Political Lessons from China's 20 Years of Reform

Home , Open Door Policy, Zheng Yongnian, Zhu Rongji

Third World Quarterly, Vol 20, No 6, pp 1157± 1177, 1999

Political incrementalism: political lessons from China’ s 20 years of reform

YONGNIAN ZHENG

ABSTRACT The recent crackdown by the Chinese Communist Party government on the efforts of Chinese dissidents to organise the China New Democratic Party has raised a serious question among scholars: why has the Chinese leadership been so reluctant to initiate democratic reforms? But an equally important question is: how has the Chinese political system been able to accommodate drastic socioeconomic changes? Although Chinese leaders from Deng Xiaoping to Jiang Zemin have strongly opposed the Western style of democracy, they have continuously adjusted the country’ s political system to prevent socioeconomic chaos from occuring, chaos that has troubled many former communist states and Third World countries. This paper explores China’ s political incrementalism and explains how incremental political reforms have worked. It argues that, although Chinese leaders have so far been successful in accommodating social changes through incrementalism, they are still uncertain about how to cope with increasing social demands for political reform and democratisation.

The past two decades have witnessed unprecedented economic growth in the People’ s Republic of China. Real growth during 1978±97 was at an annual rate of 9.8%, although growth slowed to 8.8% for 1997 and 7.8% for 1998. With a per capita GNP of US$860, by 1997 China had moved away from the category of lower middle-income countries. In 1978 China’ s nominal GNP was only US$44 billion or about 70% of that of South Korea. By 1997 China’ s nominal GNP had grown to $1055 billion, which was ranked as the world’ s seventh largest.1 As a matter of fact, in terms of purchasing power parity (PPP), the Chinese economy was the world’ s second largest, after the USA, in 1997. Will economic development lead to political democratisation in China? When China began to carry out its reforms and open door policy in the late 1970s, optimism prevailed both inside and outside China. It was believed that Deng Xiaoping had renounced Marxism±Leninism and that China was becoming the ® rst communist state to transform from a totalitarian to a democratic system. Now, two decades have passed and Chinese democratisation has not yet taken place, even with such impressive economic progress. Nonetheless, it is expected that the new leadership under Jiang Zemin might initiate democratic reforms. Recent developments, however, seemed to confound rather than elucidate the

Yongnian Zheng is at the East Asian Institute, National University of Singapore, AS5, Level 4, 10 Kent Ridge Crescent, 119260 Singapore.

ISSN 0143-6597 Print; 1360-2241 Online/99/061157-21 Ó Third World Quarterly 1157 YONGNIAN ZHENG issue. On 18 December 1998 Jiang Zemin, General Secretary of the Chinese Communist Party (CCP), spoke at the conference commemorating the 20th anniversary of the Third Plenum of the Eleventh Congress of the CCP (1978), which led to the abovementioned rapid economic changes in the country.2 There was nothing unusual in the Party commemorating such an important event. Surprisingly, however, Jiang’ s speech caused enormous reaction, both at home and abroad. Before the speech, it was widely believed that political reform would be Jiang’ s central theme and would become one of the most important agendas of the CCP. This belief was not without sound foundations. First of all, China’ s political system needed to be reformed in order to accommodate drastic changes resulting from the economic reform. Second, Jiang Zemin had consolidated his power as the core of the third generation of leadership since the death of Deng Xiaoping in early 1997, and would probably initiate a new wave of political reforms to achieve what Deng Xiaoping had not done. In fact, there were signs suggesting Jiang’ s readiness for political reform. For example, when US Presi- dent Bill Clinton met Jiang Zemin in Beijing in mid-1997, they discussed Tibet and the 1989 `Tiananmen Incident’ during an hour of live television. Clinton praised Jiang as a visionary. Later, China signed the International Covenant on Civil and Political Rights. Naturally, observers at home and abroad proclaimed a new period of political openness in China, and optimistic Westerners predicted that another `Beijing Spring’ was coming. Third, the year 1999 was the 80th anniversary of the May-Fourth Movement (1919) and the 50th anniversary of the founding of the People’ s Republic. This would give Jiang and his fellow leaders an opportunity to initiate new measures of political reform. Encouraged by such signals, Chinese dissidents intensi® ed their activities. It was reported that, within a few months, preparatory committees of China’ s Democracy Party were established in 23 out of China’ s 31 provinces and in major cities, and applications to register the party were made in 14 provinces and big cities.3 Developments, however, proved that such an expectation was unrealistically optimistic. Central to Jiang’ s speech was the notion that sociopolitical stability would be the CCP’ s highest priority in the coming year(s). Even though Jiang did not reject gradual political reform and argued for a Chinese-style democracy, he strongly insisted that his country would never copy Western political systems.4 Certainly, for those who live in the Chinese political system, this represented a signal that the CCP would not give up its hardline stance against democratising the political system in a Western way. During an interview with German journalist Peter Seidlitz, Li Peng, Chairman of the Standing Committee of the National People’ s Congress (NPC), argued that NPC had no plans for initiating major political reforms to challenge the CCP’ s dominant power position. Li also 5 indicated that the CCP would not allow any opposition parties to be established. In a speech to cadres attending the National Meeting on Political and Legal Work, Jiang claimed that any stirrings of organised political opposition would be `nipped in the bud’ .6 Consequently, the CCP leadership intensi® ed its crackdown on organisers of the ¯ edgeling China’ s Democracy Party (CDP), and many dissidents were sentenced for allegedly `threatening state security’ .7 1158 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM

On the other hand, the government seemed to have sound reasons to worry about social instability. Economic reforms had resulted in an increase of unemployment and off-post workers, known as xia-gang.8 Workers’ strikes took place in a number of cities over the country. If opposition parties were allowed to emerge, they would certainly seize the opportunity of chaos to challenge the authority of the government. Given the fact that many sensitive anniversaries, including the founding of the People’ s Republic (1949), the Tiananmen Square crackdown (1989), and the May-Fourth Movement (1919), came in 1999, Jiang Zemin could not afford even a small sprouting of the bud, since, as an old Chinese saying had it, a single spark could start a prairie ® re. The leadership could never forget how the communist regimes collapsed in the former Soviet Union and other East European countries. Because of the crackdown, outsiders have become suspicious of Jiang’ s seriousness over political reform. It seems to them that as long as China remains a one-party state, another `Beijing Spring’ or democratisation will not be possible.9 How should China’ s political changes be assessed? This article argues that it is not enough to ask: `why has democratisation not occurred in China yet?’ and `why has the leadership been reluctant to initiate democratic reforms?’ Instead, we need to ask some more profound, practical questions: how has the Chinese political system been able to accommodate drastic socioeconomic changes resulting from rapid economic growth?’ and `how has the Chinese leadership prevented socioeconomic chaos from occurring, chaos that has troubled many former communist and Third World countries?’ China has undertaken reforms for two decades, which provides us with a time period of considerable length to review the measures of political reform which have been introduced and to follow the path of the country’ s political changes. This article attempts to show how Chinese leaders have perceived the country’ s political reform and what they have learned politically from the past 20 years of reform. By doing so, I also attempt to conceptualise the Chinese way of political reform, namely, political incrementalism, and show what progress has been made and what dif® culties lie ahead for democratisation under such an incremental approach. The analysis of political incrementalism here focuses on three areas, namely restructuring relations between the CCP, the government and the economy; institutionalising central±local relations; and democratising rural governance.10 The article is divided into three sections. The ® rst section attempts to de® ne political incrementalism in the context of economic development and political domination. The second section discusses how incrementalism has been embedded in all these changes. The last section discusses the limitations of political incrementalism and the challenges that the CCP has encountered. A caveat is to be added. In using this approach, I do not mean in any sense that China’ s political reforms have been limited only to these three areas. Incremental changes have also taken place in other areas, such as state±society relations, legal reforms, and so on. Nonetheless, I believe that these three areas are the most important institutions of the Chinese political system as a structure of governance. 1159 YONGNIAN ZHENG

Political reform as political incrementalism China’ s politics has long puzzled scholars and policy makers outside China since Deng Xiaoping initiated economic reforms two decades ago. In the 1980s scholars hypothesised that economic reform would go together with political reform, and that marketisation would necessarily lead to political democratisation. When Mikhail Gorbachev launched his radical political reform and initiated the process of political democratisation in the former Soviet Union, scholars in the West argued that Gorbachev must be `right’ and China’ s Deng Xiaoping must be `wrong’ . The collapse of communism in the former Soviet Union and Eastern Europe led many scholars to claim that the Western style of democracy had prevailed and human history had come to an end.11 Nevertheless, when Gorbachev’ s reforms eventually led to the collapse of the Soviet Union, Deng Xiaoping was considered `right’ . Scholars began to re® ne their hypothesis about the linkage between political reform and economic reform, and since then China has been regarded as a model of `economic reform without political reform’ .12 As a matter of fact, `political reform’ means different things to different persons. To many scholars in the West, `political reform’ means a political process towards a Western style of democracy based on popular political participation, which usually refers to an open universal election.13 Furthermore, from a Western perspective the notion of political reform in an authoritarian state like China implies the weakening of party control. Nevertheless, this is not the case in China. Political reform is not designed to decrease the power of the Party, but rather to increase it. From these perspectives, China did indeed not have political reform in the past two decades. Admittedly, democratisation is central to political reform. But the question is: how can democratisation take place in China? What form of democracy do Chinese power elites or political leaders believe is `good’ for the country and for their power positions? Chinese political leaders, from Deng Xiaoping to Jiang Zemin, have strongly opposed introducing any Western style of democracy. They genuinely believe that the Western style of democracy is not suitable for China. This is partly because modern Chinese history and the recent history of the former Soviet Union have shown that radical democratic reforms might bring chaos to, or even break up, the country. More importantly, CCP leaders are afraid that they will lose power and the CCP will lose its dominant position once radical democratisation takes place. Nevertheless, they have also argued that the leadership has continuously taken political reform into account since, as Deng argued a decade ago, without political reform, economic reform cannot be carried forward.14 Like its economic reform, China’ s political reform has no model to follow, and the leadership has to de® ne political reform on its own terms and set up the goal of political reform in the context of economic development and political domination. To put it another way, any political reform has to enable the Party±State to maintain sociopolitical stability to further its economic development efforts, while strengthening its domination and political legitimacy. Political reform thus has been characterised by incrementalism: progress by 1160 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM trial and error. In other words, political reform is not suddenly to open the political process to the general public, but should be seen as a managed process of institutional adjustment. Needless to say, incrementalism can be proactive and reactive. Institutional adjustments were deliberately designed to enable the CCP to provide order for economic growth and new bases for legitimacy of authority. But the CCP was often forced to adjust its institutional arrangements to respond to socioeconomic changes. As mentioned earlier, since political reforms were also aimed at maintaining the CCP as the ruling party and strengthening its domination, the leadership had to make every effort to lead and direct the country’ s development. Socioeconomic changes, however, often resulted in unintended consequences. We have seen the constant rise of social demands for more radical political reform and the development of challenges to the authority of the CCP. As a result, the CCP had to use coercive measures to cope with spontaneous social forces when the existing institutions were no longer able to accommodate them. Nonetheless, using coercive forces did not necessarily mean that the CCP declined to adjust its political institutions. Rather, it meant that the CCP did not want social forces to lead the process of China’ s political development. In practising political incrementalism, the CCP leadership placed emphasis on different reform practices rather than theories. The central leadership implemented various policy experiments and, once a given policy succeeded, the leadership legitimated it. More importantly, the leadership also allowed government organisations at lower levels and social forces to practice their own ways of reforming old institutions. Once these reform practices were proved to be in alignment with central lines, the leadership was willing to legitimate them. By contrast, if a given spontaneous reform practice was against or posed challenges to the CCP, the leadership was determined to constrain its further development. Consequently, sometimes the CCP was able to initiate reform practices, while at some other times, it merely followed and tried to justify or accommodate these initiatives from below. Without an understanding of the Chinese way of political reform, it is dif® cult to make sense of the country’ s dramatic yet relatively stable development in the past two decades. Without continuous adjustment, the Chinese political system would not have been able to embrace such drastic socioeconomic changes. Furthermore, we have to understand not only the Chinese way of political reform, but also the rationale with which the Chinese leadership implemented their version of it rather than other kinds of political reform. My major arguments are threefold. First, China’ s political reform can be de® ned as political incrementalism, aimed at continuously adjusting its institutional framework to guarantee economic reforms and political stability on one hand, and accommodate drastic changes resulting from socioeconomic development on the other. Second, whether the Chinese political system is moving towards democratisation cannot be evaluated by whether or not direct measures of democratisation have been initiated alone. Instead, it needs to be measured by whether the political system, through its continuous institutional adjustments, has become more accommodative to democratic factors resulting from drastic socioeconomic 1161 YONGNIAN ZHENG changes. Even though what the leadership has done is not aimed at democratising the country, with continuous adjustments, the Chinese political system tends to show its ¯ exibility by being more accommodating towards social changes and democratic developments. In other words, original policy objectives of political reforms might be aimed at consolidating and strengthening the power of the CCP. But in doing this, the CCP has created a new political basis that was able to accommodate various democratic factors. Third, changes that occurred to China’ s political system in the past two decades were not merely byproducts of rapid economic development. Instead, adjusting the political system was a deliberate effort by the Chinese communists to serve the country’ s economic growth needs and consolidate its power by accommodating the consequent drastic socioeconomic changes.

Restructuring party± government± enterprise relations In the 1980s, Deng Xiaoping described China’ s reform as two separations, that is, separating the government from the enterprise and separating the Party from the government. The former was aimed at providing an institutional base for a market economy to grow, while the latter was to reduce arbitrary interference by the Party in government affairs, and to establish a more ef® cient government. It has not been easy for the Chinese leadership to implement these two separations. Ideologically, it seemed that the CCP did not have great dif® culty in justifying the legitimacy of the separation of the government from the enterprise. In order to justify the separation, the CCP had to legitimate a market economy while negating the old planned economy. Although the CCP justi® ed a market economy simply by legitimating economic practices that had already come into being, the process of justi® cation was very gradual. In 1982 the Twelfth Party Congress proposed `planned economy as the main pillar and market economy as a supplementary element’ . The market economy did not gain even a theoretical legitimacy. In 1987, at the Thirteenth Party Congress, Zhao Ziyang, the then General Secretary of the CCP; proposed `combining planned and market economies’ , arguing that China was still in a primary stage of socialism. Thus, the market economy gained an equal position to that of the planned economy in the Party ideology. After Deng Xiaoping’ s 1992 southern tour to end the controversy of so-called `socialism’ and `capitalism’ , the Fourteenth Party Congress (1992) fully legitimated the market economy as a part of the Party’ s ideology by stating clearly that China’ s reform was to establish a market economy.15 Furthermore, the Second Plenary Session of the Ninth People’ s Congress in March 1999 passed a third constitutional amendment, which legitimated private economic activities and other forms of non-state ownership that had been practised for many years.16 At the practical level the government initiated three major waves of so-called administrative re-organisation before Zhu Rongji’ s current reform: Zhao Ziyang’ s reform in 1982 and Li Peng’ s two attempts in 1988 and 1993, respectively. All these reform initiatives, however, were seriously constrained by the major leaders’ concerns about the relationship between the government and the marketplace. The government understood that the separation of the govern- 1162 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM ment from the enterprise would change the way the government intervened in economic activities. Every time a new reform was initiated, its aim was to change the economic functions of certain government organisations. As a result, rather than downsizing the government, these reforms actually expanded it. According to one report, the number of `staff and workers’ employed by the government (Chinese civil servants) increased from 8.79 million in 1993 to 9.95 million in 1996, while administrative expenses as a percentage of total budget expenditure rose from 12% to nearly 15% during the same period.17 More dif® cult was the implementation of the separation of the Party from the government. In 1980 Deng Xiaoping pointed out the necessity of separating the Party from the government: It is time for us to distinguish between the responsibilities of the Party and those of the government and to stop substituting the former for the latter ¼ This will help strengthen and improve the uni® ed leadership of the Central Committee, facilitate the establishment of an effective work system at various levels of the government from top to bottom, and promote a better exercise of government functions and powers.18

Nevertheless, within the CCP leadership, Deng’ s argument was not without controversy. Most political conservatives believed that this separation would necessarily weaken the power of the Party, and they preferred to use the term `the division of labour between the Party and the government’ (dang zheng fen gong) rather than dang zheng fen kai (the separation). Only after Deng Xiaoping endorsed the concept was Zhao Ziyang able to legitimate dang zheng fen kai as a goal of the political reform at the Thirteenth Party Congress in 1987.19 Dang zheng fen gong was different from dang zheng fen kai. While the former meant the Party devolved some functions with a degree of power to the government, the latter implied that the government created its own domains and became an autonomous unit.20 The legitimation of dang zheng fen kai created a rather liberal atmosphere for China’ s political reform after 1987 and led to a period of political liberalisation until the 1989 pro-democracy movement took off. Indeed, the concept of dang zheng fen kai was visionary, and the realisation of the separation would have a tremendous impact on China’ s political system, especially on political democratisation. The programme, however, never materialised. After the government’ s crackdown on the pro-democracy movement, the CCP tightened its control over the government.21 To a great degree, this failure seemed inevitable. It was a dilemma for the Chinese leadership to achieve the two separations simultaneously. The separation of the government from the enterprise meant delegating government power to the marketplace. Given the fact that the government and the economy were closely intertwined under the planned economic system and that government units gained enormous bene® ts from their connections with enterprises, it would be impossible to separate the government from the enterprise without interference from the CCP. Furthermore, major leaders, from Deng Xiaoping to Jiang Zemin, wanted the CCP to be the guardian of political reform. As early as 1981 Deng argued that, 1163 YONGNIAN ZHENG

`without Party leadership there de® nitely will be nationwide disorder and China 22 would fall apart’ . For Deng and his fellow leaders, the CCP, as the ultimate power source of the government, could promote political reform on the one hand, and serve as the ® nal guarantee of political stability on the other, should mistakes be made during the process of political reform. Realising that the two separations could not be achieved at the same time, the leadership began to reorientate the reform after Jiang Zemin consolidated his power in the Party’ s Fifteenth Congress in 1997. By the Ninth National People’ s Congress in March 1998, the leadership seemed to divide the two separations into two stages, the separation of the government and the enterprise ® rst, and the separation of the Party from the government later. In order to achieve the ® rst goal, the leadership had to delay the separation of the Party from the government. Zhu Rongji, the new premier, seemed to have learned from the failure of previous reforms under Zhao Ziyang and Li Peng and found a better way to separate the government from the enterprise. For Zhu Rongji, the large size of the government and the slow process of administrative reform should be blamed for the dif® culty of reforming state-owned enterprise (SOE) and the government’ s inef® ciency. China’ s SOEs were the result of the old planned economy, which enabled government of® cials to intervene legitimately in SOEs. Like other major leaders, Zhu saw that a precondition to reform SOEs was to separate the government from the enterprise. But without eliminating the old institutions which had been involved in the SOEs, any measures to reform them would be ineffective. As an old Chinese saying indicates: `When there is the temple, the monks will not go away. The only way to chase them away is to pull down the temple.’ Certainly, in order to reform SOEs effectively, the old Leviathan had to be downsized ® rst. This idea led to a major organisational change. After its establishment, the new administration announced that it would attempt to build a smaller and more ef® cient government. Under the scheme, the original 40 ministries were reduced to 29, and eight million civil servants would be gradually trimmed down to four million.23 Zhu’ s initiatives were embodied in two separate administrative ® ats. The ® rst was to downgrade six government ministries, which had a close operative guanxi (relationship) with SOEs, to the status of bureaus; and subsequently these bureaus were incorporated into the State Economic and Trade Commission (SETC). A second decree was to strip off cooperative functions of government organisations with state-owned enterprises. It should be made clear that the purpose of the restructuring was not aimed at a withdrawal from monitoring SOEs by the government. Instead, Zhu made SETC the government’ s overseer of the country’ s growing economy, with functions similar to Japan’ s Ministry of International Trade and Industry (MITI). Similarly, the number of sectoral ministries was reduced from 12 to three. These radical changes also helped to separate the government from enterprises structurally. Presumably the new arrangement would solve the SOEs’ many problems connected with the systemic characteris- tics of these huge enterprises that obligated the state to inject them continuously with funds from the state budget. Furthermore, the State Planning Commission (SPC) was renamed the State 1164 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM

Development Planning Commission (SDPC) with appropriate alteration of its functions. The SPC was a symbol of the old planned economy and played an extremely important role in controlling Chinese state enterprises. As a result of renaming and restructuring, the new Commission had lost its managerial functions. The chief function of the new Commission is to formulate plans for China’ s long-term development strategies. In order to realise a real separation of the government from the enterprise, the government had to cut down other non-essential functions as well, which required the government to withdraw from interfering with the market, allowing market forces to play a more important role. By reducing government interven- tion, Zhu Rongji in fact allowed more freedom for the marketplace to give directions for future economic policies. Zhu’ s initiatives in restructuring the government had obvious effects in that the size of the State Council is now smaller. Downsizing was re¯ ected in the number of Vice-Premiers, which was reduced to four from the previous six. State Councillors were reduced to ® ve from a previous eight. Overall, the State Council now consists of 38 members. Successful separation of the government from the enterprise is likely to have a major impact on the second separation, ie, between the Party and the government. If Zhu Rongji succeeds in separating the government from the enterprise by `liquidating’ various bureaucracies, the second separation belongs to Jiang Zemin or his successor Hu Jintao and others. There are many units and staff of CCP organizations at different levels whose functions overlap with those of the government. When their functions overlap, the separation of the Party and the government becomes impossible. However, whether the Party will be able to initiate such an overhaul depends, to a large degree, on Zhu’ s success in his present reform initiatives.

Adjusting central± local relations and selective recentralisation Adjusting the central±local relationship has become one of the foci of China’ s political reform since it linked the central government to local society. In some sense, it is local governments, not the central government, which rule Chinese society. Therefore, whether the central government can promote rapid economic growth while maintaining order depends on whether it can solicit local cooperation, which, in turn, depends on how the central government adjusts its relations with localities. Because of the signi® cance of central±local relations, the central government has been extremely cautious in adjusting the old institutions that linked the centre and localities. Many studies have pointed out that China’ s development in the reform era was characterised by decentralisation.24 It has also been noted that Zhu had attempted to recentralise economic power since he began to handle China’ s economic problems in the early 1990s, especially since he became the new premier in March 1998. More recently, the new government initiated a campaign against local vested interests in coastal provinces, such as Guangdong and Guangxi, in the name of anti-smuggling and corruption.25 Outside observers began to wonder whether the new government would go back to the old- 1165 YONGNIAN ZHENG fashioned centralised control over localities. The direction to be taken by central±local relations is still a puzzle for academic circles. Scholars have tried to conceptualise China’ s central±local relations to see what `ism’ the central±local relationship can ® t into, but with no success. In the past 20 years what concerned the Chinese leadership was not to build a central±local relationship according to an `ism’ , but how much power should be kept at the national level of government and how much power should be delegated to localities. As a matter of fact, major leaders did not have any idea which central±local relationship was suitable for China and how it could be institutionalised. The evolution of central±local relationships was very incremental. The leadership’ s emphasis was not on institutionalising central±local relations, but on continuously adjusting the relationship to cope with local challenges. After the third generation of leadership was ® rmly established, the centre began to institutionalise its relationship with localities through what I call `selective centralization’ .26 After Deng Xiaoping came to power in the late 1970s, the government attempted to change China’ s worsening situation by decentralising power to society and local government. While political elites in the Soviet Union and East European countries implemented a top-down reform strategy, the reformist leadership in China identi® ed the decentralisation of economic decision-making power as a major strategy for reforming the economic system and achieving economic growth. Rapid decentralisation did indeed create an unprecedented momentum for local development. However, it produced enormous problems for central±local relations, such as economic localism, ethnic nationalism and greater regional income disparities.27 At the end of the 1980s the central government seemed to have lost control over localities. Not a few Chinese scholars began to argue that decentralisation was plunging China into chaos in terms of central±local relations.28 China watchers in the West were even more pessimistic and predicted that the old institutions of central±local relations would collapse and China as a nation-state would disintegrate.29 The 1990s have witnessed the centre’ s efforts to recentralise its power. Political recentralisation came ® rst, and economic recentralisation second. Politi- cal centralisation was given the highest priority in the early 1990s after the 1989 pro-democracy movement emerged. It seemed to the leadership that only a political solution could stabilise Chinese society. Even though the leadership did not want old-fashioned highly centralised central control, it was not able to ® nd a new way to achieve political centralisation. The efforts of the central government were to re-strengthen the old nomenklatura system, a traditional way that the communists used to control local Party cadres and government of® cials.30 After the crackdown on the 1989 pro-democracy movement, the central government began to tighten control over local personnel appointments.31 As Table 1 shows, in the 14th Party Committee (1992), the leaders from various central bureaucracies became the largest block (40%), while the power of local leaders declined (33%). The table also shows that the number of military personnel in the Central Committee increased from 16% in 1987 to 22% in 1992. Doubtless, the military has been the most important national institution that the central government could rely on in maintaining national unity, and an increase 1166 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM

TABLE 1 Power con® guration of the Central Committee (Full members 13± 15

13th (1987) 14th (1992) 15th (1997) No (%) No (%) No (%)

Central organisations (Party and government) 62 (35) 76 (40) 81 (42) Local organisations (Party and government) 67 (38) 62 (33) 62 (32) Military 28 (16) 41 (22) 42 (22) Others* 18 (10) 10 (5) 8 (4) Total 175 (99)** 189 (100) 193 (100)

*The `Others’ category includes mass organisations, intellectuals, model workers, etc. **The percentage does not add up to 100 because of rounding. Sources: China News Analysis, 1347, 15 November 1987, p 3; China News Analysis, 1471, 1 November 1992, p 7; and China News Analysis, 1594, 1997 October 1 p 4. in the power of the military is favourable to power centralisation. Although the power of local leaders was strengthened at the 15th Party Committee in 1997 (32%), leaders from central bureaucracies were still the largest power block (42%). Far more important is that the central government had strengthened the cadre management (ganbu guanli) system. `Party management of cadres’ (dang guan ganbu) has been one of the most important organisational principles, and indeed, this principle gives the central government a dominant say over personnel decisions.32 As recently as 1995 the central government issued a document entitled `Temporary Regulations on the Selection and Appointment of Party and Government Leading Cadres’ . The 1995 regulations re-emphasised the cadre transfer system or the cadre exchange system (ganbu jiaoliu zhidu), which enabled the centre to tighten control over local cadres.33 The focus of the transfer is on leading members of Party committees and the government. According to the 1995 regulations, a leading member of a local Party committee or government should be transferred if he/she has worked in the same position for 10 years. The Constitution of the Chinese Communist Party provides that positions in Party committees at county level and above have a term of ® ve years. Therefore, if a cadre of provincial level has not reached retirement age by the end of his/her second term, he/she has to be transferred. Transfers may result from, ® rst, work needs, second, needs for enriching work experience and improving leadership, third, the rule of avoidance, and other reasons. Whatever the purpose, the system of cadre transfer is an effective instrument for the centre to constrain the rise of localism. The transfer of local cadres has occurred in various ways. First, inter- provincial transfers have often been used. From 1990 to early 1998 (the Ninth NPC), there were 44 cases of inter-provincial exchanges. 34 A second form of the cadre transfer is from the provinces to the centre. Also from 1990 to March 1998, there were 50 cases of transfers from provinces to the centre.35 This form of transfer was multi-functional. In some cases, the transfer was a promotion, but 1167 YONGNIAN ZHENG in other cases, transfers to the centre only meant that the cadres were deprived of political power they had enjoyed in their home provinces. A third form is the transfer from the centre to the provinces. From 1990 to March 1998 there were 19 such cases. This form of transfer enabled the central government to control the provinces directly. Among these 19 cases, six served as governors, ® ve as secretaries, four as deputy secretaries, and four as vice-governors. Without doubt, the system of cadre transfer is still an effective institutional means for the centre to control provincial of® cials. But it is not without challenges. The strengthening of the People’ s Congress tends to weaken the cadre transfer system. Provincial congressional members prefer to vote for native cadres rather than outsiders. Furthermore, with the improvement of the provincial electoral system, provincial leaders are increasingly local interest-orientated. Regardless of whether they are natives or outsiders, they all have to pay attention to local interests. Otherwise, they will face dif® culty in winning local support. Therefore, leaders come and go, but local interests remain. Certainly, how central control and local interests should be reconciled is still an important issue facing the Chinese leadership. While adjusting central±local political relations, the leadership is seriously constrained by various factors such as the old ideology and power consider- ations. However, the situation of adjusting its economic relations is rather different. Instead of centralisation, decentralisation gained a momentum in the early 1990s as a result of Deng Xiaoping’ s southern tour in early 1992. This new wave of decentralisation soon created enormous economic problems, such as over-heated investment and high in¯ ation. Zhu Rongji was appointed to cope with these growing economic problems in 1993. On the political front Deng Xiaoping did not express any disagreement over recentralisation. But on the economic front he insisted that China should not go back to the old-fashioned central control and pushed Zhu to initiate institutional innovation.36 What the centre did was to implement selective recentralisation, which can be exempli® ed by Zhu Rongji’ s two major reforms, ie taxation reform and central banking system reform, among others. In 1994 the central government began to implement a new taxation system, the tax-division system or a federal-style taxation system. Before this system, the centre did not have its own institutions to collect taxes. All taxes from the provinces were collected by provincial governments ® rst and were then divided between the centre and the provinces through bargaining. Provincial governments were regarded only as a part or an extension of central power, rather than institutions with their own power base. The new taxation system has had a major impact on the old system and changed the way of interaction between the centre and the provinces in the following two ways. First of all, under the new taxation system taxes are divided into three categories, namely, central, local and shared. Central taxes will go to the central coffers, local taxes will go to local budgets, and shared taxes will be divided between the centre and the provinces according to previously established agreements. Second, tax administration is centralised. Instead of authorising local tax of® ces to collect virtually all taxes, the centre now collects taxes with its own 1168 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM institutions, independent of the provinces. This means that the centre has established its own revenue collection agencyÐ the national tax service. Never- theless, the new system also recognises independent provincial power, that is, provincial authorities can collect several types of taxes without central interference. In other words, there are now two parallel and independent systems of tax administration, namely, a national system for central taxes and a local one for local taxes. Shared taxes are collected by the central government ® rst and then divided between the centre and the provinces. These institutional changes shifted ® scal power from the provinces to the centre. Total government revenue had increased quite dramatically. The annual increase grew from 20 to 30 billion yuan before 1993, to 85 billion in 1994 and to 122 billion in 1996. The proportion that made up the central collection had increased from lower than 30% to around 50%. If the locally collected revenues that local governments were obliged to remit to the central coffers were included, the central government’ s share reached about two-thirds of total government revenue. Since most revenues are now collected and redistributed by the centre, the ® scal dependence of the provinces on the central government has increased substantially. Before the new system, the central government tended to rely heavily on coastal provinces and cities such as Shanghai, Shandong, Zhejiang, Jiangsu and Guangdong for revenue contribution. But now this trend has been reversed.37 Similar efforts have been made to reform China’ s central banking system. Before the current reform, China’ s central banking system was highly decen- tralised. The central bank, People’ s Bank, established branches in the provinces and assumed that all provincial branches would take orders from the centre since they were theoretically parts or extensions of the central bank. But in reality local branches were often exposed to political in¯ uence from the local government, since the personnel of local branches were appointed and their welfare was provided by local governments. This frequently led to local branches ignoring orders from the central bank and lending themselves to local in¯ uences. Local branches of the central bank often became an effective instrument for local governments to promote local economic growth. But rapid local growth was achieved at the expense of the stability of the national economy.38 At the end of the 1980s the central government introduced changes into the central banking system and decided that all directors of local branches should be appointed by the central bank rather than provincial governments. To do this, the central government expected all local branches to act in accordance with central directives and be independent from local political in¯ uence. Nevertheless, the change did not bring the expected results. Local branches had developed their own independent institutional interests and preferred to use their resources to develop local economies, since they could bene® t greatly from local growth. This eventually led to the crisis of macroeconomic management in the mid- 1990s. After Zhu Rongji became China’ s new premier and a new government was established in March 1998, the central government announced a daring measure to reform China’ s ® nancial system: all provincial branches of the central bank were to be eliminated and major cross-provincial or regional branches established in the years to come. In December 1998 the central 1169 YONGNIAN ZHENG government formally declared that the 31 provincial branches of the central bank were to be replaced by nine regional branches. 39 The reform measure attempted to follow the US model of the central banking system, which aimed at getting rid of the institutional instruments of provincial governments to intervene in the central banking system.40 These institutional initiatives provided the new government with some power- ful institutional means to constrain growing localism. It is still hard to tell what central±local relations the Chinese leadership wants to build. It is certain, however, that continuous institutional adjustments have enabled the Chinese government to cope with growing localism. After all these institutional adjustments, a rather clear pattern of the central±local relationship has emerged, ie China is moving towards economic federalism. Whether China will develop a federal system depends on political innovations that can be introduced into the existing central±local political relationship. Such innovations will be increasingly signi® cant thanks to the increasingly complicated nature of the central± local relationship.

Democratising rural governance At the grassroots level where the majority of the Chinese (peasants) live, the Chinese government has focused on restructuring rural governance by introducing rural democracy. Indeed, rapid development of rural elections has caught worldwide attention and produced enormous enthusiasm about Chinese democratisation. 41 For many observers, the birth of the rural election system can serve as a starting point of the Chinese style of democratisation, that is, democracy from below. As happened in Taiwan earlier, grassroots democracy will be expanded to higher levels, and elections at the national level will eventually occur.42 There is no sign, however, to indicate that the Chinese government will expand direct elections from the village level to the township level, let alone the county level. Indeed, the government has adopted an incremental approach to rural democracy. Political leaders want to consolidate rural democracy ® rst before they consider whether direct elections can be expanded upwards.43 One important aspect has been under-emphasised, that is, the Chinese leaders established the rural election system to restructure rural governance rather than democratise the whole political system. In traditional China, the reach of the state was very limited, and the county was the lowest level of state administration.44 Below the county, the country was governed by an elite group, ie the gentry.45 When the Nationalist Party came to power before 1949, it attempted to extend its state power to villages. It failed because it still relied on local elite groups and local residents were excluded from the political process. By contrast, the Chinese Communist Party used a mobilisation strategy to rebuild the countryside. The original three levels of administration, the center±province± county, were extended to ® ve, the center±province±county±commune (equivalent to township)±production brigade. The extension of the reach of the state enabled the Party, in its early years, to create new power resources within Chinese society and thus to implement 1170 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM such profound tasks of social engineering as land reform, collectivisation and nationalisation of business and commerce.46 Nevertheless, there were costs. Chinese society lost its initiative to develop. This in turn reduced the state’ s ability to govern in the rural areas. What Deng Xiaoping did was to shorten the reach of the state so that society could gain some leeway to develop itself spontaneously. The rural reform initiated in the late 1970s was based on the so-called household responsibility system. The rapid spread of this system soon led to the collapse of the old system of governance, ie the production brigade system, and eventually, the collapse of the commune system. The central state decided to restructure the governance system at the basic level. A more traditional form of governanceÐ the township systemÐ was immediately established to ® ll the institutional vacuum left by the breakdown of the commune system. But what is important to note is that this does not mean going back to the old tradition. Instead, the system was restructured. State power was withdrawn from the village level and villages became the units of self-governance. But how the village self-governance system should be organised was not without controversy. Senior leaders such as Deng Xiaoping, Peng Zhen and Bo Yibo believed that democracy should be the way of reorganising.47 It was not an easy task to implement democracy in rural China. Resistance from local cadres was strong. Because of the power of these senior leaders, democratic election became a national policy to be implemented. In 1987 the National People’ s Congress passed the `Village Committee Organic Law of the PRC (Experimen- tal)’. According to this law, `village committees should be established in China’ s rural areas in order to safeguard farmers’ opportunities and rights of political participation. The control over village cadres by farmers and the level of villagers’ self-government will be improved through direct election of the directors, deputy directors and members of the villagers’ committees, thus upgrading the quality of farmers’ political participation.’ 48 Even though the village government no longer belongs to the state administration, the leadership has been very cautious in implementing rural elections, since the restructuring of rural society is to provide a stable political framework to accommodate changes resulting from economic growth. It has been a process of trial and error. Indeed, the abovementioned law is rather vague and is to be supplemented by provincial implementation regulations. The central government did this inten- tionally to give provincial governments much leeway to address issues and concerns arising from differences in local conditions. In order to ensure that the system was spread smoothly, the central government designated many locations as `demonstration sites’ for others to follow. For instance, from 1990 to 1995, some 63 counties, 3917 towns and 82 266 villages were set up as demonstration sites.49 Since the central government did not attempt to implement the law nationwide at the same time, provincial regulations were gradually implemented. At the end of 1995, some 24 provinces had promulgated their own laws on the organisation of villagers’ committees.50 While some provinces had made impressive progress in institutionalising rural elections, such as Fujian, Jiangsu, Liaoning and 1171 YONGNIAN ZHENG

Sichuan, others like Beijing, Shanghai and Guangdong had lagged behind. Consequently, rural elections had taken place very unevenly. Nevertheless, the election system has developed rather impressively. The estimates of the spread of the election system vary. According to the Ministry of Civil Affairs, which has been in charge of implementing the election system, as of March 1997 more than 80% of China’ s 930 000 villages have conducted at least one round of relatively democratic elections. However, a report by the US State Department believes that the ® gure is about one-quarter to one-third.51 The gap between the two ® gures may be reconciled by an assessment offered by an of® cial in the Ministry of Civil Affairs: àbout 30 percent of the elections are conducted in a model way, 40 percent are average and 30 percent poor.52 For the central government the goal of initiating rural direct elections was to restructure the governance system. When Peng Zhen promoted rural elections in 1987, he argued that it could be used to help the Party±state to govern China’ s countryside and save the CCP’ s rule. According to Peng, without any constraints on Party cadres and government of® cials at lower levels, the CCP’ s authoritarian rule could result in popular complaints, even rebellions against the CCP. Rural elections could play a role in constraining local of® cials’ arbitrary behaviour. To a great degree, the Party±state had bene® ted from this system. According to statistics provided by the Civil Affairs Bureau of Fujian provincial government, since 1994 when the second term of villagers’ committees as elected in the province, 92.4% of the committees ful® lled the task of family planning, 98.9% the tasks of collecting and purchasing grain for the state, 86.2% the task of paying taxes, and 99% the task of drafting.53 Local of® cials may exaggerate these ® gures, but the bene® ts for the government are real. The impact of the election system on China’ s democracy is signi® cant. Grassroots democracy has resulted in a phenomenon that may be called `the lowering of the centre’ s political legitimacy,’ ie the lower the level of government is, the higher level of political legitimacy it possesses. Because government of® cials at the grassroots level are elected by local residents, they can say `no’ to higher authorities, since their political legitimacy is no longer based on appointment or recognition from higher authorities, but on popular votes. Governments at higher levels ® nd that it is increasingly dif® cult to deal with lower level of® cials. In this sense, the local election system promotes democratisation by putting political pressure on government of® cials at higher levels. It is still uncertain, however, that direct elections will be applied to select government of® cials at higher levels in the near future. Even though there are forces pushing to extend direct elections to the township level, the Chinese government has placed its priority on consolidating rural democracy rather than expanding it radically. This consideration is not without a sound rationale. First of all, as mentioned above, rural democracy is only part of the leadership’ s scheme of restructuring its governing system. Without local residents’ enthusiasm and active participation, rural democracy would not have developed so fast. Similarly, without political support from the top leadership, the functioning of rural democracy would become problematic. China is still a society of state domination, and democracy is less likely to be a political system that signi® cant social forces create of their own volition.54 Therefore, any further 1172 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM development of rural democracy is heavily in¯ uenced by the political will of the top leadership. When political leaders consider whether or not they will expand grassroots democracy upwards, they have to think about other aspects of development to see the compatibility between democracy from below and other important political reforms.55 After 20 years of reform, the leadership has learned that a more balanced development is more desirable. Second and practically, as discussed above, rural democracy has developed unevenly. Up to this stage, localities have been quite autonomous in developing the system of direct rural election. No centralised and uni® ed regulations and policies exist. Indeed, diversi® ed developments in different regions have made it impossible for the centre to implement such uni® ed regulations and policies. The central leadership thus decided to consolidate the system ® rst before expanding it to higher levels, meaning certain aspects of regulations and policies have to be applied to every locality. When rural elections develop relatively evenly among different regions, it will be time to expand the system upwards. Third and unfortunately, the development of rural democracy has coincided with the development of social organisations such as clan organisations and different types of `secret societies’ . In many places these organisations gain their legitimacy to rule rural residents through elections. The heads of these organisations often behave like little emperors. In many other places, previous Party cadres and government of® cials control all major economic resources there and are able to in¯ uence voters’ preferences. Voters have to vote for these local strong men. Otherwise, their economic bene® ts will be endangered. It is hard for local residents to choose between their political rights and economic bene® ts. Many scholars in China have simply attributed the rise of such rural èvil forces’ to the government’ s loosening control over rural societies.56 Indeed, with the rise of such unexpected social forces, the leadership is beginning to worry that the government will lose control over rural societies and will not expand rural democracy until it is sure that the government is capable of maintaining stability and order in rural areas. As a matter of fact, consolidating rural democracy includes a crackdown on such èvil forces’ . Finally, from the perspective of power politics, the development of rural democracy is contradictory to the original plan of the government. As I argued, the aim of the decision of the leadership to develop rural democracy was to restructure the system of rural governance. However, when local leaders are elected by local residents, they have to consider local interests ® rst. In other words, local leaders have legitimate reasons not to take orders from above. Indeed, there have been enormous con¯ icts between elected political bodies and other government organisations such as local Party units and government economic organisations.57 With an increase in con¯ icts between elected bodies and government organisations, the top leadership becomes hesitant to push rural democracy further. In 1998 the National People’ s Congress adopted the Organ- isation Law of Village Committee. On the one hand, the law fully legitimates the rural election system and thus is likely to facilitate further development of rural democracy. However, it also stipulates that the Party needs to strengthen its rule in rural areas.58 1173 YONGNIAN ZHENG

Concluding remarks I have discussed how political incrementalism has been embedded in various aspects of institutional adjustment in china in the past 20 years. Political adjustment has occurred both within and without the regime. In order to maintain stability and order, the government has to implement within-system-adjustment to consolidate its power and increase the ef® ciency of its governance. In order to accommodate the social forces released by rapid economic development, it has to implement without-system-adjustment to change its relations with society. Even though all these adjustments are not aimed at democratising the country, the process of continuous adjustment has bred various democratic factors. Over the years, the leadership has quietly allowed grassroots democracy in the rural areas to grow and spread through direct election. With continuous adjustment, the Chinese political system tends to show its ¯ exibility by being more accommodating towards social changes and democratic developments. The problem is that the Party still does not want growing social forces to in¯ uence and interrupt its plan of reform. The Party wants to use its own way to accommodate demands for political changes or democratisation, and cannot tolerate any spontaneous democratic movements forcing it to democratise the government. This is why the Party has used very brutal measures against political challenges from society. The recent crackdown on the dissidents’ efforts to organise an opposition party serves as an example. Drastic socioeconomic changes create great demands for political changes. This was what Chinese leaders learned from the 1989 pro-democracy movement. However, they also learned from the former Soviet Union and other East European countries that radical political reform and democratisation would not only force the Communist Party out of power, but also lead the whole country into great chaos. From whatever perspective, the best thing to do seemed to be to adopt an incremental approach to political reform, ie to accommodate social demands for political reform through institutional adjustment. The top leadership, however, is still not sure whether such incrementalism will be able to cope with the greatest political challenge, ie democratisation. Incrementalism means that the leadership wants to use its own way of reforming the political system, but social demands for political reform are often far greater than the capacity of incrementalism can contain. Although political incrementalism has enabled the CCP to build better governance while maintaining social stability, with the rising demand for more vigorous political changes, the CCP’ s ability to govern China effectively as in the past could be called into question.

Notes The author is grateful to Wang Gungwu, John Wong, Vai Io Lo and the two anonymous reviewers from Third World Quarterly for their constructive comments on the draft of this paper. Thanks also go to Ms Cui Wei for her research assistance. 1 All these ® gures are based on World Bank, World Development Report 1998/99, New York: Oxford University Press, 1999. 2 Jiang Zemin, `Zai jinian dang di shi yi jie san zhong quanhui zhaokai ershi zhounian dahui shang di 1174 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM

jianghua’ (`Speech at the Conference commemorating the Third Plenum of the Eleventh Congress of the Chinese Communist Party’ ), People’ s Daily, 19 December 1998. 3 John Pomfret, `Why Beijing spring cooled: dissidents overstepped’ , International Herald Tribune, 4 January 1999, pp 1, 7. 4 Ibid. 5 Li Peng, `NPC has no plans for structural reform’ , China Daily, 2 December 1998, p 4. 6 `Jiang signals return to hard line’ , South China Morning Post, 24 December 1988. 7 Pomfret, `Why Beijing spring cooled’ . 8 For analyses of Xiagang, see Qiu Zeqi & Zheng Yongnian, `Xia-Gang and its sociological implications of reducing labor redundancy in China’ s SOEs’ , in Wang Gungwu & John Wong (eds), China’ s Political Economy, Singapore: Singapore University Press & World Scienti® c, 1998, pp 22±48; and Edward X Gu, `From permanent employment to massive layoffs: the political economy of ª transitional unemploymentº in urban China (1993±8)’ , Economy and Society, 28(2), 1999, pp 281±299. 9 For example, Elisabeth Rosenthal, `What many forget: China remains a one-party state’ , International Herald Tribune, 28 December 1998, p 4; John Pomfret, `China reaf® rms one-party control: In name of stability, Jiang vows to crush democracy movements’ , International Herald Tribune, 19±20 December 1998, p 8. 10 I thank many Chinese government of® cials for pointing me towards these three perspectives during my interviews with them in October 1998. I certainly agree with them that these three perspectives indeed consist of major themes of political adjustments in the reform era. 11 For example, Francis Fukuyama, `The end of history?’ , The National Interest, 16, 1989, pp 3±18. 12 Susan L Shirk, The Political Logic of Economic Reform in China, Berkeley, CA: University of California Press, 1993. 13 According to Tsuyoshi Hasegawa, `transition from the communist system ¼ involves two inter-related and interdependent processes: transition from a command economy to a market economy and transition from communist party dictatorship to democracy’ . See Hasegawa, `The connection between political and economic reform in communist regimes’ , in Gilbert Rozman (ed), Dismantling Communism, Baltimore, MD: The Woodrow Wilson Center Press and Johns Hopkins University Press, 1992, p 62. 14 Deng Xiaoping, `Guanyu zhengzhi tizhi gaige wenti’ (`On the issues of political system reform’ ,) in Deng, Deng Xiaoping wenxuan (Selected Works of Deng Xiaoping), Vol 3, Beijing: Renmin chubanshe, 1993, p 176. 15 For a brief discussion of this evolution, see Zheng Yongnian, `Power and agenda: Jiang Zemin’ s new political initiatives at the CCP’ s Fifteenth Congress’ , Issues and Studies, 33 (11), 1997, pp 38±44. 16 Zou Keyuan & Zheng Yongnian, `China’ s Third Constitutional Amendment: some signigicant milestones?’ EAI Background Brief, No 34, East Asian Institute, National University of Singapore, 21 May 1999. 17 John Burns, `China’ s Leviathan’ , Asian Wall Street Journal, 16 March 1998. 18 Deng Xiaoping, `On the reform of the system of party and state leadership’ , in Deng, Selected Works of Deng Xiaoping (1975± 1982), Beijing: Foreign Languages Press, 1984, p 303. 19 For a detailed description of this debate, see Wu Guoguang, Zhao Ziyang yu zhengzhi gaige (Political Reform Under Zhao Ziyang), Hong Kong: The Paci® c Century Institute, 1997. 20 For a discussion of this issue, see Shiping Zheng, Party vs State in Post± 1949 China: The Institutional Dilemma, New York: Cambridge University Press, 1997. 21 John P Burns, `Strengthening central CCP control of leadership selection: the 1990 nomenklatura’ , China Quarterly, 138, 1994, pp 458±491. 22 Deng Xiaoping, `Concerning problems on the ideological front’ , in Deng, Selected Works (1975± 1982), p 369. 23 For a detailed description of Zhu Rongji’ s reform, see Zheng Yongnian & Li Jinshan, `China’ s politics after the Ninth National People’ s Congress: power realignment’ , in John Wong et al, China After the Ninth National People’ s Congress: Meeting Cross-Century Challenges, Singapore: World Scienti® c and Singapore University Press, 1998, pp 75±84. 24 For example, Linda Chelan Li, Centre and Provinces: China 1978± 1993, Oxford: Clarendon Press, 1998; Shaun Breslin, China in the 1980s: Centre± Province Relations in a Reforming Socialist State, Basingstohe: Macmillan, 1996; and Wang Shaoguang & Hu Anguang, Zhongguo guojia nengli baogao (A Report of State Capacity in China), Shenyang: Liaoning renmin chubanshe, 1993. 25 Zheng Yongnian & Zou Keyuan, Towards More Effective Governance: China’ s Politics in 1998 EAI Occasional Paper, No 16, Singapore: World Scienti® c and Singapore University Press, 1999. 26 Zheng Yongnian, Zhu Rongji xinzheng: Zhongguo gaige de xin moshi (Zhu Rongji’ s New Deal: A New Model for Reforming China), Singapore: World Scienti® c, 1999. 27 For a discussion of this point, see Yongnian Zheng, Discovering Chinese Nationalism in China, Cambridge: Cambridge University Press, 1999, 3. 28 For example, Wang & Hu, Zhongguo guojia nengli baogao. 29 WJF Jenner, `The state, people and culture known in English as China are in a profound general crisis ¼ 1175 YONGNIAN ZHENG

The very future of China as a unitary state is in question’ . Jenner, The Tyranny of History: The Roots of China’ s Crisis, London: Penguin, 1992, p 1; Jack A Goldstone, `We can expect a terminal crisis within the next 10 years’ . Goldstone, `The Coming Chinese collapse’ , Foreign Policy, 99, 1995, p 52; and David Bachman, `the dissolution of the People’ s Republic of China (PRC) [will take place] not so much due to the late twentieth century equivalent of warlordism but by the growing irrelevance of the central leadership and the deliberate ignorance of the center’ s directives by some, if not all, regions of the country ¼ A weak confederative Chinese state de facto is in the making’ . Bachman, `China in 1993: dissolution, frenzy, and/or breakthrough?’ Asian Survey, xxxiv (1), 1994, p 30. 30 John Burns (ed), The Chinese Communist Party’ s Nomenklatura System, Armonk, NY: ME Sharpe, 1989. 31 For a discussion of changes in the nomenklatura system, see Burns, `Strengthening Central CCP Control of Leadership Selection’ . 32 Burns, The Chinese Communist Party’ s Nomenklatura System; and ibid. 33 Renmin ribao, 17 May 1995, p 1. 34 The author’ s database. 35 The author’ s database. 36 For a detailed discussion, see Xiao Zhengqin, Zhu Rongji: kua shiji tiaozhan (The Coming Challenges to Premier Zhu Rongji), Hong Kong: Pacific Century Press, 1998, 5. 37 For assessments of the 1994 taxation reform, see Shaoguang Wang, `China’ s 1994 fiscal reform: an initial assessment’ , Asian Survey, xxxvii (9), 1997, pp 801±17; and Hu An gang, `Fenshuizhi: pingjia yu jianyi’ (`The taxation-division system: assessment and recommendations), Zhanlue yu guanli (Strategy and Management), 18, 1996, pp 1±9. 38 For discussions of the central banking system reform, see Paul Bowles & Gordon White, The Political Economy of China’ s Financial Reforms: Finance in Late Development, Boulder, CO: Westview Press, 1993; and Chen Yuan, Zhongguo jinrong tizhi gaige (Reform in China’ s financial system), Beijing: Zhongguo caizheng jingji chubanshe, 1994. 39 Bain Ji, `31 provincial branches replaced by regional ones’ , China Daily, 16 December 1998. 40 Although the Chinese government did not call the system federalism, the formation of the system was based on the US model of federal±state relations. Interviews in the Development Research Centre, the State Council, 6 May 1998. 41 An incomplete list of words on rural democracy include the following: Anne F Thurston, Muddling Toward Democracy: Political Change in Grassroots China, Washington, DC: United States Institute of Peace, 1998; Kevin J O’ Brien, `Implementing political reform in China’ s villages’ , Australian Journal of Chinese Affairs, 32, 1994, pp 33±59; Susan L Lawrence, `Democracy, Chinese style’ , Australian Journal of Chinese Affairs, 32, 1994, pp 61±68; Minxin Pei, `Creeping democratization in China’ , Journal of Democracy, 6, 1995, pp 73±76; Gang Bai, `Villagers autonomy: political participation of Chinese peasants’ , Journal of International Cooperation Studies, 3 (2), 1995, pp 1±38; Kerin O’ Brien & Lianjiang Li, `The politics of lodging complaints in rural China’ , China Quarterly, 143, 1995, pp 756±783; Lianjiang Li and Kerin O’ Brien, `Villagers and popular resistance in contemporary China’ , Modern China, 22 (1), 1996, pp 28±61; Jean Oi, Economic development, stability and democratic village self-governance’ , in Maurice Brosseau et al, (eds), China Review, Hong Kong: Chinese University Press, 1996, pp 125±144; Melanie Manion, `The electoral connection in the Chinese countryside’ , American Political Science Review, 90 (4), 1996, pp 736±748; Jorgen Elklit, `The Chinese village committee electoral system’ , China Information, xi (4), 1997, pp 1±13; Daniel Kelliher, `The Chinese debate over village self-government,’ China Journal, 37, 1997, pp 67±75; and Kent M Jennings, Political participation in the Chinese countryside’ , American Political Science Review, 91, 1997, pp 361±372. 42 See many articles presented at the conference `Elections on both sides of the Straits’ , Harvard University, 8±9 May 1997; and Chen Ming-tung & Zheng Yongnian (eds), Liangan jiceng xuanju yu zhengzhi shehui bianqian (Grassroots elections and sociopolitical changes on the mainland and Taiwan), Taipei: Yuedan chubanshe, 1998. 43 Personal interview, Beijing, October 1998. 44 Vivienne Shue, The Reach of the State: Sketches of the Chinese Body Politic, Stanford, CA: Stanford University Press, 1988. 45 Fei Hsiao-tung, China’ s Gentry, Chicago, IL: University of Chicago Press, 1953; and Hsiao Kung- chuan, Rural China: Imperial Control in the 19th Century, Seattle, WA: University of Washington Press, 1962. 46 Vivienne Shue, `State power and social organization in China’ , in Joel S Migdal, Atul Kohli & Vivienne Shue (eds). State Power and Social Forces: Domination and Transformation in the Third World, Cambridge: Cambridge University Press, 1994, pp 65±88. 47 Lianjiang Li & Kevin J. O’ Brien, `Struggle over village elections’ , in Roderick MacFarquhar & Merle Goldman (eds). The Paradox of China’ s Reform, Cambridge, MA: Harvard University Press, forthcoming. 48 Cited in Jiang Wandi, `Grossroots democracy taking root’ , Beijing Review, 39 (11), 1996, p 11. 49 Ibid, p 12. 50 Ibid, p 11. 1176 POLITICAL LESSONS FROM CHINA’ S 20 YEARS OF REFORM

51 Li & O’ Brien, `The struggle over village elections’ . 52 Mark O’ Neill, `A vote for the village’ , South China Morning Post, 12 April 1997, p 3. 53 Jiang, `Grassroots democracy taking root’ , p 13. 54 For a detailed discussion of this point, see Yongnian Zheng, `Development and democracy: are they compatible in China?’ Political Science Quarterly, 109 (2), pp 235±259. 55 Zheng Yongnian, `Will China become more democratic: a realistic view of China’ s democratization’ , in Wang Gungwu & John Wong (eds), China’ s Political Economy, Singapore: Singapore University Press and World Scientific, 1998, pp 167±190. 56 For example. He Qinglian, Xiandaihua de xianjing: dangdai Zhongguo de jingji shehui wenti (The trap of modernisation: economic and social problems in contemporary China), Beijing: Jinri Zhongguo chubanshe, 1998, ch 8. 57 Qiu Zeqi, `Xiangcun xuanju he cunzhen zuzhi guanxi’ (Rural elections and their relations with village and township organisations’ ), in Chen & Zheng (eds), Liang an xuanju, pp 369±392. 58 For the text of the Organisation Law of Village Committee, see People’ s Daily, 5 November 1998.

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