China Before Today


Unifying and controlling China means first and foremost unifying the Han and controlling the means of agricultural production and distribution. This has played out as the establishment of a very strong, centralized regime at the beginning of any given dynasty. This unifying power maintains tight control to avoid allowing any challenge from local ethnic minorities or regional rivals. But the geographic core of China is not entirely secure: The sedentary Chinese agricultural society is surrounded to the west and north by vast plains and plateaus easily traversed by enemies — and at the other end of these plains and plateaus were skilled nomadic horsemen. Securing the Chinese core also meant securing the routes of approach — in other words, conquering or at least subduing the buffer states of Tibet, Xinjiang and Mongolia. And this required the expansion of Chinese territory.



China’s vast territory meant that, for the most part, it had nearly all the natural resources it needed. When China sought to move beyond subsistence to economic growth, however, it required trade. Much of this trade traditionally was carried out along the old Silk Road routes; the importance of these routes can be seen in the various historical maps of Chinese dynasties. Even when Chinese borders have receded back to the core, they often still included nominal control over the long, thin paths through Xinjiang on to Central Asia. Power and wealth grew along the trade routes, and the central government had to be vigilant to avoid losing control. The isolated nature of the land trade routes, however, also meant the center had to rely on local authorities to provide security and collect taxes and fees. This created a dual-reliance structure, where the central government was reliant on the local authorities, but the local authorities had to be careful not to overstep their bounds or find themselves countered administratively or militarily by the center.


Things grew much more complex when industrialization shifted the balance, and coastal trade became the key route for the accumulation of national wealth. China had many troubles with the Silk Road route, but it did manage to reinforce control through expansion of territory. The more powerful navies of Europe (and eventually Japan and the United States) dominated coastal trade, however. The Europeans outgunned the Chinese army and navy, and thus outsiders set the terms for Chinese economic interaction with the outside world. To increase national security and strength, the center needed to take advantage of the new trading paradigm. But trading ports were concentrated in the southeast, both for geographic reasons and to try to insulate the central government from foreign encroachment.


This isolation of the central government meant several layers of bureaucracy lay between the center and the foreign trading partners, which left responsibility for dealing with foreigners to the bureaucracy and local governments. Through this control of trade, the southeastern local governments and elite eventually obtained more and more power. But they did not use this power to rise against the center, as they still relied on the center to provide other services, like national security. The center, meanwhile, relied on the local elite for money to redistribute to the poorer but more populous interior.


The trade patterns created an economic imbalance, a regional competition for wealth that the center was responsible for managing but unable to fully control. Too much central pressure on the wealthy trading regions along the coast could disrupt the flow of money desperately needed to quell social unrest in the interior and to strengthen national defense against more industrialized nations. The center found itself stuck between the rising dissatisfaction of a poor but heavily populated interior being left behind economically and an increasingly autonomous and self-serving coast that was the only source of revenue needed to appease the interior.


The center became a hostage to geography and trade patterns. Its only options were to cut trade and plunge China into poverty — though at least unified poverty — or to accept the decentralization of power and hope that things could be kept under control until the country could develop the industrial capacity to counter its overdependence on trade and rectify its geographic economic disparities. The power of the wealthy elite usually meant the center chose the latter option, but this left the central government weakened and susceptible to shock. As throughout Chinese history, in the late 19th and early 20th century, the devolution of power and strong disparity of resources and wealth signaled the beginning of the end of a dynasty. External forces could now overwhelm the fragile system, sending the country into political chaos until a new strong central leadership could re-emerge, unify and consolidate power — and begin the cycle all over again as the center began relying on spreading bureaucracy to manage the diverse and dispersed population.


This cycle thus has repeated itself in the modern era. The collapse of the Qing Dynasty in the early 20th century reflected the steady degradation of central power and control as the coastal provinces became more connected to the needs of the merchants and their foreign trading partners than to the interests of the inland peasants. The Nationalist government that briefly held power (though it never exerted full control over China) was closely tied to the business elite along the coast. Mao tried to rally these same elites to foment his revolution, but failing that, moved to the interior. There, he raised an army of peasants, exploited the clear sense of socio-economic imbalance, and emerged victorious to found the People’s Republic of China (PRC) in 1949.


Like the beginnings of dynasties in the past, Communist China began with tight centralized control, this time focusing on the interests of the peasantry, the redistribution of wealth, and the reclamation of the buffer territories in the west. Attention was also turned toward Taiwan in the east, but any military attempts to finally quell the Nationalist forces that fled to the island were sidelined by the outbreak of the Korean War. The balance of power after the U.S. intervention left mainland China without any real opportunity to seize Taiwan thereafter. Beijing recognized the need to maintain power over the large nation, but wanted to avoid the pitfalls of a large-scale bureaucracy. Instead, it focused on the commune system in a bid to exercise administrative control without (at least in theory) an overly powerful bureaucracy.


Once again, it became clear that China could be fairly secure and isolated from global interactions (in this case the early moves of the Cold War) only so long as it was willing to remain poor. But many among China’s elite were not willing to be poor, and even Mao recognized the need to increase the standard of living and spur production to keep China from falling too far behind the rest of the world. The Great Leap Forward (GLF) represented an attempt to kick-start economic growth without weakening central authority or exposing China to the influences and intervention of the outside.


In the face of growing economic decentralization and political competition, next Mao launched the Great Proletarian Cultural Revolution, or simply the Cultural Revolution, which, beginning in 1966, harnessed students and peasants to target anything deemed even remotely bourgeois or elite by radical ideology.


The subsequent chaos, and the death of Mao, paved the way for Deng Xiaoping’s massive reversal of China’s economic policies. The Economic Opening and Reform program, beginning with a few select localities in 1978, threw economic initiatives down to the provincial and local governments. It made economic growth a top priority for political advancement. The idea was that though some would get rich more quickly than others, the rising tide would eventually lift all boats. By some measures, this was accurate, and both urban and rural per capita gross regional product did rise. But rather than rising across the board, the cities began rapidly outpacing the countryside, leaving the peasants behind.




Once again, China was creating a polar system, with economic activity and growth largely concentrated along the east and southeast coast, and the interior left lagging far behind. Under former President Jiang Zemin and current President Hu Jintao, different efforts were mounted to address this imbalance. Jiang’s attempt at reallocation of resources by fiat — the so-called “Go West” policy — saw little progress, due both to institutional resistance and geographic realities. (While a factory may be able to make cheaper Christmas ornaments in far inland China, the higher transportation costs eliminate that advantage.)


Current President Hu, has sought to regain some control over the economic devolution of power, targeting key industries like steel, coal and oil (with limited success thus far). Hu has also pursued the “Harmonious Society” initiative, which aims to address the socio-economic disparities that the continued decentralization of economic control has exacerbated. This program has been met with plenty of lip service, but little action when it comes to the wealthier regions sacrificing their industry or revenues with less fortunate regions.




The Decentralization Cycle and its Impact Today


Reclaiming centralized economic control is not easy, despite central recognition of the critical need to address the widening disparities across economic regions and the attendant social instability such disparities can stir. The devolution of power, which allowed rapid growth since the economic opening three decades ago, has become an entrenched element of Chinese administration. And as always in Chinese history, the interests of the local officials do not always coincide with central interests. At the same time, the center is unwilling or unable to take too strong a stand against the regional leaders. Beijing fears such action could undermine China’s economy and links to foreign investments and trade, trigger stronger local resistance or unrest, and start to pull down central government officials, who have links through the webs of power down to the regional and local levels. The pattern of bureaucracy accumulating more power at the expense of the center thus continues.


Significantly, the current decentralization primarily relates to economic power, not political power. The Communist Party of China (CPC) has been the unchallenged central authority since the founding of the PRC in 1949. The structure of government and political affairs ensures this. Party and government functions are often highly intertwined, to the point of overlapping roles (Hu is both president of China and general secretary of the CPC; he also serves as chairman of both the government’s Central Military Commission and the Party’s Central Military Commission — in reality, the same commission with two different entities to which it must report). This means that while the local leadership may resist economic dictates from the center if they are not conducive to local interests, at the same time, they are not challenging the central authority of the Party. In fact, they are all members of the same party, or on occasion members of one of the smaller “democratic” parties that are themselves in existence only so long as they support fully the central rule of the CPC.


This Party-state system in the form of two-tier leadership reaches from the top echelons all the way down to the local governments (and even into the state-owned enterprises). Beginning at the provincial level, the party-government dual administrative system is arranged hierarchically. A Party chief at each level holds policymaking authority, while his administrative counterpart (governors, mayors and the like) is responsible for implementing the policy and coordinating the local budgets. In this manner, the Party secretary is often more influential and important than the governor or mayor he serves beside. A good example is Bo Xilai, Party secretary in Chongqing, a city being used as a testing ground for new economic and social policies. One rarely hears of Bo’s counterpart, Chongqing Mayor Wang Hongju. In part this is because Bo himself is somewhat of a celebrity, but it is more so because it is the Party secretary who is guiding policy, not the mayor.


In practice, government and Party officials at each level (from province down through the township in most regions) are appointed by the level one step higher. Such institutional arrangements mean local government and Party officials are only responsible to the officials directly above them in the hierarchy, and not to the people they govern. Local governments are rewarded for their economic growth, and thus encouraged to develop their local economies, but this development is rarely designed with any broader national efficiencies or needs in mind. In short, local governments are unintentionally induced to pursue overinvestment and duplication of industry on a national level, because their policies are focused on local growth and personal self-interest.


The lack of an effective accountability and supervision system in the political structure further exacerbates this situation. Local officials frequently hold near-absolute power within their jurisdiction, and the drive for economic growth and the personal power relationships spawn rampant corruption and nepotism. Distrust of the Party at the local level due to corruption and lack of accountability threatens to weaken support for the Party in general, a major concern for the central leadership.


Further complicating matters, personal relationship networks (guanxi) are often as important as Party and government dictates and regulations in determining policy promotion and application. These close webs of relationships serve by default as a check to any major political reforms, or even to initiatives to clean up corruption or try to regain centralized control. Just as the lower-level officials rely on their performance reports and the good graces of those above them, so too do the higher officials increase their own relative power and influence if those in their network below them are seen to perform well, particularly in regard to economic growth or quelling dissent.


These chains are not only vertical: Horizontal relations are built to protect against possible factional fighting or purges. This further complicates any bids at institutional reform, or even cracking down on local corruption (a frequent trigger for localized social instability). This is because investigations easily can move through the networks of relationships and come back to strike at the initial instigators of the investigation, or at least their close allies.


These interlinking networks of guanxi also insulate local officials from stronger action by Beijing to implement more centralized economic controls. Shutting down a steel mill in one city to rectify inefficiencies across the whole sector may make sense from a macroeconomic viewpoint. But the personal links from the local steel mill manager through his local party officers up through the provinces and into the national level means there are many potential individuals along the way with an interest in not undermining the specific local economic interest, even if the local interest does not mesh with a national initiative.


Central government macroeconomic policy pronouncements often fall on deaf ears at the provincial or local levels (even within major state-owned enterprises, like the oil companies). It is one thing to call for a consolidation of the steel industry to make it more profitable; it is quite another for a local official to agree to close the steel plant in his jurisdiction and lose the profits and kickbacks as well as have to deal with the newly unemployed workers. With population movement between provinces — and even between cities within a province — still highly restrained by the household registration system, it is not easy to shift populations to follow jobs. Instead, jobs must be created and maintained for populations.


And this is a major dilemma for Beijing. To manage China, the center must shift a fair amount of administrative and fiscal responsibility to the regional and local level. But this leaves the local leadership more closely tied to its own local interests than to those in other provinces. And at times, this means a local government is more attuned to the interests of a foreign investor or market than to other Chinese provinces, or even the central government.





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