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Improving Public Service Delivery in Municipality of Province Jing, Central University of Finance and Economics,

Abstract: This paper will assess the effectiveness of the reform of improving public service delivery and identify the factors responsible for the improvements in public service delivery in Qingdao municipality of Shandong province in the People’s Republic of China. This paper begins with a description of the policy context and discusses how the policy context affects the improvement of public service delivery in Qingdao municipality. It then discusses the ef - forts of improving the delivery of public service through enhancing human service delivery, reforming the adminis - trative approval system and increasing government transparency and public participation in Qingdao municipality. Finally, this paper will identify the factors affecting the improvement of public service delivery in Qingdao munic - ipality in terms of the decentralization of economic management, tax profit sharing with the , po - litical control, the delegation of law-making and the local leadership.

he transition from a centrally planned economy agement as well as enterprise management and to con - to a market economy in China has brought centrate on indirect macroeconomic regulation. How - about the emphasis on government functions ever, the increasing influence of the private sector in iTn the public service sector. In a centrally planned the market required the local government to rely more economy, the State-owned Enterprises (SOEs) pro - heavily on implementing the regulations given the vided their employees with all kinds of benefits such severity of the problems in the market place in China, as child care, medical care, pensions, housing and - such as unfair competition, lack of protection of in - curity. After the transition to a market economic sys - tellectual properties and fraud which had disrupted the tem, the SOEs would unavoidably reduce some of market order and dampened consumers’ interests. In these benefits such as medical and child care due to this case, the regulatory activities of local government the urgent need to cut budgets to enhance their com - became rapidly expansive (ADB, 2003, pp. 57-58). petitiveness in the market. On the other hand, in a This expansion of regulation created a situation where market economy, the SOEs might also be bankrupt, enterprises and citizens must go through many differ - which is “a phenomenon inconceivable in a centrally ent government departments to obtain approvals for planned economy, but quite possible in a market econ - their private business. These cumbersome adminis - omy” (Asian Development Bank [ADB], 2003, p. 56). trative procedures were blamed for wasting too much Therefore, employees may face more risks than ever time for foreign investors and clients; at the same such as being retrenched and the loss of pension or time, these procedures weakened the efficiency of other welfare benefits. This situation had produced local government. much pressure for the municipal governments to carry The local government often utilized its regula - out the administrative reform for strengthening the tory power to “protect or expand departmental or local service delivery functions. Therefore, local govern - interests rather than to further develop the market. As ment reform in the Qingdao municipality since 1999 a result rent-seeking opportunities abound” (ADB, sought to improve government functions in human 2003, p. 62). At the same time, the phenomenon of service delivery (Shandong Provincial Government, “sanluan (Three Unrulies)”: unruly levies ( luan - 2000, p. 2). shoufei ), forced donations ( luantanpai ), and fines ( - Moreover, the transition from a planned econ - anfakuan ) had also breached the trust of the public for omy to a market economy in China also required the the local government. Some government agencies did local government to improve its regulatory services. not standardize the administrative and institutional The market economic reform allowed the local gov - costs ( xingzheng shiyexing shoufei ) on drugs, water, ernment to be freed from the functions of micro-man - power supplies and medical care, which were essen -

Jing • Improving Public Service Delivery in Qingdao Municipality of Shandong Province 41 tial to people’s everyday lives. 1 Therefore, administra - participation in order to improve services (Xia, 2003, tive approval reform was carried out in the municipal pp. 15-16). governments to minimise the items of administrative Qingdao municipality is the economic centre examination and approval, to rationalize the adminis - of Shandong province. It is a centrally-planned city trative procedure for the purpose of improving (jihua danlie shi ) approved by the State Council. With regulatory services of government and to enhance gov - rapid economic development, administrative reform ernment efficiency (Qingdao Municipal Government, initiated by the Qingdao government has gone 2001, p. 2). through many interesting experiences worthy of study In addition, another way of improving public among other municipalities in Shandong province. services was to disclose government information to According to the ADB (2003), public services the public and to encourage citizens’ participation in in China may be classified into three major categories: monitoring local government affairs. However, before “infrastructure construction and operation, including the economic reform in 1978, much government in - public utilities; human services; and services of a reg - formation was listed as confidential according to the ulatory nature, such as registration and licensing” (p. document of “Provisional Regulation on Guarding 55). Rather than discussing reform in the delivery of State Secrets” circulated in 1951. In 1988 “The Law infrastructure construction, this paper will focus on of the People’s Republic of China on Guarding State the improvement of the delivery of human services Secrets” was enforced, which narrowed the scope of and services of a regulatory nature since these two as - national secrets down to seven aspects including na - pects constitute the core of local government reform tional defence, diplomatic activities, national eco - in Qingdao city. nomic and social development. 2 However, the scope This paper will assess the effectiveness of the of confidential government information was broad reform of improving public service delivery and iden - and the released government information was rela - tify the factors responsible for the improvements in tively limited. public service delivery in Qingdao municipality. It be - In this case, citizens could only get limited gins with a description of the policy context and dis - government information such as government news cusses how the policy context affects the from newspapers or on television. Consequently, the improvement of public service delivery in Qingdao public could not monitor the decision-making process municipality. It then discusses the efforts of improv - effectively due to a lack of information and trans - ing the delivery of public service through enhancing parency which had hindered “attempts to hold gov - human service delivery, reforming the administrative ernment accountable for the delivery of public approval system and increasing government trans - services” (ADB, 2003, p. 62). Therefore, the admin - parency and public participation in Qingdao munici - istrative reform in Qingdao city was designed to im - pality. Finally, this paper will identify the factors prove the accessibility of public information by affecting the improvement of public service delivery improving its government website (Qingdao Local in Qingdao municipality in terms of the decentraliza - Chronicles Compilation Office, 2002, p. 345). tion of economic management, tax profit sharing with Moreover, the lack of external scrutiny and ob - the local government, political control, the delegation servation by the public participation in the local gov - of law-making and the local leadership. ernment had also impeded the possible improvement of public service delivery. For a long time, contacting Policy Context citizens was only an institutionalized form of public Qingdao city is located in Shandong province, which participation in China to solicit and deal with public is situated in the eastern part of China on the lower complaints (Luehrmann, 2003, p. 847). This kind of reaches of the . Shandong province bor - political participation, to some extent, provided the ders the and on the eastern side, governments with the “chance to systematically and overlooks South and across a vast gather information about popular preferences and of - stretch of sea. Because of this geographical advantage, ficials’ behaviour” (Luehrmann, 2003, p. 848). How - Shandong province is an important coastal and eco - ever, even contacting citizens could not fully perform nomic province in China. It has a land area of 156,000 the functions of scrutiny and supervision because the square kilometres and a population of 90 million government has manipulated this channel. Therefore, (Shandong Yearbook Editorial Department, 2005). local government reform in the Qingdao municipal - Shandong province is divided into 17 municipalities, ity was aimed to strengthen the level of public partic - 49 , 31 -level cities and 60 . ipation through inventing more channels of public The 17 municipalities include (capital), Qing -

42 Chinese Public Administration Review • Volume 6, Number 1/2 • September/December 2009 dao, , , , , Tai’an, Dongy - Improving Public ing, , , , , , , , and (Shandong Statisti - Service Delivery cal Bureau, 2004, p. 3). Qingdao city is located at the southern tip of the Improving Public Service Delivery facing the Yellow Sea. It covers According to the ADB, improving human service de - an area of 10,654 square km and has a population of livery resulted from the fact that with the transition 7.31 million in 2006 (Qingdao Statistical Bureau, from a planned economy to a market economy, work 2005). It is currently divided into seven urban districts, units 6 would no longer provide human services for the namely, Shinan, Shibei, Sifang, Licang, Laoshan, citizens in terms of education, health and social secu - Chengyang, Huangdao, and five county-level cities, rity (ADB, 2003, p. 56). Moreover, the local govern - namely, Jimo, Jiaozhou, Jiaonian, , and ment could hardly provide sufficient human services (Qingdao Local Chronicles Compilation Office, 2003). due to the lack of funding (, 2004, p. 258). Drawing Compared to other municipalities in Shandong from international experience, the local governments province, Qingdao city is a relatively young city with in China mainly implemented privatization, which a history of 114 years. It became a German colony in was primarily aimed to attract more resources from 1897 after the Opium War and was occupied by Japan society to supplement the public school and the uni - in 1914 during the First World War. Its short but com - versity system, and to share the responsibility of im - plicated history of being colonized by foreign coun - proving the quality of human service and relieving tries had prepared the Qingdao people in terms of their own financial stress. interacting with other cultures. This interactive rela - With regard to privatization in education, the tionship with other cultures was accelerated after Qingdao government was dedicated to attracting more Deng Xiaoping’s 1978 reform which exposed China resources from the society to supplement the public to the outside world. Thus, Qingdao’s characteristic school and the university system, an approach called of being open-minded has made its government offi - “shehui liliang banxue .” In primary and secondary ed - cials more open to accepting new ideas of economic ucation, the government encouraged investors to set management and government administration than up private schools by providing them with preferential other municipalities. policies. These policies have made it possible for the Qingdao city is also the business centre of investors to gain profits by investing in private Shandong province. Its coastal location enables Qing - schools while having the status of an authorized edu - dao city to undertake foreign trade more conveniently. cational institution approved by the government Consequently, it is one of the five major ports for for - (Qingdao Local Chronicles Compilation Office, 2003, eign trade in China. According to the survey of eco - p. 231). By the end of 2002, the total number of stu - nomic competitiveness of 17 cities in Shandong dents in private schools of Qingdao city reached province, Qingdao city was ranked first in terms of 126,600, contributing to 0.17 per cent in the total the economic development level in 2001. 3 In 2005, number of students in public primary and secondary Qingdao’s economic performance was still ranked schools (Qingdao Local Chronicles Compilation Of - number one in Shandong province. Its GDP was RMB fice, 2003, p. 231). 269.54 billion and overseas investment was USD 3.66 In the field of higher education, private col - billion (Qingdao Local Chronicles Compilation Of - leges and universities had emerged in Qingdao city fice, 2006, pp. 25-26). increasingly. This measure allowed more students, Qingdao’s strong economic power has facili - who could not meet the admission criteria of more tated the implementation of economic and adminis - well-established public universities, to enroll in pri - trative reforms. Obviously, a city with strong vate colleges or universities to receive higher educa - economic power will have more revenue to improve tion. In 1999, the number of enrolment in universities city infrastructure and social security. 4 With regard to per 10,000 persons in Qingdao city was 48 students city infrastructure, Qingdao government invested and in 2003 it had increased to 234 students (Qingdao RMB 1985.02 million in 2002 for capital construction Statistical Bureau, 2000, 2003) (See Table 1). (Qingdao Statistical Bureau, 2003, p. 93). As for so - The privatization of education has forced citi - cial relief, the minimal living security standard for zens to bear more financial responsibilities on their urban residents in Qingdao city was RMB 230 per own in receiving education, which relieved the gov - month in 2005, which ranked first among 17 cities in ernment from financial stress to a certain extent. Since Shandong province. 5 1998, the Ministry of Education has allowed that

Jing • Improving Public Service Delivery in Qingdao Municipality of Shandong Province 43 Table 1: Student Enrolment in Tertiary Education in Qingdao Municipality, 1999-2003

Source: Qingdao Statistical Bureau (2000-2004), Qingdao tongji nianjian 2000-2004 [Qingdao Statistical Yearbook 2000-2004], : Zhongguo tongji chubanshe, 2000-2003, p. 17 (2000), p. 15 (2001), p. 15 (2002), p. 35 (2003), p. 16 (2004).

Qingdao Ocean University to charge higher tuition in Linyi city, Heze city and Liaocheng city, the poorer fees. From then on, all public universities in Qingdao areas in Shandong, farmers would have to pay the city started to charge or raise tuition fees which were total insurance premium since the county and village free previously. would not have sufficient funds for paying the insur - Similarly, in regard to social security and ance premium. Not surprisingly, in these poorer areas, health care, the Qingdao government introduced a re - it was very difficult to persuade farmers to pay for the sponsibility sharing system, where the government, insurance premium since most of them, living in employers, and employees all made their contribution poverty or just above the poverty line, would not want to the employees’ welfare package. Pension insurance, to pay additional money for the insurance premium, medical insurance and unemployment insurance are which was often considered unnecessary. the three basic types of insurance that are covered by Apart from the process of privatization, what this system (Qingdao Local Chronicles Compilation has attracted wide attention has been the establish - Office, 2003, pp. 268-269). However, the distribution ment by the Qingdao government in 2004 of a new model has yet to be established to determine to what urban and rural social security system, called the extent employers, employees and the government “Sunshine Aid Project” ( yangguang jiuzhu should pay for the insurance premium until the pres - gongcheng ) to ensure transparency, openness, fair - ent time. The current situation is that the municipal ness, and kindness ( wennuan ) in this system (Qing - governments in Shandong province have different dao Civil Affairs Bureau, 2004). The aim of this policies for distributing the insurance premium among project was to provide more assistance of social se - the local government, employers and employees. curity for the poor rather than only focusing on deliv - The only confirmed matter in this reform was ering the poor from starvation, and to openly and that employees would pay for the major part of the in - fairly distribute the limited funds of social security in surance premium, although in rich areas the local gov - the districts and villages of Qingdao city. 8 ernment or profitable enterprises would cover a larger The “Sunshine Aid Project” has devised five proportion of the insurance premium for their em - mechanisms for improving social security: (1) the ployees. This led to different coverage rates of insur - “four category administrative mechanism” which con - ance among different cities. Among 17 cities in sists of city, (county), street (township/), Shandong province, the coverage rates of pension in - and (village) committees; (2) the surance of urban employees in Qingdao city was the “household eligibility evaluation mechanism” which highest, 86.30% in 2004 (Shandong Statistical Bu - investigates pensioners’ income and living conditions; reau, 2005). (3) the “procedure standardization mechanism” which For instance, in the villages of regulates every step of the social security process in Qingdao city, the village and Laoshan district pay from application to approval; (4) the “classification up to 30 per cent of pension and medical insurance mechanism” which provides different services ac - premium for farmers who would only need to pay for cording to pensioners’ individual and family condi - the remaining 70 per cent. If farmers in these villages tions; and (5) the “supervision mechanism” which are 60 years old for a man or 55 years old for a incorporates citizens, social security inspectors and woman, they could receive RMB 352 per month as the media (Qingdao Civil Affairs Bureau, 2004). their pension and RMB 1,000 as an additional sub - The project has also proposed multiple meth - sidy, which would be paid in full by the district gov - ods for providing social security. Apart from meeting ernment and the village. 7 In contrast, in some villages the basic living needs of the poor people, the Qing -

44 Chinese Public Administration Review • Volume 6, Number 1/2 • September/December 2009 dao Civil Affairs Bureau has explored several meth - could not be adapted to the separation of local gov - ods for enhancing the connections between the urban ernment from the enterprises, such as the approval of and the rural social security system in terms of grant - the merger and bankruptcy of enterprises under the - ing temporary aid, housing, health, and education aid, risdiction of the municipal government and the ex - and private mutual aid. amination of a changing equity structure of By the end of November 2004, the Qingdao share-holding enterprises approved by the municipal municipal government had spent RMB 60.55 million government (Qingdao Municipal Government, 2001, to provide social security for over 15,870 households p. 2). As a result, through the reform, the administra - and 37,110 persons in urban areas of Qingdao city, tive approval items in the Qingdao government were which accounted for 1.5 percent of its total popula - reduced by 70.63%, which indicated that the Qingdao tion (Qingdao Civil Affairs Bureau, 2004). In this government had reduced the most administrative ap - sense, the establishment of the “Sunshine Aid Proj - proval items among the 17 municipalities in - ect” safeguarded basic living conditions for the poor dong province (Qingdao Local Chronicles people in urban and rural areas and guaranteed family Compilation Office, 2002, p. 243). and social stability to some extent. More important, it This is not surprising as the Qingdao govern - is a good example to show how the Qingdao govern - ment had faced more pressure than other municipal ment is trying to take care of its citizens’ interests and governments in Shandong province in terms of re - the vulnerable communities in the society. ducing government intervention so as to attract more foreign investment. After China’s entry into WTO, Reforming Administrative Examination more and more foreign investors came to Shandong and Approval System province to establish factories and Qingdao city was Administrative approval reform was carried out for always the most favoured city with its status as the the purpose of solving the problem of the expansion of economic centre of Shandong. regulation, which had not only wasted too much time The Qingdao government had also set up sev - for foreign investors and clients but also had weak - eral effective service models such as the one-stop ened the efficiency of local government. Moreover, it shops ( yizhanshi fuwu ) and the government affairs was an imperative task for the local government to hall ( zhengwu dating ), “physically concentrating re - change the administrative examination and approval lated units so that customers can go through all for - system. This was because numerous approval and li - malities in a single designated place” (ADB, 2003, p. censing requirements had empowered the government 58). One-stop shops were established for the purpose agencies to make decisions for private firms and for of reducing costs and enhancing efficiency as well as the market, which had generated many rent-seeking customer service. Citizens and enterprises, especially opportunities for the agencies accordingly (Yang, foreign invested enterprises in Qingdao city could get 2004, p. 152). the examination and approval from government agen - Therefore, in 1999, the Qingdao government cies more easily and quickly than before. These agen - requested the government agencies to reduce the items cies including the Local Taxation Bureau, the of administrative examination and approval and to Administration for Industry and Commerce, the En - simplify and standardize the procedures of examina - vironmental Protection Bureau and the Health Bureau, tion and approval (Qingdao Municipal Government, opened representative offices in the government af - 2001, p. 2). This reform focused on two aspects: re - fairs hall (Qingdao Local Chronicles Compilation Of - ducing government intervention and rationalizing ad - fice, 2003, p. 86). Such one-stop shops ( yizhanshi ministrative procedure. fuwu ) and the government affairs hall ( zhengwu dat - Reducing government intervention has taken ing ) provided a model for other cities in Shandong the form of narrowing down the scope of examination province, such as Linyi, Laiwu and Zibo. and approval and limiting the agencies’ power. The Qingdao, government eliminated the administrative Government Transparency approval items which were in conflict with the rules of and Public Participation WTO such as the approval of financial registration for A lack of transparency would hinder citizens from foreign invested enterprises, the check on the ac - monitoring the decision-making process carried out counting of revenue and expenditure for foreign in - by the government (ADB, 2003, p. 62). Therefore, the vested enterprises 9 and the examination on direct Qingdao municipal government aims to improve the import and export for the industrial enterprises. The level of local government transparency and public Qingdao government also eliminated the items which participation. Zhang Huilai, the Secretary of the Qing -

Jing • Improving Public Service Delivery in Qingdao Municipality of Shandong Province 45 dao municipal Committee of the CCP, had required practices) practices have hindered the implementation governments at all levels to double their efforts to - of these systems and the sale and purchase of official wards the goal of making government affairs trans - positions has further eroded the principle of cadre se - parent to the public in order to ensure that this system lection through an open and fair competition in Qing - could be institutionalized and become a regular prac - dao city. 10 Therefore, achieving government tice (Qingdao Local Chronicles Compilation Office, transparency is a long-term goal of local government 2002, p. 345). The establishment of the government reform in China. information website is an important step forward for In addition to improving government trans - improving public information in Qingdao city. parency, the lack of public scrutiny in local govern - According to the “Results of the Effectiveness ment affairs also impeded the improvement of public of Municipal Government Websites” issued by the service delivery. In this case, the Qingdao govern - State Council Informatization Office of China in ment opened numerous channels for broader public 2005, the Qingdao government’s website is ranked participation in order to improve government serv - first in China (State Council Informatization Office of ices in 1999. China, 2005). This is because its government website One channel was to solicit and deal with pub - provides the most comprehensive, detailed and lic complaints through letters and telephone calls, prompt government information to the public, which which was a continuation of the “correspondence and has established its reputation for being transparent, ef - visit system” ( xinfang zhidu ) established in the 1950s. ficient and close to its people (State Council In - The contents of public complaints often varied from formatization Office of China, 2005). This community relations, public service, economic liveli - government website not only provides general infor - hood, to political affairs and appeals (Luehrmann, mation such as government documents, regulations, 2003, pp. 861-865). Since the mid-1990s, in addition statistical data, department information and govern - to writing complaint letters to the relevant bureau and ment news, but also such important information as making personal visits to the bureau, people could use personnel appointment and removal, government pro - more channels to express complaints, such as sending curement, and financial revenue and expenditure. Fur - letters to the media or call various “hotlines” thermore, the Qingdao government website updates (Luehrmann, 2003, p. 846). After 1999, the Qingdao the content of government information frequently so municipality established the Mayor public telephone that the public can receive government information and Mayor email box to handle complaints, protests on a regular basis (State Council Informatization Of - and consultation. By the end of 2001, the Mayor pub - fice of China, 2005). More specifically, the level of lic telephone and e-mail box of Qingdao city had re - openness of government information on the Qingdao ceived 119,398 letters and calls from various government website is the highest among 333 Chi - institutions and citizens, and 90% of these letters and nese municipal governments. For example, regarding calls were answered by the mayor and the leaders of government bidding, the Qingdao government’s web - related government departments (Qingdao Local site provides very detailed information including bid Chronicles Compilation Office, 2003, p. 57). proposals, the name of enterprise which has won a bid However, the communication of a complaint and the date when the bid was won. between the government official and citizens does not A transparent government also means trans - necessarily lead to the resolution of the problem. parency in the civil service system. With the promul - Sometimes, the complaints made by people “are often gation of the “Provisional Regulations on National mishandled by leaders, being ignored at best and ma - Civil Servants” ( guojia gongwuyuan zanxing tiaoli ) nipulated at worst” (Luehrmann, 2003, p. 866). in 1993, the Qingdao government has implemented Luehrmann (2003) argued that “leaders attempt to the open recruitment examination system by requir - limit input from the masses, by specifying formal re - ing all newly recruited civil servants to pass an ex - strictions on group complaints and by making it po - amination and announcing their names on the local litically difficult to pursue sensitive grievances” (p. government websites. The Qingdao government has 846). Nonetheless, the voices of citizens had indeed also carried out the cadre selection process with an provided important information to “help local leaders open and fair competition ( gongkai xuanba lingdao understand the sources of popular discontent, and pos - ganbu ) since 1999. The system of pre-appointment sibly even discern avenues for heading off problems announcement ( renqian gongshi zhidu ) is also popu - or even full-blown crises” (Luehrmann, 2003, p. 865). lar in cadre appointment in recent years. However, In this case, local government in China must guanxi (personal connections) and houmen (back door not only widen the methods of receiving public com -

46 Chinese Public Administration Review • Volume 6, Number 1/2 • September/December 2009 plaints but also take the problems raised by citizens fore, many public hearing meetings that intended to seriously. Fortunately, since the 1999 reform, the evaluate the price had ironically become the means Qingdao municipality started to resolve the problems for “increasing price” after these public hearings. raised by citizens. For instance, the Qingdao govern - Finally, Qingdao municipality is the only city ment and the broadcasting stations in Qingdao city in Shandong province to encourage more citizens to had jointly set up hot lines for public complaints. be involved in the process of policy-making. This Since this kind of communication was in the form of form of public participation was first carried out in the a live one-on-one conversation, the local leaders who Qingdao Civil Affairs Bureau. To prevent opaque ad - were responsible for answering particular questions ministration ( anxiang caozuo ), the “Sunshine Aid needed to respond to the audience’s enquiries imme - Project” in the civil affairs bureau established a social diately. This kind of communication has proven to be security evaluation committee to discuss whether the more effective than other communication channels applicants for social security met the standards for (letters, visits and email) in settling public com - pensioners. This committee included applicants for plaints. 11 social security, accredited deputies of the National Secondly, Qingdao city is the first city in China People’s Congress in the community, members of the to conduct public hearings on the pricing system Political Consultation Congress in the community, the (Qingdao Local Chronicles Compilation Office, 2003, supervisor of social security from the civil affairs bu - pp. 101-102, 197-200, 212-213 & 227). The public reau of district government, officials of social secu - hearing on the pricing system established a new mech - rity from the neighbourhood residents’ committee and anism which involved the local government, man - the street affairs agency, as well as representatives of agers of monopoly trade and customers. It had also residents including the neighbours of the applicants provided a way for citizens to participate in the deci - and the administrator of the applicants’ residence sion-making process. In 2000, the citizens invited to (Qingdao Civil Affairs Bureau, 2004, pp. 2-4). This the public hearing meetings on collecting fees in pri - prompted a self-governing function of the neighbour - mary and secondary schools in Qingdao city had suc - hood committee and reduced problems caused by cessfully persuaded the schools to reduce some of the opaque administration. unauthorized fees (Zhang, 2005, pp. 3-12). This case showed that this kind of public hearing meeting had Factors Affecting the Improvement contributed to the enhancement of citizens’ participa - tion. Yet, it was still a preliminary step because these of Public Service Delivery public hearings only focused on the issues of public utilities such as adjusting water prices and taxi sur - Decentralization of Economic Management charges. More important subjects such as government The central government gradually extended its eco - decisions, administrative law enforcement and procu - nomic management authority over the municipal gov - ratorate affairs were yet to be discussed. ernment for the purpose of establishing the Moreover, in other cities, those citizens who management system of a national economy centred were invited to attend public hearing meetings did not on the city. In 1983, the State Council approved 14 represent a consensus among all citizens. For instance, cities 13 as centrally-planned cities ( jihua danlie shi ) in 2002, the public hearing meeting on increasing bus because of their important economic status. A prefec - fare was held by the Jinan 12 Price Control Bureau. ture of China must meet the following four criteria to Twenty eight representatives were selected to partic - become a centrally-planned city: (1) an urban centre ipate in this meeting. Among these representatives, with a non-rural population over 1,000,000; (2) an An - nine representatives were senior government officials nual (GDP) of over 15 bil - from different bureaus. Among the other 19 customer lion RMB; (3) a well-established foundation for representatives, there was only one grass-root cus - industry and business reinforced by strong technology tomer and the other 18 were company managers, power; and (4) playing a significant role in economic scholars, senior engineers, representatives of the Peo - development and reform in China (“Definition of ple’s Congress, and members of the Municipal Com - Centrally-planned City,” 2006). The 14 cities had both mittee of the Chinese People’s Political Consultative economic management and fiscal management au - Conference, who enjoyed higher social status and had tonomy at the provincial level (Xie et al., 1998, p. 71; rarely used any public transportation (Song, 2002). In Fu, & Rui, 2004, p. 223). Qingdao city is the this case, it was understandable that the result of the only city approved as a centrally-planned city in Shan - public hearing was an increase in the bus fare. There - dong province. In this case, Qingdao city enjoys both

Jing • Improving Public Service Delivery in Qingdao Municipality of Shandong Province 47 the economic and fiscal management autonomy at the ation law has stated that the local governments at var - provincial level. ious levels should strengthen their leadership in the ad - The Qingdao government has economic man - ministration of tax collection within their jurisdictions agement authority at the provincial level in areas such and support the tax authorities in carrying out their - as granting approval in investment and collecting ties in tax collection. 16 Chuizhi guanli means that the taxes. According to the Income Tax Law of the Peo - Taxation Bureau at every level should be under the ju - ple’s Republic of China for Enterprises with Foreign risdiction of a higher level Taxation Bureau in all the Investment and Foreign Enterprises (1991), aspects of the organizational structuring, staff recruit - ment, appointment of leaders, and budgeting. The income tax on enterprises with for - According to the chuizhi guanli system, the eign investment and the income tax Qingdao State Taxation Bureau is directly under the ju - which shall be paid by foreign enter - risdiction of the State Administration of Taxation rather prises on the income of their establish - than the Provincial State Taxation Bureau since Qing - ments or places set up in China to engage in production or business opera - dao city as a centrally-planned city has fiscal manage - tions shall be computed on the taxable ment authority at the provincial level. The Qingdao income at the rate of thirty percent, and Local Taxation Bureau is directly under the jurisdiction local income tax shall be computed on of the municipal government instead of the provincial the taxable income at the rate of three government. Therefore, the Qingdao government en - percent (article 5). joys much more autonomy in the management of fiscal revenue and expenditure than other municipal govern - However, for the income tax on enterprises ments in Shandong province. Consequently, more fi - with foreign investment of a production nature estab - nancial revenue has been transferred to the municipal lished in the coastal economic open zones, where the coffers in Qingdao city whereas in other cities of Shan - Special Economic Zones (SEZs) or the Economic and dong province, most of the local financial revenue is Technological Development Zones (ETDZs) are lo - transferred to the provincial and central coffers. cated, shall be levied at a reduced rate of 24%. 15 Thus, foreign enterprises in the SEZs or ETDZs of Qingdao Political Control city is eligible for privileged tax policies. Since other Apart from economic decentralization, the central cities in Shandong province do not have the same government has also strengthened its political control level of authority over economic management, for - over the local government through the nomenklatura eign enterprises cannot enjoy these preferential poli - system. The term nomenklatura comes from the for - cies. Consequently, most of these enterprises have mer USSR, a notion that consists of “lists of leading congregated in the coastal and open cities, such as positions over which party units exercise the power Qingdao city, instead of inland cities, such as Dezhou of appointment and dismissal, lists of reserve candi - and Linyi cities in Shandong province. In addition, the dates for those positions, and rules governing the ac - limit in examining and granting approval to foreign tual processes of appointments and dismissals” investment has been increased to US$100 million in (Lieberthal, 2004, p. 234). Qingdao city after they are promoted as sub-provin - The 1990 nomenklatura had given the central cial cities whereas the other municipal governments authority control over sub-provincial level chiefs, except the Jinan government in Shandong province “adding the positions of prefectural bureau chief and still have to struggle within these limitations (Shan - deputy chief to the central Organization Department’s dong Provincial Government, 2005). Thus, Qingdao scope of management” (Burns, 1994, pp. 468-469). city has experienced faster development than other The Organization Department has strengthened its - regular cities in Shandong province. Its strong eco - pervision of appointment and removal of heads and nomic foundation has contributed to the improvement deputy heads of prefectures and prefecture-level cities of public service delivery in the education, health, and (Burns, 1994, p. 469). More specifically, the nomen - social security sectors. klatura has extended the CCP’s personnel authority to China’s five centrally planned cities including Taxation Sharing with the Local Government Qingdao and 15 sub-provincial level cities. Accord - The central government has carried out chuizhi guanli ing to Burns: (hierarchical control through vertical administration) in the taxation system from the central to county level This move can be seen as a further lim - after 1998. Before implementing this measure, the tax - ited re-centralization of nomenklatura

48 Chinese Public Administration Review • Volume 6, Number 1/2 • September/December 2009 authority. The change may have been which are the bases of the provincial and autonomous prompted by appeals from city officials region governments, and larger municipalities ( jiaoda who sought to reduce the influence of de shi ) approved by the State Council such as the sub- provincial leaders in municipal affairs. provincial level city, can establish regulations ac - As a result of the change, city officials cording to the administrative laws and local laws. 17 had direct access to Beijing (Burns, Local governments at the township level, however, do 1994, p. 469). not have the authority to establish these regulations. The legislative system in China has four tiers. The mayor of a centrally-planned city or a sub- The first tier is the National People’s Congress (NPC) provincial city such as Qingdao city is equal in polit - and the second tier is the State Council and its subor - ical status to a vice-governor of a province, who is dinate units. The third tier is the People’s Congress appointed by the central authority directly. In contrast, and government at the provincial level and the fourth the mayor of a prefecture-level city such as Zibo city tier is the People’s Congress and government of the in Shandong province is equal in status to a bureau sub-provincial city (Xie et al., 1998, p.88). chief in a province or a vice-mayor in a sub-provincial According to these four categories of the leg - level city, who is appointed by the provincial author - islative system, the People’s Congress and government ity. In this case, leaders in the Qingdao government at the Qingdao municipality have the authority to es - are more acquainted with the central government than tablish local laws and regulations based on their local the ones in the prefecture-level government since they contexts. In contrast, the People’s Congress and gov - are directly appointed by the central government. ernment at the prefecture-level city have little authority Burns (1994) has observed that in the relation - to formulate local laws and regulations. Indeed, the ab - ship between the provincial and central governments, sence of specific local laws to meet the needs of local “top Party leaders select provincial (and military) of - economic and administrative management in prefec - ficials, [and] they in turn, through their membership of ture-level cities has caused much confusion on some the CCP Central Committee, select the top Party lead - issues in local government reform and has delayed the ers. Central and provincial leaders are therefore process of solving problems, which has in return hin - caught in a relationship of interdependence” (p. 470). dered the development of their local economy. Burns (1994) has also pointed out that “Deng Xiaop - For instance, social insurance is a relatively ing’s early 1980s strategy of ‘playing to the provinces’ new matter for farmers in the process of local gov - to build a coalition of support for reform and create a ernment reform. Until now, there are only general political counterweight to the central bureaucracy rules rather than specific laws on this matter in China. strengthened the hand of [the] provincial leaders vis- This lack of detailed regulations has caused many à-vis the Centre” (p. 470). The relationship between a problems, such as the evaluation on the amount of in - sub-provincial city and the central government is quite surance premium to be collected by the local govern - similar to the relationship between a provincial gov - ment in the process of providing social insurance for ernment and the central government. Through the po - farmers. In this case, it is urgent for local governments litical control over the sub-provincial cities and with to issue relevant laws by themselves. The Qingdao increased trust between the central and sub-provincial government has issued the “Provisional Regulations governments, the central government has given more on Basic Pension for Farmers” in 2005 and many support to the Qingdao government for their adminis - farmers have benefited from this regulation. For in - trative reforms. With the central government’s sup - stance, in the villages of the Laoshan district in Qing - port, the Qingdao government has been encouraged dao city, almost 90% of the farmers have bought to implement innovative reform measures like the pension insurance by paying 70% of the premium “Sunshine Aid Project.” themselves with the remaining 30% being paid by the villages and Laoshan district. When these farmers Delegation of Law-making reach 60 years of age for men or 55 for women, they According to the Organic Law of the Local People’s will receive RMB 352 each per month as pension and Congresses and Local People’s Governments of the RMB 1,000 as an additional subsidy. People’s Republic of China, local governments at the Therefore, the authority in formulating local levels of province, autonomous region and centrally laws in Qingdao city has facilitated its administrative administered municipalities ( zhixiashi ) can establish reform since its government can formulate new local regulations based on various laws such as the admin - laws to satisfy the need for local economic and ad - istrative laws and the local laws. The municipalities, ministrative management.

Jing • Improving Public Service Delivery in Qingdao Municipality of Shandong Province 49 Local Leadership Shandong province from December 1992 to August With regard to the local leadership in the 17 cities of 1995 and he was the secretary of Shandong Provin - Shandong province, the leaders in Qingdao city are cial Political and Legislative Affairs Committee of the the most famous for their creative and dynamic re - CCP from August 1995 to January 1996. In October form measures. One of the famous leaders is 1997, Zhang was appointed as the secretary of the Zhengsheng. Even now, Qingdao people have praised Qingdao municipal committee (Qingdao Local the work of Yu, the former mayor and former secre - Chronicles Compilation Office, 2000, p. 309). tary of the Qingdao municipal committee of the CCP In 2002, Jiang Zemin stepped down from his 18 and attributed the achievements in economic and position and Hu Jintao was appointed as the General administrative reform to him. 19 Secretary of the CCP. Hu (2004) suggested the new From 1989 to 1994, Yu was the mayor of Qing - idea of “Putting People First” ( min ben ) for the dao city and from 1992 to 1997, he was the secretary government administration. Following Hu’s idea, of the Qingdao municipal committee of the CCP. Dur - Zhang is the first municipal leader in Shandong ing his term of office, he claimed that Qingdao gov - province to introduce the idea of “service-oriented ernment officials should liberate their minds and government” for administrative reform (Qingdao change their attitudes to embrace a market economic Local Chronicles Compilation Office, 2002, p. 345). system (Yu, 1996, pp. 1-6). In the “1993 Qingdao Gov - During Zhang’s term of office, the Qingdao govern - ernment Work Report,” Yu (1993) indicated that the ment has carried out “five projects” ( wuxiang Qingdao government at all levels should concentrate gongcheng ) in the government management system on performing overall planning, coordinating, provid - to change the government officials’ attitudes to public ing services, and supervising functions so as to pro - service and enhance the overall effectiveness of the vide better services for the enterprises and the public. government departments. The Qingdao government Because of Yu’s work, Qingdao city has devel - leaders have responded faster in accepting and apply - oped quickly since 1998. His successor, Zhang ing new administrative concepts than other cities in Huilai, 20 was appointed as the first party secretary of Shandong province, and this explains why the Qing - the Qingdao municipality in 1997. Jiarui, 21 was dao government has excelled in public service deliv - appointed to be the mayor of Qingdao municipality in ery sector. 1998. Since then, administrative reform in Qingdao From Wang to Zhang, the Qingdao government municipality has been further accelerated. has actively promoted the level of government trans - Wang received his Ph.D. in economics from parency. Wang is the first mayor in China to establish and he is called the “doctor mayor.” the Mayor email box to handle complaints and con - As a researcher himself, Wang understands that the sultations, which has helped citizens out of difficul - main problem in establishing a modern enterprise sys - ties and strengthened the connection between them. tem in China is the lack of a clear boundary between Zhang has also encouraged citizens to be involved in the functions of government and enterprises ( zhengqi the decision-making process in important public af - bufen ). Therefore, he has made efforts in reforming fairs. Therefore, during Wang and Zhang’s adminis - the SOEs in Qingdao city and indicated that the gov - trative periods, the number of cases in public hearings ernment functions should catch up with the SOE re - is increased as well as the level of transparency within form (Wang, 2000, pp. 11-12). More specifically, the government. Wang has stressed the importance of education being a scholar himself. During his administrative period, Conclusion Wang has claimed that a modern and international city Compared with other municipalities in Shandong should not only include a good city infrastructure and province, the status of being a business centre and its a developed economy, but also the morality of its cit - open-minded characteristic has helped the Qingdao izens, which represents the real core of a city. For this government in implementing administrative reform. purpose, he has requested the Qingdao Education Bu - Borrowing from international experiences, the reau to initiate the programme of moral education in Qingdao government adopted the measure of privati - elementary schools, middle schools and universities zation in improving the education services. Moreover, (Wang, 2000, p. 12). in the social security and health care sectors, a uni - Zhang is another effective secretary of Qing - form social security system needed to be established dao city after Yu. Like Yu, before taking the position in Shandong province for the purpose of providing as the mayor of Qingdao city, Zhang was the secre - pension, medical and unemployment insurances. Yet, tary of the Dezhou municipal committee of the CCP in due to a regional disparity in development, the Qing -

50 Chinese Public Administration Review • Volume 6, Number 1/2 • September/December 2009 dao government was able to accomplish more in im - ernments in Shandong province, and enable the Qing - proving the service delivery sector in the social secu - dao government to be the most effective municipality rity system through the “Sunshine Aid Project,” while in providing service for enterprises and the society. the other municipal governments in Shandong province lagged behind. Notes Administrative approval reform improved the 1 Interview with an official of Government Set-up De - administrative examination system in Qingdao mu - partment of Qingdao Personnel Bureau, 23 June 2005. nicipality. The Qingdao government minimised the 2 Article 8, The Law of the People’s Republic of China administrative approval items by 70 per cent, the on Guarding State Secrets, adopted at the Third Meet - highest rate among 17 municipalities in Shandong ing of the Standing Committee of the Seventh Na - province. This reform had also simplified the proce - tional People’s Congress of the People’s Republic of dures of granting administrative approval through China on 5 September 1988. eliminating duplication and setting time limits. 3 This survey utilized 29 indicators in seven fields to Since 1999, the Qingdao government increased comprehensively evaluate the urbanization level of the level of government transparency and public par - total 17 Shandong cities and set up the rank of com - ticipation. Compared with the websites of other mu - petitiveness of 17 cities. For more details, see Shan - nicipal governments in Shandong province, the dong Statistical Bureau (2002, September 4), 17 Qingdao government website played an important role chengshi jingzhengli diaocha yu paihang [The Report in providing comprehensive and timely information to of Survey of Competitiveness of 17 Cities in Shandong the public. Nevertheless, the objective of achieving Province], Dazhong ribao [Dazhong Daily], p. A1. government transparency was not institutionalized. 4 Interview with the dean of General Office of Qing - With regard to public participation, the Qing - dao Urban Administrative Bureau, 22 June 2005. dao government adopted numerous forms of public 5 Interview with the director of Social Relief Depart - participation to improve their services. These forms in - ment of Qingdao Civil Affairs Bureau, 20 June 2005. cluded soliciting and dealing with public complaints, 6 The work units in China include government agen - organizing public hearings and encouraging citizens to cies, state-owned enterprises and public institutions. be involved in the process of policy-making. The 7 Interview with an official of Qingdao Labour and Qingdao government had started to organize more Social Security Bureau, 22 June 2005. public hearing meetings in government decision-mak - 8 Interview with the Director and Section Chiefs of ing and administrative law enforcement. However, the Social Relief Department of Qingdao Civil Affairs local government should have invited more grass-roots Bureau, 20 June 2005. citizens to participate in these public hearing meetings 9 The two items of the approval of financial registra - and should have valued their opinions more seriously. tion for foreign invested enterprises and the check on Among the 17 municipalities in Shandong province, the accounting of revenue and expenditure for foreign only the Qingdao government enhanced the level of invested enterprises were transferred from the ap - public participation by inviting the public to be in - proval and examination item to the item of putting on volved in the process of policy-making. file by municipal government. Why has the Qingdao government achieved so 10 Interview with an official of Government Set-up much in terms of improvement of public service de - Department of Qingdao Personnel Bureau, 23 June livery? The decentralization of economic management, 2005. tax profit sharing with the local government, political 11 Interview with an official of Government Set-up control, the delegation of law-making and the local Department of Qingdao Personnel Bureau, 23 June leadership have played important roles in influencing 2005. the improvement of public service delivery in Qing - 12 Jinan city is the capital of Shandong province. dao municipality. Qingdao city is approved as a cen - 13 These 14 centrally-planned cities are , trally-planned city, and enjoys both provincial fiscal , , , , , and economic management autonomy. The preferential Ha’erbin, Xi’an, , Qingdao, , , policies and special authority for the centrally-planned , and . city have encouraged Qingdao city to promote admin - 14 The management autonomy includes industry and istrative reform. In addition, the top leaders in Qingdao agriculture production, transportation, post and city are more open-minded in accepting and applying telecommunications, investment in fixed assets, sales, new administrative concepts and initiating more inno - purchases and the distribution of main commodities, vative reform measures than the other municipal gov - the distribution of energy and raw materials, import

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