ta bl e 3.1  Zouping County Townships by Fiscal Category, 1989 and 2005 Paid Taxes 1989 2005 Zouping Daixi Linchi Gaoxin Changshan Changshan Weiqiao Weiqiao Mingji Mingji Haosheng Handian Qingyang

No Taxes, No Subsidies 1989 2005 Huangshan Haosheng Linchi

Received Subsidies 1989 2005 Xidong Xidong Jiaoqiao Jiaoqiao Sunzhen Sunzhen Jiuhu Jiuhu Taizi Taizi Matou Matou Yuanchen Handian Qingyang

S ou rc e s: Oi Interview 90-sum; China Interview 050629.

ships and among the highest taxpayers in 1989, was no longer able to pay taxes by 2005.23 Urbanizing Rur al China

The second strategy used in addressing the ­rural-​­urban income divide has been to urbanize rural China. Rather than relying on rural to urban migration and migrants’ remittances to fuel rural economic development, the central government has encouraged the industrialization and urbanization of rural areas themselves. Such efforts will not only help close the ­urban-​ ­rural income gap but will also relieve overcrowding in some of the country’s largest urban areas. To date the county governments’ primary role in this effort has been to oversee the mergers of many of their villages and townships to form larger villages, townships, and subdistricts.24 Nationwide, since 2000 roughly 60 percent of townships and 40 percent of villages have been merged.25 Zouping has by and large followed these urbanization trends by merging its economically weakest townships with larger towns, eventually getting rid of the more rural administrative units of townships (乡) altogether.26 In 1989 Zouping County had seventeen townships, of which three were ­zhen-​ ­level townships (or towns) (邹平,长山,魏桥) and the remaining fourteen were ­xiang-​­level townships (西董,好生,临池,礼参,苑城,焦桥,韩店,孙镇,九户,青阳,明 集,里八田,台子,码头). In 1997 Zouping County consisted of fifteen towns and two townships; by 2010 there were four subdistricts (街道办事处) and

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twelve towns. However, these before and after numbers hide the complexities of the administrative changes that occurred during this time. Since 2000 Zouping County has seen two significant changes in the administrative districts it oversees. First, in 2001 three pairs of towns merged to form three larger towns: Zouping town and Lican town merged to form an expanded Zouping town, Changshan town and Yancheng town merged to form an expanded Changshan town, and Weiqiao town and Libatian township merged to form an expanded Weiqiao town. The following year, Matou township became Matou town, ridding Zouping County of all its townships. Second, in 2002 Zouping town, which housed the county seat, split into three subdistricts: Daixi subdistrict, Huangshan subdistrict, and Gaoxin subdistrict. In 2010 Haosheng town became Zouping’s fourth subdistrict, giving Zouping a total of four subdistricts. The elimination of townships and the creation of subdistricts are clear signs of Zouping’s rapid urbanization. Today, roughly a quarter of the county’s population is considered nonagricultural,27 and a third of residents live in urban areas (城区人口). Urbanization through Consolidation: Residential Communities

In a separate but related effort toward industrialization and urbanization, Zouping, along with many other parts of the rest of the country, has begun to form what are known as residential communities (社区 ) at the village level. One or more villages form a community, identifiable largely by their modern h ­ igh-​­rise housing, dearth of agricultural land, and provision of welfare services based on residency; these communities are to be the next phase in urbanization. Villagers receive one or more apartments in the new community in exchange for their spacious farmhouses and the residential land (宅基地 ), which are often located in more remote corners of the village. Many villagers also give up their farmland in exchange for job training and w ­ age-​­earning positions in the community or nearby factories. As village residents become wage earners and household income from agriculture diminishes in proportion, local governments acquire valuable agricultural and residential land to develop as new sources of economic growth. As with the fiscal programs, these urbanization programs have had varying effects across Zouping. The four subdistricts surrounding the county seat are largely urban, with easy access to a major highway leading directly

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to the provincial seat. In contrast, in the county’s poorest and most agricultural township of Matou, just ­t wenty-​­eight of ­seventy-​­eight villages had running water in 2009.28 The county’s overall push toward increasing total fiscal revenue and becoming more urban has clearly been successful, propelling Zouping County toward economic prosperity, but the equalization efforts from above have been less so. The following sections examine further how development paths diverge and inequalities persist at the subcounty level.

Persistent Inequalities among Townships and Villages in Zouping County Any recent visitor to the Zouping county seat who has seen its gleaming county headquarters and the modern facilities of its magnet schools would agree that Zouping is a model of rural development success. Average annual incomes in Zouping are now roughly double the national average. But as Alitto’s chapter 2 describes, there were historical variations in levels of economic development within Zouping. Inside the limited confines of today’s Zouping County, once again not all townships and villages have experienced the prosperity evident at the county seat. After the surge in the privatization of former TVEs in the 1990s and the abolition of the agricultural tax by 2006, disparities in township and village incomes have in fact intensified. Individual circumstances have left some townships significantly behind the leaders. For example, Matou township still has one foot firmly planted in traditional s­ mall-​­scale agriculture,29 while land preservation restrictions have limited the development of industry in mountainous Xidong township.30 In 2005 while the county average percentage of income from agriculture hovered around 5 percent, Matou township still earned over 50 percent of its income from agriculture. At the village level, the persistence of inequality is even starker. In 2000, 11 villages out of 858 had average annual incomes over 4,000 yuan, or roughly 30 percent above the county average of 3,120 yuan. The richest village averaged 4,931 yuan. Yet the poorest village averaged only 1,657 yuan, which was just 33 percent of its richest neighbor and 53 percent of the county average. In 2009, 11 out of 858 villages had average incomes over 10,000 yuan, 30 percent above the county average of 7,606 yuan. The richest village, however, earned 13,170 yuan, and the poorest earned just 5,000

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yuan, or 38 percent of its richest neighbor and 66 percent of the county average.31 Echoing a point made by Alitto in chapter 2, we see that the determinants of economic success do not appear to be limited to initial endowments. While this is just one county among hundreds of others, a close examination of the development paths taken by Zouping’s townships illustrates the plurality of development paths within the Chinese countryside and the multiple causes of divergence. To be sure, townships and villages throughout Zouping benefited from the rural reforms experienced all over China. As the first volume on Zouping (Andrew Walder, ed., Zouping in Transition) carefully describes, the liberalization of agricultural policies and the rise in state procurement prices brought immediate and rapid growth to all parts of this rural county. During the 1980s and 1990s, agriculture diversified, and rural industrialization fueled the growth of the economy. Such economic growth was distributed relatively evenly among Zouping’s townships and villages. The shift from agriculture to industry was not limited to the county seat; township and village governments rallied to establish hundreds of small enterprises that held the key to their local economic success. While some TVEs in the rest of the country began to experience hardships by the late 1980s, in 1992 TVEs in Zouping still produced over 50 percent of the county’s rural industrial output.32 Still, TVEs in Zouping were not immune to the changes sweeping the rest of the country. As was the case for localities with TVEs elsewhere, privatization of TVEs went into full swing in Zouping by the early 1990s, and by the ­mid-​­1990s, the output of private industrial firms surpassed that of the collective enterprises.33 However, even during the privatization process, local governments at all levels continued to play a pivotal role in the economic development of their localities. While privatization in other transitional economies often implies the swift removal of the heavy hand of the government, the process of privatization as it took place in Zouping and in many other parts of China retained the involvement of local governments.34 Local governments played an especially important role in procuring the necessary funds for privatization, much as they did during the earlier phase of building TVEs.35 While funding for private enterprises was less likely to come directly from public government funds, local officials could still assist by lobbying banks and credit associations for necessary access to loans. Thus, the suc-

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cess or failure of privatization, and by extension rural industry as a whole, still rested heavily in the hands of local officials.36 But the role of local officials tells only one part of the story. Clearly, townships and villages situated in less arable, mountainous lands that were ill suited for agriculture or industry had less room for growth. But initial endowment explains only a portion of the variation in outcomes, and townships that were poorly endowed with natural resources were not necessarily those that failed to achieve economic development. Why then, in a relatively small area such as Zouping County have some townships and villages fared far better than others? What explains the explosive growth of Weiqiao township versus the decline of Linchi township or Fengjia village, once among the most prosperous villages in the county?37 Why did these localities take the development paths that they did? What are the predictors of development, and why have some townships that one would predict to perform poorly outperformed others with more abundant resources and promising circumstances? The remainder of this chapter examines three townships that have taken three very different paths that our previous understandings of development would not have predicted.

Linchi Township Linchi township was for a long time one of the wealthiest townships in Zouping County. In 1989 it was the ­third-​­highest-taxpaying township, contributing roughly one- seventh of the county’s total fiscal income.38 At that time, Linchi’s main industrial output was masonry, primarily stone products. During the 1980s and early 1990s, Linchi prospered due to the sudden and rapid boom in TVEs. The entire county was under construction, building new factories and rebuilding outdated ones. From 1986 to 1990, Zouping County held a campaign to get rid of unproductive plants and rebuild new factories in their place. Linchi benefited from the strong demand for stone and other building materials sustained by the massive construction frenzy. By the late 1990s, however, the scenario had quickly changed. Prices for building materials rose quickly, and new construction slowed down. Once built, new modern facilities did not require frequent rebuilding. Linchi’s production capacity had overexpanded to meet the needs of a temporary surge in construction, but the capital investments already made and the raw materials already acquired were difficult to reverse or divert. The ­then-​

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i­nflated prices of stone and building materials did not have markets outside the county, and the transportation of heavy building materials over long distances would have only added to the price. By 2002 Linchi had experienced a reversal in its economic fortunes and was no longer able to pay taxes to the county.39 Today, 65 percent of its workers remain in the secondary (manufacturing) industry, but with poor returns and few other options.40 Linchi remains the poorest of Zouping’s sixteen townships, with an annual per capita income of 6,200 yuan, 20 percent below the county average.

Weiqiao Township and Weiqiao Textile Company Limited The economic history of Weiqiao township stands in stark contrast to that of Linchi township. Weiqiao is now home to China’s largest, and one of the world’s largest, cotton textile producers, the Weiqiao Textile Company Limited, but it began the process of industrialization much like other townships in Zouping, by first building collective enterprises. Weiqiao Textile Company itself originated as a ­spin-​­off of the Cotton Oil Seed Processing Plant, founded in 1951.41 It was first established as the Zouping Number Five Cotton Processing Mill, a very small cooperative, and in 1993 changed its name to the Weiqiao Textile Mill. In 1996, it was still a large collective enterprise. Several factors contributed to the success of Weiqiao Textile Company and, by extension, of Weiqiao township. First, Weiqiao Textile had ready access to the raw material in the form of cotton that was both domestically grown and imported. During its early years, the enterprise took advantage of locally grown cotton, a historically important crop for Zouping County and produced in abundance. The county’s tax system also favored enterprises that processed locally grown products, benefitting both growers and processors.42 By the time Weiqiao had grown to compete with the other ­state-​­owned cotton mills in Zouping for raw and ginned cotton supplies, Weiqiao had already gained access to imported cotton.43 When state supplies of cotton became tight and the price of domestic cotton surpassed that of imported cotton, Weiqiao’s status as a collective enterprise worked to its advantage, giving Weiqiao the freedom to seek the cheapest suppliers, unlike its ­state-​­owned competitors, which were limited to purchasing domestically grown cotton. Similar types of advantages given to collective enterprise in the 1990s are well documented in the first Zouping volume (Andrew Walder, ed., Zouping in Transition).

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Second, as Weiqiao expanded further, Zouping’s location along a major highway connecting the provincial capital of Jinan to the major port city of Qingdao facilitated easy access to both raw materials and new markets. By the ­mid-​­1990s, Weiqiao’s needs for raw cotton well exceeded what was available within Zouping County in both quantity and quality. By 1996 only ­one-​­third of the cotton used at the Weiqiao Textile Mill came from Zouping and neighboring counties.44 Proximity and convenient transportation to the ports at Qingdao allowed Weiqiao to import high- quality cotton from as far away as Egypt and California. The limited capacity of the local market for Weiqiao’s finished products also encouraged early exploration of markets outside the county. Here again, county government officials played an important role in helping Weiqiao seek markets for its products early on.45 Today, Weiqiao supplies textiles to major department stores in the United States and Europe as well as in China. Third, leadership and the role of individuals who contributed to the decisions to spin off from the Cotton Oil Seed Processing Plant, to establish itself as the collective enterprise Weiqiao Textile Mill, to restructure and become the Weiqiao Textile Company, and to eventually expand it into a world- class company listed on the Hong Kong stock exchange also played a major part in Weiqiao’s current success. During this process, one of their biggest challenges was navigating the numerous contradictions in the macro management between the planned and market economies.46 As recently as 1996, cotton remained part of the planned economy: Zouping still had a cotton acreage target for the county as a whole. The price of cotton was set high by the state in order to encourage cotton growing. However, the needs of the mill always exceeded what the state could supply. Because collective enterprises like Weiqiao were placed second in line behind ­state-​­owned enterprises for gaining access to local cotton supplies, they were forced to purchase cheaper imported cotton. But local officials faced another dilemma; local farmers who grew cotton in excess of state procurements hoping to sell directly to the mills often complained, expecting state prices for cotton grown outside of the state plan. By offering generous tax benefits to enterprises like Weiqiao for purchasing locally grown cotton, local officials made up the difference between s­ tate-​­set prices and imported prices, thereby creating incentives for Weiqiao to buy local, in effect subsidizing local farmers. Such a policy was sustainable so long as Weiqiao remained successful, remitting significant tax payments to the

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county. Reconciling the interests of the state, the collective, and the farmers was a major problem requiring deft political skills that once again called for the talent, decisiveness, and foresight of local officials. Once Weiqiao Textile Company began its rapid expansion, several other factors contributed to its success. Weiqiao township and the surrounding areas provided abundant labor and land for the company to expand. Weiqiao currently employs more than 150,000 workers. The firm’s sheer size both in terms of labor and land are key to the successful expansion of Weiqiao. However, as Alitto’s chapter 2 discusses, this part of the county was historically one of the most challenged. In the past, land and labor were conditions that did not ensure economic success. It was the political changes that allowed peasants to move away from the land and the policy changes that allowed Weiqiao township to convert a majority of its agricultural land to building Weiqiao Company’s facilities that changed the predictors of success. The county itself also played a significant part in the success of Weiqiao. County and township officials assisted Weiqiao Company in gaining access to raw materials, able workers, and markets outside of the county, eventually obtaining licenses from the central government for trade with more than twenty countries and regions in the world. The importance of the role of the county is difficult to quantify, but Weiqiao Company is the largest taxpayer in the county. The future of not only Weiqiao township but certainly of Zouping County is now intricately tied to the future of Weiqiao Company.

Mingji Township and Duanqiao Village As China’s ­third-​­largest ­cotton-​­producing province, Shandong Province has many localities with a long history in cotton production and processing. Not every township can take advantage of its homegrown crops to nurture a company as successfully as did Weiqiao, but the story of Mingji township and Duanqiao village illustrates the multitude of paths to development taken in China’s countryside. Such variation in development paths is largely hidden behind frequently used measures of development and prosperity. In the case of Weiqiao and Mingji, some basic measures show that both townships have prospered equally. In 2005 the average per capita income in Weiqiao township was 5,558 yuan versus 5,489 yuan in Mingji township, hardly a significant difference; half a decade later, in 2011, Weiqiao’s aver-

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age per capita income was 10,660 yuan, roughly equal to Mingji’s average income of 10,549 yuan.47 Yet the following tells a vastly different story. Mingji township lies to the west of Zouping County. It is an a­ verage-​­size township in Zouping, with a population of 35,839.48 For the past three decades, Mingji township has been an average performer in Zouping County. Even before agricultural decollectivization, cotton was Mingji’s major crop, and the processing of raw cotton as well as the production of cotton yarn and cloth, especially canvas, have continued to dominate its industry. After the dismantling of the planned economy, Zouping County’s government, like many other rural governments in China, actively sought to help its local industries secure both supplies and markets for their newborn industries.49 However, while the county government had been of some help in seeking markets for their cotton products, residents of Mingji township also sought opportunities on their own.50 Travels beyond the county border began in 1979 when several adventurous residents from Duanqiao village in the western end of Mingji township went north to learn how to spin stronger cotton yarn for weaving burlap and sturdy canvas. This was a time when the rural economy had just begun to industrialize, and opportunities for profiting from cash crops such as cotton suddenly became plentiful. Mingji township was just one of many localities in Zouping County producing cotton. At that time, many other townships and villages had already begun to saturate the local markets for simple and common cotton products. Thus, Mingji began to send several residents north to Dongbei, China’s northeast region known for its cotton textiles, to study the textile industry beyond the county borders and to search for ways to differentiate their products from their immediate neighbors. Many of these early migrants began working in textile factories throughout Dongbei to obtain new skills on the job, and they became experts at mending cloth and canvas. They eventually brought their newly acquired skills and knowledge back to the township. Today, Mingji township, and Duanqiao village in particular, are known for their production of burlap and canvas, among many other types of cotton products. These early efforts at product differentiation have helped Mingji township and Duanqiao village remain competitive in both the local markets and beyond the county’s borders. Remaining within the cotton textile industry, although a gamble, was an important factor in the success of Mingji and Duanqiao. As in the case

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of Weiqiao, Mingji also took advantage of the fiscal incentives the county created for localities to develop industries that processed locally grown agricultural products.51 Mingji and Duanqiao recognized the value of the policies the county promoted, not only for their fiscal benefits but also for their contribution to ­long-​­term economic stability and for maintaining a balance between agriculture and industry throughout the process of industrialization. As in the case of Weiqiao, local farmers and enterprises both benefited from these tax programs. In addition to cotton products, Duanqiao also took advantage of its expansive bamboo groves and began to develop bamboo products and to combine bamboo with cotton to develop new products, thereby taking advantage of the fiscal benefits while moving its industry beyond reliance on cotton alone. The county, in turn, continued to support local sourcing to promote environmentally sound practices, an increasingly important criterion for ­county-​­level industrial planning. Mingji and Duanqiao have also taken further advantage of the support offered by the local governments as well as the central government’s development plans by moving beyond the county border to Xinjiang Province. Starting in the late 1980s, around the time when privatization of TVEs began to take off in Zouping County, Duanqiao residents lacked the funds necessary to purchase and privatize the few collective enterprises that they had. Furthermore, their burlap and canvas production faced limitations in the supply of raw materials and the market demand for products. Their access to cotton was limited to their locality since neighboring townships and villages had set up larger cotton mills and textile factories of their own. On the demand side, local markets for burlap and canvas were already saturated, in part due to the overall small size of the local market. So once again they ventured beyond their own borders and looked to the northwest region of Xinjiang, where cotton grew well, land was abundant, and the demand for w ­ ell-​­crafted burlap and canvas was high. Duanqiao villagers visited and studied multiple locations as possible targets for expansion, but several characteristics of Xinjiang made this western province the most attractive outpost location. First and foremost, the geographic features and climate of Xinjiang were suitable for producing cotton. By growing cotton in Xinjiang, not only could Duanqiao village stay within the cotton industry, where they had accumulated experience and ­k now-​­how, but they could also afford to expand the size of their industry both in Xinjiang and in Zouping by growing more cotton at cheaper cost.

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The greatest advantage was the low cost to rent land. Back in Duanqiao, available arable land had already been planted, and there was limited room for expansion. Second, relatively weak competition in Xinjiang gave the entrepreneurs from Duanqiao greater access to resources, especially to the funds necessary for expanding into Xinjiang. Despite the continued efforts to assist private enterprises in securing funds, as they had done for public enterprises in the past, local governments’ direct access to funds became more limited. The township government could no longer directly distribute publicly collected funds, and its influence on banks and credit cooperatives had also diminished. Duanqiao’s village leaders recalled how local competition for loans in Zouping had become too stiff, and what loans they were offered came with high interest rates. In Xinjiang, however, Duanqiao villagers were “big stuff,” and banks in Xinjiang offered loans with lower barriers for qualification and much lower interest rates than what was offered at home in Zouping. The central government’s policy of developing the west (xibu kaifa) also worked to the villagers’ advantage by qualifying them for policy loans reserved for outside investors and developers entering the western regions. Furthermore, although the residents of Duanqiao confess to having been ignorant of this fact when they first arrived in Xinjiang, the central government had paired Shandong Province with Xinjiang Province as partners in the drive for western development, where Shandong would serve as a “big brother” to its less w ­ ell-​­off sibling. This official partnership gave entrepreneurs from Shandong preferential treatment in Xinjiang, particularly in obtaining loans and gaining access to land and other necessary resources. Mingji and Duanqiao’s expansion into Xinjiang was by no means a coincidence or an overnight occurrence. While the initial hunt for resources and k­ now-​­how from outside the locality began with a few adventurous villagers, subsequent moves of much larger scale proceeded with the assistance of local governments and the support of the entire locality, both in Xinjiang and especially at home in Zouping. In the early 1980s, individuals from Duanqiao went to set up cotton farms, intending to ship the cotton back to Mingji for processing, but it was soon evident that the market for textiles in Xinjiang was larger and expanding. Processing and selling the finished products in Xinjiang became much more cost effective and lucrative. The first factory in Xinjiang was funded by money collected in Duanqiao with the help of the villagers and the local township government. They hired

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local labor in Xinjiang to work on the farms and in the factories, but as the outpost venture took off, they returned to Duanqiao to recruit their relatives and neighbors as managers, gradually expanding their recruitment beyond the village into Mingji township. There are now more than forty factories in Xinjiang owned and run by Mingji residents, most of them located in and around Urumqi. Competitors have arrived from Hebei and Shanxi, but Mingji workers have the advantage of an earlier start, more experience, and greater numbers. They have established a large network of suppliers and manufacturers, and their relationships with the Xinjiang local government and local business community are extremely strong. Today, some villagers have been in Xinjiang for more than two decades, but their identities as residents of Mingji and Duanqiao remain intact, and all but a handful of them return each year for the new year’s holiday. The managers of the cotton farms, mills, and textile factories in Xinjiang are all people from Mingji. This has created some problems and conflicts between the management and the local workers, but the operation has been lucrative, and the potential for e­ ver-​­higher earnings continues to support this ­cross-​­country operation. In 2007 about an eighth of the population of Duanqiao, or roughly 4,270 villagers, worked in Xinjiang, earning an average of 10,000 yuan annually, as opposed to the then–Mingji township average of 5,500 yuan.52 If one takes a quick walk around Duanqiao village, it is easy to spot the houses of those with family members working in Xinjiang; compared to the average ­single-​­story, clean but simple housing typical of the area, these houses are often two stories and decorated with colorful tiles and elaborate front gates. Village officials from Duanqiao now make an annual trip to Xinjiang to visit the cotton operations, including cotton farms and textile mills run by Duanqiao residents. Their main objective is to help these operations obtain access to more capital in the form of loans, primarily from agricultural cooperative banks both in Xinjiang and at home in Zouping. By traveling to Xinjiang, they can examine the factories and operations in person, and as local village officials, they can become guarantors for loans obtained in Zouping. As competitors from other counties and provinces enter Xinjiang, Mingji and Duanqiao officials have encouraged diversification. Workers from Mingji in Xinjiang have now begun to produce mechanical parts for

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repairing cars, contributing to Mingji’s second- most- important industry, automobile restoration. To help maintain strong ties between Duanqiao and Xinjiang and to prevent permanent migration and the loss of income to Xinjiang, Duanqiao officials also organize regular transportation between Mingji and Urumqi, help families stay in touch, and support many of the children and elderly left behind in Duanqiao. Mingji township has always been relatively well off among townships in Zouping. However, a competitive ­cotton-​­processing industry within Zouping does not guarantee Mingji, and especially Duanqiao, continued prosperity, especially after the collapse of TVEs and the end of ­government-​ ­assisted funding for public enterprises. In order to secure funding for their local enterprises, local officials must now make appeals to banks based on the projected profitability, future earnings potential, and contribution to national development goals of their firms rather than their status as public enterprises. Mingji and Duanqiao illustrate the continued important and changing role of local governments, especially with regard to their willingness and ability to seek resources beyond the locality, both within China and abroad. Village officials commute to f­ar-​­flung farms and factories owned and run by local villagers, serve as liaisons between their home village and outside interests, and serve as guarantors for loans from the county government. In addition, balancing the industrialization process by promoting the use of locally grown agricultural products has helped to support the local agricultural base while forging ahead with industrialization.

Conclusion As seen in the examples of Weiqiao and Mingji, the county government has adapted to play a significant role in linking Zouping to the outside world, allowing localities and enterprises to overcome resource and market limitations. Formally established in 2001, the Bureau of Foreign Trade and Economic Cooperation (对外经济合作 ) now plays a particularly important role in a county like Zouping with growing industries but limited supplies and markets within the locality.53 The mission of this office is to assist local enterprises with trade, to promote investments into and out of Zouping, and to create opportunities for cooperation and joint ventures with foreign firms. Since 2006 enterprises in Zouping have invested in six foreign countries, including the United States and Zimbabwe. While investigative study

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tours to model localities all over China and abroad had taken place earlier,54 the establishment of formal trade relationships and actual production in foreign countries has been more recent. For example, entrepreneurial businessmen from one village in Zouping have gone to Zimbabwe, where they purchase scrap pulp from the lumber industry to produce cardboard, which they then sell to markets in the Middle East. Zouping County officials supported this venture by providing seed capital partially obtained from a national program promoting overseas production expansion and assisting in the recruitment of workers from Zouping. Here again, the enabling role of the county government, combined with the availability of favorable funding from the central government in the form of subsidies for investment and production in the African continent, has played an important role in the villagers’ choice of destinations.55 In so doing, China’s entry into foreign markets not only as exporters but also as local producers has reached beyond the urban centers to previously rural areas like Zouping, thereby greatly expanding growth opportunities. After nearly four decades of reform, rural China has become more varied than ever. Despite a relatively uniform set of centrally determined rural reform policies, implementation and outcomes of these policies have varied widely. Even within the limited geographic confines of a county like Zouping, there is great variation in the paths taken and the subsequent economic fortunes of ­subcounty-​­level localities. At the same time, counties like Zouping provide proof that some counties “get it right” by adeptly governing and helping develop the townships and villages under their control, even if the supporting roles have evolved as public enterprises have declined in importance. Control over the funds necessary for development has been and remains largely in the hands of the county government, making funding an important economic and political tool for promoting economic development. Counties can use their control over these funds through individually tailored programs such as ­interest-​­free or l­ow-​­interest loans and tax breaks, which create incentives for economic growth at the subcounty level. At the same time, many other factors have now also come into play. In the case of Zouping, the promotion of industrialization with the continued use of locally available agricultural inputs such as corn and cotton has carefully balanced the pursuit of industrialization with its initial endowments and local ­k now-​­how. Zouping has also taken advantage of its history and ex-

Creativity and Flexibility in Economic Governance  83

perience of outward orientation and greatly expanded its search for inputs and markets beyond the county boundaries. The coupling of local sourcing with openness has become one of the key ingredients for steady and continued economic growth. While this is just one county among hundreds of others, a close examination of the development paths taken by Zouping’s townships and villages illustrates the plurality of development paths within the Chinese countryside. Key to Zouping’s success has been the county government’s ability to be creative and flexible even within the confines of a nationally scripted rural development policy. The anecdotal evidence from Zouping points to local leadership and to the linkages with resources outside the locality, both within China and abroad, as equally important factors in the development of rural China. These examples also raise further questions about alternative forms of development, including the impact of interprovincial and international trade and investment in their many forms on the local economy and politics. Studies of Zouping County over the past two decades have given us an u ­ p-​­close view of a once typical county in rural China, one that now requires a much expanded context for our full understanding. Zouping County’s experience also offers a valuable glimpse into how an authoritarian government can allow for diversity, creativity, and flexibility at the local levels to promote overall economic stability and resilience.

Notes

1.  Early works from the 1980s include Jean C. Oi, “Commercializing China’s Rural Cadres,” Problems of Communism 35 (1986): 1–15; Christine P. Wong, “Between Plan and Market: The Role of the Local Sector in ­Post-​­Mao China, Journal of Comparative Economics 11 (1987): 385–98; Jean C. Oi, “The Chinese Village, Inc.,” in Bruce Lloyd Reynolds and Ilpyong J. Kim, eds., Chinese Economic Policy: Economic Reform at Midstream, 67–87 (New York: Paragon House, 1988). The role of local government officials as economic actors was also a central theme in the previous volume on Zouping. Similar findings have come from Shulu County in Hebei Province. See Marc Blecher, and Vivienne Shue, Tethered Deer: Government and Economy in a Chinese County (Stanford, CA: Stanford University Press, 1996). 2.  Andrew G. Walder, Zouping in Transition: The Process of Reform in Rural North China (Cambridge, MA: Harvard University Press, 1998), 2. 3.  China Interview 061102. Also noted in 2004年度全国百强县（市）社会经济

84  K ay Sh i m i z u 综合发展指数测评结果 .

Eligible counties include all administrative areas at the county level including cities at the county level (xian ji shi县级市) and districts under the jurisdiction of cities（市辖区）. http://www.stats.gov.cn/tjsj/qtsj/bqxssj/ t20051025_402287154.htm. 4. 2011年度中国中小城市科学发展测评前100个城市. Medium and small municipalities must have a nonagricultural population under 500,000. 5.  As late as 1993, Zouping County was a typical rural county in China, remaining near average in most indicators of development; see Walder, Zouping in Transition, 14. By 2005 Zouping had been selected as one of the top 100 f­ astest-​ ­growing and most promising counties in China among more than 2,000 counties (including 377 ­county-​­level cities). China Interview 061102. 6.  Zouping County Statistical Bureau, Zouping tongji nianjian (Zouping County statistical yearbook) (Jinan: Zouping tongji nianjian, 2011), 2. 7.  Zouping County Statistical Bureau, Zouping tongji nianjian (2011), 12–13. 8.  Jean C. Oi and Kay Shimizu, “The Uncertain Outcomes of Rural Industrialization: A Reassessment,” in ­Tse-​­Kang Leng and Y ­ un-​­han Chu, eds., Dynamics of Local Governance in China during the Reform Era (Lanham, UK: Lexington Books, 2010). 9.  Recent examples include Gang Guo, “China’s Local Political Budget Cycles,” American Journal of Political Science 53 (2009): 621–32; Y ­ i-​­wai Li, Bo Miao, and Graeme Lang, “The Local Environmental State in China: A Study of ­County-​­Level Cities in Suzhou,” The China Quarterly 205 (2011): 115–32; Lynette H. Ong, Prosper or Perish: Credit and Fiscal Systems in Rural China (Ithaca, NY: Cornell University Press, 2012). 10.  The Ninth ­Five-​­Year Plan (1996–2000), adopted in September 1995, first clearly expressed concerns for widening inequalities and the possible consequences for social and economic stability. The leadership’s sense of greater urgency in addressing these concerns is evident in the Twelfth ­Five-​­Year Plan (2011–2015). 11.  Fiscal incentives have also been created at higher levels of government. At the highest level, wealthier provinces have been paired with poorer provinces; the wealthier province has fiscal incentives to invest in economic activity in and with their less ­well-​­off provincial partner, creating a w ­ in-​­win situation for both provinces involved. Such programs have helped to alleviate some of the resentment expressed in wealthier coastal provinces, which have become net taxpayers that see little in return for their money. 12.  The Chinese government officially abolished the agricultural land tax on January 1, 2006, as part of the Eleventh F ­ ive-​­Year Plan. Most provinces phased out the agricultural tax in the early 2000s. However, farmers continue to pay

Creativity and Flexibility in Economic Governance  85 other forms of rural local taxes and levies including a special product tax, a slaughter tax, and a farmland utilization tax. Townships and villages also collect levies for local expenditures such as schools, family planning, support for military veterans, and road construction and maintenance. 13.  The negative impact of the 1994 fiscal reform and the abolition of the agricultural tax for some localities has been well documented. See, for example, Jean C. Oi and Zhao Shukai, “Fiscal Crisis in China’s Townships: Causes and Consequences,” in Merle Goldman and Elizabeth Perry, eds., Grassroots Political Reform in Contemporary China (Cambridge, MA: Harvard University Press, 2007), 75–96. 14.  Zouping County Statistical Bureau, Zouping tongji nianjian, (2000), 104; Zouping County Statistical Bureau, Zouping tongji nianjian (2005), 75. 15.  Zouping County Statistical Bureau, Zouping tongji nianjian (2000), 342. 16.  These townships include Xidong, Jiaoqiao, Sunzhen, Jiuhu, Taizi, and Matou. 17.  Ten years later, by the beginning of 1999, Zouping County included fifteen ­zhen-​­level townships and two ­xiang-​­level townships (里八田， 码头). In March 2001, Lican, Yuancheng, and Libatian townships were dissolved and merged with Zouping, Changshan, and Weiqiao townships, reducing the total number of townships to fourteen. In April 2002, Matou became a ­zhen-​­level township, thus eliminating all ­xiang-​­level townships from Zouping County. In February 2003, Zouping zhen was divided into three subdistricts (街道办事处) ( 黛溪，黄山，高薪 ). Thus, currently Zouping County has thirteen zhen level townships, and three subdistricts. Zouping County Statistical Bureau, Zouping tongji nianjian (1999–2003). 18.  Oi Interview ­90-​­sum. 19.  Oksenberg Interview ­96-​­I-135. 20.  Technically, since 2002 there are only thirteen townships and three subdistricts, for a total of sixteen township level units directly under the county. 21.  China Interview 050629. 22.  Handian township received 280,000 yuan in subsidies, and Qingyang township received 110,000 yuan in subsidies out of a total of 1,761,000 yuan in subsidies distributed. Oi Interview ­90-​­sum. 23.  For details see the section on Linchi township later in the chapter. 24.  Efforts to urbanize rural China have also taken place at the county levels where many counties have been promoted to c­ ounty-​­level cities (xian ji shi 县级 市). However, studies also show that these promotions do not always correlate to the actual extent of urbanization. For example, see J. H. Chung, and T. Lam, “China’s ‘City System’ in Flux: Explaining P ­ ost-​­Mao Administrative Changes,”

86  K ay Sh i m i z u China Quarterly 180, no. 180 (2004): 945–64. Chung and Lam show that there are many incentives to increase the share of “urban” local governments, regardless of whether their residents are economically or socially urban. 25.  Yang provides evidence of a push from the State Council to reduce the number of towns and townships in 2000. Dali L. Yang, Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China (Stanford, CA: Stanford University Press, 2004), 48–49. 26.  The difference between a town (zhen) and a township (xiang) is the ratio of the urban population. A town has over 10 percent of the population registered as nonagricultural (urban), whereas a township has over 90 percent of the population registered as agricultural (rural). 27.  Zouping County Statistical Bureau, Zouping tongji nianjian (2009), 324, 332. 28.  Ibid., 53. 29.  China Interview 050711. 30.  China Interview 050713. 31.  Zouping County Statistical Bureau, Zouping tongji nianjian (2009), 85, 100–104. 32.  Zouping County Statistical Bureau, Zouping tongji nianjian (1992), 121. 33.  Zouping County Statistical Bureau, Zouping tongji nianjian (1988 and 1995). 34.  Oi, “Fiscal Reform and the Economic Foundations of Local State Corporatism,” World Politics 45 (1992); Jean Chun Oi, Rural China Takes Off: The Institutional Foundations of Economic Reform (Berkeley: University of California Press, 1999). 35.  China Interview 050705. 36.  Oi, Jean C., “The Evolution of Local State Corporatism” in Walder, ed., Zouping in Transition, 35 37. Walder, Zouping in Transition, 18. 38.  Oi Interview ­90-​­sum. 39.  China Interview 070816. 40.  Zouping County Statistical Bureau, Zouping tongji nianjian, (2011), 14. 41.  Oksenberg Interview ­96-​­II-183. 42.  This was especially the case after the 1994 tax reforms. Oksenberg Interview ­96-​­I-128. 43.  Oksenberg Interview ­96-​­I-184. 44.  Oksenberg Interview ­96-​­I-183. 45.  Walder also attributes this outward orientation of county officials to the limited scale of Zouping’s own markets at this time. Walder, Zouping in Transition, 69.

Creativity and Flexibility in Economic Governance  87 46.  Oksenberg Interview ­96-​­I-184. 47.  Zouping County Statistical Bureau, Zouping tongji nianjian (2006), 65; Zouping County Statistical Bureau, Zouping tongji nianjian (2011), 77. 48.  Mingji township homepage accessed Jan 2, 2014. http://www.zouping. gov.cn/mingji/index.htm. 49. Walder, Zouping in Transition, 68. 50.  China Interview 070820. 51.  The tax system reforms enacted in 1994 favored enterprises that processed locally grown agricultural products. Oksenberg Interview 9­ 6-​­I-128. 52.  China Interview 070820, 0806. 53.  In 1988 this was still known as the dui wai jingji maoyi weiyuan hui. 54.  Oi, “The Evolution of Local State Corporatism,” 52.
55.  China Interview 070816.

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Ch a p t er 4

Directed Improvisation in Administrative Financing Yuen Yuen Ang

This chapter examines one of the oldest and most basic problems of governance: how to pay the bureaucracy. Before any government can deliver public goods and services, listen and respond to citizens’ needs, or be held accountable, it must first be able to pay the bureaucracy. Yet among local governments in China, including those in Zouping, this is no easy feat. These local governments face heightened budgetary pressures following the 1994 tax reform. In addition, they must finance an e­ ver-​­growing number of public personnel and provide an e­ ver-​­enlarging range of regulatory and public services.1 Even as a relatively prosperous locale that is ranked among China’s “top 100 economic performers,” Zouping County is not spared from budgetary pressures. As my fieldwork finds, many agencies and public service providers still receive only erratic and incomplete sources of state funding from the county government. Facing this situation, these public organizations must “­self-​­finance”—that is, generate a portion of their own incomes and staff benefits. How do they go about s­ elf-​­financing? Are they free to generate revenue in any manner? Or is their s­ elf-​­financing behavior regulated by certain rules, and if so, which rules? Examples from Zouping suggest that strategies of administrative s­elf-​ ­financing in local China are bound by rules, specifically rules made by an intersecting matrix of vertical (条) and horizontal (块 ) authorities within the state.2 More broadly, this account illustrates a key condition of adaptation—which I call “directed improvisation.”3 While many observers have underscored and hailed China’s remarkable adaptability,4 few have 

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explained the sources of its apparent adaptive capacity.5 Why does China alone appear so adaptable? Rather than attribute its adaptive outcomes to fixed factors such as history or culture, I argue that the combination of ­top-​­down directions and b­ ottom-​­up improvisation is essential for effective adaptation to occur within the bureaucracy. Encouraging improvisation and experimentation without setting boundaries is more likely to invite chaos than workable solutions. Whether in administrative financing or other policy realms, bureaucratic adaptation in China works only when it is bound by rules.6 Needless to say, it would be disastrous if local agencies were free to finance themselves in any manner. For public organizations that wield regulatory and coercive power, the quickest and surest way of generating revenue is through extraction, such as by extracting fees and fines from residents and by extorting bribes. Indeed, from the 1980s through the 1990s, bureaucratic predation was so widespread in China that it inspired the term “three arbitraries” (arbitrary fees, arbitrary fines, and arbitrary extortions).7 This was the period that led observers like Lü to conclude prematurely that China’s bureaucracy “refuses and fails to adapt” and that as a result, he pronounces, it has become “indefinitely patrimonial.”8 The reality that I find in Zouping and elsewhere, however, is far from Lü’s projection of a static bureaucracy that is forever trapped in its old ways. Rather, consistent with the theme of this volume, agencies in Zouping, as well as other localities in China, have adapted and continue to adapt to budgetary pressures and capitalist opportunities. Practices and strategies of administrative ­self-​­financing, though unfettered and chaotic in the past decades, have evolved toward a more regulated system that is sanctioned by state rules, rather than being in brazen violation of them. This logic may be summed up in a colloquial Chinese phrase: “assign policies not money” (给政策不给钱 ). In other words, instead of financing public agencies fully through formal state budget allocations, as “normal governments” in developed democracies do, Chinese state authorities enact policies that permit local bureaucracies to ­self-​­finance, such as by collecting fees or generating profits through market activities. Such policies typically emanate from the center and are used or improvised upon by l­ower-​­level authorities.9 Administrative ­self-​­financing is nothing new in history; nor is it unique to China. As Weber famously points out, premodern state administrations relied universally on s­ elf-​­financing—in his words, they were “prebendal.”10

Directed Improvisation in Administrative Financing  93

Rather than pay public officials fixed salaries from state treasuries, feudal and imperial governments assigned them the right to exact fees from local populations, conduct monopoly trades, receive gifts, and so on. Viewed in corporate terms, prebendal agents were entrepreneurs who provided certain services to rulers in exchange for the right to profit from those services. Opportunities to profit from public office, however, encouraged widespread abuse of power. What is different in the context of contemporary China, as seen in Zouping, is that when prebendal (­self-​­financing) practices in days of yore were combined with the growing powers of a modern state, they became progressively regulated. In this way, China’s local agencies are not purely Weberian; that is, they do not receive only a single source of stable income from the government. Yet their entrepreneurial efforts at ­self-​­financing are not corrupt in the sense of being illegal or completely out of control. The Zouping bureaucracy is today a hybrid of the premodern and the modern, and it is still continuing to adapt and evolve. The chapter proceeds as follows. I begin by clarifying the fiscal terminology and defining revenue earned by local bureaucracies as part of a local government’s base of taxless revenue. Then, based on interviews in Zouping, I present case studies of “directed improvisation” in administrative financing in three sectors (系统): education, health, and construction. A discussion follows that places Zouping in national perspective. A final section concludes the chapter.

Clarifying the Fiscal Structure: Tax versus Nontax Revenue Before turning to the case studies, I begin by clarifying fiscal terminology. In the existing literature, there have been a bewildering array of terms used to describe the portion of revenue beyond taxes. Local governments have two sources of funding: formal t­ ax-​­based budgets and o­ ff-​­budget finance.11 The latter comprises extrabudgetary funds and ­self-​­raised funds. Extrabudgetary funds are further divided into funds controlled by local governments, administrative agencies, and ­state-​­owned enterprises. ­Self-​­raised funds include contract fees, collective income, and other contributions at the township level.12 However, since the 1994 ­tax-​­sharing system and rural fiscal reforms, the fiscal terminology has been changed. In 1993 retained profits from state enterprises were removed from the category of extrabudgetary revenue.

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Along with the t­ ax-​­for-fee reform (费改税 ) and the abolition of agricultural taxes, township s­ elf-​­raised funds fell dramatically after 2002.13 In the 2000s, the Ministry of Finance began progressively replacing the traditional budgetary concept of “extrabudgetary revenue” (预算外收 入) with the new concept of “nontax revenue” (非税收入). This change in terminology was first proposed in a 2001 central document entitled “Notice from the Ministry of Finance Regarding Reforms to Deepen Separation of Revenue from Expenditure” (财政部关于深化收支两条线改革的通知). In July 2004, the Ministry of Finance issued a f­ollow-​­up document, entitled “Notice on Strengthening the Management of Taxless Revenue” (关于加 强政府非税管理的通知). This document officially adopted the term “nontax revenue” and phased out “extrabudgetary revenue” as a budget category.14 Replacing the term “extrabudgetary” with “nontax” indicates more than just a superficial change of name. Importantly, it signals the redefinition of ownership rights over revenue that is collected or generated by public bureaucracies. For the central government, this budget reclassification reflected “a deepened conscious effort to refine our public financial structure and to regulate the collection of public revenue.”15 The term “extrabudgetary” signaled the division of public revenue by ownership or management rights. It implied that individual units of the p ­ arty-​­state apparatus could “own” the revenue they collect. By contrast nontax revenue divides revenue by sources—that is, taxes or nontaxes—with no assumptions made about ownership.16 In my interviews, the vast majority of local finance officials, especially in economically developed locales like Zouping, now refer to “tax versus nontax revenue” rather than “within versus extrabudgetary revenue.” Feishui (非税) literally means “revenue that is not taxes.” Taxes consist of revenue collected by the national and local tax agencies in accordance with national tax laws.17 Nontax revenue is a residual category of public finance comprising six subcategories: (1) earmarked revenue (专项收入), (2) administrative and user charges (行政事业收入), (3) fines (罚没收入), (4) profits from operating state assets (国有资产经营收入), (5) profits from charges for use of state assets (国有资产使用收入), and (6) others (其他收入). Revenue collected by individual public agencies and service providers belongs in the fiscal category of taxless revenue. For both measurement and analytical reasons, it is important to classify income collected by administrative units (e.g., fines, fees, charges) as nontax rather than extrabudgetary revenue. In the existing literature, admin-

Directed Improvisation in Administrative Financing  95 TOTAL BUDGET

Regular Budget (yiban yusuan)

Tax Revenue (shuishou)

Earmarked Budget ( jijin yusuan)

Taxless Revenue ( feishui shouru)

Within

Extra Budget

Figure 4.1. Local Public Finance Structure Source: Author’s interview at Zouping Finance Office, 2011.

istrative income has frequently been equated with extrabudgetary funds.18 Some commentators even indiscriminately classify all fees and fines as “­off-​ ­budgetary revenue,”19 asserting that “most of them are not legal.”20 Such assertions, however, are not backed up by evidence or careful institutional analyses that income generated by local agencies is necessarily illegal or excluded from official budgets. Although central finance officials have keenly pushed to phase out extrabudgetary funds, this category still appears in many local budget reports. In most cases, however, “extrabudgetary” is now measured as a subset of nontax revenue. For example, in Zouping, education charges are classified as extrabudgetary nontax revenue, in that the allocation of these funds is not subject to the same formal legislative approvals as w ­ ithin-​­budget nontax funds. Other regulatory fees, however, are included in the ­within-​ ­budgetary category. In sum, income collected or generated by individual bureaucracies forms part of Zouping County government’s base of nontax revenue. For analytic purposes, interpreting administrative income as nontax revenue is technically accurate and avoids unqualified assumptions of corruption that often have been associated in the earlier literature with the term “extrabudgetary.”21 In a 2011 interview, the Zouping Finance Office described the public financial structure as summarized in figure 4.1. The total budget is first divided into two categories: regular budget (yiban yusuan 一般预算 ) and

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earmarked budget (jijin yusuan 基金预算). The regular budget is subdivided into tax revenue and nontax revenue.22 The earmarked budget consists of income from various earmarked funds that can be established only by the central and provincial governments and be used for prespecified purposes. For example, land proceeds (土地出让金), a major and growing source of local revenue, falls under the earmarked budget, and these funds may be appropriated only for ­land-​­related projects. This description from the Zouping Finance Office is roughly consistent with my interviews conducted elsewhere and with available official documents, though there remains some local variance in budget classifications.23 In 2010 Zouping reported income of 3.66 billion yuan in its regular budget, of which tax revenue made up 72.4 percent and taxless revenue 27.6 percent. In comparison the earmarked funds budget was about 0.5–0.6 billion yuan, mostly proceeds from leasing land. Evidently, thanks to its strong industrial sector, Zouping’s public finances are heavily based on tax revenue.

­Post-​­Mao Adaptation of Prebendal Practices Contemporary practices of administrative ­self-​­financing are not unique to contemporary China. Precedents exist throughout premodern societies, both in and beyond China. From a historical perspective, administrative ­self-​­financing is a contemporary adaptation of what Weber calls “prebendalism.” In premodern societies, capacities of centralized tax collection were weak, and revenue flows into royal treasuries were unpredictable. As a result, rulers either could not, or preferred not to, pay public officials fixed compensation and budgets. Instead, rulers licensed their agents to s­ elf-​­finance by extracting rents from office. Such license was sometimes granted openly and at other times implicitly by turning a blind eye to local actions. According to Weber, examples of prebends included rights to extract fees, conduct monopoly trade, or employ land for private use.24 Students of contemporary China would find all of these sources of rents uncannily familiar.25 Further back in history, fiscal shortages, unfunded mandates, and unsalaried clerks and runners have persisted in China for centuries.26 County offices and magistrates were severely underfunded and sometimes not funded at all. Thus, local officials were forced to exact fees on local populations or seek contributions from the gentry. Yet even though prebendal practices

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were necessary to fund local administrations, they were prone to individual abuses of power and imposed fiscal burdens. Unsurprisingly, local residents resented prebendal practices and saw them as corruption. Unsalaried runners who lived on fees, for example, were labeled the “vermin” of county yamen.27 Strategies of nontax public financing also prevailed in the early days of state formation in the United States. During the eighteenth and nineteenth centuries, the United States relied heavily on state governments, rather than the federal government, to finance and build major infrastructure projects, such as the Erie Canal, Ohio Canal, and railroads. Although state governments were keen to promote economic development through infrastructure investments, they were electorally constrained from raising taxes on local populations. As John Joseph Wallis describes, these circumstances forced state governments “to develop creative ways of financing projects” without raising taxes. He calls this strategy “taxless finance.”28 Methods of taxless finance included issuing bonds and selling corporate charters. In the case of corporate charters, private entrepreneurs who financed infrastructure projects were granted exclusive rights to operate in lucrative sectors such as banking. This was essentially a variant of prebendalism, albeit in grander form and employed toward the goal of financing infrastructure, rather than personnel salaries and administrative expenses. In the contemporary Chinese context, it is no surprise that both the scholarly and popular literature have widely lambasted practices of administrative s­ elf-​­financing as corruption. In an earlier study, Lü labeled all ­revenue-​­making activities among local agencies as “organizational corruption.”29 Many others cite the existence of departmental slush funds (小金 库), extrabudgetary financing, and fee extractions as evidence of weak state control over the bureaucracy,30 or even imminent signs of state collapse.31 Indeed, ­self-​­financing practices, if unregulated, are prone to abuses and excesses. Yet once placed in comparative and historical perspective, contemporary practices of administrative s­ elf-​­financing in China are less exceptional than they initially seem. At the same time, a comparative view calls into question whether and how the current situation in China differs from prebendal practices in premodern times and in other poor, predatory states. The distinction is sharp and important. More precisely, although local agencies in China, including those in rich counties like Zouping, continue

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to be underfunded and are compelled to generate part of their own incomes, it is important to understand that their practices of ­self-​­financing are sanctioned and regulated by state rules. This logic is reflected in the colloquial Chinese phrase “assign policies not money” (给政策不给钱 ), which means that if the government was unable to pay agencies money (钱 ), it could assign moneymaking policies (政策) in lieu of budgeted funds. I will use the case studies that follow to illustrate two types of policy awards. One originates from provisions issued by central ministries that sanction the collection of fees, fines, and charges at the provincial and subprovincial levels. This is also known as ­tiao-​­tiao (vertical) policies. The second consists of preferential treatment and protection provided by core bureaus (机关单位) to subsidiary extrabureaucracies (shiye danwei 事业单 位).32 This dynamic of ­patron-​­client exchange takes place at every administrative level, down to the townships.33 Whereas central policies may take the form of laws and provisions, preferential treatment extended by core agencies to their subsidiary providers are often nowhere written and yet are known among insiders, which may explain why change in Chinese political institutions remain opaque. Shiye danwei, which I translate as “extrabureaucracies,” play an important role in administrative ­self-​­financing, despite their relative obscurity in scholarly studies of the Chinese bureaucracy. Extrabureaucracies hire about 80 percent of all p ­ arty-​­state employees.34 Nearly all core bureaus (that is, organizations listed on formal organizational charts) have extrabureaucracies. Functionally, shiye danwei include offices that conduct administrative duties, public schools and hospitals, and organizations that openly offer commercial services for profit. Financially, they may be fully state funded (全额拨款), partially state funded (差额拨款), or entirely ­self-​­funded (自收自 支). Shiye danwei are a useful vehicle for ­self-​­financing precisely because of their ambiguous identity: they are public organizations that may engage in market activities. In other words, we may think of them as the contracting arm of the formal civil service.35

Case Studies of Administrative ­Self-​­Financing The Education Sector: Q ­ uasi-​­Marketization of Public Schools

Public schools are the main type of shiye danwei in the education sector, and in principle they should be fully state funded. In Zouping there were 206

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kindergartens, primary schools, and secondary schools, with 7,054 teachers for about 100,000 students. I visited a premier, or literally translated from the Chinese “­key-​­point” (重点 ) elementary public school, which I dub Fortune Elementary. With more than 2,000 students, Fortune Elementary was the largest elementary school in the county. During my visit, it was in the midst of renovating its campus, despite having already impressive facilities. The principal planned to add a new building and a rubberized running track. Although public schools were supposed to be fully state funded, they still faced tremendous financial pressure. Fortune Elementary received only part of its funding from the county government. Every semester, the county was supposed to allocate a budget of 140 yuan per student to the school. In reality, however, it provided only 60 yuan per student, and the school had to make up the rest. The principal stressed that even if the county government granted the full budget allocation of 140 yuan per student, that amount would be sufficient to cover only basic operational expenditures. The county government also provided budget allocations to pay teachers’ salaries, but only for teachers who held official positions (编制). Among the 171 teachers at Fortune Elementary, only 109 were official. The school had to raise funds to finance the remaining nonofficial (编外) teachers, who received lower pay despite performing the same job as official teachers. The school principal hoped to eventually equalize wages between the two groups. The division between official and unofficial teachers at Fortune Elementary reflects broader problems with China’s ­dual-​­track public employment system. According to the Finance Bureau, the hiring quota for civil servants in Zouping had been frozen since 1993. For public schools, the Shandong provincial government set the t­eacher-​­student ratio (bianzhi) at 1:20 in primary schools (which gave Fortune Elementary 111 official slots). Fortune’s principal complained that this bianzhi allocation was “far from enough.” The school had to “borrow” help from elsewhere and hire nonofficial teachers. Like many other public schools in China, Fortune Elementary had to generate its own revenue to finance a number of spending items: the wages of nonofficial personnel; a portion of the school’s operational expenditure; and bonuses, allowances, and fringe benefits for its employees. The largest expenditure was for renovation and expansion of the existing campus. According to the principal, this was an essential task, as “classrooms were

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already very packed.” This renovation project was initially targeted to cost 10 million yuan. However, by 2006, 8 million yuan had already been spent, and the final costs were projected to reach 20 million yuan. The Education Bureau provided only 6 million yuan in grants, although it had originally pledged to allot a total of 9 million yuan. How did Fortune Elementary obtain the necessary funds to pay for things that it needed but which the county government could not fund? One source of revenue was tuition and fees. However, in line with the central government’s policy to provide nine years of free education, Zouping waived all school fees until 2006, at an annual cost of 17 million yuan to the county government. However, in 2006 Fortune Elementary continued to collect school fees from students of urban background. It was said that all tuition and fees would be waived by 2007, and the school had already done so for students from rural families. Yet another source of revenue was to charge for services in adjoining kindergartens. The n ­ ine-​­year compulsory education policy excludes preschool education, so public schools are allowed to charge for this ­high-​ ­demand service. Fortune ran a kindergarten with more than five hundred students. It planned to devote part of its rebuilding efforts to upgrading and creating a “special, h ­ igh-​­quality” kindergarten. While there is nothing wrong with public schools operating a kindergarten on school grounds to earn supplemental revenue, it is worth noting that ­key-​­point schools enjoy a significant advantage in student recruitment. Thanks to their dominant reputations and outstanding facilities, k­ ey-​­point schools could easily attract ­fee-​­paying students. Moreover, public schools could always directly seek assistance from the Education Bureau, its supervising agency and regulator of the education sector, whereas a purely private, ­non-​­state-affiliated education provider would be entirely on its own. Collecting fees and setting up kindergartens could cover only a minor share of the school’s financing shortfall. The school’s largest financial cost came from expanding and renovating the existing campus, which as detailed above, amounted to at least 20 million yuan. To raise funds for construction, public schools across China have borrowed from banks, and Fortune Elementary was among them. The school principal proudly boasted that his supervisors from the Education Bureau sat beside him at banquets with banking officials. Together, the three parties—school, agency, and bank—negotiated loans. Their symbiotic ties were evident.

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In addition to spending time at Fortune Elementary, I visited one of only two private schools in Zouping. The director of this private school was simultaneously the principal of an adjacent public school. Setting up the private school required total s­ tart-​­up capital of 20 million yuan. The main investors were the teachers of the public school next door; about 90 percent of the teachers had invested in setting up this private school. The teachers contributed funds in a formal shareholding arrangement. Shareholders received dividends if the private school made profits and incurred losses if it failed. Officials at the Education Bureau emphasized that the establishment of private schools was permitted by state policy under the Law to Promote Private Education Services Provision (民办教育促进法). Both the adjacent public school and the individual teachers who invested in the private school stood to gain financially from their enterprising efforts. Beyond Zouping the q­ uasi-​­marketization of public schools is a national phenomenon and ­revenue-​­making strategy, dubbed “reputable public schools operate private schools” (名校办民校). As private entities, private schools linked to k­ ey-​­point public schools are legally permitted to collect tuition, thus circumventing restrictions on public schools. In addition, ­key-​­point public schools commonly collect school selection fees (zexiaofei), which is not a compulsory tuition charge but an optional premium charge to qualify for entry into k­ ey-​­point schools. What would induce parents to pay hefty zexiaofei? Schools that charge such fees must offer a premium value, and such premiums exist only when resource distribution is highly unequal across schools. This is observed in Zouping, where as a foreign visitor, I was brought to visit the best public school. The principal of Fortune Elementary revealed that as part of his ­fund-​­raising efforts for renovation, he obtained a special grant of 100,000 yuan for “repairing dangerously dilapidated schools” (危房改造 ). I was informed earlier by the Education Bureau that it had awarded about the same amount for this particular grant. It thus appeared to me that Fortune, which looked barely dilapidated, had received the bulk of those funds. As ­well-​­endowed schools were extremely ­well-​­endowed, these schools received mounting demand for enrollment. And as these schools became overpopulated, their leaders were further pressured to expand and refurbish school grounds. For the principal at Fortune Elementary, this was, in his words, a “virtuous cycle.” Moreover, it should be pointed out that collecting premium fees does

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not violate the policy of n ­ ine-​­year compulsory education. Provincial and city governments have issued policies that allow the collection of zexiaofei, as the Price Bureau confirmed. This is not illegal or arbitrary. Nor is it against the spirit of central policy. The central government had left county governments in charge of providing essential services like education without adjusting revenue assignments. Funds for public education had to come from somewhere. In short, the unequal distribution of financial and personnel resources by regulatory authorities generates high demand for k­ ey-​­point schools. Their dominant appeal empowers these schools to charge high premium fees and to spin off private affiliates that can legally generate profits and distribute dividends to investors from public entities that sit next door. The Health Sector: ­Q uasi-​­Marketization of Public Health Providers

Nationwide, China’s public health sector is only partially state funded. For public health care providers, s­ elf-​­financing matters not merely for the provision of fringe benefits and new furnishings but for sheer survival. In Zouping there were ­twenty-​­two public health providers, including eight ­county-​­managed units and fourteen t­ ownship-​­managed units. I interviewed administrators at one of the county’s three hospitals. Table 4.1 provides a breakdown of the health sector’s financial status. According to the Health Bureau, ­state-​­budgeted funds covered only 8.4 percent of the sector’s total expenditure, resulting in a deficit in 2005. County officials admitted that staff wages were owed. The hospital generated half its revenue from the sale of medications and drugs. Among township health clinics, that share was even higher, about 60–70 percent. The county hospital’s remaining income came from ward and examination charges. Looking at media reports, one gets the impression that Chinese hospitals shamelessly gouge patients. (Even a cadre from Zouping’s Foreign Affairs Office could not help chastising the health sector. Informally, he complained that he had spent 500 yuan, about a third of his official monthly salary, getting shots repeatedly at the local hospital for a mere cold.) On the surface, the health sector appears to be the textbook case of arbitrary collection of fees and charges. Yet, in fact, its situation is perhaps the best illustration of “giving policies not money.”

Directed Improvisation in Administrative Financing  103 Ta bl e 4 .1  Financial Structure for Zouping County’s Health Sector, 2005 (yuan) Total revenue • Of which, total funds from government • Of which, self-generated revenue Total expenditure Deficit

168.5 million 15.2 million 153.3 million 180.5 million 12.0 million

S ou rc e: Zouping County government, 2006.

Nationwide, the government progressively cut funding to public health providers, but in exchange it awarded a policy that allowed them to profit from selling drugs and medications. This is enshrined in a central document, entitled “Notice on the Policies of Health Care Reform” (国务院批 准卫生部关于卫生改革若干问题报告的通知 ), which was jointly issued by the State Council and Ministry of Health in 1985. Following this provision, health providers could legally mark up the prices of drugs by up to 15 percent. This green light to profit from selling drugs coincided with comparatively strict pricing guidelines on ward and examination charges. The County Price Bureau indicated that 60 percent of pricing decisions for medical services were made at the central level and 40 percent at the local level, in accordance with central guidelines. In other words, pricing for medical services was highly restricted and hence out of touch with reality. The director of the county hospital lamented that ward charges in Zouping ranged from only 8 to 100 yuan a night. He added emphatically that staying overnight at the county hospital is cheaper than staying in a hotel. To maximize revenue without violating price regulations, public providers resort to overselling medications and overprescribing treatments. A Foreign Affairs cadre who was present at the interview offered a useful illustration: “Say you need a shot. There’s a 5 yuan shot and a 50 yuan shot. Maybe the 5 yuan shot would work for your condition. But the doctor says you need the 50 yuan shot. He has the final word on what the patient needs. Even if the markup price is capped at 15 percent, the hospital will still make more from the 50 yuan shot.” The other county officials present did not disagree with what was said. Unfortunate as it is, the situation described is common knowledge in China.36

104  Y u en Y u en A ng The Construction Sector: The “Haves” of the County Bureaucr acy

The construction sector represents the “haves” among local agencies. In Zouping its wealth and privilege are obvious. Among the various departments I interviewed, this was the only sector that did not complain about financial pressure or wage arrears. The construction sector occupied its own building, separate from the ­county-​­state building that was shared by multiple offices. Even the Foreign Affairs officer who accompanied me to the interview remarked that the building that housed the construction office was “very good looking.” The construction sector consisted of the Construction Bureau and many subsidiaries: a construction company, landscaping services office, construction management office, rural construction management office, procurement office, construction materials assessment center, construction design institute, and real estate development company. The construction company was an enterprise unit that did construction work; it used to be a collective enterprise (集体单位) but had since been restructured (改制) and is now a shareholding company. The remaining organizations were shiye danwei, not enterprise units. Only the greening office, construction management office, rural construction management office, and procurement office were fully state funded; the remaining units were entirely ­self-​­funded. I asked the chief at the Construction Bureau, “What does it mean for a state unit to be “entirely s­ elf-​­funded”? He responded, “For example, if the design institute has work to do, they make money; if they make money, they can pay salaries. Their employees receive all their salaries from the income they earn. The government does not provide any funding. After subtracting costs and taxes, the rest belongs to the organization.” Furthermore, he added, as ­self-​­funded units “enjoy more flexibility in paying salaries,” their employees were better paid than civil servants who worked in the Construction Bureau. My next question was, if these ­self-​­funded entities rely entirely on their own means to generate income, how do they survive in the market? Do they face competition from private providers? The chief responded that there are many private companies that provide construction design services today. In the late 1990s, the central government urged public design institutes nationwide to restructure into enterprise units. Zouping, however, did not restructure the institute and left it as a shiye danwei because “the pro-

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cess was complicated and our personnel refused to restructure.” Apparently, retired personnel of enterprise units would receive less in pension funds than those who worked in service units. Yet the more important reason went beyond reduced pensions. As the Construction Bureau chief further explained: “If they restructured and became independent, they would no longer be under our supervision. The implication is that if the government has a project, for example, they must rely on their abilities.” Reading between the lines, I wondered: rely on their “abilities” as opposed to what? His statement subtlety revealed that extrabureaucracies, by virtue of their public status, enjoyed certain market privileges that purely private providers do not have. This is another kind of policy in lieu of budgeted funds.

Zouping in National Perspective Several themes emerge from the preceding case studies. First, even in Zouping, most county agencies and public service providers face budgetary pressures, with the exception of “haves” like the Construction Bureau. Such pressures are particularly intense in the education and health sectors, both of which confront growing demand for public services. These two sectors share a common trend of marketization without privatization. Public schools and hospitals are not privately owned and operated units. Nevertheless, they behave like market actors, motivated by revenues and profits. Yet unlike private providers, marketized public schools and hospitals share intimate ties with their respective supervising agencies, which bestow on them significant market advantages. Second, there exists a paradoxical disconnect between rigid price controls set by the government and public perceptions of excessive and arbitrary extraction. As my interviews suggest, public providers do not seem to brazenly disregard price controls and extract payments as they wish. Rather, even as they seek to maximize revenue, these providers keenly attempt to play by ­state-​­issued rules. That is why prohibitive health care costs in China stem from a particular behavioral pattern, namely, the overprescribing of drugs, rather than excessive charges for skilled medical services. If health care providers paid no regard to state rules, they could extract payments from drugs and services alike. Third, the construction sector illustrates the commercialization of services through extrabureaucracies. Commercialized extrabureaucracies are

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not the same as b­ ureau-​­operated companies, which proliferated in the 1980s and early 1990s, and were variously named jingji shiti (economic subsidiaries), gongsi (companies), or sanchan (tertiary sector undertakings).37 Whereas extrabureaucracies operate only in the services sectors regulated by their parent agencies, corporate entities could run businesses in any sector.38 Moreover, ­bureau-​­operated companies were “­profit-​­making, ­risk-​ ­taking businesses” that could make losses.39 These companies disappeared by the late 1990s, both as a result of central policy to divest state agencies of side businesses and because they could not compete against private firms.40 Extrabureaucracies, on the other hand, may enjoy competitive advantages or even monopoly rights ­vis-​­à-vis nonstate services providers.41 These patterns of administrative s­elf-​­financing in Zouping are common throughout the rest of China. Compared to other locales, Zouping is distinct in two respects. First, Zouping is one of the country’s most economically successful counties. Hence, despite budgetary gaps reported by local agencies and providers, the situation in Zouping is superior to that in many other locations. For example, Fortune Elementary faced tremendous pressures to borrow and raise funds because it chose to renovate the campus lavishly. The campuses of the best public schools in Zouping are local landmarks of pride. In addition, thanks to Zouping’s thriving economy, the semicommercialized extrabureaucracies in Zouping had done well. For instance, the extrabureaucracies of the Construction Bureau had no lack of business, especially in the ­fast-​­growing and highly profitable real estate sector. And generally, because Zouping had a strong tax base that was supported by profitable industries, fees and fines played only a supplementary role in administrative financing. In poor counties with weak tax bases, however, local agencies derive much of their income from ­self-​­generated revenue.42 Second, as a research site, Zouping is unique because foreign scholars are given research access through formally arranged interviews. It should be emphasized that there are tremendous conveniences provided to scholars who study Zouping.43 The ability to gain access to a range of bureaucracies permits researchers to compare situations across departments. This cannot easily be done in other locations where research access tends to be partial. However, the formalized nature of research access in Zouping also may limit one’s inquiries, information, and insights obtained through interviews. For example, a superficial encounter with Fortune Elementary might

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leave one with a glowing impression of the public education provided. The school boasted impressive facilities, and its leaders claimed in earnest to serve the public interest by expanding and renovating school grounds. In short, placing Zouping in national perspective requires that the researcher consider the exceptional economic success of the county and also how the “positionality” of the observer and the avenue of research access shape his observations and interviewees’ responses, as ethnographers emphasize.44

Conclusion This chapter explores how various county agencies and public service providers in Zouping have adapted to budgetary constraints. It must be pointed out that underfunded public bureaucracies exist in all developing countries, not only in China. In typical predatory states, when bureaucracies lack funds, they turn to theft or extortion, or they simply stop working.45 In local China, however, I find that bureaucracies make keen efforts to generate or extract revenue within the parameters of state policy. From a comparative perspective, this variance is significant. Lawless forms of extraction, as seen in predatory states like Zaire, are qualitatively distinct from the relatively ­rule-​­abiding form of prebendalism in China. No doubt, there are slippages and bad apples. In poor locales where tax revenue is scarce and monitoring mechanisms weak, we find a concentration of anecdotes about crass abuses of power by individual cadres and predatory extraction.46 However, in a relatively prosperous county like Zouping, even though local agencies still face budgetary pressures, their methods of ­self-​­financing are more tightly regulated and enforced than in poor counties. There, the fees and charges collected by agencies also make up a much smaller portion of bureaucratic income than in poor locales with few sources of tax income. Significant institutional changes that have taken place since the 1990s require that we update our perceptions of China’s bureaucracy. Based on observations in the 1980s and 1990s, the literature on “bureaucratic entrepreneurialism” highlighted “­profit-​­making, r­ isk-​­taking ventures” made by local agencies.47 That on “organizational corruption” underscored the dangers of unfettered extraction and profiteering at the agency level.48 Since the 1990s, however, central reformers have pushed through a comprehensive

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program of reforms to build administrative capacity, such as by reforming systems of budgeting, auditing, treasury management, nontax revenue collection, and so forth.49 As these bureaucratic reforms are technical and obtuse, they lack appeal compared to earlier accounts of entrepreneurism, corruption, and predation, and have therefore received little attention. In fact, far from “refusing and failing to adapt,”50 the Chinese bureaucracy has adapted. Going forward, analyses of local governance must take these developments into account. In summary, in drawing conclusions about the character of bureaucracy in China, we must keep both temporal and regional variations in mind. The quality and functioning of bureaucracy varies over time in a single county and across regions at any time.51 By opening its doors to the outside world, Zouping has provided generations of foreign researchers with the opportunity to capture snapshots of the county since the 1980s and into the future.

Notes

1.  For figures on the growing size of China’s public employment, see Yuen Yuen Ang, “Counting Cadres: A Comparative View of the Size of China’s Public Employment,” China Quarterly 211 (2012), 676–96. 2.  On the “matrix” structure of Chinese bureaucracy, see Kenneth Lieberthal, Governing China: From Revolution through Reform (New York: W. W. Norton, 2003), chap. 6. 3.  I elaborate on this concept in my book How China Escaped the Poverty Trap (Ithaca, NY: Cornell University Press, 2016). On the problems of promoting adaptation and how to create conducive conditions for it, see chapter 2. 4.  For example, see Kellee Tsai, “Adaptive Informal Institutions and Endogenous Institutional Change in China” World Politics 59, no. 1, 116–41; Martin Dimitrov, Why Communism Did Not Collapse: Understanding Authoritarian Regime Resilience in Asia and Europe (New York: Cambridge University Press, 2013); David L. Shambaugh, China’s Communist Party: Atrophy and Adaptation (Washington, DC: Woodrow Wilson Center Press / Berkeley: University of California Press, 2008); Charlotte Lee, Training the Party: Party Adaptation and Elite Training in R ­ eform-​­Era China (Cambridge: Cambridge University Press, 2014). 5.  One notable and widely cited exception is Heilmann et al., who attribute China’s adaptive capacity to the Chinese Communist Party’s revolutionary past. While their argument points importantly to the enduring effects of history,

Directed Improvisation in Administrative Financing  109 history alone cannot explain why China’s bureaucracy has adapted in particular ways over the past decades. Nor can it explain why the immense creativity of local problem solving in a large country did not degenerate into chaos. See Sebastian Heilmann et al., Mao’sInvisibleHand: The Political Foundations of Adaptive Governance in China (Cambridge, MA: Harvard University Press, 2011). 6.  See Ang, How China Escaped the Poverty Trap, chap. 3. 7.  Kellee S. Tsai, “Off Balance: The Unintended Consequences of Fiscal Federalism in China,” Journal of Chinese Political Science 9, no. 2 (2004): 1–27. 8.  Xiaobo Lü, Cadres and Corruption: The Organizational Involution of the Chinese Communist Party (Stanford, CA: Stanford University Press, 2000), 22. 9.  For an elaboration beyond Zouping, see Yuen Yuen Ang, “Beyond Weber: Conceptualizing an Alternative ­Ideal-​­Type of Bureaucracy in Developing Contexts,” Regulation and Governance (2016), doi: 10.1111/rego.12123. 10.  Max Weber, Economy and Society: An Outline of Interpretive Sociology (New York: Bedminster Press, 1968). 11.  Christine Wong, Financing Local Government in the People’s Republic of China (Hong Kong, New York: Oxford University Press, 1997). 12.  Ibid., 202. 13.  Based on the author’s calculation of statistics from Ministry of Finance, Caizheng tongji nianjian (China public finance yearbook) (2005), 372, on “Items in Extrabudgetary Revenue.” Retained profits from state enterprises disappeared from statistics after 1992. Township s­ elf-​­raised funds first appeared in 1996 at 7 percent of total extrabudgetary revenue, peaked in 1998–2000 at 11 percent, and by 2003 had fallen to 6 percent. The absolute amount fell from 41 billion yuan in 2001 to 29 billion yuan in 2003. For a review of rural fiscal reforms in the 1990s, see Jean C. Oi, “Two Decades of Rural Reform in China: An Overview and Assessment,” China Quarterly 159 (159), 616–28. 14.  Xuren Xie, 30 Years of China’s Fiscal Reforms (Zhongguo Caizheng Gaige Sanshnian) (Beijing: China Finance & Economics Press, 2008), chap. 7. 15. Ibid. 16.  For a discussion of “unbundled” ownership rights, see Jean Oi, and Andrew Walder, Property Rights and Economic Reform in China (Stanford, CA: Stanford University Press, 1999). 17.  Examples of taxes are the ­value-​­added tax and the enterprise tax. 18.  Jean Chun Oi, Rural China Takes Off: The Institutional Foundations of Economic Reform (Berkeley: University of California Press, 1999); Christine P. W. Wong, ed., Financing Local Government in the People’s Republic of China (Hong Kong: Oxford University Press, 1997); Jing V. Zhan, “Explaining Central Intervention in Local ­Extra-​­Budgetary Practices in China,” Asian Survey 51, no. 3 (2011): 497–519.

110  Y u en Y u en A ng 19.  Xin Deng and Russell Smyth, “­Non-​­Tax Levies in China: Sources, Problems and Suggestions for Reform,” Development Policy Review 18, no. 4 (2000): 391–411; Shuanglin Lin, “Excessive Government Fee Collection in China,” Contemporary Economic Policy 23, no. 1 (2005): 91–106. 20.  Lin, “Excessive Government Fee Collection in China,” 94. 21.  See, for example Xiaobo Lü, Cadres and Corruption: The Organizational Involution of the Chinese Communist Party (Stanford, CA: Stanford University Press, 2000); T ­ ak-​­Wing Ngo, “­Rent-​­Seeking and Economic Governance in the Structural Nexus of Corruption in China,” Crime, Law and Social Change 49, no. 1 (2008): 27; Andrew Wedeman, “Budgets, ­Extra-​­Budgets, and Small Treasuries: Illegal Monies and Local Autonomy in China.” Journal of Contemporary China 9, no. 25 (2000): 489. 22.  In statistical records complied by the Ministry of Finance, the regular budget (yiban yusuan) is recorded in two ways. In the section on “income and expenditure” (shouzhi), the regular budget records tax and taxless revenue as sources of income but does not include fiscal transfers. In the section on “balanced budgets” (pingheng), total income includes tax revenue, taxless revenue, and all other fiscal transfers, including tax refunds (shuishou fanhuan) and earmarked transfers (zhuanxiang buzhu). 23.  Some locales classify earmarked funds as part of taxless revenue, rather than as a budget category parallel to the regular budget. 24. Weber, Economy and Society, 235. 25.  In addition to the prevalence of local agencies that rely on fees, fines, and profits from market activities as budgetary supplements, local governments have turned to selling land as a major source of nontax revenue. 26. ­Tung-​­tsu Chu, Local Government in China under the Ch’ ing (Cambridge, MA: Harvard University Press, 1962); Bradly Ward Reed, Talons and Teeth: County Clerks and Runners in the Qing Dynasty. Of Law, Society, and Culture in China (Stanford, CA: Stanford University Press, 2000); Paul C. Hickey, “­Fee-​ ­Taking, Salary Reform, and the Structure of State Power in Late Qing China, 1909–1911,” Modern China, 17 no. 3, 389–417; Madeleine Zelin, The Magistrate’s Tael: Rationalizing Fiscal Reform in E ­ ighteenth-​­Century Ching China (Berkeley: University of California Press). 27. Reed, Talons and Teeth. 28.  John Joseph Wallis, “Constitutions, Corporations, and Corruption: American States and Constitutional Change, 1842 to 1852,” Journal of Economic History 65, no. 1 (2005): 211–56. 29. Lü, Cadres & Corruption. 30.  See also Thomas P. Bernstein and Xiaobo Lü, Taxation without

Directed Improvisation in Administrative Financing  111 Representation in Rural China (Cambridge: Cambridge University Press, 2003); Wedeman, “Budgets, ­Extra-​­Budgets, and Small Treasuries.” 31.  Minxin Pei, China’s Trapped Transition: The Limits of Developmental Autocracy (Cambridge, MA: Harvard University Press, 2006). 32.  The term shiye danwei has been translated variously into “business units,” “institutional work units,” “­government-​­funded ­not-​­for-profit organizations,” “public service units,” and “service units.” I choose to translate shiye danwei as “extrabureaucracies” for an analytical purpose. This translation captures the principal feature shared among all shiye danwei—they are attached and subservient to a parent agency. See Ang, “Counting Cadres.” 33.  The extension of preferential treatment by core bureaus to extrabureaucracies is most evident at the city and county levels of government. At the township levels, the divide between core bureaus and extrabureaucracies is less c­ lear-​­cut. Moreover, after a series of rural reforms that have hollowed out the functions of township governments, there has been notably less ­self-​­financing at this level of government. For more on the .hollowing out” of township and village governments, see Jean C. Oi et al., “Shifting Fiscal Control to Limit Cadre Power in China’s Townships and Villages,” China Quarterly 211 (2012): 649–75. 34.  Ang, “Counting Cadres.” 35.  Ang, “Beyond Weber.” 36.  See Karen Eggleston et al., “Health Service Delivery in China: A Literature Review,” Health Economics 17, no. 2 (2008): 149–65. 37.  Examples of ­bureau-​­operated entities included restaurants, canteens, dance halls, convention centers, print shops, small trading companies, and department stores. See Blecher, “Developmental State, Entreprenuerial State,” in G. White, ed., The Chinese State in the Era of Economic Reform: The Road to Crisis (London: Macmillan, 1991); Jane Duckett, The Entrepreneurial State in China (New York: Routledge, 1998); Y ­ i-​­min Lin and Zhanxin Zhang, “Backyard Profit Centers: The Private Assets of Public Agencies,” in Jean Oi and Andrew Walder, eds., Property Rights and Economic Reform in China (Stanford, CA: Stanford University Press, 1999); Albert Park et al., “Distributional Consequences of Reforming Local Public Finance in China,” China Quarterly 147 (1996): 751–78. 38. Duckett, The Entrepreneurial State in China, 26. 39.  Ibid., 14. 40.  Michael Hubbard, “Bureaucrats and Markets in China: The Rise and Fall of the Entrepreneurial Local Government,” Governance 8, no. 3 (1995): 335–53; Dali L Yang. Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China (Stanford, CA: Stanford University Press, 2004). 41.  Ang, “Beyond Weber.”

112  Y u en Y u en A ng 42.  For my case study of a poorer county in Hubei Province, see Ang, How China Escaped the Poverty Trap, chap. 6. 43.  In my experience, the Foreign Affairs Office has successfully arranged almost all my interview requests except with the Organization Department, which is the office in charge of personnel appointments. 44.  Christina Chavez, “Conceptualizing from the Inside: Advantages, Complications, and Demands on Insider Positionality,” Qualitative Report 13, no. 3 (2008): 474–94; Bjorn Kjellgren, “The Significance of Benevolence & Wisdom: Reflections on Field Positionality,” in Maria Heimer and Stig Thogersen, eds., Doing Fieldwork in China (Honolulu: University of Hawaii Press, 2006); Edward Schatz, ed., Political Ethnography: What Immersion Contributes to the Study of Power (Chicago: University of Chicago Press, 2009). 45.  In the case of Africa, see Giorgio Blundo and J­ ean-​­Pierre Olivier de Sardan, Everyday Corruption and the State: Citizens and Public Officials in Africa (New York: Macmillan, 2006). 46.  T. P. Bernstein, and X. Lü, Taxation without Representation in Rural China (Cambridge: Cambridge University Press, 2003). 47. Duckett, The Entrepreneurial State. 48. Lü, Cadres and Corruption. 49.  Ang, “Beyond Weber”; Yang, Remaking the Chinese Leviathan; Jun Ma, “‘If You Can’t Budget, How Can You Govern?’—A Study of China’s State Capacity,” Public Administration and Development 29, no. 1 (2009): 9. 50. Lü, Cadres and Corruption, 22. 51. Ang, How China Escaped the Poverty Trap, chaps. 5 and 6.

Ch a p t er 5

The Evolution and Adaptation of Business–Government Relations in Zouping Martin K. Dimitrov

Research on bureaucratic agencies that enforce intellectual property rights (IPR) in Zouping nearly four decades after the beginning of marketization provides a window onto the variation and change over time in ­business-​ ­government relations in a Chinese county. Historically, three ­ideal-​­typical models have been used to analyze b­ usiness-​­government relations in China: the Maoist model, the developmental state model, and the regulatory state model. In the Maoist model, state and business are fused. In practice this means that a line ministry owns the entire production capacity within a certain economic sector (for example, heavy machinery, electricity generation, or oil extraction) and directs resources to its companies in order to help them meet plan targets.1 In contrast in the developmental state model, state and business are separate, but state financial and administrative resources (as well as the pursuit of specific industrial policies) are used to create the best possible environment for business.2 In the regulatory state model, state and business also are separate; moreover, in theory the state has no particular interest in the ­well-​­being of any specific firm. In this model, the relationship between the state and business is mediated by regulatory agencies, which are independent of the state and approach business as impartial referees. Regulatory agencies issue permits and licenses and then conduct inspections to verify that businesses abide by the scope of the licenses. In principle regulatory agencies increase transparency and thus mitigate the potential for corruption that is inherent in the close ­business-​ ­government relationship in the developmental state model.3 Each model captures the predominant aspect of one of the past several 

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decades: the Maoist model held sway until the late 1970s, the developmental state model arose in the 1980s, and the regulatory state, in the late 1990s and early 2000s.4 Recently, a debate has emerged on the relative merits of the developmental state and the regulatory state models as prisms for understanding China.5 Research on one locality, like Zouping, cannot adjudicate this debate, but it can help both track change and explore variation in ­business-​ ­government relations within a particular county. We can identify and explain variation within the county in terms of the relationship between the local state and different types of businesses to explore how institutions seem to remain the same yet operate in new ways in a changed environment.6 This chapter argues that b­ usiness-​­government relations in Zouping cannot easily be categorized into one of the three ­ideal-​­typical models. Areas that most resemble the Maoist model may display some features of the local developmental state, just as areas that come closest to the local developmental state model may exhibit some characteristics of the regulatory state. Zouping allows us to document the hybridity among the three models and raises questions as to what might explain this fluidity on the ground. The developmental state model is dominant, but the Maoist model has persisted as well. There are also indications that the enforcement activities of some bureaucracies in Zouping are moving toward a regulatory state model. What this means is that the institutions of government and governance are changing, even if the forms and names do not. The adaptive change that this essay finds in ­business-​­government relations illustrates well the theme stressed in the introduction to this volume. Moreover, it underscores an insight from previous research on Zouping, namely that b­ usiness-​­government relations evolve and are subject to continuous adaptive change.7 Instead of thinking of the three models of development as fully separate, or of expecting the emergence of one dominant form, research in Zouping shows that there are three types of b­ usiness-​­government relations, but each has itself changed over time. One type is a remainder from the previous Mao era, when there was no distinction between the state and the firm: this is the case of the Tobacco Company and the Tobacco Monopoly Bureau, which operate on the principle of zhengqi heyi (政企合一, unification of business and government). However, this remainder of the Maoist era has undergone adaptation and is now subject to market dynamics.8 The second type is the local developmental state, which is most clearly seen in the area of patents and trademarks, where government agencies actively

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encourage local firms to apply for more patents and to develop trademarks that can obtain the status of provincially—or nationally—famous brands. As would be expected, enterprises that succeed not only receive financial support from the state, but in this updated local development state model, these firms also benefit from the county’s administrative resources that are used to protect them against companies that counterfeit their brands and thus limit their market shares. In the third type, regulatory agencies approach the firms they regulate in the way that a developmental state would: they take a strong interest in their expansion. One enduring feature that seems to determine how the different faces of the state interact in China’s changing economic context is the revenue imperative. Earlier research has stressed how the revenue imperative can account for the adaptations of Maoist organizational forms to the needs of local state corporatism.9 The revenue imperative survives to this day and explains why hybrid forms persist on the ground: even though they might diverge from the i­deal-​­typical models, they are effective at promoting the fulfillment of local developmental goals. Perhaps the most interesting finding is that the revenue imperative determines the consistency with which IPR regulations are enforced: large firms are more likely to be treated more leniently; small firms (which generate more limited revenue) are likely to be subject to more consistent enforcement of rules and regulations. Considering that consistent enforcement is an essential element of the regulatory state model, this finding has concrete implications about the pathway through which regularized enforcement and the regulatory state are likely to evolve in the future. IPR Bureaucr acies as a Lens on B­ usiness-​­Government Rel ations in Zouping

One could choose a number of different industries in order to analyze ­business-​­government relations in contemporary China. This chapter approaches ­business-​­government relations in Zouping by focusing on the bureaucracies that enforce IPR laws. Because they are numerous (there are eight bureaucracies with IPR mandates in Zouping) and have jurisdiction over businesses in a broad range of industries, these bureaucracies provide a focused yet unusually wide lens for analyzing b­ usiness-​­government relations. The main task of these bureaucracies is to regulate firms that either manufacture or sell products protected by IPR laws.

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Virtually every product made or sold in China benefits from some form of IPR protection. Intellectual property laws cover three broad subcategories of rights: copyrights, patents, and trademarks. Copyrights protect literary and artistic works, including books, music, motion pictures, and computer software. Patents protect new, nonobvious, and useful inventions, such as the molecule of sildenafil citrate, the active ingredient of the erectile dysfunction drug Viagra. Trademarks protect the brand names of goods ranging from clothing to food to electronics (e.g., C ­ oca-​­Cola). All three subtypes of IPR are subject to theft involving the manufacture of unauthorized copies of a product, which are then sold to customers with ­ nti-​­Counterfeiting the claim that they are genuine.10 The International A Coalition estimates that the counterfeiting business was worth $1.77 trillion in 2015, or about 5–7 percent of world trade.11 In general, there are three main avenues for enforcing IPR laws: civil, criminal, and administrative. Civil enforcement is provided by the civil courts of law. China began establishing specialized IPR tribunals in the early 1990s, and by now more than four hundred such tribunals exist at the level of the Supreme People’s Court, the high people’s courts, the intermediate people’s courts, and the basic people’s courts; in addition, entire specialized IPR courts have been set up in Guangzhou, Shanghai, and Beijing.12 Courts allow individual claimants to lodge a complaint, to get a procedurally fair hearing, and to then receive some form of compensation.13 When it comes to criminal enforcement, the key institutional actors are the police, the Procuratorate, and the criminal divisions of the courts. Criminal enforcement allows for the eventual imprisonment of pirates and counterfeiters. It is carried out by the Public Security Bureau (PSB) and is used only for ­large-​­scale IPR violations. Finally, administrative enforcement is provided by various agencies sharing the IPR enforcement portfolio. These administrative agencies have a broad mandate. They can inspect premises where suspected counterfeit activity takes place. When they locate counterfeits, they can impose fines. They can also seize and destroy counterfeit and pirated goods. At the national level, as many as twenty different agencies are engaged in the administrative enforcement of IPR laws. Even without enumerating all agencies with an IPR enforcement mandate, it should be clear that China does not suffer from a lack of enforcement avenues. In fact, no country in the world offers more enforcement options to rights holders seeking redress for violation of their IPR than China.14 One problem at the

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national level is that copyright and trademark administrative protection are characterized by agency overlap, which means that agencies that do not wish to enforce IPR laws may use jurisdictional ambiguity as an excuse for shirking their responsibilities. Who enforces IPR laws in Zouping? The situation is quite different from the one described above for the national level. At the local level, the court plays no role in IPR enforcement.15 Similarly, the Public Security Bureau is rarely a lead enforcer, typically participating in enforcement as a peihe bumen (配合部门, supporting unit).16 The bulk of IPR enforcement in Zouping is carried out by administrative agencies. The number of agencies enforcing in Zouping is smaller than at the national level. For example, Zouping has no Customs Bureau. Furthermore, several agencies tasked with copyright enforcement at the national level do not exist as independent bureaucratic actors at the county level. More specifically, the functions of the Copyright Bureau, the Press and Publications Bureau, and the Antipiracy and Anticounterfeiting (扫黄打非) Office are all subsumed under an unlikely home in the Culture and Sports Bureau. If we compare the structure at the county level with national- and ­provincial-​­level enforcement arrangements, we see that there is a crucial difference: copyright enforcement is more streamlined, and overlap is eliminated.17 This effectively leaves only eight distinct administrative agencies sharing the IPR enforcement portfolio: patents are handled by the Technology Bureau (renamed the IPR Bureau in 2007), copyrights are the purview of the Culture and Sports Bureau, and trademark protection is supplied by the Industry and Commerce Bureau, the Technical Supervision Bureau, the Agriculture Bureau, the Food and Drug Bureau, the Health Bureau, and the Tobacco Monopoly Bureau (Tobacco Monopoly Company). As this chapter shows, it is in the area of trademark protection that one still does find administrative overlap. The local regulatory state in Zouping is one where various bureaucracies regulate firms by granting them permits and by then conducting inspections to verify whether firms abide by the scope of the permits. Yet powerful local developmental imperatives affect the operation of the local regulatory state. For example, firms (企业) are treated more leniently than sole proprietorships (个体户). This is logical from the perspective of the local state: large firms (regardless of whether they are successors to the TVEs or private firms) are better integrated through informal connections with the local government and are a more important source of local budget revenue

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than are small businesses. Hence, inspections of large firms are less frequent, and when irregularities are discovered, firms are given several opportunities to correct their mistakes. A less accommodative approach is used toward small firms: when violations are found, small enterprises (getihu) are more likely to be punished than large firms are. This type of strict enforcement is in fact fully consistent with what we would expect from agencies that take their regulatory functions seriously. The regulatory state is most clearly seen in copyrights, where no local brands are produced and where the commercial turnover is fairly small. The relative insignificance of the copyright retail sector as a source of revenue for the local state means that firms in that sector are more likely to be treated consistently than are firms in the trademark sector. The logic is straightforward: because copyright firms are small in size, they have not built alliances with the local state. In the trademark sector, where there is differentiation, large firms do build alliances with the local state, and they receive preferential treatment, whereas small firms do not. In the copyright sector, all market players are small in size, and therefore no firm is likely to receive preferential treatment. The rest of the chapter provides details on when and where we find the operation of each of the three models of b­ usiness-​­government relations and how they interact and change. We start with the Maoist model, then move to the local developmental state model, and finally examine the local regulatory state model. The chapter concludes with reflections on the broader implications of the variation in ­business-​­government relations observed in Zouping.

The Maoist Model: The State as a Monopolist The standard Maoist economic organizational form involved the unification of government and enterprises (zhengqi heyi 政企合一 ), where large ­state-​ ­owned enterprises belonged to various government units, which channeled resources to them and took control of their output. In theory, the era of reform has been marked by a different policy, that of separation of government functions from business enterprises (政企分开 ). In practice, although the separation process is virtually complete, zhengqi heyi has survived in some parts of the economy. For example, prior to its dissolution in 2013, the Ministry of Railways was fused with the China Railways Group, which owned the physical infrastructure of the Chinese railway network. Another

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manifestation of this phenomenon is the fusion of the Salt Industry Administration Office with the China National Salt Industry Corporation, which has a monopoly on the production and distribution of salt in China. A third example is provided by the tobacco industry. The China National Tobacco Corporation has a monopoly over the production, processing, transportation, i­mport-​­export, distribution, and sale of tobacco and tobacco products in China. The State Tobacco Monopoly Administration, a government department with ­vice-​­ministerial status, regulates the tobacco and cigarette industry. Although one might assume that the tobacco corporation and the regulatory agency would be separate entities, they are in fact merged under the principle of “one organization with two nameplates” (一个机构两块牌子 ). Zouping provides us with a vantage point for analyzing how zhengqi heyi operate at the local level long after the economy began to be marketized. In Zouping the county tobacco monopoly bureau is merged with the Zouping Marketing Department of the Binzhou Tobacco Company (Zouping County is part of Binzhou prefecture). One physical sign of the extensiveness of the merger is the fact that the same individual performs the functions of party secretary of the Zouping Tobacco Monopoly Bureau, head of the Zouping Tobacco Monopoly Bureau, and president of the Zouping Tobacco Company. Established in 1983, the company employed more than one hundred people in 2010.18 In contrast to the Maoist period when the state would direct financial resources toward an enterprise, its employees now describe the company as a firm that operates on the zishou zizhi (自收自 支) principle, which means that it has autonomy from the Finance Bureau in spending the funds it has raised by itself. However, similar to the policy in the Maoist period, this firm enjoys a ­state-​­granted market monopoly on the production and sale of all tobacco products in Zouping county. The tobacco company is important to the local state as a source of tax revenue. Nationally, the State Tobacco Monopoly Administration has traditionally been the largest single contributor of taxes to the consolidated budget.19 Because no tobacco leaf is grown in Zouping and no cigarette manufacturing facilities exist in the county, the tobacco company, which distributes and markets cigarettes produced elsewhere in China, is only the t­ welfth-​­largest source of tax revenue in Zouping. Nevertheless, with a turnover of 300 million yuan in 2010, it is still a major company from the perspective of the local government.20

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Most notable about the role of the local state in Zouping is how tenuous its presence feels when one visits the tobacco company. Surprisingly, the county Tobacco Monopoly Bureau has no official personnel allocation (编 制) and therefore no employees with the status of civil servant.21 Instead, its employees are hired using the same procedures that would be applicable to hiring the staff of a private firm. Although it receives no financial support from the local state, the tobacco bureau does have regulatory functions that reflect its status as a government entity. The key regulatory task of the bureau is to issue permits for the retail sale of tobacco products and to conduct inspections of market order. Three types of violations are possible. Some businesses, such as street vendors, sell cigarettes without a retail license. Others peddle illegally purchased tobacco products (these might have been legitimately produced, but the factory that manufactured them would not have had a license whose geographic scope extends to the locality where the cigarettes are sold). The third violation is the sale of counterfeit cigarettes, which are produced in underground factories and bear a trademark (e.g., Xiongmao or Marlboro) affixed without the authorization of the rights holders. The tobacco bureau has a mandate to inspect retail businesses and to impose sanctions on those businesses that engage in m ­ arket-​­distorting violations. The tobacco bureau is incapable of monitoring the tobacco market without the support of other government units. It does have both an inspection team and a tobacco monopoly supervision team, which conduct checks of businesses selling tobacco products. These teams inspect retail establishments and in cases of violations may impose sanctions on them like a temporary suspension of their business activity (停业整顿), confiscation of the illegal income, or a fine.22 Importantly, however, the tobacco bureau cannot revoke the operating license of a retailer (which is issued by the Industry and Commerce Bureau), cannot check on whether tobacco products are illegally transported into Zouping (this is the prerogative of the Transportation Bureau), and cannot check on the price of cigarettes (illegally obtained or counterfeit cigarettes are cheaper, but control over prices is carried out by the Price Bureau). Another key limitation of the mandate of the tobacco bureau is that it cannot enter private residences that are used as underground cigarette production facilities (only the PSB is authorized to do this). These restrictions mean that the tobacco bureau needs the active assistance of other government units. Of course, many

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government agencies in China engage in joint enforcement actions (联合执 法), when they pool their administrative resources. Such enforcement is episodic, typically during an enforcement campaign, and therefore has limited ­long-​­term effectiveness. The tobacco bureau in Zouping county presents us with a different and rather unique model of interagency cooperation. The Zouping tobacco bureau has been successful in acquiring permanently stationed PSB and Industry and Commerce personnel; other agencies, like the Transportation Bureau and the Price Bureau can also participate in anticounterfeiting enforcement activities whenever necessary. Such arrangements are highly unusual in Zouping: for example, the Agriculture Bureau and the Food and Drug Bureau, which also conduct joint enforcement actions, do not have PSB or Industry and Commerce personnel stationed in their offices. The essentially regularized support of the PSB and the Industry and Commerce Bureau has allowed the tobacco bureau to engage in a flurry of activity and to become by far the most active enforcer of all agencies with an IPR mandate in Zouping. The volume of enforcement has increased over the past decade, with special enforcement campaigns being undertaken every year.23 This resulted in an annual average of 1,164 investigations of illegal activity in 2004–2009.24 This number was considerably higher than the annual average of 776 investigations in 2000–2007.25 Although other factors contribute to the high volume of enforcement (for example, Zouping has a ­tip-​­off hotline), the support of powerful enforcement bureaucracies like the PSB and the Industry and Commerce Bureau has been essential. What is noteworthy about this support is that it is provided to the government entity that most resembles a firm rather than to another government unit.26 The zhengqi heyi situation in Zouping has allowed the local state to create the most favorable business environment for the tobacco company. One strategy for improving business conditions has been the deployment of the full array of available administrative resources to identify and prosecute counterfeiters. Thus, the tobacco company allows us to observe not only a fusion of the firm and the state but also the extraordinary level of assistance that other parts of the state provide to this ­state-​­owned enterprise while it enforces its monopoly rights over the tobacco market. As with any other firm, the tobacco company is interested in eliminating unfair competition and maximizing profits. In the tobacco sector, unfair competition originates from producers of counterfeit cigarettes; counterfeits erode the

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market share of the brands sold by the Zouping Tobacco Company and diminish its profits. No other firm in the IPR domain has been able to receive as much comprehensive assistance in eliminating unfair competition as the tobacco company, because no other company is fused with the state in a similar way. For the tobacco company, the mere shell status of a government bureaucracy (in the form of the Tobacco Monopoly Bureau) has been sufficient to provide it with enforcement resources of its own, as well as with the active support of other government units. Zouping serves as a powerful illustration of the institutional hybridity on the ground in China: a Maoist enterprise operates in a market environment and is therefore subject to market dynamics such as competition from counterfeiters and the need to make a profit. However, its Maoist monopolistic clout over the tobacco sector makes it easier for it to survive in a market environment. The case of the Zouping Tobacco Monopoly Bureau (Zouping Tobacco Company) thus confirms earlier insights about the adaptability of Maoist institutional forms to the market.27 It also attests to the resilience of these institutional forms, and of Maoist ­government-​ ­business relations, several decades after China began the transition to the market.

The Local Developmental State: The Promotion of Local Champions Various government policies toward firms serve as indicators of the presence of a developmental state: preferential bank loans, tax breaks, restriction of foreign competition, and so on.28 One developmental state policy at the national level in China is the promotion of national champions. Through various financial incentives, the central state stimulates select firms to innovate and to achieve national and international recognition for quality. This policy has a counterpart at the local level, where the county government similarly stimulates local enterprises to become recognized for their high quality at the provincial, and if possible, even at the national level. Scholars have developed the theoretical framework of local state corporatism to describe an empirical reality from the 1980s and 1990s, when the local state used financial and administrative resources to help the development of local industry, which consisted primarily of s­ mall-​­scale enterprises.29 The promotion of local champions is a type of local state corporatism that emerged only in the 2000s, a decade when the firm landscape became more var-

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iegated and localities engaged in “brand wars.”30 In the area of IPR, this policy is evident in patents, trademarks, and quality certification. Patents

One aspect of the promotion of local champions is government support for inventive activity. To demonstrate such support, the Zouping government created an Intellectual Property Rights Bureau in April 2007. Despite its name, this bureau is not responsible for the entire spectrum of IPR but rather focuses exclusively on patents. The bureau has five employees, who handle all aspects of patent affairs, from filing patent applications to adjudicating patent disputes. Official statistics indicate that Zouping did mediate a total of ten patent disputes between 1999 and 2009, or an average of one dispute per year.31 The statistics powerfully demonstrate that the employees of the IPR Bureau focus primarily on helping local inventors file patent applications, rather than on enforcement in cases of patent disputes. This is also consistent with statements by IPR Bureau personnel that “enforcement is not a main part of what we do.”32 The commitment of the local government to support inventive activity is reflected in a county government document from 2007 entitled “Opinion of the Zouping Government about Further Strengthening IPR Work.” The Opinion laid out the ambitious goal of increasing IPR ownership in Zouping by 20 percent by the end of 2010, especially in industries such as textiles, food, medicines, chemical engineering, new building materials, and new energy sources. To achieve this goal, large enterprises were expected to set aside 5 percent of their sales income for research and development, ­medium-​­size enterprises 3 percent, and ordinary enterprises (一般企业) 1 percent. In addition, the Opinion specified that 80 percent of the ­county-​ ­level enterprises should establish an internal IPR supervision system before the end of 2010. The 2007 Opinion mandated generous monetary compensation for local inventors who apply for patents on their inventions. The Zouping government, the prefectural government, and the provincial government jointly provide the funds for these subsidies. A tiered incentive system was introduced, with applicants for invention patents receiving 5,500 yuan, applicants for design patents 800 yuan, and applicants for utility models 1,200 yuan. The incentives for Hong Kong, Macau, Taiwan, and international patents applications were most generous, amounting to 50,000 yuan.33

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Longitudinal statistics indicate that this strategy of supporting local industry has been successful. Whereas there were 96 patent applications in Zouping in 2006 (the year prior to the enactment of the policy), there were 379 patent applications, a fourfold increase, by 2009. Recognizing the efforts of Zouping, the provincial intellectual property office designated it an ­a ll-​­province IPR experimental county (全省知识产权试点县). Following this designation, there was a further increase in the number of patent applications. In the first six months of 2011 alone, there were 670 patent applications from Zouping. Another sign of the success of the policy is that eleven Zouping firms have received the designation of Shandong patent star enterprise (山东专利明星企业), whereas ­thirty-​­three received the designation of Zouping patent star enterprise (邹平专利明星企业).34 Such designations are eagerly sought after by firms, because they allow them to receive a tax break and are helpful for listing on the stock exchange. This is a w ­ in-​­win situation for both the government (because firms that are more inventive are valued more highly on the market) and for the firms themselves, because high levels of inventiveness translate into increased financial support from the government and eventually into higher share prices. Zouping is now at the forefront of inventive activity in Binzhou prefecture (in the whole prefecture, only Binzhou city has applied for more patents than Zouping),35 and is also one of the most inventive counties in Shandong Province.36 Tr ademarks

One marker of the excellence of a brand is its designation as a locally famous trademark (著名商标 ) or as a nationally famous trademark (驰名商 标 ). Each provincial Industry and Commerce Bureau has discretion over designating trademarks as locally famous, whereas the status of nationally famous mark remains the exclusive jurisdiction of the State Administration of Industry and Commerce. Both types of trademarks reflect well on the locality, so there is intense competition to get more famous trademark designations. Zouping has been very successful in this regard. As of 2009, the county had three nationally famous trademarks (two of them belong to the Weiqiao Textile Company and one to Xiwang Bioengineering Company) and seventeen provincially famous trademarks.37 This is an excellent record considering that Zouping had no provincially famous trademarks, not to mention nationally famous trademarks, prior to 2002.38 This achievement testifies to the success of the nurturing attitude of the local state. The desire

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of the local state to create favorable conditions for local enterprises and to protect them is also reflected in the zeal with which Industry and Commerce personnel conduct checks for counterfeiting of locally and nationally famous trademarks and punish businesses that sell counterfeit items (among other measures, violators of famous local trademarks are likely to receive steeper fines than violators of nonlocal trademarks).39 Quality Certificates

Another desirable status, especially in the wake of numerous quality scandals, is a certificate of quality. Zouping manufacturing enterprises can claim successes on this front as well. As of 2007, four products of two enterprises had received the status of “goods exempt from inspection” (免检产品 ),40 awarded by the Administration of Quality Supervision, Inspection, and Quarantine in Beijing. In addition, one manufacturer had received a quality prize from the Shandong government.41 Therefore, at least as far as manufacturing enterprises are concerned, the local state has been able to use local developmental policies to steer them toward improving the quality of their products. Of course, at the extreme, there can be a negative side to preferential policies for local firms. To keep a firm operating, for example, enforcement officials may look the other way when violations occur. They may also fail to enforce a law, even when there is ample need to do so. Clearly, there are costs over the long term to excessive localism.42 A developmental state may encourage growth, but it can do so at the expense of setting clear and predictable rules and enforcing them. At worst, local protectionism can develop, leading to severe market and economic distortions. I provide examples of these problems in the area of IPR enforcement in my previous work.43 Yet there is no evidence that local protectionism is an issue in Zouping. In fact, the opposite seems to be true: local state corporatism has been and remains an engine of growth. The promotion of local champions is evidence both of the resilience of local state corporatism and of its ability to adapt over time by adopting some features of the regulatory state model.

The Local Regulatory State The local state in Zouping assumes the role of a regulatory state in areas where no significant local production takes place. In the domain of IPR,

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these areas are the sale of all copyrighted goods (books, audiovisual media, and software) and the vending by small businesses of trademarked goods for which the trademark does not belong to a Zouping company. Bureaucracies that enforce copyrights and trademarks operate in the same way: they issue permits to businesses for the sale of these goods and then conduct periodic inspections to verify whether businesses comply with the scope of their licenses. When violations are discovered, regulatory agencies can impose sanctions, ranging from a fine to the revocation of a business license. At first glance, we may think that it would not be in the interest of bureaucrats to enforce laws in an impartial way when regulating businesses that do not engage in local production but rather in the sale of goods produced elsewhere. By enforcing strictly, bureaucrats would help rights holders from other provinces. Yet it must be remembered that strict enforcement helps the local state by creating a more predictable and thus more attractive business environment. In addition, if bureaucrats discover that violations are committed by an unlicensed business, they can put pressure on the business owner to obtain the necessary licenses. The licensing of more businesses would eventually lead to an increase in local revenues. Over the long term, therefore, the creation of a local regulatory state is incentive compatible. Tr ademark Regul ation

When we move beyond the small group of local champions, there are two types of businesses in Zouping: qiye (which most closely resemble m ­ edium-​ ­size and large enterprises by American standards) and getihu (small enterprises). The first type includes ­state-​­owned enterprises, collectively owned enterprises, privately owned enterprises, and ­foreign-​­owned enterprises—as well as various hybrids of the preceding four kinds. The second type consists of sole proprietorships that employ up to eight people. From the perspective of the regulatory bureaucracies, it is easier to manage qiye. The problem with getihu is that they are often itinerant businesses and are therefore less likely to have a fixed address, which makes it harder to license them than qiye. Hence, a priority for bureaucrats is to supply as many getihu as possible with licenses. Once they are licensed, small businesses are subject to periodic inspections, and the threat of losing their licenses makes them more likely to comply with the relevant laws and regulations, including those protecting intellectual property rights.

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All bureaucracies that enforce in the area of trademarks regulate both small and large enterprises. In practice, these two types of enterprises are treated very differently. Established enterprises have all the necessary general business licenses and special licenses, such as a pharmaceutical retail license or a food retail license. These enterprises are subject to periodic checks by the relevant bureaucracies. When problems are discovered, the attitude of bureaucrats is gentle and cooperative.44 Usually, enterprises are reminded that they should abide by the scope of their license. For more serious cases, criticism (批评教育) is used.45 Fines are imposed rarely, following only about 1 percent of the inspections.46 Even less typical is the temporary suspension of business activity, the cancellation of the business license, or the outright closure of the business. As bureaucrats said, “punishment is not our goal.”47 This statement reveals the underlying regulatory philosophy that is adopted with regard to large enterprises: the local state enforces the relevant laws and regulations, but it does so amicably, the way that a local developmental state would be expected to do with licensed enterprises that contribute to the local tax base. A different attitude is evident toward small enterprises. When asked about violations of intellectual property rights, bureaucrats say that the source of counterfeit goods in the county is small, unlicensed enterprises. Such enterprises often possess no fixed address and have supply chains that are difficult to track. This makes them more likely than larger, established enterprises to engage either in the manufacture of counterfeits (in underground production facilities) or in the sale of counterfeit items. The regulatory approach toward small businesses has been more aggressive than the one adopted toward larger enterprises. Small businesses are offered a stark choice: they can either get licensed or pay a fine. Although licensing may be a ­time-​­consuming process (because of the paperwork required to obtain a license), it is ultimately to the benefit of the owner of the small business, because a failure to get licensed might lead to future fines from the authorities. Therefore, the l­ong-​­term strategy is to legalize getihu and to thus weed out illegal business activity, in order to make the business environment more transparent and more predictable. The emphasis has been not on enforcement and punishment but rather on management, as we would expect from a nascent regulatory state. Such signs of progress notwithstanding, a major problem (which is not unique to Zouping but rather affects all of China) remains in the area of

128  M a rt i n K . Di m i t rov Ta bl e 5.1  Characteristics of Trademark Bureaucracies in Zouping Bureaucracy Industry and Commerce Technical Supervision Food and Drug Health Tobacco Monopoly Agriculture PSB

Overlapping Jurisdiction with All others All others Health; Industry and Commerce; TSB Food and Drug; Industry and Commerce; TSB Industry and Commerce; TSB Industry and Commerce; TSB None (exclusive jurisdiction over criminal enforcement)

S ou rc e: Interviews.

trademark enforcement: namely, jurisdictional overlap. In Zouping the following regulate s­ mall-​­scale enterprises that engage in the sale of t­ rademark-​ ­protected goods: the Industry and Commerce Bureau, the Technical Supervision Bureau, the Food and Drug Bureau, the Health Bureau, the Tobacco Monopoly Bureau, and the Agriculture Bureau. In addition to these administrative agencies, the PSB also participates in enforcement, but it does so only as a supporting unit that gets involved when IPR violations constitute a criminal offense. The crux of the matter is that apart from the PSB, each trademark bureaucracy has an enforcement mandate that overlaps with the mandate of at least one other bureaucracy (see table 5.1). As described earlier in this chapter, some bureaucracies like the Tobacco Monopoly Bureau have used creative strategies to turn overlap to their advantage. But for other agencies, overlap leads to significant coordination difficulties, especially in areas that are difficult to control, such as food and pharmaceuticals. When multiple agencies share an enforcement portfolio, they can deflect their responsibility for enforcement. A case in point is food anticounterfeiting, which is handled by the Food and Drug Bureau, the Health Bureau, the Industry and Commerce Bureau, and the Technical Supervision Bureau. We can provide some statistics concerning the situation in 2007. Even though the Food and Drug Bureau is supposed to be the leading department (牵头单位) in charge of food counterfeiting, it did not handle a single food case in 2007. The Health Bureau handled four cases of food poisoning, which may or may not have occurred as a result of the consumption of counterfeit food. The Industry and Commerce Bureau had no exact statistics, but officials indicated that they handled “very few food

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counterfeiting cases.”48 Surprisingly, the bulk of food counterfeiting was handled by the Technical Supervision Bureau, which reported accepting ­t wenty-​­one cases for investigation in 2007. The Technical Supervision Bureau also established a special food division (食品科) in 2007, which was staffed with two people.49 Contrast this with the Food and Drug Bureau: its Food Safety Office had just one employee, who did not “actually participate in enforcement.”50 In short, food anticounterfeiting enforcement is an area where jurisdictional overlap allows agencies to shirk their enforcement responsibilities and to provide a lower volume of enforcement than we would expect, especially from bureaucracies that, at least according to formal organizational charts, should be the main enforcers. Following the nationwide food safety scandals in 2007–2008, the Technical Supervision Bureau stepped up its quality checks. The two m ­ ilk-​ ­producing firms in Zouping were subjected to lengthy inspections in 2008, and no substandard products were discovered.51 Inspections of the other ­food-​­producing enterprises in Zouping led to the closure of some and the rectification of others; after the inspections, all ­food-​­producing enterprises signed commitment letters (承诺书) to maintain quality standards.52 Although food manufacturers are now more strictly controlled in Zouping, it is surprising that the Health Bureau and the Food and Drug Bureau remain marginal players in this field, which falls fully within their enforcement mandates.53 Outside the area of food safety, interview evidence suggests that a similar situation exists in the protection of pharmaceuticals in Zouping: though both the Health Bureau and the Food and Drug Bureau can control retail pharmaceutical trade, neither of them does so systematically. One reason may be that they have a vested financial interest in allowing all of the licensed sellers of pharmaceuticals to continue to operate; revoking their permits would limit the proceeds these agencies collect from awarding licenses.54 And because the regulation of pharmaceuticals requires a high level of technical expertise that the Industry and Commerce Bureau and the Technical Supervision Bureau lack, these two agencies remain unwilling to enforce in this domain.55 Overlap allows them to engage in passing the buck. When it comes to the quality of enforcement then, overlap has a negative effect, which is evidenced by the numerous ­food-​­quality and ­dangerous-​­pharmaceuticals scandals in recent years throughout China. The existence of jurisdictional overlap is recognized as a problem by the

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Chinese government. Numerous attempts to resolve this issue through coordination of enforcement activity and clarification of the respective mandates of enforcers in situations of overlap have been made since the early 1990s. With every new p ­ roduct-​­quality scandal, it becomes clear that the problem is not resolved, which leads to new calls by the government to improve coordination—until the next scandal, which demonstrates yet again that coordination has not been successful. The real solution is to clarify and limit the existing mandates of enforcement agencies, but that solution would require a major administrative restructuring that thus far remains impossible. For this reason, jurisdictional overlap will continue to be a feature of trademark protection in China. What is noteworthy in this context is the concerted effort of the local government in Zouping to introduce elements of the regulatory state despite the various challenges that make this process difficult. Copyrights

The Culture and Sports Bureau is the main administrative entity in charge of regulating the more than 300 businesses in Zouping that either sell copyrighted goods or utilize them as an integral part of their business. Among these are 160 Internet cafes, 23 recreation halls, 15 music halls, 25 audiovisual stores, and 38 bookstores.56 All these enterprises need to secure a special copyright permit from the Culture and Sports Bureau. In order to obtain this permit, the enterprises commit in writing to respect copyright. Other requirements for receiving a permit are to have a fixed place for doing business and an established channel for sourcing the goods.57 Once they have a permit, enterprises found to violate the relevant copyright laws and regulations can be punished in accordance with the national and provincial regulations. The pervasiveness of copyright piracy in China is widely known. In this context, the active support of the Zouping government for stronger enforcement of copyright laws is noteworthy. One sign of this support is a generous financial subsidy that is given to the Culture and Sports Bureau to underwrite special anticounterfeiting efforts. After being increased several times over the past decade, the subsidy amounted to 250,000 yuan in 2011.58 In part this subsidy is used to finance the antipornography and antipiracy campaigns (扫黄打非行动) that are conducted at least once a year and that feature joint enforcement by the Culture and Sports Bureau, the PSB,

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the Industry and Commerce Bureau, the Radio and Television Bureau, and the City Management Bureau (城管). Although these campaigns are announced in advance, they nevertheless lead to discoveries of copyright law violations. Between 2004 and 2009, for example, campaigns led to the confiscation of fifteen thousand pirated items, mostly audiovisual products, books, and textbooks.59 The subsidy is also used to reward citizens who provide ­tip-​­offs (by phone or in person) that can be used by the Culture and Sports Bureau to identify enterprises that violate the law. In addition to campaigns and t­ ip-​­offs, the periodic inspections conducted by the Culture and Sports Bureau also lead to the discovery of copyright violations. Enforcement efforts in Zouping have resulted in a large volume and range of antipiracy actions. For example, between 2004 and 2009, more than five thousand inspections were conducted. These inspections led to the temporary closure of 135 businesses. In addition, 85 cases were accepted for investigation (立案查处). This measure is implemented only for the most serious cases, because it involves a complicated formal procedure with an open hearing and a written administrative decision, and, at least in theory, allows for administrative or judicial appeal. Last but not least, enforcement actions led to the clamping down and closure of more than one hundred stalls of itinerant vendors. Getihu found to violate copyright laws would then be placed on a list maintained by the Culture and Sports Bureau and be subject to more serious inspections in the future. In contrast to itinerant businesses, enterprises with a fixed address that were found to violate copyright law were subject to restrictions in the scope of their business licenses rather than to outright closure. In 2009 when a comprehensive inspection of all 303 licensed copyright units was conducted, such restrictions were imposed on 29 enterprises.60 This more lenient treatment reflects the paternalistic attitude of the local state to legitimate local businesses. It also reveals the tensions between the traditional task of all government units in Zouping to support local economic growth and more recent attempts to come to terms with their function as impartial local business regulators. Antipiracy efforts in Zouping have to be understood in the context of the fact that pirated copyrighted items (books, CDs, DVDs, and software) are popular with ordinary citizens and do not harm their health in the way that counterfeit food or medicines do. Perhaps hardest to justify is enforcement in cases of business software piracy, because it disproportionately protects Microsoft, which enjoys market dominance in the sphere of business

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software in China. Nevertheless, following a nationwide policy aimed at limiting the distribution of counterfeits in 2005, legitimate software was gradually adopted by all government units, then by large and m ­ iddle-​­size 61 enterprises, and eventually by small enterprises in Zouping. Despite these advances, software enforcement remains a weak side of copyright protection in Zouping. Largely, the problem lies in the lack of technical capacity among Culture and Sports Bureau personnel to check whether the software is legitimate; instead, they can check whether the software has been obtained through legitimate channels. Given these difficulties, the closure of Internet cafés for copyright violations in 2010–2011 reflects efforts that have positive implications for the eventual emergence of an impartial regulatory state in Zouping.62 An obstacle for the rise of a local regulatory state in Zouping has been that copyright protection was long executed with a potential conflict of interest between licensing and enforcement. The same individuals would grant licenses to businesses and would then conduct inspections to verify whether businesses were abiding by the scope of the license. Because enforcers would already be familiar with the businesses, this system created incentives for bureaucrats to look the other way when they might notice violations and lowered the probability that violators would be prosecuted. To address this deficiency, in 2009 Zouping became the site of an experiment in Binzhou prefecture of separating the licensing and enforcement functions of the Culture and Sports Bureau. After the separation, licensing is handled by the Information Center, whereas enforcement is the domain of the Enforcement Team of the bureau. The separation required a personnel increase: whereas only five employees were responsible for copyright work prior to 2009, fifteen were employed after the changes (three in the Information Center and twelve in the Enforcement Team). The separation has allowed copyright work to become more specialized. After it implemented this separation, the Culture and Sports Bureau structurally began to resemble trademark bureaucracies like the Industry and Commerce Bureau or the Technical Supervision Bureau, in which licensing and enforcement are separate activities handled by personnel belonging to different departments. In sum, copyright enforcement patterns in Zouping indicate that despite some evidence of greater leniency when dealing with established local enterprises than with itinerant traders, substantial progress has been made to-

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ward establishing a local regulatory state where enterprises receive the same ­arms-​­length treatment by the local state. What has helped in this regard is that after the closure of itinerant stalls, all remaining copyright retailers in Zouping are of small or medium size. This means that, in contrast to trademarks, no large retailers exist that might influence enforcement decisions. In addition, as no local copyrights are produced in Zouping, there is less potential for local developmental priorities to interfere with impartial bureaucratic enforcement.

Conclusion This chapter explores b­ usiness-​­government relations in a single Chinese county through the lens of IPR regulation. A focus on Zouping reveals the scope of variation that exists in b­ usiness-​­government relations more than two decades after the introduction of policies regarding the separation of business and government. The chapter finds that elements of all three ­ideal-​ ­typical models characterize b­ usiness-​­government relations in Zouping: the Maoist model, where state and business are fused; the local developmental state model; and the regulatory state model. The coexistence of both continuity and adaptive change in Zouping with regard to IPR enforcement illustrates one of the main themes of this volume—the difficulty of assessing institutional change when names and organizations do not match functions and practice. Old forms and models seem to exist, but they have changed in the way they operate. In probing the reasons for the persistence of the Maoist and the developmental state models, the chapter highlights the continuing relevance of the revenue imperative in grassroots governance in China. Firms are treated differently depending on the amount of revenue they bring to the locality. The local state has a strong interest in the ­well-​­being of important players in the local economy and assists them in whatever way it can. In the specific area of IPR, this assistance means the elimination of competitors (for the tobacco sector), the disbursement of financial incentives (for inventors of patents and famous trademarks, as well as for firms that attain quality certification), and more lenient enforcement for large enterprises that commit IPR violations. The revenue imperative also has implications for the conditions under which the behavior of IPR bureaucracies is most likely to resemble the

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regulatory state model. In Zouping small enterprises that are minor revenue generators (or in the case of illegal enterprises, generate no revenue at all) are subject to more impartial regulation and are more likely to be punished when they commit IPR violations. The paradox, of course, is that this regulation seems partial when compared to the lenient treatment that large enterprises receive. Nevertheless, the general motivation behind this regulatory behavior is positive: the state wants to limit unpredictability and put small and illegal enterprises on the revenue books. To the extent that the rise of the regulatory state increases transparency and predictability, it is a development that should be welcomed not only in Zouping but elsewhere in China. One question that is raised by the material presented in this chapter concerns the future of b­ usiness-​­government relations. Because the number of industries where government and business are fused has been consistently declining for the past three decades, it is a relatively safe bet that the Maoist model will eventually become extinct and the last remaining monopolies in China will be transformed into oligopolies, if not into fully competitive industries. It is also a safe bet that the developmental state model will persist in China as it has done in numerous other states. What remains unknown is what specific impact the rise of the regulatory state would have on the developmental state model and to what extent developmental state policies would need to be scaled back to accommodate the transparency and impartiality that are an integral part of the regulatory state model. One likely outcome is the persistence of hybrid forms (for example, of a regulatory state with elements of a local developmental state) for as long as they adapt well to local priorities to maximize revenue generation. The experience of Zouping thus far suggests that ongoing skillful adaptation would be essential for maintaining high levels of growth and for implementing good governance.

Notes

1.  On the general model, see Janos Kornai, The Socialist System: The Political Economy of Communism (Princeton, NJ: Princeton University Press, 1992). On China, see Andrew G. Walder, Communist Neotraditionalism: Work and Authority in Chinese Industry (Berkeley: University of California Press, 1986); Deborah A. Kaple, Dream of a Red Factory: The Legacy of High Stalinism in China (New York: Oxford University Press, 1994).

The Evolution and Adaptation of Business–Government Relations in Zouping  135 2.  See Jean C. Oi, “The Evolution of Local State Corporatism,” in Zouping in Transition: The Process of Reform in Rural North China, ed. Andrew Walder (Cambridge, MA: Harvard University Press, 1998), 35–61; Andrew G. Walder, “The County Government as an Industrial Corporation,” in Zouping in Transition, ed. Andrew Walder, 62–85; and Jean C. Oi, Rural China Takes Off: The Institutional Foundations of Economic Reform (Berkeley: University of California Press, 1999). 3.  Margaret Pearson, “The Business of Governing Business in China: Institutions and Norms of the Emerging Regulatory State,” World Politics 57, no. 2 (January 2005), 296–322. 4.  These are nationwide trends, although there has, of course, been substantial variation across individual provinces. Some localities have not developed any of the three models but have instead been characterized by local predation, especially in the 1980s and 1990s. However, such local predatory states are relatively rare. See Andrew H. Wedeman, From Mao to Market: Rent Seeking, Local Protectionism, and Marketization in China (New York: Cambridge University Press, 2003); and Andrew H. Wedeman, Double Paradox: Rapid Growth and Rising Corruption in China (Ithaca, NY: Cornell University Press, 2012). 5.  On the developmental state, see Jean C. Oi, “Fiscal Reform and the Economic Foundations of Local State Corporatism in China,” World Politics 45, no. 1 (October 1992), 99–126; Oi, “The Evolution of Local State Corporatism”; Walder, “The County Government as an Industrial Corporation”; Oi, Rural China Takes Off; and Jean C. Oi and Andrew G. Walder, eds., Property Rights and Economic Reform in China (Stanford, CA: Stanford University Press, 1999). On the regulatory state, see Dali L. Yang, Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China (Stanford, CA: Stanford University Press, 2004); and Roselyn Hsueh, China’s Regulatory State: A New Strategy for Globalization (Ithaca, NY: Cornell University Press, 2011). 6.  Walder, “The County Government as an Industrial Corporation.” 7.  Oi, “The Evolution of Local State Corporatism.” 8.  This is not to argue that there were no market dynamics during the Mao era. Market relations did exist then, but had a limited scope. 9.  Oi, “Fiscal Reform and the Economic Foundations of Local State Corporatism in China”; Oi, Rural China Takes Off. 10.  Various terms are used to describe the unauthorized product: “pirated copies” generally applies to copyrighted items; “counterfeit” or “fake” are used for trademark and p ­ atent-​­infringing goods. An unusual characteristic of intellectual property makes piracy and counterfeiting attractive: namely, the development of the original product often takes years of investment, yet the cost of producing a perfect copy is extremely low. For example, a nylon purse with a Burberry brand

136  M a rt i n K . Di m i t rov name could retail for $1,000 but cost only $10 to produce. An entrepreneurial counterfeiter aware of this huge differential can sell knockoffs of the purse at a fraction of the typical retail price, thus reaping a profit and simultaneously diluting and eventually destroying a brand that took decades to create. 11.  See “Counterfeiting Statistics,” IACC, accessed March 29, 2015, http:// www.iacc.org/­counterfeiting-​­statistics. Also see Tim Phillips, Knockoff: The Deadly Trade in Counterfeit Goods (London: Cogan Page, 2005). 12.  Zhongguo Faxue Hui, Zhongguo falü nianjian 2015 (Beijing: Zhongguo falü nianjian chubanshe, 2015), 133–34. 13.  For more on this point, see Martin K. Dimitrov, “Structural Preconditions for the Rise of the Rule of Law in China,” Journal of Chinese Governance 1, no. 3 (2016), 470–87. 14.  Martin K. Dimitrov, Piracy and the State: The Politics of Intellectual Property Rights in China (New York: Cambridge University Press, 2009). 15.  There is no mention of any IPR cases in the portions of the Zouping Yearbook discussing the operation of the local court. See Shandong Sheng Zouping Xian Difang Shizhi Bianzuan Weiyuanhui Bangongshi, Zouping nianjian 1986–1995 (Jinan: Qilu Shushe, 1997), 169–73; Zouping nianjian 1996–1998 (Jinan: Shandong Xinhua Yinhuachang, 1999), 199–201; Zouping nianjian 1999–2003 (Jinan: Shandong Xinhua Yinhuachang, 2004), 204–8; and Zouping nianjian 2004–2009 (Jinan: Jinan Wenchang Gongsi, 2010), 181–85. 16.  Zouping Public Security Bureau interview, January 11, 2008. 17.  We should note that this streamlining in Zouping significantly preceded national efforts to reduce the number of copyright bureaucracies, which occurred only during the 2013 bureaucratic restructuring, when the Ministry of Culture and the General Administration of Press and Publications subsumed several previously independent copyright bureaucracies. 18.  Zouping Tobacco Monopoly Bureau interview, July 26, 2011. 19.  For example, in 2002 tobacco tax revenues (excluding those from the special agricultural tax on tobacco crops and the enterprise income tax levied on cigarette factories) amounted to 105 billion yuan. In the same year, the total tax revenue in China’s consolidated budget was 1.76 trillion yuan. See STMA Tobacco Economic Research Institute Report No. 30, Zhongguo yancao 2002 nian fazhan baogao, April 18, 2003, www.tobacco.-gov.cn/yjs/zeyao30.htm; and Zhongguo tongji nianjian 2007 (Beijing: Zhongguo tongji chubanshe, 2007), 279. Currently, tobacco taxes account for 7.5 percent of revenue at all levels of government (Economist, July 9, 2016, p. 36). 20.  Zouping Tobacco Monopoly Bureau interview, January 8, 2008. 21. Ibid.

The Evolution and Adaptation of Business–Government Relations in Zouping  137 22.  See Articles 60–62 of the Regulations for the Implementation of the Law of the People’s Republic of China on Tobacco Monopoly (1997). 23.  Zouping nianjian 2004–2009, 331. 24. Ibid. 25.  Zouping Xian Yancao Zhuanmai Ju, “Zouping xian yancao zhuanmai ju guanyu gongzuo kaizhan qingkuang de huibao” (unpublished typescript, Zouping Xian Yancao Zhuanmai Ju, 2008), 3. 26.  The Monopoly Bureau is a firm to the extent that, as a tobacco company, it is in the business of selling tobacco products. 27. Oi, Rural China Takes Off, 95–138. 28.  On the developmental state in general, see Meredith W ­ oo-​­Cumings, ed., The Developmental State (Ithaca, NY: Cornell University Press, 1999); Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, NJ: Princeton University Press, 1995); Robert Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton, NJ: Princeton University Press, 1990); and Stephan Haggard, Pathways from the Periphery: The Politics of Growth in the Newly Industrializing Countries (Ithaca, NY: Cornell University Press, 1990). 29. Oi, Rural China Takes Off. 30.  In the 1980s and early 1990s, there was significantly less product differentiation, and as a result brands were not as important. 31.  Zouping nianjian 1999–2003, 458; Zouping nianjian 2004–2009, 433. 32.  Zouping IPR Bureau interview, July 28, 2011. 33.  Zouping renmin zhengfu, “Zouping renmin zhengfu guanyu jinyibu jianqiang zhishichanquan gongzuo de yijian,” Zouping renmin zhengfu wenjian 18 hao (2007). 34.  Zouping nianjian 2004–2009, 433. 35.  For example, official materials supplied by the Technology Bureau indicate that Zouping applied for 656 patents between 1984 and 2007, thus accounting for 20 percent of all applications in Binzhou prefecture (Binzhou city made up 38 percent of all applications). 36.  Zouping IPR Office interview, July 28, 2011. 37.  Zouping nianjian 2004–2009, 225; Zouping Industry and Commerce Bureau interview, July 25, 2011. 38.  Zouping nianjian 1999–2003, 249. 39.  Zouping nianjian 2004–2009, 225; Zouping Industry and Commerce Bureau interview, January 3, 2008. 40.  Two of the products were produced by Weiqiao Textile Company and two by Xiwang Bioengineering Company. Zouping Industry and Commerce

138  M a rt i n K . Di m i t rov Bureau interview, July 25, 2011; Zouping Technical Supervision Bureau interview, July 26, 2011. 41.  Zouping nianjian 2004–2009, 230. 42. Wedeman, From Mao to Market. 43. Dimitrov, Piracy and the State, esp. chap. 7. 44.  This represents continuity with earlier practices in Zouping. See Oi, Rural China Takes Off, 146–51. 45.  Zouping Industry and Commerce Bureau interview, July 25, 2011; Zouping Technical Supervision Bureau interview, July 26, 2011; Zouping Food and Drug Bureau interview, July 28, 2011. 46.  Calculation based on statistics reported in Zouping nianjian 2004–2009. 47.  Zouping Agriculture Bureau interview, July 27, 2011; Zouping IPR Bureau interview, July 28, 2011. 48.  Zouping Industry and Commerce Bureau interview, January 3, 2008. 49.  Zouping Technical Supervision Bureau interview, January 7, 2008. 50.  Zouping Food and Drug Bureau and Zouping Health Bureau interview, January 9, 2008. 51.  Zouping nianjian 2004–2009, 228–32. 52. Ibid. 53.  Zouping diverges from nationwide trends on this dimension. See Dimitrov, Piracy and State, esp. chap. 7. 54.  Zouping Food and Drug Bureau and Zouping Health Bureau interview, July 28, 2011. 55.  Zouping Industry and Commerce Bureau interview, July 25, 2011; Zouping Technical Supervision Bureau interview, July 26, 2011. 56.  Zouping nianjian 2004–2009, 417; Zouping Culture and Sports Bureau interview, July 27, 2011. 57.  Zouping Culture and Sports Bureau interview, July 27, 2011. 58. Ibid. 59.  Zouping nianjian 2004–2009, 417. 60. Ibid. 61.  Zouping Culture and Sports Bureau interview, January 9, 2008. 62.  Zouping Culture and Sports Bureau interview, July 27, 2011.

Ch a p t er 6

Nonjudicial Interpreters of “Legality” and the Development of Law in the Local State Douglas B. Grob

Introduction The development of legal institutions presents a number of puzzles in any context, and China is no exception. By examining the Zouping County Legal Affairs Office (法制室 , hereafter Fazhi Shi), this chapter aims to enhance our understanding of at least three such puzzles. The first puzzle has to do with the role of courts. Independent courts are necessary to any ­well-​­functioning legal system. Where courts are chronically weak and not independent, however, do loci of legal development appear elsewhere? Shining a light on the Zouping Fazhi Shi reveals how nonjudicial actors at the local level in China are charged with “legalizing” the local administrative state. The Fazhi Shi and legal affairs (法制 ) personnel within ­county-​­level administrative departments are charged with determining what is and is not “legal” (合法 ) in local government administration. Over time the Fazhi Shi’s role has grown, and so has its influence. Not only has the Fazhi Shi adapted as the demands on local government have changed, but by serving as an interpreter of legality, gatekeeper in the development of the rulemaking agenda, and mediator among government departments, it has provided local government officials and departments room and procedures with which to adapt to local needs and changing circumstances. The Fazhi Shi exemplifies how new functions and patterns of official behavior and responsibility have appeared within old institutional forms, and it has come to operate in surprising new ways. The second puzzle has to do with mechanisms for resolving adminis

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trative disputes. There are multiple avenues whereby citizens may seek to formally register grievances and pursue the resolution of administrative disputes in China. The literature on two of them—petitioning (信访) and administrative litigation (行政诉讼)—is vibrant and growing.1 We understand far less, however, about the system of administrative reconsideration (行政 复议), in which the Fazhi Shi and legal affairs personnel within ­county-​ ­level administrative departments play a central role. This understanding is especially relevant because administrative reconsideration, by providing an alternative to both petitioning and administrative litigation as a means of addressing disputes, potentially affects the universe of cases subject to administrative litigation in ways that are not sufficiently accounted for in the extant literature. This chapter shines a light on the local Fazhi Shi’s formal role in administrative reconsideration, and in so doing identifies topics for further research on a legal process arguably designed to formalize institutional agility amid ongoing social and economic change. Finally, the third puzzle has to do with bureaucratic competition. If loci of legal development exist outside the courts, then how are they “selected”— that is, how and why do they become such loci—and does bureaucratic competition undermine or support their development? Competing interests between the Fazhi Shi and the Justice Bureau (司法局), for example, offer a possible test case for the future study of the role of bureaucratic competition in the development of legal institutions in China. Bureaucratic competition has been a ­time-​­honored feature of Chinese domestic politics. In the case of the Fazhi Shi, it is worth considering whether it may provide insight into how a s­ ingle-​­party authoritarian system has managed to carry out the core functions of local administration and governance amid fundamental economic and social change. China’s Two Legal States

For the first decade and a half of the t­wenty-​­first century, under Chinese law, governing bodies with formal lawmaking power have existed at the levels of the center, the province, and the autonomous region, as well as in some larger cities as specified by law.2 In contrast, governing bodies—including local people’s congresses, local people’s governments, and administrative departments—in most of China’s several hundred remaining cities, in its nearly three thousand counties and ­county-​­level political units, and in its more than forty thousand townships and t­ownship-​­level political units

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do not have independent formal lawmaking power.3 That is, rules (规范性文 件 or “normative documents”) issued at these levels do not have the status of law in and of themselves;4 they acquire binding legal effect only after a review for “legality” (合法性审查 ) and an official determination of legal consistency with measures issued at higher levels that do have formal lawmaking power.5 Although an administrative rule issued at the county level may be imposed on citizens in any number of (just or unjust) ways, it becomes “legal” and legally enforceable only by virtue of its being explicitly linked, via consistency determinations made during the county rulemaking process, to an enactment or promulgation previously issued at a higher level with formal lawmaking power. Hence we might think of China as having two legal states: the lawmaking state above, and the “legalized” local state below. In the local state, where law from above meets the real conditions of daily life below, formal legality critically depends on those determinations of legal consistency. To be specific, as Michel Oksenberg appreciated, it depends on the people who render those determinations of legal consistency and on the institutions within which those people work.6 Who are the local officials in Zouping County charged with determining what is and is not legal (合法) in local administrative rulemaking? That is, who are the interpreters of “legality” in the local administrative state? What is the nature of the institutions within which they work and the processes that govern their activities? In Zouping, as in other counties in China, the government entity chiefly responsible for findings of legal consistency during the ­county-​­level rulemaking process, and hence for the “legality” of local administrative rules, is the county government legal affairs office, or Fazhi Shi, and legal affairs personnel who work in ­county-​­level administrative departments.7 The Fazhi Shi should not be confused with the legal affairs office of the standing committee of the local people’s congress (人大法规工作室or 法规 处). That office receives draft legislation from the specialized committees of the local people’s congress to be considered for enactment by the local people’s congress. This chapter uses the term “rules” to refer mainly to administrative measures (规范性文件) adopted by the local government and local administrative departments, and not to measures enacted by the local people’s congress. As Michel Oksenberg observed in his 1991 interview with officials in the Zouping Fazhi Shi, relations between the Fazhi Shi and the legal affairs officials of the local people’s congress are close, but their functions and operations are entirely distinct from each other. This chapter ex-

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plicates administrative rulemaking processes in Zouping and the role that the Zouping Fazhi Shi plays in them. The Zouping Fazhi Shi’s portfolio of formal duties appears to be modest—at least at first glance. Institutional dynamics, however, permit the Fazhi Shi greater de facto influence than its formal portfolio implies. This is manifest in at least three ways. First, as detailed below, the structure of institutions affords the Fazhi Shi opportunities to exercise gatekeeping and ­agenda-​­setting influence over rulemaking. Second, institutional structure empowers the Fazhi Shi to preempt, to mediate, and at times to resolve administrative conflicts that may arise between government departments during the ­post-​­rulemaking stages. Third, the Fazhi Shi pursues and protects its bureaucratic mission and institutional interests by emphasizing, implementing, and enforcing procedure. The development of legal institutions depends on increasing the importance and weight attached to procedure.8 In part for this reason, the influence of the Fazhi Shi has grown with time. Understanding the development of legality and legal institutions in Zouping, therefore, requires sufficient understanding of the structure and functions of the Zouping Fazhi Shi. At the same time, the development of the Fazhi Shi serves as an indication of the role of “legality” and legal processes and institutions in Zouping and how they have evolved over time. The chapter is divided into seven sections. The sections provide a basic introduction to the Zouping Fazhi Shi; a description of the rulemaking process in Zouping and the role that the Fazhi Shi plays in it; a description of appointments and staffing of the Fazhi Shi; a description of the Fazhi Shi’s influence in the p ­ ost-​­rulemaking stages, including during rule “­clean-​ ­up” (清理) and administrative reconsideration (行政复议); a description of relations between the Fazhi Shi and the local justice department (司法局); and conclusions.

The Zouping Legal Affairs Office (Fazhi Shi) As the legal affairs arm of the local government, the Zouping Fazhi Shi operates in an ostensibly procedural realm. It is an operational department (办公部门 ), not a functional department (职能部门 ). As such, it receives no delegation of substantive administrative power from either the local people’s government or local people’s congress, and it has no direct responsibility for substantive policy implementation (apart from implementation of adminis-

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trative procedure and of administrative law reform). Its formal purpose is to assist the county government to promote “legality” in c­ ounty-​­level administration (依法行政 ) and in the county’s subjurisdictions, to provide legal advice to the county head, and to function as an advisory body serving in a supporting role for government initiatives and innovations.9 The Zouping Fazhi Shi was established in 1990, several years after the establishment of the State Council Legislative Affairs Office (国务院法制办 公室) and the Shandong Provincial Legal Affairs Office (山东省人民政府法制 办公室). At the time, its main function included drafting rules, both at the instruction of the county government and in some cases on its own initiative. As Michel Oksenberg noted in his 1991 interviews with Zouping Fazhi Shi officials, the Fazhi Shi during its early period coordinated the drafting and rulemaking activities of functional departments, providing legal research, empirical investigation, guidance, and drafting. In addition, the Fazhi Shi was responsible for reviewing and editing administrative rules (规 范性文件 or “normative documents”) issued by ­township-​­level administrative departments (typically issued at this level as 通知, or “notices”) for consistency with ­higher-​­level rules; for reviewing the implementation of rules; and for reviewing the legality of actions by administrative personnel that were challenged by citizens. The Fazhi Shi was responsible for responding on behalf of the county government to appeals from citizens in townships, and served as the county government’s representative in court. The Fazhi Shi also managed and guided the response to citizen petitions (信访) brought to the county government. In this role, the Fazhi Shi played an advisory role to other government departments as they responded to citizen petitions, helping departments formulate responses that emphasized mediation and individual citizens’ use of formal legal procedures (法律程序) rather than collective activities (集体活动), including mass petitioning (集体上访) and collective lawsuits. In the early 1990s the Fazhi Shi prepared Zouping’s first ­five-​­year legislative plan and engaged in legal education and propaganda. By 2007 the Zouping Fazhi Shi’s main activities had expanded, falling into four formal categories: 1. Planning of the county ­government-​­wide rulemaking agenda. 2. Reviewing rules submitted by functional administrative departments for legal consistency with superior measures, and in some cases redrafting such rules as necessary.

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3. Following up with administrative departments on problems brought to the county government’s attention, for example, through the petition ( 信访) system, serving in a legal advisory role to government departments as they respond to petitions, helping formulate responses that emphasize the use of legal procedures (including administrative reconsideration [行 政复议] and mediation) rather than petitioning and protests. 4. Conducting administrative reconsideration (行政复议) on behalf of the county government under the Administrative Reconsideration Law (ARL) (行政复议法), advising and supervising administrative reconsideration organs within the county’s administrative departments and often coordinating with agencies in reconsideration proceedings toward settlement as a means of resolving disputes. By 2012 the Zouping Fazhi Shi’s responsibilities had expanded further, falling into eight categories: 1. Reviewing, revising, and compiling administrative rules (规范性文件) and auditing rules filed by ­county-​­level administrative departments and township governments within the county’s jurisdiction; performing mandated periodic “cleanup” (清理) of c­ ounty-​­level rules, and mandated submission and filing of ­county-​­level rules with ­higher-​­level authorities; developing and implementing the county government’s rulemaking plan and agenda. 2. Taking in, reviewing, investigating, and collecting evidence for administrative enforcement complaints (行政执法投诉) and for applications for administrative compensation (行政赔偿案件); preparing compensation decisions; publishing relevant legal information. 3. Auditing ­county-​­level administrative departments’ and township governments’ responses to administrative compensation, administrative penalty, and administrative enforcement complaints; when problems are found, issuing a recommendation on proper handling; in cases where citizens, legal persons, or other organizations register dissatisfaction with an administrative compensation decision by a county government department, issuing an opinion concerning the proper handling of the alleged illegal or improperly handled decision. 4. Serving as the county’s Administrative Reconsideration Office, handling all the county government’s administrative reconsideration cases; representing the county government in all administrative reconsideration and administrative litigation cases; coordinating nonlitigation cases (协调处

Nonjudicial Interpreters of “Legality” and the Development of Law in the Local State   145 理非诉案件);

compiling and reporting statistics on administrative reconsideration and administrative litigation cases. 5. Implementing the Administrative Licensing Law in order to further the policy of streamlining administrative licensing practices. 6. Providing supervision, guidance, and assessment of the county’s “administration according to law” (依法行政) work; investigating, assessing, and enforcing accountability in cases of wrongful administrative enforcement; organizing public law training for countywide administrative enforcement personnel; certifying and managing the credentialing of administrative enforcement personnel and administrative penalty–hearing chairs. 7. Serving as an advisory body providing legal advice to the county government; carrying out the county’s legal propaganda work and promoting awareness of national and provincial laws and regulations. 8. Completing other matters assigned by the county leadership.10 This final category is a catchall that leaves open the possibility of a more expansive role for the Fazhi Shi in the future.

Rulemaking in Zouping The following describes how the formal rulemaking process generally begins in a functional administrative department in Zouping (e.g., the Transportation Bureau, Water Bureau, Education Bureau, Finance Bureau, Construction Bureau, Environmental Protection Bureau, Forestry Bureau, etc.). Within each department, there is a legal affairs section (法制科 ), typically with three subsections: drafting, enforcement and supervision, and administrative reconsideration. When department personnel identify a need for a new rule, they propose the idea for a new rule to the departmental legal affairs section head. With the legal affairs section head’s approval, the idea is presented to the department head. If the department head approves the idea, a formal description, explanation, and preliminary draft of the proposed rule are sent to the county Fazhi Shi. The Fazhi Shi then decides whether or not to place the proposed rule on the annual rulemaking plan. According to this plan, the county government will formally promulgate administrative rules over the next year. The final decision of whether to give a department’s proposal a place on the plan is made by the head (主任) of the Fazhi Shi. Although the head

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of the Fazhi Shi formally is subject to supervision by the Zouping Local People’s Congress, as well as to supervision by the party’s p ­ olitical-​­legal committee and the Fazhi Shi at the next level up (Binzhou city), the head of the Zouping Fazhi Shi is the first real gatekeeper of consequence in the ­county-​­level rulemaking process. The Fazhi Shi head may refuse to place a proposal on the plan for any number of reasons, for example: (1) The proposed rule is explicitly contrary to or strongly implies inconsistency with a ­higher-​­level measure that has legal effect. (2) The proposed rule is intended primarily to protect bureaucratic turf or to enhance a department’s revenue (e.g., through the levying of fees) in a manner that is inconsistent with countywide planning and policy or that could prompt public protest without serving an established policy goal. (3) A higher-level measure is in the works that will accomplish the same end or with which the proposed rule will not be consistent (the Fazhi Shi often receives information about forthcoming h ­ igher-​­level measures before individual departments do). (4) The proposed rule is deemed by the Fazhi Shi to be an inadequately or inappropriately designed measure based on the Fazhi Shi’s own analysis of current local circumstances. (5) The annual rulemaking plan is already too long. Noninclusion on the plan does not kill a proposed rule, however. Especially if there are officials strongly advocating a measure, the Fazhi Shi may recommend, and even assist with, further analysis, information gathering, and development of a revised proposal for consideration as part of a future plan. If, however, the Fazhi Shi does place a departmental proposal on the plan, the proposal is then sent back to the original administrative department’s legal affairs section for drafting. Alternatively, the Fazhi Shi at this juncture may become directly involved in the drafting. Or it may deem that the rule affects areas outside the purview of the proposing department, in which case it may instruct other departments to participate in the drafting. This is a second juncture at which the Fazhi Shi may exert ­agenda-​­setting influence during rulemaking. The opportunity for an administrative department to draft or to participate in drafting a rule confers administrative power on the department, so in this sense, the Fazhi Shi functions as a potential power broker among administrative departments. The draft, once completed, is submitted back to the Fazhi Shi for official consistency review (合法性审查). In an increasing number of cases, departments will post a draft online for public comment in accordance

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with regulations on open government information (政府信息公开), and will submit a report to the Fazhi Shi summarizing comments received and how they were dealt with during drafting. Here again, the Fazhi Shi has an opportunity to recommend or to make changes to the proposed rule. Once its review, including its review for legal consistency, is complete, the Fazhi Shi at its discretion may report the final draft to the local government working conference (政府办公会议). The working conference consists of the county head (县长), ­vice-​­heads (副县长), the head of the Fazhi Shi, and other t­op-​ ­ranking county officials as may be indicated by the meeting agenda. There is discussion, but no vote. The county head decides whether or not to sign off on the proposed new rule. If he does not sign off, then the proposed rule is dead. If he does sign off, the rule becomes “legal” and legally enforceable. However, its “legality” still remains vulnerable to challenge during implementation and enforcement through administrative reconsideration under the ARL, which is handled by the Fazhi Shi, or through bei’an review11 at the next level up (handled by the Binzhou city Legal Affairs Office (滨州市 法制办公室),12 or through periodic rule “cleanup” (清理) as described below. Mediating Role among Government Departments

The Fazhi Shi also plays an important mediating role among government departments. When a department seeks to promulgate a rule that involves or affects the responsibilities of another department, or when two or more departments with overlapping portfolios both seek to promulgate a similar rule (or conflicting rules), the county government has authority to decide which department will issue the rule, whether the departments will issue the rule jointly, or whether the county government itself will issue the rule instead. When government departments cannot reach a compromise solution on their own, the county government usually assigns the task of working out a compromise to the Fazhi Shi.13 Draft rules originate in each department, are drafted and reviewed by each department’s legal affairs section, and are then sent to the Fazhi Shi. So it is often the Fazhi Shi that first spots duplicative or conflicting drafts among departments. In such cases, the Fazhi Shi typically consults with each department to resolve conflicting issues, and may convene a joint meeting of two (or more) departmental legal affairs sections to work out a compromise. It is not uncommon for such meetings to result in a draft developed jointly by more than one department. In one case, for example, the Urban Management Bureau (城

148  Dougl a s B. Grob 管局 ),

Forestry Bureau (林业局 ), Water Bureau (税务局 ), Environmental Protection Bureau (环保局 ), Construction Bureau (建设局 ), and Planning Bureau (规划局 ) all had an interest in the draft Zouping County Measures on Dai River Basin Watershed Management (Draft for comment) (邹平县 大溪河流域管理办法 [征求意见稿 ]). Accordingly, the Zouping County Fazhi Shi announced that on November 28, 2012, it would convene a “deliberation meeting” (论证会 ) at which each of the bureaus named above would be asked to prepare and offer input and revisions to the draft rule.14 When no compromise solution can be found, such disagreements are usually referred to the county vice-head (副县长 ) in charge of the policy area(s) in question, and they are also referred to the head of the Fazhi Shi. Over time as the role of the Fazhi Shi has increased and become more institutionalized, government deferral to the Fazhi Shi’s judgment in settling interdepartmental disagreements has increased, and the Fazhi Shi’s role as a mediator among government departments has become more formalized.15 For example, it is not uncommon for disagreements over enforcement to arise between the Industry and Commerce Bureau (工商行 政管理局) and the Environmental Protection Bureau (环境保护局). Both these bureaus have an interest in enforcement concerning such activities as illegal deforestation, logging, and trade in wood. Similarly, both these bureaus have an interest in enforcement concerning remediation following oil spills or other forms of industrial contamination. But their interests do not always align. Moreover, while the Industry and Commerce Bureau may be authorized (or have the desire) to take enforcement action only with respect to license violations, the Environmental Protection Bureau’s interest in enforcement action may be broader. In such cases, according to Commerce Bureau officials, the Zouping County Fazhi Shi has played an important coordinating role in mediating outcomes, and has served a gatekeeping function in determining the extent of the county government’s involvement in specific cases. Joint development of rules by two or more administrative departments not only reflects the Fazhi Shi’s mediating role during rulemaking but also results in the Fazhi Shi’s increased influence during implementation and enforcement. For example, when an individual is subjected to an allegedly illegal or unreasonable action by an administrative department, the individual may apply for administrative reconsideration (行政复议) under the ARL. In some cases, the rule on which the administrative department

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justifies its action will have been developed jointly with another department. Should the citizen wish to apply for review of the legality (合法性) of the rule itself in addition to reconsideration of the specific action (as is her right under the ARL), she has two options under the ARL: to apply for reconsideration to the administrative department at the next level up (Binzhou city), or to apply to the Zouping Fazhi Shi for reconsideration.16 Departments at the next level up, however, may be more reluctant to review a rule jointly developed with another administrative department than they would be to review rules issued solely by the departments directly under them. Citizens in such cases involving jointly developed rules may prefer to direct applications for reconsideration to the Zouping County Fazhi Shi. Thus, the legal framework within which the Fazhi Shi is embedded encourages individuals to direct some applications for reconsideration that involve jointly developed rules to the county Fazhi Shi rather than to the administrative department at the next level up, thereby increasing the potential influence of the county Fazhi Shi. The opportunity to review a rule developed jointly by more than one department has another implication. When reviewing a jointly developed rule during administrative reconsideration or more generally, the Fazhi Shi is in a position to make recommendations not only about future revision of the rule but also about the division of labor among administrative departments in revising and in subsequently implementing and interpreting the revision. When two or more government departments disagree regarding a matter of enforcement and their attempts to coordinate fail, the matter goes to the Zouping County Fazhi Shi for “coordination” (in “major matters” [重大事项], the decision goes to the county government for action based on the Fazhi Shi’s recommendation).17 Fazhi Shi–brokered compromise between rival departments, therefore, may imply mutual agreement between or among departments to surrender some future discretion.

Fazhi Shi Appointments and Staffing Appointments to the Fazhi Shi are formally made by the county head, with the consent of the standing committee of the Zouping Local People’s Congress. In addition, appointment to the Fazhi Shi must be approved by the county party Organization Department. At every point, the local party Political and Legal Affairs Committee (政法委 ) may have input. As Michel

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Oksenberg observed in his 1991 and 1996 notes on the Political and Legal Affairs Committee, the committee’s principal activities included, but were not limited to, conducting legal campaigns and resolving conflict among the courts, prosecutors, and the Public Security Bureau (PSB). Supervision of the Fazhi Shi appeared to be an important but somewhat lesser priority for the party Political and Legal Affairs Committee. In most circumstances, the Fazhi Shi still appears to enjoy a wide berth (except, for example, in highly contentious administrative reconsideration cases). The Fazhi Shi is staffed by individuals who in some way can lay claim to being members of the local legal elite. In 1991 Michel Oksenberg noted that the Fazhi Shi staff consisted of four members: the head (主任), the ­vice-​ ­head (副主任), and two secretaries (秘书). At the time, officials expressed their hopes to triple the size of the staff, to hire lawyers, and to establish legal sections (法制科) within ­county-​­level functional departments. By 2007 these hopes had been realized at the county level. During the 1990s, townships under the county established their own legal affairs offices (法制局 or 法制室). By 2007 these ­township-​­level offices were staffed with an average of four or five officials. Villages typically have no legal affairs office, but since the early 1990s, they have had a legal affairs officer (法制员). The village legal affairs officer is typically a village resident lent on a nonpermanent basis from the village justice office (司法所) or the village’s party-committee office (党政办). This position is typically not staffed by an individual sent down (派出) from the c­ ounty-​­level Fazhi Shi. At all levels, Fazhi personnel function as advisers to local government officials on legal affairs. At all levels they also seek to coordinate administrative organs toward settlements as a means of resolving disputes. Fazhi Shi officials are routinely involved in legislative drafting, research, and analysis at a level of detail that traditionally had not been part of judicial training. Although Fazhi Shi officials are exposed to a broad array of issues across policy areas, they are still specialists in administrative law, whereas local judges often tend to be generalists. On technical issues outside the context of a specific case, judges from time to time do consult with the Fazhi Shi. When the Fazhi Shi perceives a general need among judges for clarification on technical issues, it may convene a seminar, inviting professors, experts, and judges as participants. The legislative affairs committee of the Zouping Local People’s Congress has some formal supervisory

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authority over the Fazhi Shi, and consultation does occur between the two, particularly over matters of legislative planning.

Fazhi Shi Influence after Rulemaking Rule “Cleanup”

Some early reformers envisioned the Fazhi Shi as a transitional organ and expressed the hope that all government employees eventually would develop a “sense of the law” sufficiently strong to render the Fazhi Shi obsolete. As detailed above, however, the role of the Fazhi Shi over time has become more and more institutionalized, and its portfolio has become broader. This trend has continued. In 2010, for example, the Zouping County government issued guidelines for “Cleaning Up” Rules intended to eliminate old, ­out-​­of-date, obsolete and legally noncompliant rules. 18 The guidelines require all ­county-​­level administrative departments, as well as township governments, street committees, and county development zone committees, to comply with national, provincial, city, and county government rule cleanup requirements in a timely fashion, and to report all problems that arise during the cleanup process to the Fazhi Shi. These guidelines helped to formalize the role that the Fazhi Shi plays in the ­post-​­rulemaking stages.19 As a result of “cleanup,” a rule may be abolished altogether, designated as needing revision so as to render it legally consistent with h ­ igher-​­level measures and suitable to current needs (some rules at the time of their issue may have been legally consistent with h ­ igher-​­level measures, but new h ­ igher-​ ­level measures subsequently issued may have created new inconsistencies), or preserved on the books as is. Following cleanup work launched in July 2010, the Zouping County government announced that fifty rules would continue in effect, seven would be revised, and twelve would be abolished altogether.20 The guidelines require that the department that drafted a rule or the department that is chiefly responsible for implementing a rule make a recommendation to the county government regarding its disposition following “cleanup.” In the case of a rule jointly developed by two or more departments, the guidelines require that the department that took the lead in drafting the rule or the department that is chiefly responsible for implementing the rule make a recommendation regarding whether it should

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be abolished, revised, or kept on the books as is. In some cases, however, it may not be possible to determine clearly which department took the lead in drafting (for instance due to the passage of a long period of time since the drafting took place). In other cases, there may be disagreement between or among departments over which department took the lead in drafting or which department is chiefly responsible for implementation. In both types of cases, the guidelines explicitly provide that the Fazhi Shi determine which department will make recommendations to the county government regarding the rule’s disposition.21 Thus, the 2010 guidelines expand the Fazhi Shi’s influence as a mediator of interdepartmental disputes over the legality, validity, and staying power of a rule, not just during the rulemaking process but even long after the rule already may have been on the books. That is, the guidelines now formally provide the Fazhi Shi a second bite at the apple: it reviews proposed rules for “legality” prior to promulgation, and then again during the cleanup process. So the role of the Zouping County Fazhi Shi in the cleanup process, specifically its mandated review for legality (合法性审查), enables it to formally conduct a kind of review over legally binding rules that Zouping’s courts have not been fully empowered to do. 22 Moreover, the Fazhi Shi’s actions in this role have been consequential: of ­sixty-​­nine rules reviewed during the mandated periodic cleanup launched in July 2010, nineteen (27 percent) were either abolished altogether (twelve rules or 17 percent) or slated for revision (seven rules or 10 percent). These nineteen rules were drafted by a wide range of government departments including the Urban and Rural Construction Bureau (城乡建 设局), Civil Affairs Bureau (民政局), Agriculture Bureau (农业局), Land Bureau (国土局), Health Bureau (卫生局), Audit Bureau (审计局), Water Bureau (税务局), and Housing Security and Real Estate Management Bureau (住房 保障和房产管理局), among others. 23 The guidelines specify that township governments, street committees, and county development zone committees are responsible for the cleanup of rules that they have issued. But they must report the results of their cleanup to the Fazhi Shi, where the results are subject to the Fazhi Shi’s review. The guidelines further specify that county government departments must submit a list of rules designated for cleanup to the Fazhi Shi, and can proceed with cleanup only after the list has been certified (确定) by the Fazhi Shi.24 This effectively provides the Fazhi Shi with the discretion to add items to the cleanup list, or to claim what amounts to ­line-​­item veto authority over

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departmental cleanup plans. Moreover, because the guidelines clearly state that recommendations for cleanup must be reviewed for legality, Fazhi officials at their discretion may serve as a check on departments who seek to use or abuse the cleanup process in order to change or invalidate rules in a manner or for purposes that are inconsistent with h ­ igher-​­level measures or 25 that otherwise exceed the department’s authority. Once cleanup of rules is completed, all county government departments, township governments, street committees, and development zone committees must submit a summary of cleanup activities to the Fazhi Shi, again underscoring the Fazhi Shi’s formal role in the ­post-​­rulemaking stages.26 Prior to cleanup, all cleanup recommendations, along with a brief statement of justifications, are to be posted on departmental websites for public comment; a list of all comments received that take issue with the cleanup recommendation, whether the comments are accepted or not, must be reported to the Fazhi Shi together with an explanation.27 By allowing the Fazhi Shi in this way to monitor departments’ decisions on whether or not to accept the public’s comments, this provision assigns to the Fazhi Shi a potential role in maintaining (or impeding) public accountability. The guidelines require departments to also consider the views of other administrative departments that may have an interest in rules recommended for cleanup. In cases where interdepartmental disputes arise, and the departments are unable to arrive at a written compromise, the guidelines grant authority to the Fazhi Shi to mediate if the Fazhi Shi finds it necessary to do so.28 Hence, in the two decades from the establishment of the Zouping Fazhi Shi in 1991 to the issue of the guidelines for “Cleaning Up” Rules in 2010, the Fazhi Shi evolved into an arbiter of administrative legality, mediator among administrative departments asserting competing claims to “legality,” and possible instrument for monitoring, promoting, or limiting the incorporation of popular input throughout the full life cycle of administrative rules—from the birth of a rule to the possible death of a rule, that is, from rulemaking to rule cleanup. Administr ative Reconsider ation

While these institutional developments in Zouping have conferred influence and authority on the Fazhi Shi, the development of administrative law in China more generally has also formalized the Fazhi Shi’s potential

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for influence. China’s system of administrative reconsideration, initially set forth in an Administrative Reconsideration Regulation (ARR), was revised in 1999 and enacted by the National People’s Congress as the Administrative Reconsideration Law (ARL). One difference between the ARL and the previous ARR is that the ARL specifically allows applicants to challenge the legality of rules on which an administrative department had based an allegedly illegal or unreasonable administrative act, in addition to challenging the specific act itself.29 Because the ARL specifies legal affairs organs as organs for administrative reconsideration (as did the ARR),30 the Fazhi Shi effectively, if indirectly, has enjoyed the authority to review the legality of rules themselves, and not just of the specific administrative actions taken pursuant to a rule. Courts generally have not fully enjoyed such formal authority.31 The Fazhi Shi’s handling of administrative reconsideration and its increasing influence in that realm present it with challenges. The Fazhi Shi’s influence on the development and implementation of law derives in part from its role in drafting and establishing the legality of local rules, and then reasserting its claims over determinations of legality as interpreter and arbiter during reconsideration. Through reconsideration the Fazhi Shi may be called upon to review its own prior consistency determinations. One question, therefore, is whether the Fazhi Shi can function neutrally as a reconsideration organ in a manner that preserves the integrity and objectives of the administrative reconsideration process. The risk of bias resulting from such a potential conflict of interest is reduced (though not eliminated) if the threat of litigation following administrative reconsideration is real, and if the courts are not predisposed ex ante to uphold administrative reconsideration decisions. Whether these conditions can be met remains unclear. Because administrative reconsideration, by law, can address some problems that courts, by law, cannot, administrative reconsideration decisions are not necessarily influenced by the possibility of subsequent judicial action; that is, they do not necessarily take place “in the shadow of the courts.” Generally, Chinese courts have had authority to rule on the legality of specific administrative acts but not on their reasonableness (except in the case of “manifest unreasonableness” [显失公平] with respect to administrative fines, as explicitly provided in the Administrative Litigation Law).32 Administrative reconsideration, however, does function as a review for reasonableness, and was established, in part, for that purpose.

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Administrative reconsideration organs can also review the legality of local rules in some ways that courts have not formally been fully empowered to do. Although the courts have not had review authority over rules, however, they have had review authority over reconsideration decisions.33 This meant that while a court may not have been able to directly review a rule, it could review an administrative reconsideration decision that reviewed a rule. Administrative reconsideration decisions that reviewed rules and that were later challenged in court, therefore, provided an opportunity for courts, by reviewing and ruling on an administrative reconsideration decision, to influence the disposition of rules indirectly and perform a de facto and indirect form of legal review. In this way, the Fazhi Shi, as the county’s main administrative reconsideration organ, may have played a role in legal development to the extent that it may have effectively judicialized the review of some rules. That is, through the manner in which it handled some administrative reconsideration cases, the Fazhi Shi may in some cases have enabled courts in practice not just to review specific administrative actions, but indirectly to review the rules on which specific administrative actions were based.

Fazhi Shi and the Justice Department Some provisions in Chinese administrative law in theory provide citizens with legal means to sound alarms when they allege that they have been subjected to transgressions by local officials. When asked to describe the typical new employee’s first day on his staff, one Zouping official responded: “I tell every person on my staff on their first day here ‘every person you have contact with outside this office today may be the plaintiff we confront tomorrow. You must go about your duties with this clearly in mind.’” The official’s words reflect a growing legal awareness among Chinese citizens that has been well documented elsewhere. The Zouping County Justice Department (司法局), t­ownship-​­level justice offices (司法所), and village justice officers (司法人员) have taken part in officially mandated efforts to promote legal awareness (普法) among Zouping’s citizens. The availability of administrative reconsideration (over which the Fazhi Shi has oversight), as a ­lower-​­cost, simpler alternative to administrative litigation, has also contributed to awareness of the law among citizens. Zouping officials spoke of the Fazhi Shi’s and Sifa Ju’s interests as some-

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times being at odds with each other. The Ministry of Justice’s third F ­ ive-​ ­Year Pu Fa Plan (1995–2000) emphasized administrative law. It was during this period that the Fazhi Shi system evolved. Indeed, Michel Oksenberg’s notes from his 1996 interviews with Sifa Ju officials reveal that by that time, both the Sifa Ju and the Fazhi Shi claimed “supervision of administrative law” as a primary responsibility. The Sifa Ju promotes awareness among citizens of their rights, including the right to apply for administrative reconsideration. At the same time, the Fazhi Shi represents the government in administrative reconsideration cases. The Sifa Ju is also responsible for mediation, legal aid, notary services, and administration of the bar (and in other ­higher-​­level administrative divisions, it also administers prisons). The Sifa Ju has on occasion used its administration of the bar in order to claim oversight or supervisory authority over Fazhi Shi officials who serve as counsel for the government in administrative litigation cases. The Fazhi Shi credentials administrative enforcement officers; the Sifa Ju credentials the lawyers who may challenge those officers’ actions in court. The Sifa Ju is a functional department (职能部门) that promulgates administrative rules. In theory it should be subject to the gatekeeping functions that the Fazhi Shi performs during rulemaking and cleanup as described above, and in theory its rules are potentially subject to review by the Fazhi Shi during administrative reconsideration. In practice, however, according to some interviewees, the Sifa Ju does not file its rules with the county Fazhi Shi but sends them only to the Sifa Ju at the next level up (Binzhou city). Even in the case where the Sifa Ju seeks to make a rule that conflicts or overlaps with another department’s rule (for example, with a PSB rule),34 the Fazhi Shi does not play the same mediating role that it plays in analogous situations involving other bureaus as described above. In part this is because one of the county vice-heads (副县长) is charged with overseeing both the Sifa Ju and the PSB, he has frequent contact with both, he will be the first to know a ­conflict-​­of-rules situation is brewing, and he rather than the Fazhi Shi will play the coordinating and mediating role. In the case of the county Sifa Ju (and PSB), the county Fazhi Shi does not have the same level of awareness during Sifa Ju rulemaking that it has in virtually all other functional administrative areas. Whether or not competing interests between the Sifa Ju and the Fazhi Shi, which in theory could be constructive, will in fact be so remains to be seen.

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Conclusion Examining the Fazhi Shi’s origins, development, and operations in Zouping shows how nonjudicial actors have been charged with “legalizing” the local state. In a system where courts are chronically weak and not independent, the Zouping Fazhi Shi is a nonjudicial interpreter of legality and a locus of legal activity outside the courts. Over time the Fazhi Shi has been retooled and assigned tasks beyond its original scope of work. The structure of institutions affords the Fazhi Shi opportunities to exercise gatekeeping and a­ genda-​­setting influence over rulemaking. Institutional structure empowers the Fazhi Shi to preempt, coordinate, mediate, and at times resolve administrative conflicts. The Fazhi Shi pursues and protects its bureaucratic mission and institutional interests by emphasizing, implementing, and enforcing procedure, and provides local government officials and departments mechanisms with which to adapt to local needs and changing circumstances. In the two and a half decades following its establishment in 1991, the Zouping Fazhi Shi has evolved into an arbiter of administrative legality, a mediator among administrative departments asserting competing claims to “legality,” and a possible instrument for monitoring, promoting, or potentially limiting the incorporation of popular input throughout the full life cycle of administrative rules. The Fazhi Shi’s central role in administrative reconsideration further exemplifies how new functions and patterns of official behavior have appeared within old institutional forms. The Fazhi Shi reviews the legality of rules in ways that courts have not formally been fully empowered to do directly. By carrying out its mandated nonjudicial responsibilities, the Fazhi Shi may have created conditions that allowed courts in practice to broaden the scope of judicial action. In these many ways, the Fazhi Shi has emerged as a locus of legal activity outside the courts, and has come to operate in surprising new ways. The Zouping Fazhi Shi remains but one example of how institutions in China have changed since economic reform began more than three decades ago. At the outset of the reform era, China’s system was one of administration according to policy, documents, and leaders (依政策行政; 依文件行政; 依领导行政). The system now is one in which officials are purportedly supposed to think in terms of administration according to law (依法行政). As a nonjudicial interpreter of legality, the Zouping Fazhi Shi has emerged as a critical part of that system. It is also an important part of the explanation of how a local government has been able to govern and maintain control

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within a radically changed economic and social environment, even while it remains within a preexisting Leninist structure. The development of the Fazhi Shi illustrates institutional agility in the absence of political reform, providing insight into how a ­single-​­party authoritarian system has managed to endure amid fundamental economic and social change.

Notes The views expressed herein are those of the author and are not presented as those of the Congressional Research Service. 1.  See, for example, Lianjiang Li, Mingxing Liu, and Kevin J. O’Brien, , “Petitioning Beijing: The High Tide of 2003–2006,” China Quarterly, no. 210 (June 2012), 313–34; Yongshun Cai, Collective Resistance in China: Why Popular Protests Succeed or Fail (Stanford, CA: Stanford University Press, 2010); Ethan Michelson, “Justice from Above or Below? Popular Strategies for Resolving Grievances in Rural China,” China Quarterly, no. 193 (March 2008), 43–64; Carl F. Minzner, “Xinfang: An Alternative to Formal Chinese Legal Institutions,” Stanford Journal of International Law 42 (2006); Kevin J. O’Brien, and Lianjiang Li, Rightful Resistance in Rural China (Cambridge: Cambridge University Press, 2006); Eva Pils, “Land Disputes, Rights Assertation and Social Unrest in China,” Columbia Journal of Asian Law 19 (2005); Kevin J. O’Brien, and Lianjiang Li, “Suing the Local State: Administrative Litigation in Rural China,” in Neil Diamant, Stanley Lubman, and Kevin O’Brien, eds., Engaging the Law in China: State, Society, and Possibilities for Justice (Stanford, CA: Stanford University Press, 2005); Laura Luehrmann, “Facing Citizen Complaints in China, 1951–1996” Asian Survey 43 (2003), 845. 2.  PRC Law on Legislation, issued March 15, 2000, effective July 1, 2000, Arts. 63–64, 69, 73, 80, 88, and 89. The Law on Legislation as issued in 2000 extended lawmaking power to “large cities” (较大的市). The “large city” designation is made by the State Council and, under Article 63 of the Law on Legislation as issued in 2000, was used specifically in connection with the assignment of lawmaking power. The “large city” designation is not directly related to other designations the State Council applies to select cities for other purposes (e.g., tequ chengshi, jihua danlie chengshi, etc.). There are f­ orty-​­nine “large cities,” including the t­ wenty-​­seven provincial and autonomous region capitals, the four special economic zones, and eighteen other cities, as follows (dates of designation by the State Council in parentheses): Tangshan, Datong, Baotou, Dalian, Anshan, Wushun, Jilin, Qiqihar, Qingdao, Wuyang, Huainan, and Luoyang (1984); Ningbo (1988); Zibo, Handan, and Benxi (1992); Suzhou and Xuzhou (1993). A

Nonjudicial Interpreters of “Legality” and the Development of Law in the Local State   159 March 2015 revision of the PRC Law on Legislation expanded the set of cities with lawmaking power to include not just the State Council–designated”large cities,” but the broader category of “cities subdivided into districts” (设区的市). The revised law provided that these cities could begin engaging in lawmaking at a time and at a pace to be determined by the Standing Committee of the relevant p ­ rovincial-​­level People’s Congress based on its consideration of local demographic, social, and economic conditions; its determination of needs; and its assessment of the city’s capacity to undertake lawmaking. See PRC Law on Legislation, revised March 15, 2015, Arts. 72, 82, and 98. Note that the use of the term “city subdivided into districts” (设区的市) is consistent with the language of the PRC Organic Law of the Local People’s Congresses and Local People’s Governments. 3.  PRC Law on Legislation as originally issued in 2000, Arts. 63–77; PRC Law on Legislation, revised March 15, 2015, Arts. 72–86. PRC Administrative Litigation Law, as originally issued April 4, 1989, effective October 1, 1990, Article 53 (as revised November 1, 2014, effective May 1, 2015, Article 63); Organic Law of Local People’s Congresses and Local People’s Governments, Arts. 7, 43, and 60; PRC Constitution, Arts. 58, 89–90, 100, and 105; State Council Opinion on Strengthening the Establishment of Government by the Rule of Law (Guowuyuan guanyu jiaqiang fazhi zhengfu jianshe de yijian), October 10, 2010, Article 9; State Council Implementation Outline for the Comprehensive Promotion of Administration according to Law (Guowuyuan quanmian tuijin yifa xingzheng shishi gangyao), March 22, 2004. See also Xixin Wang, “Rule of Rules: An Inquiry into Administrative Rules in China’s Rule of Law Context,” in The Rule of Law: Perspectives from the Pacific Rim (Washington DC: Mansfield Foundation, 2000); Peter Howard Corne, “Creation and Application of Law in the PRC,” American Journal of Comparative Law 50, no. 2 (2002): 369–443. 4.  In Chinese, these documents are typically named guiding, banfa, guize, xize, yijian, jueding, tongzhi, gonggao, or tonggao. See, for example, Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Section 2 (3). 5.  State Council Opinion on Strengthening the Establishment of Government by the Rule of Law (Guowuyuan guanyu jiaqiang fazhi zhengfu jianshe de yijian), October 10, 2010. State Council Implementation Outline for the Comprehensive Promotion of Administration according to Law (Guowuyuan quanmian tuijin yifa xingzheng shishi gangyao), March 22, 2004. Wang, “Rule of Rules”; Corne, “Creation and Application”; Randall Peerenboom, China’s Long March toward Rule of Law (New York: Cambridge University Press, 2002). 6.  In his notes, Michel Oksenberg painted rich portraits of the officials he

160  Dougl a s B. Grob interviewed in the Legal Affairs Office, Justice Bureau, courts, Procuratorate and party p ­ olitical-​­legal committee, and documented in meticulous detail the institutional backdrop in which they operated. He recorded biographical details, including officials’ places of birth, education and career paths, family histories and sizes, experiences during the Cultural Revolution, military service (if any), salaries, as well as his personal impressions of their personalities and leadership traits. He recorded the sizes of offices, numbers of personnel, divisions of labor, levels of educational attainment, and career trajectories of those reporting to the person being interviewed. 7.  Zouping County People’s Government Opinion on Speedy Establishment of a “Strong Rule of Law County” (Zouping xian renmin zhengfu guanyu jiakuai jianshe fazhi qiang xian de yijian), Zouping County People’s Government Document No. 6 (2012), issued November 22, 2012, Section 5(2). Zouping County Government Fifth ­Five-​­Year Plan on Administration according to Law 2011–2015 (Zouping xian yifa xingzheng di wuge wunian guihua [2011–2015]), Zouping County People’s Government Document No. 5 (2012), issued November 22, 2012, Sections 11, 18, and 22. Responsibilities of the Zouping County Legal Affairs Office (Zouping xian zhengfu fazhishi gongzuo zhize), issued November 22, 2012. Shandong Province Administrative Procedure Regulation (Shandong sheng xingzheng chengxu guiding), issued June 22, 2011, effective January 1, 2012, Sections 36–37, 48–49, 51, 130. See also State Council Opinion on Strengthening the Establishment of Government by the Rule of Law (Guowuyuan guanyu jiaqiang fazhi zhengfu jianshe de yijian), October 10, 2010, Sections 9 and 11. 8.  For scholarly treatment of the link between procedure and the development of the rule of law, see, for example, Martin Shapiro, Courts: A Comparative and Political Analysis (Chicago: University of Chicago Press, 1981); Philippe Nonet and Philip Selznick, Law and Society in Transition: Toward Responsive Law (New York: Harper & Row, 1978); Richard Posner, “Creating a Legal Framework for Economic Development,” World Bank Research Observer 13, no. 1 (1998): 1–11. For discussions of the topic in the context of contemporary Asia, see, for example, Stanley B. Lubman, Bird in a Cage: Legal Reform in China after Mao (Stanford. CA: Stanford University Press. 2000); Tom Ginsburg, Judicial Review in New Democracies: Constitutional Courts in Asian Cases (New York: Cambridge University Press, 2003). See also State Council Opinion on Strengthening the Establishment of Government by the Rule of Law (Guowuyuan guanyu jiaqiang fazhi zhengfu jianshe de yijian), October 10, 2010. 9.  On the Fazhi Shi’s role in promoting legality not only at the county level but also in the county’s subjurisdictions, see, for example, Zouping County Government Fifth F ­ ive-​­Year Plan on Administration according to Law 2011–2015 (Zouping xian yifa xingzheng di wuge wunian guihua [2011–2015]), Zouping

Nonjudicial Interpreters of “Legality” and the Development of Law in the Local State   161 County People’s Government Document No. 5 (2012), issued November 22, 2012, Sections 8, 9, 13, 26, 46–47, 51. 10.  As detailed on the Fazhi Shi’s website. See Responsibilities of the Zouping County Legal Affairs Office (Zouping xian zhengfu fazhishi gongzuo zhize), issued November 22, 2012. Zouping County Government Fifth F ­ ive-​­Year Plan on Administration according to Law 2011–2015 (Zouping xian yifa xingzheng di wuge wunian guihua [2011–2015]), Zouping County People’s Government Document No. 5 (2012), issued November 22, 2012. 11.  Bei’an refers to the system whereby an official entity files documents with the next level up. On the Bei’an system generally, see PRC Constitution, Arts. 100, 110; PRC Law on Legislation, as issued March 15, 2000. Arts. 55, 89, and 92; and PRC Organic Law of Local People’s Congresses and Local People’s Governments, Arts. 7, 27, 31, 43, 44 (9–10), 60, and 64. 12.  Prior to May 1, 2015, the legality of a local rule was not r­ eviewable by courts through administrative litigation, in part because, under the Administrative Litigation Law as issued in 1989 (see especially Arts. 5 and 54), courts had the authority to review only ­so-​­called specific administrative acts (juti xingzheng xingwei), not rules, sometimes referred to as “abstract administrative acts” (chouxiang xingzheng xingwei). A 2014 revision to the PRC Administrative Litigation Law that took effect on May 1, 2015, began to allow courts some authority to review the legality of some local rules (guifanxing wenjian). See PRC Administrative Litigation Law, revised November 1, 2014, effective May 1, 2015, Arts. 53 and 64. The revision replaced references to “specific administrative acts” with references simply to “administrative acts” (行政行为), eliminating the “specific administrative act” requirement. See National People’s Congress Standing Committee Decision on the Revision of the PRC Administrative Litigation Law (Quanguo renmin daibiao dahui changwu weiyuanhui guanyu xiugai zhonghua renmin gongheguo xingzheng susongfa de jueding), issued November 1, 2014, effective May 1, 2015, item 60. 13.  Zouping County Government Fifth F ­ ive-​­Year Plan on Administration according to Law 2011–2015 (Zouping xian yifa xingzheng di wuge wunian guihua [2011–2015]), Zouping County People’s Government Document No. 5 (2012), issued November 22, 2012, Section 24. 14.  See “Notice Regarding the Convening of a Rulemaking Deliberation Meeting” (Guanyu zhaokai guifanxing wenjian lunzheng hui de tongzhi), issued by the Zouping County People’s Government Fazhi Shi, November 27, 2012. 15.  Zouping County Government Fifth F ­ ive-​­Year Plan on Administration according to Law 2011–2015 (Zouping xian yifa xingzheng di wuge wunian guihua [2011–2015]), Zouping County People’s Government Document No. 5 (2012), issued November 22, 2012, Sections 24 and 27.

162  Dougl a s B. Grob 16.  PRC Administrative Litigation Law, issued April 4, 1989, effective October 1, 1990, Article 37; Implementing Regulations for the Administrative Reconsideration Law, Arts. 23–24. 17.  Zouping County Government Fifth F ­ ive-​­Year Plan on Administration according to Law 2011–2015 (Zouping xian yifa xingzheng di wuge wunian guihua [2011–2015]), Zouping County People’s Government Document No. 5 (2012), issued November 22, 2012, Section 27. 18.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010. 19.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Preamble. 20.  The Zouping Fazhi Shi published the announcement online, including a list of these rules and their drafting bureaus. See Notice Regarding the Publication of Lists of Rules to Continue in Effect (Including Those Pending Revision) and to be Repealed (Guanyu gongbu jixu youxiao [han dai xiuding] he feizhi de guifanxing wenjian mulu de tongzhi), Zouping County People’s Government Document No. 43 (2010), issued October 27, 2010, Appendix. See also Notice Regarding the Launching of Rule Cleanup Work (Guanyu kaizhan guifanxing wenjian qingli gongzuo de tongzhi), Zouping County People’s Government, issued July 13, 2010. 21.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Section 4 (1). 22.  This began to change in 2015, when a revision to the PRC Administrative Litigation Law began to allow courts some authority to review the legality of some local rules (guifanxing wenjian). PRC Administrative Litigation Law, revised November 1, 2014, effective May 1, 2015, Arts. 53 and 64. See also National People’s Congress Standing Committee Decision on the Revision of the PRC Administrative Litigation Law (Quanguo renmin daibiao dahui changwu weiyuanhui guanyu xiugai zhonghua renmin gongheguo xingzheng susongfa de jueding), issued November 1, 2014, effective May 1, 2015, item 60. 23.  See Notice Regarding the Publication of Lists of Rules to Continue in Effect (Including Those Pending Revision) and to be Repealed (Guanyu gongbu jixu youxiao (han dai xiuding) he feizhi de guifanxing wenjian mulu de tongzhi) Zouping County People’s Government Document No. 43 (2010), issued 27 October 2010, Appendix. 24.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian gui-

Nonjudicial Interpreters of “Legality” and the Development of Law in the Local State   163 fanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Section 7(2)2. 25.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Section 7(4). 26.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Section 7(6). 27.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Section 8(1)1. 28.  Zouping County Guidelines for “Cleaning Up” Rules (Zouping xian guifanxing wenjian qingli gongzuo zhidao yijian), Zouping Government Document Number 41 (2010), issued July 29, 2010, Section 8(1)3. 29.  PRC Administrative Reconsideration Law, Article 7; Implementing Regulations for the Administrative Reconsideration Law (Xingzheng Fuyi Fa Shishi Tiaoli), Article 26. These include, for example, the denial of a license or permit without cause; levy of fees or imposition of administrative penalties or other forms of administrative punishment without cause; issuance of an injunction or the seizure or taking of property or freezing of assets without cause; failure to enforce environmental or occupational safety standards; failure to provide adequate compensation in case of harm to a person or property caused by an official action or dereliction of duty; failure to take enforcement action on private entities that fail to pay workers’ compensation according to law in proven cases of workplace injury; improper denial of social security, health, or educational benefits; excessively restrictive or intrusive zoning decisions. 30.  See Administrative Reconsideration Law, Arts. 3, 17, 22–23, 28, 38. 31.  This began to change in 2015, when a revision to the PRC Administrative Litigation Law began to allow courts some authority to review the legality of some local rules (guifanxing wenjian). See PRC Administrative Litigation Law, revised November 1, 2014, effective May 1, 2015, Arts. 53 and 64. The revision also replaced references to”specific administrative acts” (具体行政行为), typically understood to exclude rules of general application, with references simply to”administrative acts” (行政行为). See National People’s Congress Standing Committee Decision on the Revision of the PRC Administrative Litigation Law (Quanguo renmin daibiao dahui changwu weiyuanhui guanyu xiugai zhonghua renmin gongheguo xingzheng susongfa de jueding), issued November 1, 2014, effective May 1, 2015, item 60. For historical context, see also PRC Administrative Litigation Law, as issued April 4, 1989, effective October 1, 1990, Arts. 2, 5, 11–12, 14, 17, 25–27, 32, 39, 41, 43–44, 51, 54, 65, 67–68.

164  Dougl a s B. Grob 32.  PRC Administrative Litigation Law, issued April 4, 1989, effective October 1, 1990, Article 54(4). 33.  PRC Administrative Litigation Law, issued April 4, 1989, effective October 1, 1990, Arts. 25 and 38, see also Article 17; Supreme People’s Court Interpretation on Several Problems in Implementing the People’s Republic of China Administrative Litigation Law (Zui gao renmin fayuan guanyu zhixing Zhonghua renmin gongheguo xingzheng susong fa ruogan wenti de jieshi), effective March 10, 2000, Article 53, and Arts. 7, 13, 22, 31, 33, 35. 34.  Throughout the 1990s and into the 2000s, this happened more frequently than it does now, according to officials interviewed. As the missions of the two departments have become clearer, it still occurs, but less frequently.

Ch a p t er 7

The Role of the Organization Department in Political Selection Melanie Manion

Decades of decentralizing economic reforms have greatly empowered Chinese local governments, enterprises, and individuals and have thereby powered growth. The reforms have also presented new governance challenges. As this volume’s introduction and previous chapters show, the main story of governance that emerges from a study of Zouping County today is about local party and government agencies confronting myriad challenges of a changing economic environment largely by adapting within an unchanging institutional design. Indeed, this is the story that is illustrated in this chapter too. The chapter focuses on one of the core tasks of one of the most (if not the most) powerful departments of the Communist Party of China (CPC): namely, identifying suitable, ­high-​­quality officials for leadership, which is the main charge of the party’s organization department (组织部). More specifically, the most important task of political selection in ­reform-​­era Zouping consists of applying exogenously determined standards of quality to evaluate and vet party and government officials.1 Zouping’s organization department systematically collects and stores information about local officials so as to provide timely, highly specific recommendations to the county party committee for appointments, promotions, and transfers of party and government officials. Making recommendations gives the organization department extraordinary power and huge responsibility. If political selection is done well, it effectively compensates for the inadequacy of existing institutions to monitor the behavior of officials and punish abuses of official power. The fundamentals of Leninist hierarchical structure are everywhere evi

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dent in the work of political selection in Zouping. This is not surprising: the linchpin of Communist Party rule in China today is the party’s monopoly in all matters of personnel, of which political selection is the most important. Despite decentralization in the Chinese economy, this paramount political task is (as in the past) strictly managed from Beijing. This chapter tells a story about how a local party agency carries out a crucial governance task within the constraints of historically Communist institutions. Although the institutions ceased functioning in the decade of the Cultural Revolution, they were restored in the early 1980s and remain basically unchanged, at least in outward appearance. At the same time, this chapter is a story of “institutional agility,” to use a term proposed in this volume’s introduction. Key central Communist Party documents and interviews with Zouping party officials from the 1980s, 1990s, and since 2000 make it very clear that Beijing has changed (and complicated) the standards and procedures for political selection. Today, Zouping’s organization department must conduct m ­ ore-​­frequent evaluations of quality of party and government officials than ever before. The evaluations must also include more participants and elicit more coordination. Moreover, changes like electoral reforms for the local people’s congresses have created unprecedented dilemmas for the department. The organization department’s resources to meet its new challenges have not been commensurately augmented, however. In short, this chapter describes how a local party agency adapts to meet new, numerous, and varied stresses within the confines of a seemingly unchanging institutional structure and resource allocations. In this case, the stresses do not arise from the changing economic environment. Rather, they are quintessentially political stresses, imposed on Zouping by Communist Party superiors in Beijing and communicated down the party hierarchy, with little to no room for local improvisation. Even with new measures of official performance that are more transparent and less politically pliable, as well as more elaborate rules to manage officials, the CPC continues to pay more attention to defining and discovering h ­ igh-​­quality officials for governance and advancing them to positions of power than to designing institutions to restrain them from bad behavior in the exercise of power. For example, a conclusion in Landry’s study of local governance in China is that local officials are practically never demoted.2 A conclusion in my own study of corruption in China is that the CPC makes

The Role of the Organization Department in Political Selection   169

more use of moral mandates and campaigns than of institutional design in its effort to prevent officials from abusing public office to pursue private ­ igh-​ gain.3 In sum, the onus is on the organization department to select h ­quality types so as to prevent governance failures in the first place. This chapter focuses on two questions related to cadre selection. First, how is quality defined? In particular, how are (essentially exogenously imposed) standards of quality interpreted and applied to meet the needs of local governance from the available pool of cadre talent in Zouping? Second, how does the party organization department, assisted by other agencies, identify, monitor, and upgrade local quality to strengthen local governance—and, by extension, strengthen the Communist Party regime? I endeavor to pinpoint what has changed, why, and to what effect in political selection since the county began its ­post-​­Mao reforms decades ago. I draw on an extraordinary, unique resource: hundreds of pages of Michel Oksenberg’s handwritten field notes from interviews he conducted in Zouping from May 1988 through October 1999. This includes interviews with generalist party and government leaders as well as with functionally specialized officials in the party organization department, party school, and party discipline inspection committee. To update the account in Oksenberg’s field notes, in 2007 and 2008 I interviewed officials in many of these same offices in Zouping.4 In recent years, I have reached out to county officials to update my work. The first section of the chapter introduces the organization department, the main player in political selection. In its work, the department applies the standards by which leaders in Beijing define quality for local governance. It also authorizes training of officials at the local Communist Party school, to upgrade quality.5 The second section focuses on the standards and the content of quality upgrading. The third section describes how the organization department works with other players to identify and monitor quality through routine evaluation and ad hoc vetting of local officials.

The Zouping County Organization Department The CPC monopolizes political selection of officials for every office of even moderate importance, including elected offices. It does so through a system that allocates authority among Communist Party committees at various levels down the party hierarchy.6 Since 1984 the system has given party com-

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mittees broad authority to appoint, promote, and transfer officials in offices one level below them in the territorial and bureaucratic hierarchies. This gives the Zouping County Party Committee authority over political selection of party and government leaders in Zouping’s townships and towns (乡镇 ) (i.e., one level down the territorial hierarchy) as well as of officials at the division (科 ) rank in Zouping’s party and government departments and state enterprises.7 The total number of officials under the county party committee’s authority today is still less than 800.8 Leaders interviewed in 1996 provide an estimate of 820 officials;9 different leaders interviewed in 1999 refer to “about 800 officials, somewhat fewer than in 1996.”10 The number is undoubtedly smaller now, due to changes in economic policy context that have had the effect of reducing the scope of party committee authority to encompass mainly selection of local politicians and bureaucrats, not enterprise managers or professionals in the education, science, and health sectors, for example.11 In practice, the work of the Zouping County Party Committee in political selection is the specialized function of its organization department, an operational agency (职能部门) under party committee leadership. The department grew in size from fourteen in 1988, to eighteen by the ­mid-​­1990s, to t­ wenty-​­two in 2007.12 This includes the organization department head and refers to actual staffing, not the authorized size of the department, which is somewhat larger.13 Today, as in the 1980s, the organization department works under the leadership (领导) of the county Communist Party committee, but it maintains a “very close relationship” with the organization department one level up, in Binzhou municipality.14 The Binzhou municipal organization department, with a staff of about forty in 1991,15 exercises guidance (指导) in functional matters of political selection and party affairs. Through Binzhou, the county organization department receives instructions from the Central Organization Department in Beijing and the Shandong Province Organization Department. The county organization department consults its municipal superior for opinions on difficult issues. For example, after 1978 it frequently wrote reports to ask for guidance on decisions to reverse specific political verdicts dating back as far as 1957.16 These verdicts had assigned political labels (e.g., rightist, counterrevolutionary) to party members during ­Maoist-​­era mass campaigns.

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The organization department is responsible not only for political selection of officials but also for Communist Party affairs broadly, which includes party member recruitment, party elections, and party organizations. These responsibilities are reflected in a division of labor between two teams, each headed by a deputy department head: a political selection team (干部 组 ) and a party affairs team (组织组 ). From the early to the ­mid-​­1980s, the political selection team was also responsible for management of retired veteran officials (i.e., those who had joined the Communist Party before 1949) under the new retirement system. In 1986 Zouping set up a specialized department to manage these retirees, under the county party committee.17 Party affairs have taken up relatively more of the department’s resources throughout the reform era. For example, in the late 1980s, eight people in the department worked on party affairs, and only five worked on political selection.18 The number working on political selection probably did not increase in the 1990s and amounted to four or five in 2007.19 In short, the ­reform-​­era organization department has carried out its political selection responsibilities on behalf of the Zouping County Party Committee with a cadre of less than a ­half-​­dozen specialists. Even so, based on figures for the 1990s, the department has about as many specialists to manage somewhat fewer officials than was the case a decade ago. This sort of tallying of workload and resources is flawed in at least two ways, however. First, although the county party committee manages somewhat fewer officials than in the 1980s, new policy challenges have increased the work involved in political selection. Second, as described below, the organization department can (indeed, according to policy, must) coordinate with more players than before in identifying, evaluating, and upgrading quality. This adds to the resources on which the department draws, but (more significantly) complicates the department’s work. These issues are described in the third section of the chapter. I turn first to the changing definition of quality for local governance.

The Definition of Quality for Local Governance ­ aoist-​­era leaders, including Mao himself, recognized the importance to M party rule of the selection of ­high-​­quality officials reaching down to the local level, but a definition of quality emphasizing political correctness dominated for decades. By contrast, ­reform-​­era leaders instituted reforms

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in political selection aimed at producing an “organizational guarantee” of a “­high-​­quality corps of officials” to lead economic growth.20 As Whiting notes, even fairly early in the 1980s, leaders in Beijing made clear that the most weight would be placed on real achievements in work rather than more vague political standards.21 The Central Organization Department called for the creation of a new system to evaluate quality. Evaluations were not to ignore political thought but were also to consider leadership ability, relevant substantive knowledge, participatory (literally: 民主 ) work style, and real achievements in work.22 Results of evaluations were to be the basis for rewards of various sorts (e.g., including salary and bonuses) and for promotion. By the end of the 1980s, highly specific formal guidelines had been set to identify and monitor quality. Indicators of quality emphasized economic performance, but also considered local provision of public goods (such as education and social order). Interviews in the late 1980s chart the effect of these changes in the definition of quality on political selection in Zouping. In 1988, for example, officials described the change in organization work “from a focus on class struggle to a focus on developing the economy. . . . We have to think about how to support this shift.”23 Indeed, the organization department formed a leading group that focused on intellectuals and also established an office to work on recruiting intellectuals into the party.24 Perhaps the best insight into the changing definition of quality for local governance is provided by Oksenberg’s interviews at the county Communist Party school. The first order of business in upgrading the quality of ­reform-​­era officials was upgrading general education credentials. Lee’s chapter 8 examines the Communist Party school system in more detail; here I draw from Oksenberg’s note to describe the earlier reform period and the role of the organization department in determining who is sent to the party schools and what is taught and how. Oksenberg’s interviews in the m ­ id-​­1990s indicate that in 1983 the county party committee received a directive from the Central Committee requiring that every party and government official (not including state enterprise officials) under its management achieve the educational level of a middle school graduate or higher.25 From 1985 to 1990, the county party school coordinated this work, mainly through organizing televised courses in politics, economics, and other areas of specialization. The provincial party school set course content and chose textbooks. By 1990 the beginnings of the pattern that Lee stresses in chapter 8 can

The Role of the Organization Department in Political Selection   173

be seen. Having met the goal for general education set out by the Central Committee, the county party school moved on to ­short-​­term training for local officials, with political content as well as practical training in leadership. In these courses, “the connection between theory and practice gets greater attention. . . . We ask students to connect theory to their concrete work. Good examples are developed in small discussion groups and presented to the whole class.”26 Specific political content changes continually, to integrate into training new content affirmed at regular Communist Party plenums in Beijing. For example, after the Fourth Plenum of the Sixteenth Party Congress in 2004, content of political training was organized around the tasks of the party as a ruling party: “This created a change in our work. Before, the emphasis was essentially on basic quality (素质) of officials, but after the Fourth Plenum, we focused on balance in our training between basic quality and competence (能力).”27 The party school offers different sorts of training: a ­one-​­week training course for rural Communist Party branch secretaries, a ­one-​­month training course for ­division-​­level officials, a ­three-​­month training course for officials in the reserve pool for transfer or promotion. For rural officials working at the grassroots village level, the content of training can be very practically targeted, including short courses on How to Be a Good Party Branch Secretary or How to Lead People to Be Prosperous, for example.28 As in the 1990s, the county organization department is still approving the roster of officials to take part in s­ hort-​­term training to upgrade quality.29 The organization department also discusses the content of training with party school leaders.

Identifying and Monitoring Quality Reforms in Communist Party personnel management in the 1980s demanded more of local organization departments, but they were at the same time empowering. They gave the departments h ­ igh-​­level support for the importance of their work, ­better-​­specified standards for evaluating officials, and relative autonomy in applying these standards of quality in political selection. Moreover, because the reforms of the evaluation system accompanied a broader i­nner-​­party reform effort to replace arbitrary decisions by one or a few party committee leaders with a more participatory d­ ecision-​ ­making process within the party committee, local organization departments

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could expect the information they collected to carry significant weight in party committee discussions. Organization departments normally conduct two sorts of evaluation of quality. They evaluate (考核) officials annually and vet (考察) officials less routinely. The vetting occurs when a party committee (at the county level or higher) identifies an opportunity for a transfer or promotion. The Chinese terms for evaluation and vetting are sometimes used interchangeably, which can be confusing. Moreover, the actual processes sometimes overlap. The usual distinction is to refer to an ­end-​­of-year evaluation of an official’s work as an evaluation (考核), which is not linked to any particular opportunity—although favorable results can be used in considering an official for promotion. Results of these sorts of evaluations also produce the organization department’s continually adjusted and updated reserve pool of officials (干部后备). These officials are considered for specific positions of leadership as they open up.30 By contrast, vetting (考察) refers to nonroutine evaluation related to new appointments or promotions. If the results of the annual evaluation indicate good work performance, this can be the basis for a nonroutine vetting when a new opportunity arises.31 As these routine and nonroutine evaluations are the main basis for decisions that affect the careers of officials managed by the county party committee, the evaluations are also the foundation of organization department power. The organization department acts as the party’s committee’s “radar”32 to home in on quality for political selection, because its evaluations familiarize it with the particular qualities of officials throughout the county. For example, on the basis of an annual evaluation, the county organization department may propose to the Zouping County Party Committee that an official is well suited for a lateral transfer or upward promotion to a newly identified position.33 Evaluations and vetting became more complicated after 1995. For example, describing the evaluation of township leaders in 1996, interviewees talk about the points for ten different categories of performance, noting that social order is a “veto category” (一票否决) in evaluation: that is, if the township experiences serious social disorder, they rate the official as unsatisfactory, regardless of that person’s achievements in other categories. In the series of interviews at the organization department in the 1980s and 1990s, officials briefly refer to “democratic evaluation” of officials in 1988 but go into more detail only in the m ­ id-​­1990s.34 They explain that they

The Role of the Organization Department in Political Selection   175

must consult the masses for views on township officials. Of course, they admit, the “masses” they consult most frequently are “respected people,” such as retired officials and local elders, not ordinary Chinese.35 It takes many months to complete the evaluations; the organization department has not always completed them by year’s end. The somewhat more elaborate discussion of democratic evaluation in later interviews reflects Zouping’s response to new reforms in 1995. To be sure, even before 1995 the principle of “democratic consultation” had been introduced as part of evaluation,36 but the 1995 reforms were stricter and more precise in defining standards to measure quality, focusing on the vetting and selection of leading officials. The reforms are described best in Central Committee regulations that summarize the procedures, authority, and participants for the process leading up to selection of candidates for offices of leadership: m ­ ore-​­participatory recommendations (民主推荐, literally democratic recommendation);37 careful choice of targets for vetting (考察); and then actual vetting, deliberation (酝酿 ) about vetting results, and final candidate selection. These regulations differ from earlier party documents in their greater specificity about procedures and greater number and breadth of participants. In 2002 the regulations were further expanded and elaborated to resolve, through more procedural clarity, a few problems, including an apparent increase in “improper practices” in selection of officials, but the 1995 reforms mark the real change, with the biggest effect on how organization departments carry out political selection.38 The reforms complicate organization department work in several ways. First, as described above, they expand participation to include more players. With the reforms, participatory recommendation is the initial basis for deciding on the pool of officials ultimately to be vetted for leadership offices. The reforms make much higher demands on the organization department, greatly increasing their obligations in this regard.39 The organization department must solicit opinions from a wide range of participants at and below the levels for which leaders are being selected. These participants cannot simply be local elders or retired officials or some other notion of “respected people.” They must include representatives from a range of interested agencies: the party’s anticorruption agency, various p ­ arty-​­affiliated organizations representing social groups (e.g., trade unions, women’s federations), and ­non-​­Communists. Methods to be employed are also more pre-

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cisely specified. For example, the organization department must specially convene recommendation meetings, not simply conduct some o­ ne-​­on-one interviews.40 Second, the reforms require more frequent evaluations. In effect, results of routine evaluations and vetting now have an expiration date: they are valid for no more than one year. This places pressure on the organization department to ensure that annual evaluations are conducted in a timely way so that the party committee is not constrained in its selection of officials for transfers. With more work and no additional resources,41 the county organization department has responded to new demands by mobilizing other agencies to participate in evaluations. For example, the county personnel department goes down to the townships and into the government workplaces at the county seat to assist the organization department with evaluations. This multiagency participation is different from that in the 1980s. In responding to a question about how an organization department of fourteen people manages to complete all its work, for example, interviewees asserted that they “farmed out” a lot of work.42 What is clear from the interview notes, however, is that in 1988 this refers to delegation of various tasks, not the mobilization of players from other agencies to work with the organization department jointly in conducting evaluations and vetting. Third, the reforms require the organization department to coordinate more with other specific players. This is different from the multiagency participation described above, which is a response to new challenges without new resources. For example, the reforms require participation of the county party anticorruption agency (i.e., discipline inspection committee) in an evaluation of probity as a component part of the annual evaluation of official quality. This is quite apart from the committee’s own evaluation (审查) of probity, which is also included in the set of evaluation materials considered by the party committee when making decisions on transfers or promotions. In addition to coordinating with other players in evaluations, the organization department works with the organization departments in Zouping’s townships to find appropriate posts for officials transferred down (i.e., by party committees above the county) to gain the grassroots experience newly required for promotion to higher levels in local governance. Fourth, the organization department faces a new measure of observable failure in its work. New legal provisions in 1995 required that most officials

The Role of the Organization Department in Political Selection   177

vetted and preselected as county party committee nominees for elective offices in Zouping’s township governments win those offices in contested elections against candidates nominated by representatives in township people’s congresses. That is, under the new law, party committee nominees can lose elections in congresses.43 This situation presents the county organization department with a new hard test of performance effectiveness, as reflected in an explanation of revisions to the law. It is difficult to avoid occasional instances of selection that are insufficiently w ­ ell-​­founded. The stipulation that congress representatives can nominate candidates is aimed at providing an incentive for party organizations (i.e., party committees and their organization departments) to be more conscientious in exercising their responsibilities to vet and recommend officials, to make every effort to bring about ­well-​­founded recommendations. At the same time, it is also a remedy for occasional defects, when party organizations do make insufficiently w ­ ell-​­founded recom44 mendations. Although party committees bear ultimate responsibility for “occasional defects,” the reference to “insufficiently ­well-​­founded recommendations” makes it clear that the 1995 revisions to the law raised the stakes for effective evaluation of officials by local organization departments. In the 2006 elections, at least one party committee nominee vetted and preselected to take up office as a deputy government head in a Zouping township lost to a candidate nominated by congress representatives. The representatives simply did not think they knew the party committee nominee well (不了解), and “because the law allows this to happen, the county party committee cannot necessarily guarantee their nominees will win.”45 Such cases are not very common in China, but a loss or two does not signal failure of a local organization department. At the same time, many losses in Zouping’s township government elections would be easily observable not only to the Zouping party committee but also to party committees at higher levels, up to the Central Committee. As Communist Party members numerically dominate in township congresses, such a cluster of losses in the county would reflect poorly on the work of the organization department.

Conclusion Organization departments are arguably the most powerful operational departments of Communist Party committees in Zouping, as elsewhere in

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China, from top to bottom. This chapter focuses on the crux of that power, which is also the crux of party power: political selection. Specifically, the county organization department collects information about party and government officials in the course of routine evaluations and nonroutine vetting and uses that information to recommend personnel decisions to the county party committee. It also directly influences (or independently decides) other nontrivial personnel matters, such as the selection of officials for various sorts of training at party schools, which can put the officials on the fast track for promotion.46 It has a huge responsibility. If it recommends “the wrong type of person,” then it is “really not doing the job well.”47 ­Reform-​­era changes have not only increased the challenges for the Zouping County Organization Department but also increased the likelihood that their failure to do the job well will be more easily detected. The department has not been granted substantial amounts of new resources, however. Largely, with few new staff and no major new institutional design, the organization department does many new (and newly required) things so as to accomplish the core task of political selection that has always been the department’s main charge. In this sense, the findings of this chapter are very much of a piece with others in this volume.

Notes

1.  It also supervises quality upgrades for officials through education in the local Communist Party school, which is discussed in chapter 8. 2.  Pierre F. Landry, Decentralized Authoritarianism in China: The Communist Party’s Control of Local Elites in the P ­ ost-​­Mao Era (Cambridge: Cambridge University Press, 2008). 3.  Melanie Manion, Corruption by Design: Building Clean Government in Mainland China and Hong Kong (Cambridge, MA: Harvard University Press, 2004) 4.  I cite Michel Oksenberg’s field notes as Oksenberg ZP, followed by the interview year. I cite my own 2007 and 2008 field notes as Manion ZP, followed by the year and my own interview numbering system. 5.  On the role of party schools, see chapter 8 by Charlotte Lee. 6.  See Melanie Manion, “The Cadre Management System, ­Post-​­Mao: The Appointment, Promotion, Transfer, and Removal of Party and State Leaders,” China Quarterly 102 (1985): 203–33; John P. Burns, The Chinese Communist Party’s Nomenklatura System (Armonk, NY: M. E. Sharpe, 1989); John P.

The Role of the Organization Department in Political Selection   179 Burns, “Strengthening Central CCP Control of Leadership Selection: The 1990 Nomenklatura,” China Quarterly 138 (1994): 458–91; T ­ ao-​­chiu Lam and Hon S. Chan, “Reforming China’s Cadre Management System: Two Views of a Civil Service” Asian Survey 36, no. 4 (1996): 772–86; Landry, Decentralized Authoritarianism. 7.  This includes township and town deputy leaders and deputy heads of county party and government departments. Most scholars (including me) view the 1984 shift to o­ ne-​­level-down responsibility (from the previous system of responsibility for officials one and two levels down) as rather significant. Interestingly, however, officials asked in 1988 about the change refer to it as “not major” (Oksenberg ZP 1988). 8.  Precise numbers are difficult to obtain. A l­ong-​­serving ­county-​­level official estimated in 2016 that the number is likely to be between five hundred and seven hundred people. 9.  Oksenberg ZP 1996. 10.  Oksenberg ZP 1999. Michel Oksenberg was unable to get estimates in 1988 and 1991 interviews. I was similarly unsuccessful in 2007. 11.  The party committee no longer manages enterprise managers, due to changes in enterprise ownership structure (Manion ZP ­2007-​­12, Manion ZP ­2008-​­02), although many of these changes had already taken place by the end of the 1990s. More recently, management of professionals (in public health, education, and science, for example) at the equivalent of division level is changing. Although the county party committee formally retains authority over these professionals, the party committees in the agencies where these professionals work (主管部门) now play an important role in their management. Eventually, authority over them is likely to be transferred from the county to the agency party committees. Following recent thinking at higher levels, local party committees should not manage professionals, as professionals are neither political nor administrative officials (Manion ZP ­2007-​­12). This seems different from the shift in authority over local government agency leaders described in Andrew C. Mertha, “China’s ‘Soft’ Centralization: Shifting Tiao/Kuai Authority Relations,” China Quarterly 184 (2005): 791–810. Rather than a shift to vertical over horizontal leadership, which he describes, this is about professionalization of some sorts of personnel who are still formally treated as officials (干部) in the CPC system of personnel management. 12.  Oksenberg ZP 1988, 1996; Manion ZP 2­ 008-​­20. 13.  For example, the department’s authorized size (编制) was ­t wenty-​­one in 1999, but its actual size was eighteen (Oksenberg ZP 1999). 14.  Oksenberg ZP 1988. 15.  Oksenberg ZP 1991.

180  M el a n i e M a n ion 16.  Oksenberg ZP 1988. 17. Ibid. 18. Ibid. 19.  Oksenberg ZP 1996; Manion ZP ­2007-​­12. In 1996, the team responsible for party affairs had a staff of six. Assuming at least one deputy head for this team, this leaves a maximum staff of nine and a deputy head for the political selection team. However, considering figures provided in 1988 and 2008, it seems unlikely that the team responsible for political selection of officials would be larger than that responsible for party affairs. 20.  Central Committee, 深化干部人事制度改革纲领 (Program for further reform of the cadre and personnel system), in Central Organization Department Research Office, Policy and Regulation Bureau, ed., 深化干部人事制度改革问答 (Questions and answers on further reform of the cadre and personnel system) (Beijing: Danjian duwu chubanshe, 2003), ­113-​­25. 21.  Susan H. Whiting, Power and Wealth in Rural China (Cambridge: Cambridge University Press, 2000). 22.  The reforms also replaced lifelong tenure for officials with a­ ge-​­based retirement, removing revolutionary seniority as a standard of quality. Melanie Manion, Retirement of Revolutionaries in China: Public Policies, Social Norms, Private Interests (Princeton, NJ: Princeton University Press, 1993. 23.  Oksenberg ZP 1988. 24.  In the margin of his field notes, Michel Oksenberg scribbles an aside that his interviewee in the organization department seems to hold the ­anti-​­intellectual views dominant in the previous political era, however. 25.  Oksenberg ZP 1996 26.  Ibid. Michel Oksenberg observed to his interviewees at the party school that these short courses are similar in form to m ­ id-​­career training programs run by business schools for government and corporate executives in the United States. He explained the virtues of the case method of teaching. His interviewees responded that in effect they use this method, although they have no special case textbooks (Oksenberg ZP 1996). 27.  Manion ZP ­2008-​­01. 28. Ibid. 29.  Oksenberg ZP 1996; Manion ZP ­2008-​­01. 30.  Officials are often transferred down from higher levels to gain grassroots leadership experience. This usually happens after an official is put onto the reserve list and the organization department realizes he or she lacks the grassroots experience required since 1995 for promotion. 31.  Manion ZP ­2007-​­12. 32.  Oksenberg ZP 1998.

The Role of the Organization Department in Political Selection   181 33.  Zouping County organization department officials also accompany organization department officials from the Binzhou Municipal Party Committee (one level up) when they come down to the county to evaluate ­county-​­level officials, a process that takes about a week (Oksenberg ZP 1991). 34.  Oksenberg ZP 1988. 35.  Oksenberg ZP 1996. 36.  Oksenberg ZP 1988; Manion ZP ­2007-​­01. 37.  Central Committee, 党政领导干部选拔任用工作暂行条例, in Central Organization Department Cadre Deployment Bureau, comp., 干部工作文件选编 (Beijing: Danjian duwu chubanshe, 1995), 152–65. 38.  Manion ZP ­2007-​­12. 39. Ibid. 40. Ibid. 41. Ibid. 42.  Oksenberg ZP 1988. 43.  Melanie Manion, “When Communist Party Candidates Can Lose, Who Wins? Assessing the Role of Local People’s Congresses in the Selection of Leaders in China,” China Quarterly 184 (2008): 791–810. 44.  Xiaoyang Qian and Zhang Chunsheng, eds., 选举法和组织法释喻与解答 (Beijing: Falu chubanshe, 1997), 111. 45.  Manion ZP ­2007-​­08. There were also losses at the county level in previous elections (Manion ZP 2­ 007-​­10, Manion ZP ­2007-​­11), but these are nominees vetted higher up, not by the Zouping County organization department. 46.  Oksenberg ZP 1996; Manion ZP ­2008-​­01. 47.  Manion ZP ­2007-​­12.

Ch a p t er 8

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools Charlotte Lee

Introduction Cadre training in China is integral to carrying out the core party principle of “party management of cadres” (dang guan ganbu 党管干部 ). Since the party’s early revolutionary period, the traditional purpose of cadre training has been to guarantee “redness” throughout the party ranks.1 To carry out this central task of party building, party organizations of cadre training are charged with carrying out these responsibilities throughout the party system. The creation and management of institutions of cadre training unites the party’s two pillars of ideology and organization.2 With the reforms of the past three and a half decades, this mandate has been modified and expanded, offering a window into the mechanisms of China’s authoritarian resilience. Institutions of cadre training have played their part in underwriting the conversion of cadres from “revolutionaries to semibureaucrats” and from semibureaucrats to public managers.3 At the same time, these organizations have also confronted new challenges and adapted to the shifting priorities of a complex political system in transition. Chapter 7 examines the role of the organization department in deciding who goes to the party schools and the broad outlines of what is taught and how. With the goal of understanding institutional change within political organizations of the party, this chapter goes inside the party schools to offer an assessment of how the institutions of cadre training in Zouping have adjusted to the broad transformations that have swept across the party and Chinese society. While party schools have existed since the Chinese



Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   183

Communist Party’s earliest days and constitute a core Leninist institution, this organizational continuity masks important changes in the focus and content of party school activities. A careful examination of party schools reveals the ways that political continuity has been compatible with myriad organizational reforms. As noted in the introduction to this volume, old organizational structures exhibit unexpected dynamism at the most grassroots levels of governance in contemporary China. During visits to Zouping County over the past five years, I have observed significant changes in the realm of cadre training: there are the obvious upgrades in basic infrastructure and technology, but further probing reveals that local party leaders possess changing ideas, practices, and approaches. These, in turn, suggest changes in the nature of the party itself. Beginning in 2006, I conducted a series of interviews with officials of the county party school, the traditional seat of political training for those leading cadres managed by the county. From these interviews, it was clear that the party school system was still an important vehicle for transmitting key party documents and policy doctrine. Yet seemingly apolitical changes in cadre training were also evident, from new ­income-​­generating ventures within the county party school to expanded vocational programs at the township level. These developments speak to broader reforms taking place across institutions of cadre training. What I encountered in Zouping reflects the general nationwide push to modernize party organizations within the constraints of the Leninist institutional structure. In telling Zouping’s story, this chapter addresses several questions: How have market reforms affected inner party organizations such as party schools? At the same time, how have these traditional institutions of the party bureaucracy adapted to the ­post-​­Mao emphasis on “expertness” over “redness”? And to what degree has the information transmission function of party schools given way to new priorities such as forging the managers of a new “learning party” (学习 性政党)?4 To answer these questions and gain a fresh perspective on ­reform-​ ­era transformation of the bureaucracy, this chapter examines Zouping as a case study for tracing the evolution of grassroots cadre training.5 Field interviews and documentary research have yielded several findings. First, party schools remain important conduits for conveying core party doctrine and carrying out the practices that contribute to party discipline. Second, beyond the conveyance of party doctrine, competition across

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organizations of cadre training has stimulated new behavior and strategies on the part of ­county-​­level party schools. Due to various constraints, ­township-​­level organizations are relatively less competitive in this new, more crowded training marketplace, though grassroots schools and party leaders have devised creative ways to remain relevant. Third, the ­reform-​­era mandate to modernize the bureaucracy has affected training activities at the lowest levels, giving central and local leaders the space to pursue locally relevant innovations in cadre training. For the most part, these have emphasized professional competence rather than political goals. At the township level, a significant portion of new developments in cadre training take place outside of the party school system. Fourth, efforts to update cadre training have blurred, rather than sharpened, the separation between party and state activity. Together, these findings suggest that cadre training in contemporary China is characterized by new pressures to reform, and diverse responses by local actors. Evidence for these findings is drawn from visits to Zouping County in 2006, 2008, and 2011. During these visits, I conducted interviews at six ­county-​­level bureaus and departments, including the county office and party school, six townships, and assorted villages. Interviews in 2008 focused on ­county-​­level organizations, while in 2006 and 2011 I ventured down to the townships and villages to gather information on the training activities there. In addition to conducting interviews with local officials, I also consulted documentary sources, which were available online and in print, on relevant policies, official documents, and newsworthy developments. This chapter proceeds in three parts. To understand the major drivers of change in cadre training, I first discuss two nationwide developments: the introduction of greater competition among providers of cadre training and the general push to modernize the Chinese bureaucracy. After exploring these broad changes, which serve as the national backdrop to local transformations, the chapter turns to an examination of cadre training in Zouping County. I begin with a historical overview of relevant organizations and trace major developments in cadre training at the county, township, and village levels. In examining cadre training at these three levels, this chapter reveals the means by which key party organizations—and party organization—have survived well into the reform period. The final section presents conclusions.

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   185

Nationwide Changes in Cadre Training At present, institutions of cadre training number in the thousands, of which party schools are the central system (xitong 系统 ).6 These schools are crucial organizations for carrying out the ongoing work of party building (and rebuilding), particularly as the party shifts from ­self-​­identification as a “revolutionary” to a “governing” (执政 ) and “learning” party.7 While party schools have a historical and organizational claim to centrality in the task of educating cadres on political thought and practice, there exist a variety of training academies throughout the ­party-​­state. Since the 1990s, a system of administration institutes (行政学院 ) has been created to train government— as opposed to party—officials. The de facto merging of these institutes with their party school counterparts points to the failure of earlier campaigns to separate government from party, but they represent an increase in organizational capacity to train bureaucrats of the ­party-​­state.8 Beyond party schools and administration institutes are cadre training academies located within various other bureaucracies and s­tate-​­owned enterprises. For example, socialism institutes (社会主义学院 ) are under the purview of the United Front Department and are responsible for training cadres who are members of China’s democratic parties. The Communist Youth League manages training academies for ­low-​­ranking cadres and young party activists. More recently, the Central Organization Department (COD) has created several ­central-​­level training academies, distinct from the Central Party School, and ­lower-​­level organization departments have also created training schools that exist apart from the party school system.9 On the one hand, this organizational density serves to mark bureaucratic competition over administrative turf, which in turn indicates some ambiguity in functional boundaries across those party organs with cadre training organizations. On the other hand, the resulting ambiguity has enabled more recent, deliberate changes regarding which organizations may shoulder the responsibility of cadre education and training. Since the onset of p ­ ost-​­Mao reforms, central leaders have both generated and allowed changes to this domain of political life. There are two major drivers of this organizational change: central imperatives and the introduction of mechanisms such as competition. These changes have been carried out through the vertical hierarchies of the ­party-​­state, but they have also triggered organizational responses that defy traditional levers of control. In response to these incentives, party schools have expanded their repertoire of activities,

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training and otherwise. Whereas party schools were traditionally tasked with specific activities such as granting basic degrees to cadres and training cadres in pre- or postpromotion political thought and policies, today these schools engage in a more diverse array of activities. This is happening despite the appearance of organizational inertia, as the party school system looks much as it did at the founding of the People’s Republic. With the layering of new organizations of cadre training atop the preexisting system of party schools, there has been an intensification of competition between providers of cadre training.10 This competition includes an expanding laundry list of training institutions: those managed by other xitong, new upstart private operators, Chinese universities, and foreign schools with the means and connections to bid for training contracts.11 This competition, however, is partial. Party schools are still responsible for disseminating political content to cadres responsible for party work. At the same time, these core activities now coexist alongside newer ventures initiated by the party schools themselves. One indication of the mingling of traditional party work and newer, ­school-​­led initiatives is the mix of planned and unplanned training programs carried out by party schools. Annual training plans lay out the main (主体) programs that party schools must organize, but schools are now free to plan auxiliary (非主体) classes and attract more diverse student audiences.12 These auxiliary classes have been incentivized by changes in how training monies are handled. While party schools receive, in theory, transfers from local finance bureaus, this funding can be supplemented by income from additional activities carried out by the schools. Auxiliary programs and activities can thus make up for budgetary shortfalls in poorer locales and pad public transfers of money in wealthier regions.13 Importantly, such side activities determine the prosperity enjoyed by individual schools.14 To give a sense of this new division of resources within party schools, table 8.1 offers an example of the allocation of training courses by type, scheduled by a ­city-​­level party committee for 2008.15 During this one year, auxiliary training classes, which are discretionary in nature, made up nearly half of total training time for the entire school (as measured in s­ tudent-​­months) and over half of total enrolled students. Annual training plans, then, account for only a portion of training activity actually carried out by party schools.

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   187 Ta bl e 8.1  City Z Enrollments and Time in Planned Training Classes by type, 2008

Number of training classes Enrollment, in number of students Enrollment, in student-months

Core training classes 20 1,490 (39%) 518 (55%)

Auxiliary training classes 20 2,295 (61%) 417 (45%)

Total 40 3,785 935

S ou rc e: City Z party school.

A second major driver of change in cadre training was the central mandate to modernize the bureaucracy of the p ­ arty-​­state. In the storm of declarations and reforms that swept through the early reform period, Deng Xiaoping issued a call for a more highly educated and technically competent bureaucracy.16 The motivation was clear enough: a more expert and ­better-​­trained cadre corps would possess the capacity to carry out the modernizing reforms of the p ­ ost-​­Mao era. Both immediately and over the decades to come, this mandate spurred b­ road-​­based changes throughout the organizations of the p ­ arty-​­state. Institutions of higher education swelled with students as cadres sought to fulfill basic literacy requirements.17 Following educational reforms in the ­mid-​­1980s, for example, the proportion of county leaders with college degrees increased from 14 to 47 percent.18 A boom in technocrats peaked by the third and fourth generations of party leadership.19 To make way for fresh talent, older cadres retired as part of a more systematic application of age limits.20 Throughout all these changes, the principle of “party management of cadres” remained firm. Cadre training retained its place in carrying out this essential political task, which complemented tight party control over the recruitment, evaluation, and promotion of officials.21 These new priorities, which have spanned several decades, demanded organizational responses. Organizational adjustments—and concomitant organizational entrepreneurialism—are evident when examining changes that have unfolded throughout China. Competition and new reforms are not the only determinants of observed outcomes across party schools, however. These changes coexist with the traditional functions of party organizations. To understand this mix of organizational dynamism and inertia, I now turn to a case study of cadre training in Zouping County.

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Setting the Stage: A Brief History of Zouping’s Institutions of Cadre Training At the county level, the key organization of cadre training remains the party school.22 The Zouping County Party Committee Party School (ZPDX) was founded in 1949, and changes taking place within this school have tracked the broader transitions affecting the party school system. Similar to party schools throughout the country, ZPDX began a long process of rebuilding in the 1980s. This was due in part to school reopenings in the wake of the Cultural Revolution and in response to the e­ ight-​­year cadre training plan issued in 1983, whereby the Central Organization Department called for the “regularization” (正规化 ) of the party school system.23 This document led a series of nationwide reforms that aimed for greater organizational uniformity and coherence throughout the party school system. By 1995, for example, ZPDX had a “one office, one department” organizational structure, that is, an administrative office (办公室 ) and academic affairs office (教务处 ), which reflected the push to organize schools along basic functional lines.24 Over time there has been an expansion in the school organization, and its core departments now mirror those at party schools throughout the country: an administrative office, academic affairs office, general affairs office (总 务处 ), and training office (培训处 ).25 The latter is in charge of implementing annual training plans, while o­ utside-​­the-plan activities (such as the auxiliary classes described previously) are the responsibility of either the academic affairs or general affairs offices, depending on the nature of the activity. In 1992 the school received approval from the provincial party organization and personnel allocation offices to be treated as the equivalent of a technical secondary school. As with virtually all other c­ ounty-​­level party schools in the country, ZPDX has merged with the county administration school, the Zouping County Administration and Management Cadre Academy (邹平县行政管理 干部学校). While it is not clear when these two schools merged, the county party committee and government approved the construction of the latter school in 1994. The two organizations now have “one set of classes [but] two signs” (一套班子，两个牌子).26 At present the school has t­ wenty-​­six personnel (编制). The school leadership comprises four v­ ice-​­principals, each in charge of functional areas such as daily affairs, academic affairs, and so forth.27 In 2006 there were ten ­full-​­time lecturers and three p ­ art-​­time faculty.28 The school trains approximately one thousand cadres per year, plus additional

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   189

participants in the training programs that it leads in the townships and villages within Zouping County.29 Party and government bureaus across China have been experiencing construction booms, and ZPDX is no exception, though it may be somewhat of a late bloomer. This school is in the midst of a transition, as it is planning to relocate to a new building in the coming years.30 The old school buildings have been demolished, and all faculty and staff have moved across town, to the southern district of Zouping city, where one government department after another has built imposing new headquarters. The party school now rents offices on two floors of the h ­ igh-​­rise owned by the county environmental protection department.31 What this new stage in the party school’s life will be remains vague, though grand plans are in the making. In my 2008 visit to the party school, the leaders there announced: “There is a l­arge-​­scale project in the works, a new building that will be built in the new development zone (开发区) [of the county seat]. The party school will be a central part (党校为主), along with a center for retired cadres and a training center for the people’s army (民兵训练基地).” The local government was planning the construction of a t­wenty-​­two-floor building to house multiple party and government organizations, though the project timeline and budget were unclear. All of this would be a significant upgrade to the old campus, which was comparatively modest in its proportions: the former school was situated on 34 mu of land and comprised a dormitory (with a capacity for 200 guests) and only five classrooms.32 This current construction plan is by no means unusual, especially in light of Zouping’s economic prosperity. In other party schools that I have visited in China, particularly those in coastal provinces, new party school facilities were a mark of the overflowing public coffers enjoyed by wealthier regions with access to China’s expanding urban centers and the global markets beyond. Even party schools located inland were experiencing upgrades in school facilities, from refurbished classrooms to w ­ ell-​­appointed meeting halls and conference rooms. Zouping’s construction plans are consistent with these national trends. Party schools exist at the township level in Zouping County, but they are without independent resources or ­a ll-​­important personnel allocations. Without personnel, these schools are dependent on higher levels—that is, the county, city, or even province—to supply lecturers and actual training content. According to the 2008 CCP Party School Work Regulations,

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city- and c­ ounty-​­level party schools are responsible for the training of township- or s­ection-​­ranked officials (科级干部), and there is no mention of ­township-​­level party school responsibilities.33 Yet township party schools do exist, as a space used for party school–type activities within these locales. In one township that I visited in 2011, the party school was a room where local leaders “hung a sign” (挂牌子) outside a public building.34 Others did not even bother with this gesture. At one township, for example, the party school was a conference room where the party committee small group could hold study sessions. Beyond the party school, relevant government departments organize their own cadre training activities. The county personnel bureau is one prominent example, though its training programs officially focus on government, rather than party, cadres.35 The personnel department manages a training center, which received an infusion of capital funding in 2004 from the county government. Beyond this, the training center receives annual allocations for training courses and programs from the county government, via the government bureaus that have cadres trained at the center.36 In 2008 when I met with personnel officials, they described several recent training programs. These included a countywide ­three-​­day program on the civil servant law and another program, also three days, on public administration according to the rule of law. In addition to this general training work, other party and government offices have organized smaller, more specific training programs for cadres with particular work responsibilities.37 Personnel department–organized training classes are separate from those organized by the Zouping County Administration and Management Cadre Academy, which highlights the sometimes nonintuitive distribution of training classes across various schools and organizations. The allocation of classes is a function of bargaining between training providers and requesting organizations, personal relationships between officials, and formal training plans drawn up by a ­county-​­level training committee. Depending on the training requirements, programs may be conducted by a combination of relevant government and party bureaus. ZPDX involvement in what are officially government training courses illustrates how party winds also blow through state channels. For example, one personnel department training course focused on studying the Hu administration’s scientific development theory; party school instructors were the lecturers for this program. In short, the ZPDX is now one among many providers of cadre train-

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   191

ing activities within the county. Its importance is reinforced by the county government’s infrastructure investments in support of the school’s various endeavors. These include the provision of training content to townships and villages where cadre training facilities are often thin or absent. A range of other county bureaus provide specialized training programs, and ZPDX contributes to these on an ­as-​­needed basis, perpetuating the overlap of state and party work. Walking the Party Line

Across the organizations responsible for cadre training, party schools have remained prominent due to their responsibility for transmitting and monitoring cadre adherence to party doctrine. As such, these organizations are one channel, among many, for ­top-​­down communications within the party.38 Party schools are sites for the varieties of information transmission utilized by party officials to carry out internal party affairs: meetings (including work conferences, special topics meetings, forums, and reports), study sessions, written reports, and research and investigation.39 In several respects, party schools at the county level and below continue to serve their original functions as channels within the party for transmitting directives downward from the center.40 There is also a “­filtering-​­up process” in which officials can send information up the system, but this is somewhat slower and less systematic than ­top-​­down channels.41 This transmission function is evident in recent regulations requiring all village cadres to attend at least seven days of training per year.42 ZPDX and the county organization department are responsible for organizing activities that would fulfill this requirement. In 2010 Zouping’s scheme (方案) for training village party cadres called for the study of new initiatives within the “New Socialist Countryside” program. According to the 2010 plan, the county organization department and party school were to organize special topics training classes (专题培训) on new programs such as creating “village communities” (农村社区) and engaging in “village product specialization” (一村一品, literally “one village one product”).43 This training program, designed to last seven days and enroll approximately sixty village cadres, was to include the “study of development theory, economic models, product distribution, land conversion, and so forth.” Furthermore, it was intended to “broaden horizons, exceed limits, clarify thought, and promote scientific development.”44 Such a training program demonstrates the unique position

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that party schools hold within the party organization: they combine relevant theory with broad policy initiatives and specific programs and models. More than the study of documents sent down by the center, party school training programs convey party priorities via an i­n-​­depth experience that emphasizes immersion in local conditions and interaction with local actors. There are additional means for transmitting party policies down to the township and village levels. Given the absence of teaching capacity at the grassroots, the county party school shoulders the responsibility of sending down teachers to offer lectures on party building and theory. In 2010 as part of an effort to be a “mobile party school” (流动党校), ZPDX organized ­thirty-​­five lectures in party organs, township offices, and enterprises, reaching a total audience of five thousand. In county enterprises, party school lecturers gave talks on the “party’s innovation theory” (党的创新理论).45 In addition to consolidating resources at the county level, such arrangements provide the organizational basis for t­op-​­down control over party work at the most grassroots levels. In their work transmitting the party line, party schools are accountable to and inspected by several party organs. Because relations between party schools are advisory (指导关系) and not coercive, schools located at subordinate administrative levels need not follow the directives coming from party schools above them. While the Binzhou city party school visits ZPDX for annual inspections and ZPDX files reports with higher level party schools, the county party school’s managing authority (主管部门) is the county party committee. Similar to bureaucrats in other party organs, party school bureaucrats are also individually evaluated by the organization department.46 By this arrangement, party schools are subject to accountability measures external to the party school system itself. ­Within-​­system accountability mechanisms are uneven and even absent at the lowest levels. Township party school leaders indicated that they were not subject to inspection by the county party school; instead, it is sufficient to send reports to relevant departments and committees for any given training activity.47 Four decades into the reform period, grassroots organizations of cadre training continue to transmit the party line and key political documents down through the system. Accountability mechanisms, however, are a function of party discipline across rather than within hierarchies, pointing to the interlocking pathways for maintaining broader organizational coherence.

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   193 In the Midst of Market Tr ansition: New Ventures, Old Problems

Alongside their more traditional roles as sites for disseminating the party line and continuing party practices established during the early days of the revolutionary party, party schools have also exhibited a more dynamic side. Like many institutions of the p ­ arty-​­state, they have been affected by China’s transition to a “socialist market economy.” With the decline of the planned economy and the rise of market forces, institutions throughout the p­ arty-​ ­state have responded in myriad ways. In the 1990s, government bureaus began establishing p ­ rofit-​­seeking businesses, and this “state entrepreneurialism”48 has expanded to public service units (事业单位 ) as well as to the military.49 The party has not been immune from such market pressures. Since the 1980s, there has been a liberalization of finances within the propaganda apparatus.50 Likewise, cadre training and the party school system have undergone m ­ arket-​­driven changes. This is most evident in two realms of party school activity: new e­ ducation-​­related ventures and entrepreneurial ventures of a noneducational sort. Both types of activities can be lucrative so long as individual party schools realize their particular, marketable advantages. One new venture concerns t­ uition-​­based degree programs, a logical offshoot of the traditional educational work carried out by party schools. Degree programs offered throughout the party school system show how these schools have expanded beyond their core responsibility to educate cadres on the party line and party policies. Party schools are now taking advantage of opportunities in a lucrative (and much larger) market for higher education. When I visited Zouping in 2008, one of the more striking comments a township ­vice-​­party secretary made was to point out the importance of school degrees (毕业证为主) in our broader discussion of how cadre training has changed over time.51 In some respects, this is a superficial but easily measured criterion for meeting Deng’s call to modernize the bureaucracy. The increased importance of degrees is reflected in national regulations, which require that leading cadres possess at least a specialized degree (专科 以上文化程度 ).52 Shandong Province appears to have been even more rigorous in its degree requirements. During my 2006 visit, Zouping interviewees reported a ­province-​­wide requirement that all cadres at the township or section levels must have the equivalent of an undergraduate degree in economic management (经济管理本科学位).53 For l­ower-​­level officials, getting a degree (拿

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was of paramount importance. Furthermore, rather than withdraw from work to acquire a degree, it is popular in China for officials to acquire degrees through “­after-​­hours” ((夜) or correspondence education (函授教育). This was a development that the county party school was well positioned to leverage. Through its participation in nationwide correspondence degree programs, organized by both the Central Party School and provincial party schools, ZPDX could facilitate the acquisition of these necessary degrees— and draw income in the process. Local officials were eager to take up this educational option, made more accessible by manageable course fees and local providers. Earlier, beginning in 1985, the Central Party School (CPS) offered degrees via correspondence programs, and subordinate party schools participated in this centrally managed program by providing teaching staff and facilities. The content of these programs, including syllabi, reading materials, and exams, was set by the CPS, while local schools—provincial, city, and county—would assist with implementation. Each school would receive a share of the tuition paid by students.54 This arrangement benefitted all parties involved. However, beginning in 2008, CPS was to cease offering correspondence degrees. The ZPDX annual report notes this development by referencing the “steady wrapping up” (平稳收尾) of party school a­ fter-​­hours and correspondence programs. It goes on to announce that ZPDX would “continuously broaden” (不断拓宽) vocational education.55 More specifically, in 2010 ZPDX partnered with the China Petroleum University to form a joint graduate training program that would “cultivate a group of ­high-​­level management personnel” and benefit the party committee, government, and enterprises of Zouping.56 The quest to generate new training programs “outside the plan” continues. New entrepreneurial ventures are also evident in other noneducational activities. When I visited ZPDX for the second time, in 2008, the campus had improved in interesting ways. While the school buildings appeared the same from the outside, there were renovations and changes taking place within. The meeting rooms had new furniture, there were new projectors in the classrooms, and there were new air conditioning units and computers for all the school teachers.57 In pointing out these recently acquired amenities, the school v­ ice-​­principal noted the school’s initiative to “improve the teaching environment” (改善教学环境), which was detailed in the school’s

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annual report. The initiative was straightforward enough: it called for the funding of various campus renovations through income from, among other things, auxiliary training courses, correspondence degree programs, and property rentals. The ­vice-​­principal proudly boasted, “We used to engage in these sorts of activities before, but things have been going especially well in the past two years” (最近两年做得特别好). The school was reaping the benefits of a vibrant local economy. In particular, the school had rented out school property to local business owners.58 Taking advantage of such local market opportunities was one means for the school to obtain the many material benefits I witnessed during that visit, as income from rental properties could be plowed directly into infrastructure investments.59 The story is a bit different in the townships, where there are fewer resources for the types of ventures attempted at the county level. Township party schools are without any organizational competitors inside the township, but at the same time there is little to no demand for the kinds of auxiliary training programs and rental schemes developed by schools at higher levels. This is not a new problem but rather an extension of p ­ re-​ ­reform circumstances and endowments to the present, more ­market-​­driven environment. Organizations with a long reach and high prestige can go far. For example, the Central Party School recently issued an announcement for ­fee-​­based training classes for township enterprise managers and entrepreneurs.60 Townships do not possess the human capital or the e­ ye-​­catching infrastructure necessary for drawing income from local actors, state or private, let alone those beyond the county’s boundaries.61 Instead, townships must make do with the training funds transferred to them by local finance bureaus and focus on the less lucrative but nonetheless core work of meeting Deng’s call to update the professional knowledge of local officials. New Tr aining Developments

While the broader market opportunities available to party schools hold limited possibilities for ­township-​­level organizations, there are still new developments at this grassroots level. Some of these changes have been led by ­higher-​­level party schools, others led by central leaders, and still others conducted at the behest of observant and dedicated local leaders. A major theme that has emerged is one of an expansion of training content, due in part to technological change and the push provided by Deng’s call to modernize, professionalize, and educate cadres throughout China. In my

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visits to Zouping, I observed two additional developments in cadre training at the lowest grassroots levels. First, the central hand of the party continues to reach down to townships and villages. This is accomplished through distance education programs that reflect technological changes as well as organizational flexibility on the part of central party organs. Second, in recognizing that the needs of their localities extend well beyond the training content provided and mandated by higher levels, township leaders are also taking the initiative to organize locally relevant training activities. At the same time that township cadres were occupied with degree requirements and enrollment in relevant programs, new training content was being pushed at all cadres (and party members) in the county, from the villages on up. Beginning in 2004, villages in Zouping became test sites for a new remote education system (远程教育) managed by the Central Organization Department.62 Initially, program content included the usual mix of politics and policy: political theory, central policies, laws and regulations, and policies in key areas such as family planning and agriculture. By the time I returned to Zouping in 2011, township officials were speaking animatedly about how this remote education program had much richer and more practical content. In one township, a cadre described how, through this remote education system, he was able to learn about and apply advice from an agricultural expert on improving the local cucumber crop.63 Shifts in technology facilitated this new program content at the lower levels. At the outset of this remote education program, village leaders and party members would, on designated dates, gather at the village party headquarters to watch lectures via satellite television. By 2008 this system had shifted to the Internet, complete with streaming video, a ­menu-​­style format to allow users to freely select content, and online quizzes for l­ogged-​­in users to complete.64 While it may appear incongruous for organization departments to be instructing township and village cadres via the Internet on the details of agricultural production, one official had a ready explanation for me: “When party members receive education, society benefits” (党员受教 育，社会得益 ).65 By employing new technologies and tactics, and asserting itself as a central player in shaping the “hearts and minds” of China’s cadre corps, organization departments at the higher levels have found new ways to transmit ­party-​­approved knowledge to local leaders. Finally, as with so many other domains in China, there is space for local initiative in cadre training. This is most clear with the vocational (业务)

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training programs that township leaders have the authority to organize. Townships may have little success in raising funds through entrepreneurial party school activities, but they still receive some training monies from local finance departments. Many townships that I visited utilized these funds in useful, and even creative, ways, but outside the party school system. At two different townships, party officials spoke of a new interest in teamwork (团队精神) and the need to build trust across bureaus and offices.66 Accordingly, one township sponsored an ­outdoors-​­based teambuilding course, or ropes course, for local cadres. In other townships, leaders used training funds for more basic economic activities such as organizing programs to teach villagers how to build greenhouse tents. Another use of training funds was to retain agriculture experts from nearby counties.67 In short, the training landscape at the subcounty level has moved in new directions. Throughout the system, political content must stand alongside a variety of other training and educational content, motivated by the economic imperative driving much local governance and a general push to modernize the cadre corps. On the one hand, central and provincial levels are reaching down in more direct ways to convey political priorities. This political content is diluted by the admission that grassroots leaders have little use for abstractions such as “socialism with Chinese characteristics” in the absence of practical applications. Township and village leaders are interested in the concrete tasks of big harvests, marketing their products in more sophisticated ways, and industrialization. Realizing this, central authorities have diversified the messages they transmit downward to accommodate these interests. This is evident in the COD’s online training courses, which are as likely to tout a particular watermelon seed variety as the latest political slogans emanating from Beijing. Furthermore, especially among the township leaders with whom I spoke, there has been a genuine effort to bring new knowledge to their locales, in the process raising the “quality” (素质) and “abilities” (能力) of cadres.

Conclusion By investigating the varieties of cadre training in Zouping County, this chapter seeks to trace processes of organizational adaptation, local sources of change, and the maintenance of systemwide controls in ­reform-​­era China.

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Several themes have emerged from this exploration of the work of party schools and leading cadres at three levels of governance in Zouping. There is a blurring of organizational boundaries in terms of which bureaucratic hierarchies or leaders are responsible for which aspects of cadre training. This ambiguity, while counterintuitive at times, serves at least two purposes. It provides the space for different bureaucratic actors to attempt new undertakings, in the process diversifying the menu of options available to “clients” or “customers,” that is, cadres. Moreover, it breaks up the complacency and inertia that might have been enjoyed by bureaucracies used to ­near-​­monopolistic control over a certain functional domain or policy area. This prompts the search for new ventures and more attractive ways to reach old audiences. New ambiguities in the division of labor imply that various actors may strive for “market share” in those areas not clearly marked off for specific organizations. Powerful actors can marshal resources for new endeavors and find novel ways to reach new audiences such as grassroots cadres. Thus the Central Organization Department provides online agricultural advice to townships’ leading cadres, and party schools from the county to central levels may organize degree programs to capture cadres’ demand for higher education degrees. In the process, organizations have become more savvy marketers of their wares. Zouping County’s party school has exhibited this organizational dynamism and flexibility in the variety of new ventures pursued by school leaders. These changes to cadre training would seem to set in motion a benign series of events: Organizational competition and new ­revenue-​­generating activities incentivize party organizations to take on new ventures and, in due time, to adapt to new circumstances. Multiple training providers, from the Central Party School to the county personnel department, now offer services in Zouping County. In the face of such changes, the Zouping party school has pursued a variety of revenue sources and new programs. It has rented out facilities, invested in building upgrades, offered new training courses and degree programs, and sent its instructors to lead ­off-​­site training programs. Yet there are limits to these reforms. Because of very real resource constraints, the lowest rungs of the party school system are uncompetitive, particularly when central organizations such as the CPS and COD are able to reach down to these levels with their much deeper pockets and resources. This does not necessarily mean that grassroots party organs are withering away; on the contrary, township governments in Zouping are

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actively organizing a variety of activities to train local cadres in interesting, sometimes meaningful ways. As far as I can tell, these activities are motivated not by the desire to grab market share so much as to improve the broader economic competitiveness of their localities. While higher authorities are reaching down in nonsystematic ways to monitor cadre training at the township and village levels, township governments are nonetheless mobilizing to bring useful knowledge to local state managers. This serves personal and local interests, often without the involvement of grassroots party schools. This case study of cadre training in Zouping County finds that party schools and individual actors have responded in myriad ways to the reforms of recent decades. Leninist organizations within the party have persisted through the reform period, but important changes have taken place within them. Economic transformation, with its accompanying social and political changes, has prodded these actors to embrace new opportunities—but at the same time to retain their capacity to carry out core activities. The result is an authoritarian resilience directly observable at the grassroots, from village to township to county. These schools have retained their positions as transmitters of key party policies. Yet this role coexists with new ventures: they range from those that are more purely income generating, such as property rentals, to degree programs and auxiliary training courses, which raise revenues as well as the profiles of party schools ­vis-​­à-vis competitors. All these activities have served, in multiple ways, to ensure the robustness of these party organizations. Party schools’ shift toward more comprehensive educational programs, beyond their traditional ideological role, also points to a deeper integration of party and state in contemporary China. This is evident in the physical merging of administration academies and party schools at the grassroots level, mirroring organizational mergers at higher levels in the system. Party schools are now taking on the responsibility of training local officials in the latest management techniques,68 a role that blurs rather than clarifies the boundaries between party and state. A central theme of this volume has been the exploration of mechanisms underlying authoritarian resilience. The o­ rganization-​­level changes detailed in this chapter reflect how competition and new opportunities have expanded the repertoire of cadre training activities within local party schools. This suggests how political organizations have moved away from the old

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c­ ommand-​­and-­five-​­year-plan system of the past and toward a more hybrid model, one that blends central mandates and ­top-​­down party control with adaptability to local conditions and interests.

Notes

1.  Zhongqing Wang, ed., Dangxiao jiaoyu lishi gaishu, 1921–1947 (General description of party school history) (Beijing: Party School Publishing House, 1992); Jane L. Price, Cadres, Commanders, and Commissars: The Training of the Chinese Communist Leadership, 1920–45 (Boulder, CO: Westview Press, 1976). The first CCP party schools, established in the 1920s, were modeled after the Soviet Union’s party school system. During this early period, schools offered short courses, lasting from two weeks to three months, on mass work and party organization, with a heavy emphasis on mastering theoretical texts. Early CCP party school curricula can be found, in outline form, in C. Martin Wilbur and Julie ­Lien-​­ying How, eds., Documents on Communism, Nationalism, and Soviet Advisers in China, 1918–1927: Papers Seized in the 1927 Peking Raid (New York: Octagon Books, 1972), 97–98, 130–34. An “advanced” party school course, for example, contained units on “the development of capitalism,” “imperialism and China,” “history of the socialist movement,” and “history of the Russian social revolution.” 2.  Franz Schurmann, Ideology and Organization in Communist China, 2nd ed. (Berkeley: University of California Press, 1970). 3.  Ezra F. Vogel, “From Revolutionary to ­Semi-​­Bureaucrat,” China Quarterly (1967): 36–60. 4.  See the CCP Central Committee’s “Decision on the Enhancement of the Party’s Governing Capacity,” adopted at the Fourth Plenum of the Sixteenth Party Congress in 2004. See “CPC Issues Document on Ruling Capacity,” Xinhua, September 27, 2004, http://www.chinadaily.com.cn/english/doc/2004– 09/27/content_378161.htm. Hu Jintao also uses this term in his 2007 Party Congress report. 5.  In Western scholarship on the party, cadre training has been the subject of recent inquiry. Most studies have focused on ­central-​­level institutions: scholars have traced the history of the Central Party School in Beijing. See, for example, Ignatius Wibowo and Lye Liang Fook, “China’s Central Party School: A Unique Institution Adapting to Changes, “ in K. E. Brodsgaard and Yongnian Zheng, eds., The Chinese Communist Party in Reform (London and New York: Routledge, 2006). Others have examined the emergence and purpose of leadership academies managed by the Central Organization Department. See, for example, Gregory T. Chin, “Innovation and Preservation: Remaking China’s National

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   201 Leadership Training System,” China Quarterly 205 (2011): 18–39; Emilie Tran, “From Senior Official to Top Civil Servant: An Enquiry into the Shanghai Party School,” Perspectives Chinoises 46 (2003): 27. Other work has considered the function of the CPS as a think tank for the party (Joseph Fewsmith, “Where Do Correct Ideas Come From? The Party School, Key Think Tanks, and the Intellectuals,” in D.M. Finkelstein and M. Kivlehan, eds., China’s Leadership in the 21st Century: The Rise of the Fourth Generation [Armonk, NY, and London: M. E. Sharpe, 2003]) or as a central organization in party rebuilding (David Shambaugh, China’s Communist Party: Atrophy and Adaptation [Washington, DC: Woodrow Wilson Center Press / University of California Press, 2008; David Shambaugh, “Training China’s Political Elite: The Party School System,” China Quarterly 196, no. 1 (2008): 824–44). Moving beyond c­ entral-​­level institutions, Pieke has taken a careful look at the party school system through a case study of schools in Yunnan Province. Frank N. Pieke, The Good Communist: Elite Training and State Building in Today’s China (Cambridge: Cambridge University Press, 2009); Frank N. Pieke, “Marketization, Centralization and Globalization of Cadre Training in Contemporary China,” China Quarterly 200, no. 1 (2009): 953–71. His ­in-​­depth fieldwork supports the argument that party schools are signal institutions within the party’s ideological rejuvenation through “­neo-​­socialism.” 6.  According to one official count, party schools numbered 2,753 in the ­mid-​ ­1980s. Central Party School Yearbook Editorial Committee, ed., Central Party School Yearbook 1984 (in Chinese) (Beijing: Central Party School Publishing House, 1985). 7.  Shambaugh, “Training China’s Political Elite”; and Pieke, The Good Communist. The Central Party School has probed these issues through teaching texts. See Taifeng Shi, ed., Zhonggong Zhongyang Dangxiao Jianggaoxuan 3: Makesi Liening Zhuyi, Maozedong Sixiang, Dengxiaoping Lilun, Sange Daibiao Zhongyao Sixiang Qianyan Wenti Yanjiu (Compilation of CCP Central Party School teaching scripts 3: studies of Marxism, Leninism, Mao Zedong thought, Deng Xiaoping theory, the three represents thought and other issues) (Beijing: Central Party School Publishing House, 2006); and internal reports (CPS, ed. Zhizheng dang jianshe ruogan wenti yanjiu [Research on certain questions concerning the building of a governing party] [Beijing: Central Party School Publishing House, 2004]). 8.  On the fizzling of efforts to separate the party and state in the 1980s, see Meiru Liu, Administrative Reform in China and Its Impact on the P ­ olicy-​ ­Making Process and Economic Development after Mao: Reinventing Chinese Government (Lewiston, NY: Edwin Mellen Press, 2001); Joseph Cheng ­Yu-​­shek, and Ting Wang, “Administrative Reforms in China in 1992: Streamlining,

202  Ch a r l ot t e L e e Decentralization and Changing Government Functions,” in J. C. Y ­ u-​­shek and M. Brosseau, eds., China Review 1993 (Hong Kong: Chinese University Press, 1993). On the present principle of “no separation of party and state,” see Suijian Guo, “Retrospective and Prospect for Political Reform in China,” in Political Civilization and Modernization in China (Beijing: School of International Studies, People’s University of China, 2004). 9.  The three ­central-​­level COD training academies (ganbu xueyuan 干部学院) are located in Jinggangshan, Yan’an, and Pudong. ­Lower-​­level training academies are not distributed systematically throughout localities, unlike party schools. Party schools are more numerous by far: where there is a party committee, there is a party school. 10.  Making the competition explicit in policy documents, recent c­ entral-​­level regulations have called for “a system of orderly competition” (jingzheng youxu de jigou tixi 竞争有序的体系) and again acknowledged that other institutions such as universities and research institutes may “take on the task of cadre education and training.” See Communist Party School, Cadre Education and Training Provisional Work Regulations (in Chinese) (2008), Chapter 5, Art. 27. 11.  Local organization departments, for example, may post public requests for training program proposals through s­ tate-​­managed bidding sites such as www. chinabidding.com. 12.  See chapter 7 in this volume for a discussion of the main training classes carried out by ZPDX. 13.  Pieke discusses the economic straits facing ­lower-​­level party schools in Yunnan Province. In one county, he found that “the budgetary allocation from the finance department was in fact so low that three of the teachers supplemented their salaries with commercial businesses they had set up.” Pieke, The Good Communist, 136. In my field visits to county, city, and provincial party schools in two other provinces, one coastal and the other inland, I did not encounter such dire economic situations. It appears that the wide variation in economic prosperity across localities is reflected in the party school system. 14.  See chapter 4 in this volume for an analysis of financing of shiye danwei, of which party schools are an example. While Ang focuses on government departments, party schools are subject to similar financial incentives. 15.  While not in Shandong, this city is also located in a prosperous coastal province. 16.  These calls to modernize the bureaucracy can be found in Deng Xiaoping’s speech of August 18, 1980, “On the Reform of the System of Party and State Leadership,” http://web.peopledaily.com.cn/english/dengxp/vol2/text/ b1460.html. At the onset of reforms, Deng issued a famous call to develop a “revolutionary, younger, more educated, and more technically specialized” (gem-

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   203 inghua, nianqinghua, zhishihua, zhuanyehua 革命化、年轻化、知识化、专业化) cadre corps. 17.  Hong Yung Lee, From Revolutionary Cadres to Party Technocrats in Socialist China. (Berkeley and Oxford: University of California Press, 1991); Cheng Li and Lynn White, “Elite Transformation and Modern Change in Mainland China and Taiwan: Empirical Data and the Theory of Technocracy,” China Quarterly 121 (1990): 1–35. 18. Lee, From Revolutionary Cadres to Party Technocrats in Socialist China, 256. 19.  Cheng Li, China’s Leaders: The New Generation (Lanham, UK: Rowman and Littlefield, 2001). 20.  Melanie Manion, Retirement of Revolutionaries in China: Public Policies, Social Norms, Private Interests (Princeton, NJ: Princeton University Press), 199. 21.  Melanie Manion, “The Cadre Management System, ­Post-​­Mao: The Appointment, Promotion, Transfer, and Removal of Party and State Leaders,” China Quarterly, no. 102 (1985): 203–33; Susan H. Whiting, “The Cadre Evaluation System at the Grass Roots: The Paradox of Party Rule,” in B. J. Naughton and D. L. Yang, eds., Holding China Together: Diversity and National Integration in the P ­ ost-​­Deng Era (Cambridge: Cambridge University Press, 2004). 22.  Since there were only, as of 2010, six county residents who were members of China’s eight democratic parties, Zouping does not have a ­county-​­level socialism school. Interview with United Front vice–department head, July 2011. 23.  Central Organization Department, “Notice of the Organization Department of the Central Committee,” in J. P. Burns, ed., The Chinese Communist Party’s Nomenklatura System: A Documentary Study of Party Control of Leadership Selection, 1979–1984 (Armonk, NY, and London: M.E. Sharpe, 1983), 68. 24.  Quanguo dangxiao gailan (General view of the nation’s party schools) 527. 25.  ZPDX, “Dangxiao gaikuang” 党校概况 (Party school general situation), http://zpxwdx.com/, accessed August 10, 2011. 26.  Quanguo dangxiao gailan (General view of the nation’s party schools), 527. 27.  In all party schools from the provincial level downward, the position of party school principal is nominally held by the local party secretary, while there is at least one ­full-​­time ­vice-​­principal in charge of daily affairs. 28.  These f­ ull-​­time teachers were responsible for instruction in the following topics: politics (two faculty), law, history, computers, English, economics, socialism, and writing. When queried about the training of party school teachers, I was told that “most” have attended colleges throughout China, though many of them are from Zouping. While many of them do not hold party school degrees, they do receive training at h ­ igher-​­level party schools. For example, each year two teachers and the school party secretary go to the Central Party School in

204  Ch a r l ot t e L e e Beijing for a brief course. (This course lasted for two weeks in 2005.) Consistent with the more recent wave of “revolutionary education” promoted by the Central Organization Department, all the ZPDX teachers and leaders attended a o­ ne-​ ­week program at Yan’an, which included lectures at the (then newly opened) ­COD-​­managed cadre academy. Interview with ZPDX ­vice-​­principal, 2006. 29.  In 2006 the school trained 1,141 cadres. Over the period 1971 to 1994, a total of 11,994 trainees passed through the school; this included ­seventy-​­six training semesters and ­t wenty-​­six ­degree-​­granting classes. Quanguo dangxiao gailan (General view of the nation’s party schools), 527. 30.  It was difficult to obtain information on this particular construction project. Other work on Zouping County has discussed the prominent role played by land public finance in the recent development of Zouping’s economy, at the county and township levels. For an overview of this process and the many ­revenue-​­generating uses for land, see Susan Whiting, “Fiscal Reform and Land Public Finance: Zouping County in National Context,” in J. Y. Man and Y.-H. Hong, eds, China’s Local Public Finance in Transition (Cambridge, MA: Lincoln Institute of Land Policy, 2011), 135–41. 31.  In ZPDX, “Dangxiao banqian tongzhi” 党校搬迁通知 (Announcement of party school relocation), http://zpxwdx.com/news/html/?72.html, accessed August 10, 2011. The school will occupy eight offices in the building: four for ­vice-​­principals; one for the administrative office; one for academic affairs; one for research (jiaoyan 教研), industrial education (yejiao 业教), and finance; and one for the school library. Classrooms are conspicuously absent from the new directory. 32.  The old campus was located on Daixi Third Road (daixi sanlu 黛溪三路), very close to the Daixi Mountain Village hotel (daixi shanzhuang 黛溪山庄). 33.  2008 Party School Work Regulations, Article 13, Xinhuanet, http://news. xinhuanet.com/newscenter/2008–10/29/content_10275191.htm, accessed July 19, 2009. 34.  In response to my question “Is there a township party school here?” a township leading cadre replied, “There is, but it’s only a sign” (you, keshi zhishi gua paizi 有，可是只是挂牌子). ­Township-​­level interview, July 2011. 35.  Responsible for countywide, general civil servant training programs are two offices within the personnel bureau: the civil servant management office (gongwuyuan guanli bangongshi 公务员管理办公室), which includes four employees, and the civil servant training section (gongwuyuan peixun ke 公务员培训科), which includes only two employees. Significantly, the personnel department is one administrative level lower than the county party school; whereas the party school is a ­county-​­level (zheng chuji 正处级) work unit, the personnel department

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   205 is only section level (zheng keji 正科级). Interview at Personnel Department, July 2008. 36.  This training center received an investment of more than 11 million yuan (US$1.33 million). See Zouping County Personnel Department, “Zouping xian ganbu jiaoyu peixun gongzuo jieshao” 邹平县干部教育培训工作介绍 (Introduction to Zouping County cadre education and training work, November 1, 2006, 2. 37.  The county education department, for example, has three officials in charge of teacher, school principal, and education ministry cadre training programs, respectively, but these are limited to the work unit’s functional domain. In terms of infrastructural needs, the department also has its own training center, built in 2008, to host the more than six thousand teachers who work in the county. Interview at Education Department, July 2008. 38.  Michel Oksenberg,”Methods of Communication within the Chinese Bureaucracy,” China Quarterly 57 (1974): 1–39. 39.  On the research front, the ZPDX has been active in assisting the county party committee with implementing programs within the “new socialist countryside” initiative. In 2006, for example, the party school conducted research on various rural development models within the county—for example, villages with successful, marketable agricultural products such as watermelons and persimmons—and then convened a meeting of relevant county officials. Such activities supplement the work done by conventional research offices, such as the county’s policy research office. Furthermore, “The party school is different because its recommendations are grounded in theory,” an interviewee asserted. ­Township-​­level interview, July 2008. 40.  Party schools are also clearinghouses for the informal communications that are “certainly as important as the formal communication channels—if not more so—[and] influence the policy process.” Oksenberg, “Methods of Communication,” 29. These include the networks formed during training classes, which often cross departmental and geographic boundaries. 41.  Examples of ­bottom-​­up reporting include annual visits by county party school officials to the Central Party School and weekly meetings of village party branch leaders with township party affairs cadres. 42. ­Township-​­level interview, November 2006; confirmed by interview at ZPDX, July 2008. Topics for these required training days include study of the party constitution and party documents, mediation procedures, land law, and security regulations. 43.  The building of “village communities” is underway in Zouping County and will entail the relocation of rural residents into new housing complexes, the creation of multipurpose service facilities, and reuse of rural land,

206  Ch a r l ot t e L e e among other reforms. An update on this broad policy initiative is available in Zouping County, “Zhengfu gongzuo baogao” 政府工作报告 (Zouping government work report), January 7, 2011, http://www.zpds.gov.cn/ljzp/ShowArticle. asp?ArticleID=1411, accessed August 11, 2011. “Village product specialization” is an economic development project in which villages are to focus resources on developing a product (or products, if possible) that realizes a given village’s geographical, technological, human resources, and marketing advantages. See, for example, a ­write-​­up of model sites in Zouping in “Shandong sheng zouping xian daixi ban ‘yi cun yi pin’ chu shixiao” 山东省邹平县黛溪办’一村一品’出实效 (Zouping Daixi Office achieves practical results in “One village one product”), China Agricultural Extension Network, http://www.farmers.org.cn/Article/ ShowArticle.asp?ArticleID=85542, accessed August 11, 2011. 44.  Zouping County Organization, “Document Number 25, Zouping County 2010 Village Party Cadre Training Scheme” (in Chinese) 3 (2010). 45.  ZPDX document prepared in advance of the Binzhou party school annual inspection, “Report on the Province’s Most Advanced Party Schools” (in Chinese), May 10, 2011. According to the ZPDX web page, in 2007 and 2008, the school was named an “advanced work unit” (xianjin danwei 先进单位) by the Shandong Province party school and county party committee, respectively. 46.  With the exception of the party school principal, who is the county party secretary (and evaluated by the Binzhou city organization department), party school officials are evaluated by the county organization department. 47. ­Township-​­level interviews, July 2011. 48.  Jane Duckett, “Bureaucrats in Business, ­Chinese-​­Style: The Lessons of Market Reform and State Entrepreneurialism in the People’s Republic of China,” World Development 29, no. 1 (2001): 23–37. 49.  James C. Mulvenon, Soldiers of Fortune: The Rise and Fall of the Chinese ­Military-​­Business Complex, 1978–1998 (Armonk, NY: M.E. Sharpe, 2001). Due to concerns with professionalism and readiness, military divestiture was ordered by Jiang Zemin in 1998. For a detailed discussion of the ­market-​­driven remaking of the Chinese state, see Dali L. Yang, Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China (Stanford, CA: Stanford University Press, 2004). 50.  Susan L. Shirk, ed., Changing Media, Changing China (Oxford: Oxford University Press, 2011). 51. ­Township-​­level interview, July 2008. 52.  Leading cadres include those ranked at the county magistrate or department level (chuji) or above. To attain the next administrative level (­di-​­地 (­ting-​­厅), ­si-​­司( ­ju-​­局)ji 级), a cadre must have at least an undergraduate (benke 本科) degree. See Chinese Communist Party Central Committee, “Dangzheng lingdao ganbu

Reforming and Updating Cadre Training in Zouping’s Communist Party Schools   207 xuanba renyong gongzuo tiaoli” 党政领导干部选拔任用工作条例 (Regulations on the selection and appointment of party and government leading cadres), Xinhua, July 9, 2002, http://www.moc.gov.cn/zizhan/siju/renlaosi/zhengceguiding/lingdaoganbu_GL/kaoheyurenmian/200709/t20070920_401061.html, accessed August 12, 2011. 53. ­Township-​­level and ZPDX interviews, 2006. 54.  Two separate sources quoted around 2,000 yuan per year to complete the degree program. T ­ ownship-​­level interview and ZPDX interview, 2006. An undergraduate degree would take approximately two and a half years to complete if an official already had an associate degree at the time of enrollment. Coursework for this degree included some ten to twelve courses, including accounting, “fundamental economic knowledge,” finance and banking, foreign trade, Western economics, Chinese economic law, and computing. Each semester, students could take three classes and focus on s­ elf-​­study of assigned materials. In the evenings, during the week, and on weekends, students would also attend tutorials and lectures at the county party school. See Pieke, The Good Communist, 75–80, for a detailed description of this C ­ PS-​­organized correspondence degree system. 55.  ZPDX, “Report on the province’s most advanced party schools,” 3. 56. Ibid. 57.  These upgrades represented investments totaling more than 300,000 yuan (or approximately US$37,500), according to an interview at the ZPDX, July 2008. 58.  One of these businesses included a s­ teamed-​­bun stand. Renting property was not unusual across the party schools that I visited in at least two other provinces, from the county level up. It was also common to rent out rooms in school dorms or, as the case might be, very fine school hotels. 59.  See the Ang chapter in this volume for a discussion of how “extrabureaucracies” such as party schools utilize revenues earned through policy concessions. 60.  See China Township Enterprise Association (Zhongguo xiangzhen qiye xiehui 中国乡镇企业协会), “Guanyu juban qiyejia ji guanli ganbu zhongyang dangxiao peixun ban de tongzhi” 关于举办企业家级管理干部中央党校培训班的通 知 (Central Party School training class announcement on holding a entrepreneur and management cadre training class), no. 6 (2008). This ­six-​­day class covered topics such as “international strategy, Chinese social questions and building a harmonious society, China’s macroeconomic trends, tax policy for private enterprise, and enterprise law and policy winds.” The tuition was 1,900 yuan per person, plus 200 yuan per person per day for living expenses. 61.  When I visited several township party offices in 2011, officials mentioned loaning out classrooms and meeting halls in the township government seat to local enterprises, but all of them insisted that this was a free service “to help out local businesses.”

208  Ch a r l ot t e L e e 62. ­Village-​­level interview, 2008. The party secretary reported that Guizhou and Shandong Provinces were the test sites for this program. While the Central Organization Department has overall responsibility for this program, l­ower-​ ­level departments contribute content and manpower for oversight. In 2007, for example, this village was the object of an unannounced inspection (choucha 抽 查) by the Binzhou city organization department; a delegation came, checked the equipment and video log to confirm that cadres did indeed view the required lessons. The village cadre in charge of party affairs enthusiastically took me to the room where there was a TV and logbook for cadres to sign to show that they had participated in the designated training activity. 63. ­Township-​­level interview, 2011. 64.  When I visited one township in 2011, a cadre from the party building office showed me this web page on his office computer. Even though the delivery platform had changed, township leaders still reported three days per month when cadres were expected to access the web page. 65. ­Township-​­level interview, 2011. 66. Ibid. 67. Ibid. 68. ­County-​­level interview, 2006.

Ch a p t er 9

Institutional Agility and Regime Adaptation Jean C. Oi and Steven M. Goldstein

Zouping is no longer the unexceptional place that it was in the late 1980s. While it is now a rich county, we would argue that the governmental practices described in the chapters of this volume are likely to be found in many places across China. We examine Zouping over time and in depth in order to reveal the subtle but important responses that have occurred within a local government. These barely perceptible changes have permitted an outwardly unchanged government to adapt flexibly in its operation. The chapters in this volume look closely at the internal operations of local administrative systems to provide evidence of institutional agility within a seemingly unchanging political system. Ad hoc bureaucratic adaptations and accommodations have changed the operation, if not the organizational form, of ruling institutions as existing agencies now play new and unexpected roles for which they were never designed. As such, the development of governance in Zouping shows the adaptability of the Chinese political system, which may offer new insights into discussions of authoritarian resilience.

Institutional Change and County Governance Few bureaus have been abolished or added as county government has managed its many new tasks and adapted to a vastly changed economy and new political demands. For example, one might assume that the bureau for the management of township and village enterprises (xiangzhen qiye guanli ju) might have been abolished when most of the collectively owned village en

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terprises were sold. In fact, this bureau has survived with a new name while its functions have changed dramatically. Although it is still responsible for the remaining t­ownship-​­owned enterprises, it no longer has village enterprises as part of its portfolio because these firms no longer exist. Instead, the bureau’s charge is the more than one thousand private enterprises in the county. Moreover, after the collectively owned firms were sold, the bureau is no longer tasked to “manage” but is expected to provide “services” and information to the ­now-​­private firms. Guy Alitto’s overview highlights the importance of path dependence for understanding Zouping’s development. He demonstrates how various parts of the county have survived historical and ecological challenges. We see how the p ­ ost-​­Mao reforms brought relief to places like Qidong, which suffered some of the worst ecological challenges and had been ranked among the poorest of all townships. Its Weiqiao Textile Mill became one of the largest textile manufacturers in the world and changed the township and the entire county in the process. Kay Shimizu highlights the diverse paths to development and the changes in fortune among Zouping’s townships over the course of the reforms, and shows how the county managed this transformation. Two of the poorest of these nine townships in the 1980s now rank as the richest and pay the most taxes, while others that were once at the top of the county in terms of wealth and tax payment have fallen behind and are unable to meet their tax obligations. She argues that the county allowed for “diversity, creativity, and flexibility at the local levels to promote overall economic stability and resilience.” She captures how Zouping’s officials have adapted to changed circumstances within a seemingly unchanging administrative structure by “thinking creatively and acting flexibly.” County officials play an entrepreneurial role as they did during the initial stages of reform, which was chronicled in the earlier volume on Zouping, but now they help identify markets and opportunities far from home—not only in Xinjiang but also as far away as Africa. Yuen Yuen Ang explains how the county adapted to the 1994 tax reforms that threatened to leave localities with substantially fewer resources. Ang shows how the local state created new opportunities amid new central state regulations that took away revenues but permitted localities to generate funds. In contrast to common perceptions of s­elf-​­financing as a form of corruption, she demonstrates that these ­self-​­financing mechanisms are

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legally sanctioned, and she argues that they are best understood as an adaptation of ­centuries-​­old prebendal practices described by Max Weber. Using case studies of education, health, and construction agencies, Ang highlights the implicit understanding between the center and local government that grants localities the option of collecting fees in order to fund needed public goods and services, even when rules and regulations would suggest otherwise. The center took revenues away, but within that context it opened the door for localities to adopt other means to get needed resources. There is a saying in China that the upper level “provides policy opportunities, not money” (gei zhengce bu gei qian). Looked at from the perspective of our volume, this is another example of institutional agility within an authoritarian political system. Martin Dimitrov unveils a new political and economic logic that is hidden by formal institutional structure and policy pronouncements. Using detailed case studies of copyright, patent, and trademark enforcement in different sectors, Dimitrov also reveals which bureaucratic actors do what. Such detail provides new insights into why certain aspects of intellectual property rights enforcement are better than others, and why protecting patents and trademarks is given high priority rather than copyright protection. The organization and functioning of the Zouping tobacco bureau provides a vivid example of how the old state operates at the local level long after the economy has begun the process of marketization. However, it also demonstrates how this now regulatory state continues to serve local state interests in a market economy. Douglas Grob illustrates how the Legal Affairs Office grew into “a nonjudicial interpreter of legality, and a locus of legal development outside the courts.” He chronicles how the Legal Affairs Office was able to retool and was assigned tasks beyond its original scope of work to include gatekeeping and agenda setting to influence rulemaking. As a result, this office was able to preempt, coordinate, mediate, and at times resolve administrative conflicts within county government. Over the course of its two and a half decades of development, the office “evolved into an arbiter of administrative legality, mediator among administrative departments asserting competing claims to ‘legality,’ and possible instrument for monitoring and promoting (or in some cases potentially limiting) the incorporation of popular input throughout the full life cycle of administrative rules.” Melanie Manion shows how the growing complexity of the economy

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and society has put new pressures on the Organization Department to take on a significantly increased workload in selecting cadres for a variety of new tasks. Not only has it had to change its standards, it has had to coordinate with other political actors. As we have seen in the case of other county agencies, it has evolved to meet new, numerous, and varied challenges with limited resources. Manion also provides a fuller understanding of political changes that have occurred, because unlike examples in earlier chapters, it is not the changing economic environment that is the source of the stress but the “political stresses, imposed on Zouping by Communist Party superiors in Beijing and communicated down the party hierarchy.” One of the most revealing aspects of the changes discussed by Manion is how competitive elections, which were introduced to allow local people’s congresses at different levels to put up their own candidates, have changed the department’s work. If the candidate put forth by the Organization Department loses the election, this is a black mark on the department itself. It must now consciously consider how its selection will play out at the people’s congress. Power remains in the hands of the Organization Department, but the selection process itself indirectly has been affected. Perhaps the most surprising example of institutional agility is the Communist party school. Challenging the assumption that the Communist Party might be resistant to reform, Charlotte Lee demonstrates how party schools have adapted to embrace the market while serving the educational needs of local cadres. She finds that party institutions that were created for political training have now shifted toward apolitical activities that generate income for the schools. These expanded vocational programs for grassroots leaders are consistent with changes in Zouping’s economy and the needs of local government, which seeks substantive training in management to work in an increasingly complex market environment. As Lee writes, “Economic transformation, with its accompanying social and political changes, has prodded these actors to embrace new opportunities—but at the same time retain their capacity to carry out core activities.” Manion and Lee together provide new insights into the adaptability of the Leninist system in China that help explain its resilience. These institutions have come to embrace the market and even the Internet, which most would think of as anathema to the authoritarian regimes, in order to disseminate information to wider groups of cadres and villagers in an effort to bolster support for the party.

Institutional Agility and Regime Adaptation  215

Understanding Political Change Do the changes detailed in these chapters constitute significant changes in forms of governance? Admittedly, they do not involve changes in formal organizational structures, nor do they represent an evolution toward a more open and democratically responsive political system. They do, however, show the many ways that the bureaucratic system has been responsive to radical changes in the nature of China’s economy. Local agencies have had to change their work habits and interactions with a n ­ ow-​­privatized economy and a citizenry that enjoys greatly increased geographic and social mobility. Local governments no longer own enterprises and thus are no longer the bureaucratic superiors of those who run the factories. Instead, local government must now deal with private owners who are not themselves actors in the local bureaucracy. Of course, local officials still control resources and use them to gain compliance and cooperation, but the form and the substance of those interactions have changed. Similarly, individual citizens now routinely seek redress through formal processes like applying for administrative reconsideration and litigating against local government. The county has existing institutions such as the Office of Letters and Visits to receive complaints from citizens about the operation of the system. However, it has supplemented this existing institutional structure by giving other government agencies such as the Legal Affairs Office a supporting role by providing an additional outlet for citizens to appeal administrative actions. Even the Organization Department, one of the most powerful party agencies, has had to work with other organizations and departments in order to cope with the dramatically increased and more demanding work involved in managing personnel. Moreover, the Organization Department is now held more publicly accountable. If it does not do its job well, the candidates that it puts forth will fail to be elected, which would constitute a slap in the face. Thus, while the system remains one where the Communist Party has a monopoly of power, different political actors, including citizens, increasingly have the means to provide their input, sometimes eliciting surprisingly accommodating responses. The extent to which the practices described in the volume involve significant political changes can be debated, but the chapters in this volume, and the fieldwork that went into them, make that a question worth considering. Our goal in this volume has not been to argue that governance has be-

216  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

come more democratic. Our purpose is to provide some insights into how a s­ ingle-​­party authoritarian system has managed to govern despite fundamental changes in the economy and society. In Zouping County, the local state has done so by introducing subtle changes within existing organizational structures. The institutional form has stayed the same, but the substance has changed. In our view, this has contributed in quiet and largely unnoticed ways to the adaptation of China’s authoritarian political system that has made the system resilient through decades of dramatic economic change. This volume looks inside Zouping County’s government to illuminate the mechanisms of adaptive governance. However, as the quote from Edmund Burke at the beginning of the volume suggests, institutional adaptation cannot be static. There are a number of questions to be asked about the future of this process. Are the key variables that have allowed adaptation in the past sufficient to promote further adaptation or will other factors play a role? Is there a point in the economic transformation where such adaptation will no longer be sufficient? Is there a tipping point in the political or economic contexts that will prevent this adaptation from continuing? And what impact would these changes have on continuing the adaptation necessary to enhance the resilience of the system? These are questions that research into the next phase of China’s reforms should address.

Contributors

Yuen Yuen Angis Associate Professor of Political Science at the University of Michigan. She studies the political economy of development, with a focus on nonlinear processes of development, the underlying conditions of effective adaptation, corruption, and local governance. She is the author of How China Escaped the Poverty Trap (2016). Guy Alittoreceived his PhD from Harvard University, where he also taught briefly before taking a position at the University of Chicago in 1980. There he has taught in all areas of Chinese studies, including the modern and classical Chinese languages as well as modern and premodern history. His research in the past twenty years has focused on modern intellectual history; local histories at the village, county, and regional levels; family history; intellectual history; and social history. He is especially interested in the connections between the ­political-​­social and the ­intellectual-​­cultural realms, as manifest in specific individuals and local cultures. He continues to participate in the ongoing Chinese discussion on culture and modernization through publications and lectures in the Chinese language. His publications include 世界范围内的反现代化思潮：论文化守成主义 (Antimodernization thought trends in a worldwide perspective: On cultural conservatism), The Last Confucian: Liang Shuming and the Chinese Dilemma of Modernity, and 这个世界会好吗 ?（Will mankind survive?). Martin K. Dimitrovis Associate Professor of Political Science at Tulane University. His books include Piracy and the State: The Politics of Intellec217

218  Je a n C. Oi a nd S t e v en M. G ol ds t ei n

tual Property Rights in China (2009), Why Communism Did Not Collapse: Understanding Authoritarian Regime Resilience in Asia and Europe (2013), and The Politics of Socialist Consumption (2017). He has held residential fellowships at Harvard, Princeton, Notre Dame, the University of Helsinki, the American Academy in Berlin, and the Woodrow Wilson International Center for Scholars. Steven M. Goldsteinis Director of the Taiwan Studies Workshop and an Associate at the Fairbank Center for Chinese Studies at Harvard University. He was a member of the Department of Government at Smith College from 1968 to 2016 and has also been a visiting faculty member at the Fletcher School of Law and Diplomacy, Columbia University, and the Naval War College. Dr. Goldstein’s research is focused on issues of Chinese domestic and foreign policy as well as ­cross-​­strait relations. Douglas B. Grobis head of the Asia Section at the US Congressional Research Service. He previously served as a senior adviser in the US Department of State, and as Staff Director of the US C ­ ongressional-​­Executive Commission on China. Prior to entering public service, he was on the faculty at the University of Maryland, and worked in the private sector in corporate governance, banking, and international trade. Charlotte Leeis the author of Training the Party: Party Adaptation and Elite Training in ­Reform-​­Era China (2015), which examines adaptive capacity within the Chinese Communist Party’s party school system. She received her PhD in political science from Stanford University. She is the faculty coordinator of the Global Studies Program at Berkeley City College. Melanie Manionis Vor Broker Family Professor of Political Science at Duke University. Her articles have appeared in journals including American Political Science Review, Comparative Political Studies, and China Quarterly. Her newest book, Information for Autocrats (2015), examines representation in Chinese local congresses. She earned her doctorate at the University of Michigan. Jean C. Oi, a University of Michigan PhD in political science, is the William Haas Professor of Chinese Politics in the Department of Political Sci-

Institutional Agility and Regime Adaptation  219

ence and a Senior Fellow of the Freeman Spogli Institute for International Studies at Stanford University. She directs the China Program at the Walter H. Shorenstein ­A sia-​­Pacific Research Center and is the Lee Shau Kee Director of the Stanford Center at Peking University. Oi is the author of State and Peasant in Contemporary China: The Political Economy of Village Government (1989) and Rural China Takes Off: Institutional Foundations of Economic Reform (1999). She is the editor or coeditor of Property Rights and Economic Reform in China (1999); At the Crossroads of Empires: Middlemen, Social Networks and S­ tate-​­building in Republican Shanghai (2007); Growing Pains: Tensions and Opportunities in China’s Transformation (2010); Going Private in China: The Politics of Corporate Restructuring and System Reform (2011); Adapt, Fragment, Transform: Corporate Restructuring and System Reform in South Korea (2012); Syncretism: The Politics of Economic Restructuring and System Reform in Japan (2013); and Challenges in the Process of China’s Urbanization (2017). Kay Shimizuis Research Assistant Professor in the Department of Political Science at the University of Pittsburgh. Her research focuses on comparative politics and the political economy of Japan and China. Her publications include Political Change in Japan: Electoral Behavior, Party Realignment, and the Koizumi Reforms (2009, coedited with Steven R. Reed and Kenneth Mori McElwain); Syncretism: The Politics of Economic Restructuring and System Reform in Japan (2014, coedited with Kenji E. Kushida and Jean C. Oi).

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Index

Note: Page numbers followed by “f ” refer to figures; page numbers followed by “m” refer to maps; and page numbers followed by “t” refer to tables. adaptive informal institutions, 4 adaptive institutional change, 5 administrative law, in China, 153–54 administrative reconsideration, 153–55 Administrative Reconsideration Law (ARL), 154 Administrative Reconsideration Regulation (ARR), 154 administrative self-financing, 91–92; case study of quasi-marketization of public health sector, 102–5; case study of quasi-marketization of public schools, 98–102; history of, 92–93; in Zouping, national perspective of, 105–7 agricultural taxes, abolishment of, 67 agriculture, in Zouping County, 8–9 Agriculture Bureau, 121 antipiracy efforts, 131–32 ARL (Administrative Reconsideration Law), 154 ARR (Administrative Reconsideration Regulation), 154 authoritarian resilience, 3 average income, of peasants, 67 brewery sector, of Zouping County, 9, 10

budgets: formal-taxed based, 93; offbudget, 93 business-government relations, in China: developmental state model of, 113–14, 122–25; IPR bureaucracies as lens on, 115–18; Maoist model of, 113–14, 118–22; regulatory state model of, 113–14; Zouping’s hybridity among three models of, 114–15 cadre selection, 169. See also organization department, of Zouping cadre training: competition between providers of, 186; developments in, at grassroots levels, 196; enrollment in, by type of classes, 187t; government departments and, 190; local initiatives in, 196–97; nationwide changes in, 185–87; party doctrine and, 191; personnel departmentorganized classes for, 190; technology changes and new program content for, 196; traditional purpose of, 182. See also organization department, of Zouping; party schools; Zouping County Party Committee Party School (ZPDX)



222  Index case studies: of construction sector of Zouping County, 104–5; of quasimarketization of public health sector, 102–5; of quasi-marketization of public schools, 98–102 central government, strategy of, for rural development, 66–67 Central Organization Department (COD), cadre training and, 185 Central Party School (CPS), correspondence programs of, 194. See also cadre training; party schools; Zouping County Party Committee Party School (ZPDX) change: adaptive institutional, 5; political consequences of economic, in Zouping County, 16–19 Changson County, Shangdong Province: vulnerability to economic downturns and, 41–43 China National Tobacco Corporation, 119 “Clean Up” Rules, guidelines for, 151–53 COD (Central Organization Department), cadre training and, 185 collective enterprises. See state-owned enterprises (SOEs), in Zouping County Communist Party of China (CPC): adaptability of, 3–4; corruption and, 168–69; political institutions of, 3; political selection and, 168, 169–70. See also organization department, of CPC Communist Youth League, 185 communities, residential, 70–71 Construction Bureau, 104–5 construction sector of Zouping County: case study of, 104–5 copyright piracy, 130–31 copyrights, 130–33; enforcement of, 131–33 corruption, 5; Communist Party of China and, 168–69 county-owned enterprises, restructuring of, 14–15, 15t CPC. See Communist Party of China (CPC)

Culture and Sports Bureau of Zouping, 130–31, 132 developmental state model, of Chinese business-government relations, 113– 14, 122–25 Dimitrov, Martin, 5 diversity: Dongguan (village) and, 48–53; Fengjia (village) and, 44–48 doctrine, transmission of party, party schools and, 191–92 Dongguan (village), as commercialized village prototype, 48–53 Duanqiao village, 76–81 economic development, rural governments and, 62 enforcement: of copyrights, 131–33; of intellectual property rights laws, 117–18; of trademarks, 127–29 English Baptists, 43 enterprises. See township and village owned enterprises (TVEs) environment, growing concerns about, 63 extrabudgetary funds, 93 extrabudgetary revenues, 94 Fazhi Shi. See Zouping Fazhi Shi feishui (revenue that is not taxes), 94 Fengjia (village), as agricultural heartland prototype, 44–48 Food and Drug Bureau of Zouping, 121, 128. See also pharmaceutical safety food counterfeiting/safety, 128–29 formal-taxed based budgets, 93 Fortune Elementary (school), 99–102, 106 “Four Cleanups” campaign, 48 funding sources, of local governments, 93–94 funds, self-raised, 93 getihu (small enterprises), 126–27, 131 governing bodies, Chinese, lawmaking power of, 140–41 Health Bureau of Zouping, 128 Heilmann, Sebastian, 4

Index 223 Hillman, Ben, 4 holding companies, formation of, 15 industrial sector, of Zouping County, 9 Industry and Commerce Bureau of Zouping, 128–29 informal institutions, adaptive, 4 informal relations, importance of, 4–5 institutional change, adaptive, 5 institutionalization, 3–4 intellectual property rights (IPR), 21, 113; patents and, 123–24; trademarks and, 124–25 intellectual property rights (IPR) bureaucracies, as lens on business government relations in Zouping, 115–18 intellectual property rights (IPR) laws: avenues for enforcing, 116–17; enforcement of, 117–18 intellectual property rights (IPR) protections, 116 Intellectual Property Rights Bureau of Zouping County, 123 Justice Department, Zouping, 155–56 Keqiang Index, 25n18 Legal Affairs Office of Zouping (Fazhi Shi). See Zouping Fazhi Shi legal states, of China, 140–42 Liang Shuming, 28–29; Rural Reconstruction Institute and, 31–32 Linchi township, 73–74 lineage: absence of, in Dongguan, 51; in Zouping County, 42 local governments, 5; definition of quality for, 171–73; factors transforming nature of, 62–63; funding sources of, 93–94; impact of, on economic, political, and social development of rural China, 66 Maoist model, of Chinese business-government relations, 113–14, 118–22 market expansion, 65 Mingji township, 76–81

mobility, in Zouping County (1900– 1950), 33–36 mountain villages: transportation infrastructure and, 38–39 Nathan, Andrew, 3, 4 New Socialist Countryside policies, 18–19 nontax revenues, 94 off-budget budgets, 93 Oksenberg, Michel, 5, 141, 143, 149–50, 150, 156, 169, 172 “Opinion of the Zouping Government about Further Strengthening IPR Work” (2007), 123 organization department, of CPC, main task of, 167 organization department, of Zouping: evaluations and, 168; identifying and monitory quality and, 173–77; main task of, 167; operations of, 170; responsibilities of, 171. See also cadre selection; cadre training; party schools party schools, 182–83; accountability of, 192; annual training plans of, 186; auxiliary programs of, 186; drivers of change in, 186–87; effect of socialist market economy on, 193–95; planned and unplanned training by, 186, 187t; research findings for, 183–84; at township level in Zouping, 189–90; in townships, 195; transmission of party doctrine function of, 191–92; tuitionbased degree programs of, 193–94. See also cadre training; Central Party School (CPS); organization department, of Zouping; Zouping County Party Committee Party School (ZPDX) patents, intellectual property rights and, 123–24 peasants, average income of, 67 Perry, Elizabeth, 4 pharmaceutical safety, 129. See also Food and Drug Bureau of Zouping piracy, copyright, 130–31

224  Index prebendalism, 92–93; post-Mao adaptation of, 96–98; in United States, 97 private enterprise, shift to, in Zouping County, 11–16. See also township and village owned enterprises (TVEs) private sector, in Zouping County, importance of, 12 PSB (Public Security Bureau), 150 public health sector of Zouping County: financial structure for, 103m; quasi marketization of (case study), 102–5 public schools of Zouping County, quasimarketization of (case study), 98–102 Public Security Bureau (PSB), 150 Qidong, 39–41 qiye (medium-size and large enterprises), 126 quality: defining, cadre selection and, 169; definition of, for local governance, 171– 73; evaluating and vetting, 173–77 quality certificates, 125 regulatory state model, of Chinese business-government relations, 113–14; in Zouping County, 125–35 residential communities, 70–71 revenues: are not taxes (feishui), 94; changing sources of, for Zouping County, 13t; extrabudgetary, 94; growth of, in Zouping, 7; nontax, 94; tax, 12, 13t, 25n27 rulemaking, in Zouping, 145–49 rules, defined, 141 rural China: impact of local government on economic, political, and social development of, 66; urbanizing, 69–70 rural governments, economic development and, 62 Rural Reconstruction Institute, Liang Suming and, 31–32 self-financing, administrative, 91–92; case study of quasi-marketization of public health sector, 102–5; case study of quasi-marketization of public schools, 98–102; history of, 92–93; in Zouping, national perspective of, 105–7

self-raised funds, 93 service sector, of Zouping County, 10–11 Sifa Ju, 155–56 SOEs. See state-owned enterprises (SOEs), in Zouping County software enforcement, 132 state-owned enterprises (SOEs), in Zouping County: political fallout from demise of, 17–19; restructuring, 12–14 State Tobacco Monopoly Administration, 119 taxless finance strategy, 97 tax revenues, 25n27; agricultural, abolishment of, 67; changing sources of Zouping County, 13t; private sector and, 12 Technical Supervision Bureau of Zouping, 128–30 “three arbitraries,” 92 Tobacco Company, 114 tobacco industry, 119 Tobacco Monopoly Bureau of Zouping, 114, 120–21, 122 township and village owned enterprises (TVEs), 8, 11, 65–66; restructuring, 12–13; in Zouping County, 72 townships. See Zouping townships trademark bureaucracies in Zouping, characteristics of, 128t trademarks: enforcement of, 127–29; intellectual property rights laws and, 124–25; regulation of, 126–30 training. See cadre training transportation infrastructure, mountain villages and, 38–39 Tsai, Kellee, 4 TVEs. See township and village owned enterprises (TVEs) urbanization, 63, 85n24; through consolidation of residential communities, 70–71; of rural China, 69–70 vetting, for quality, organization departments and, 173–77 villages. See Zouping villages

Index 225 Walder, Andrew, 6, 8 Weiqiao Textile Company Limited, 9–10, 32, 74–76; factors contributing to success of, 74–76; as holding company, 15 Weiqiao township, 73–76 Yellow River, Zouping County and, 36–37, 57n7 zhengqi heyi principle, 114, 118–22 zishou zizhi principle, 119 Zouping County, Shandong Province, 84n5; absence of lineage in, 42; agriculture in, 8–9; budgetary pressures of, 91; changing economic structure of, 8–11; changing sources of tax revenues for, 13t; contemporary, 63; county tobacco monopoly bureau of, 119–21; developmental state model of business-government relations in, 122–25; development paths taken in, 65–69; diversity and continuity at village level in, 43–53; diversity of economic development of, 65–66; English Baptists in, 43; entrepreneurial adaptations in government of, 20–23; financial structure of, 95–96, 95f; industrial sector of, 9; legal consistency in, 141; Maoist model of business-government relations in, 118–22; mountain villages of, 38–39; overview of economic transformation of, 8–11; political consequences of economic change in, 16–19; political makeup of, 64–65, 65m, 85n17; recent prosperity of, 6–8; regulatory state model of businessgovernment relations in, 125–35; representativeness of, as county of China, 28–29; as research site, 5–6, 8, 57n1; self-financing initiatives of, 91–92; service sector of, 10–11; shift to private enterprise in, 11–16; townships and districts of, 64–65, 65m; townships in, by fiscal category, 1989 and 2005, 69t; TVEs of, 8, 11, 12–13, 65–66, 72; vulnerability to economic downturns and, 41–43; zhengqi heyi situation in, 118–22. See also local governments

Zouping County, Shandong Province, history of: administrative redrawings of, 54–56; archetypal areas, 30; diversity of, 30, 36; elites and mobility in (1900–1950), 33–36; historical and contemporary boarders of, 29–30, 29t; Liang Suming and, 28–29, 30; population densities, 37–38, 38m; representativeness of, 28–29; rural reconstruction era (1931–1937), 32; social and economic conditions, 32–33; Yellow River and, 36–37 Zouping County Administration and Management Cadre Academy, 188 Zouping County Legal Affairs Office (Fazhi Shi). See Zouping Fazhi Shi Zouping County Party Committee, 170 Zouping County Party Committee Party School (ZPDX): brief history of, 188–91; new buildings for, 189. See also cadre training; party schools Zouping Fazhi Shi, 139, 141, 142–45; administrative reconsideration and, 153–55; appointments to, 149–50; “Cleaning Up” Rules and, 151–53; establishment of, 141; influence of after rulemaking, 151–55; main activities of, 143–44; mediating rule among government departments of, 147–49; portfolio of formal duties of, 142; puzzles of, 139–40; responsibilities of, 144–45; rulemaking in, 145–49; staffing of, 150–51; Zouping Justice Department and, 155–56 Zouping in Transition (Walder), 6, 8 Zouping Justice Department, 155–56 Zouping townships: fiscal categories, 1989 and 2005, 69m; fiscal incentives and fortunes at, 68–70; Linchi township, 73–74; Mingji township, 76–81; persistent inequalities among, 71–73, 84n10; Weiqiao township, 73–76 Zouping villages: Duanqiao village, 76–81; persistent inequalities among, 71–73, 84n10; transportation infrastructure of, in mountains, 38–39 ZPDX. See Zouping County Party Committee Party School (ZPDX)

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