Uneven Policy Implementation in Rural China

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DOI: 10.2307/25790557
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Abstract
While research on “selective policy implementation” has provided explanations for why some policies are more likely to be implemented well than others, this contribution is concerned with the phenomenon of one and the same policy being implemented well in one locality, but not in another. From a vantage point of policy implementation instruments, it examines the uneven implementation of the rural tax reform that preceded the recent Construction of a Socialist New Countryside (jianshe shehuizuhyi xin nongcun). The study reveals that “competition under hierarchy” provided incentives for some localities to continuously improve the tax reform by means of local-level experiments. Conversely, it prompted a great number of localities to circumvent or even sabotage the reform, thereby forcing the central government to make repeated financial concessions and eventually to centralize the provision of rural public services. By focussing more on processes than on end results, the article demonstrates how different experiences in local policy implementation can contribute to the overall development of a policy.
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THE CHINA JOURNAL, NO. 65, JANUARY 2011
UNEVEN POLICY IMPLEMENTATION IN RURAL CHINA
Christian Göbel
Recent publications on central–local relations in China have greatly enhanced our
understanding of how rights and responsibilities are distributed, especially
between the center and the provinces.
1
However, much less is known about how
individual policies are shaped and implemented within the corridor formed by
these rights and responsibilities, especially at the sub-provincial levels. One
prominent theory of central–local relations in China claims that certain policies
are more likely to be implemented than others (so-called “selective policy
implementation”), because the control institutions at the central government’s
disposal favor the implementation of hard, quantifiable policy targets over soft,
non-quantifiable policy targets.
2
An opposing theory explicitly criticizes this
“zero-sum” understanding of Chinese politics and holds that even local opposition
to a certain policy must be understood as co-operation.
3
Both theories provide
compelling evidence to prove their cases, but pay insufficient attention to the fact
A grant by the German Academic Exchange Service (DAAD) to finance the fieldwork
underlying the empirical parts of the article is gratefully acknowledged. For invaluable
comments and suggestions, I am indebted to Jonathan Unger, David Kühn, Andrew Kipnis,
Luigi Tomba, Björn Alpermann, Andreas Fulda, Thomas Heberer, Gunter Schubert and
two anonymous reviewers.
1
See for example John Fitzgerald, Rethinking China’s Provinces (London: Routledge,
2002), David S. G. Goodman, China’s Provinces in Reform: Class, Community, and
Political Culture (London: Routledge, 1997), Christine Wong, Financing Local
Government in the People’s Republic of China (Hong Kong: Oxford University Press,
1997), Yasheng Huang, Inflation and Investment Controls in China: The Political
Economy of Central–Local Relations During the Reform Era (Cambridge: Cambridge
University Press, 1996), Christine Wong, Christopher John Heady and Wing Thye Woo,
Fiscal Management and Economic Reform in the People’s Republic of China (Hong Kong:
Oxford University Press, 1995), Kenneth Lieberthal, Governing China: From Revolution
through Reform (New York: W. W. Norton, 1995).
2
Most notably Kevin J. O’Brien and Lianjiang Li, “Selective Policy Implementation in
Rural China”, Comparative Politics, Vol. 31, No. 2 (1999), pp. 167-68, but see also the
works by Maria Edin and John James Kennedy cited below.
3
See Linda Chelan Li, Center and Provinces—China 1978-1993: Power as Non-Zero-Sum
(Oxford: Oxford University Press, 1998) and “Towards a Non-Zero-Sum Interactive
Framework of Spatial Politics: The Case of Center–Province in Contemporary China”,
Political Studies, Vol. 45, No. 1 (1997), pp. 49-65.
THE CHINA JOURNAL, No. 65
54
that one and the same policy often produces eager supporters (known as
“pioneers”) in one locality and resisters in another, and that both reactions feed
back into the fine-tuning of that policy.
4
Measuring the “hardness” of targets
cannot explain such variation, as local leaders everywhere face the same targets.
Similarly, uniformly conceptualizing as “cooperation” both proactive pioneering
and massive resistance makes it difficult to capture analytically the very different
local reactions to one and the same policy.
This article provides an alternative conceptualization of central–local relations
in China. Focusing more on processes than on end results, it examines how different
experiences in local policy implementation contribute to the overall development of
a policy. In essence, it incorporates both of the aforementioned theories to address
the phenomenon of uneven policy implementation in rural China. Rather than
focusing solely on the effects of coercive instruments or the presence of norms of
cooperation, it relies on analyzing the different impacts of a range of “policy steering
instruments” utilized by higher-level administrations to guide the implementation
and fine-tuning of a certain policy at a lower administrative level.
The three basic types of policy steering instruments are hierarchical regulation,
market competition and egalitarian networks. As Christopher Hood has shown, each
type of instrument has its inherent strengths and weaknesses,
5
which, this article
argues, manifest themselves in local policy successes and failures and result in the
uneven implementation of a particular policy. Rural development polices are often
implemented by a mix of the stimulation of competition to implement a certain
policy fully and contribute to its refinement, and a hierarchical mode of prescribing
outcomes and punishing deviation. I call this mix “competition under hierarchy”.
While pioneers are motivated to go along, not only by fear of punishment, but also
by the promise of material and immaterial rewards, resistance is the result of a
locality’s inability or unwillingness to engage in competition. Both pioneers and
resisters contribute to shaping policy outcomes: the former by improving the policy
in local experiments, the latter by forcing the center to adjust the instruments,
usually by reducing competition and providing more top-down regulation. While
there is no doubt that, under present conditions, policies with rent-seeking potential
tend to produce more pioneers than resisters, this does not mean that rural
development policies offering no rents can only be enforced by means of coercive
instruments, as several authors argue.
6
The structural and attitudinal traits
4
Jae-ho Chung, Central Control and Local Discretion in China: Leadership and
Implementation During Post-Mao Decollectivization (Oxford: Oxford University Press,
2000). Chung distinguishes between pioneering (central to the non-zero-sum argument),
resisting (which fires zero-sum conceptions of policy implementation in China) and
bandwagoning (which does not feature in either approach and will not be part of the
present analysis).
5
See Christopher Hood, The Art of the State: Culture, Rhetoric, and Public Management
(Oxford: Clarendon Press, 1998).
6
See, for example, Sebastian Heilmann, “Policy Experimentation in China’s Economic
Rise”, Studies in Comparative International Development, Vol. 43, No. 1 (2008), p. 23,
UNEVEN POLICY IMPLEMENTATION
55
that determine whether a locality supports or opposes a policy cannot be changed
quickly, but a re-adjustment of steering instruments might well elicit more local
cooperation and less resistance in policies that benefit the public good and not
individual cadres.
In order to add empirical flesh to these theoretical bones, this article analyzes
the uneven implementation of the Rural Tax and Fee Reform (RTFR, nongcun
shuifei gaige
农村税费改革), a recent series of far-reaching and consequential fiscal
and administrative adjustments designed to improve the life of China’s farmers.
Since it was initiated by the leadership of a remote township in Anhui Province
despite its potential to hurt the interests of local-level governments, the policy
demonstrates the crucial role of local pioneers: the realization of the reform
depended on its continuous improvement by means of local-level experiments. On
the other hand, a great number of localities circumvented or even sabotaged the
reform, thereby forcing the central government to make repeated financial
concessions and eventually to centralize the provision of rural public services.
The approach presented here both envisions this variation and accounts for the
iterative character of the reform. It shows how the RTFR developed through both
cooperation and massive resistance, a process which macroscopic approaches
have difficulties capturing. The analysis builds on findings from 18 weeks of
fieldwork in Anhui, Shandong and Hebei to make an explicit argument regarding
the uneven implementation, unexpected outcomes and policy implications of this
policy, one of the most important rural reforms since the formation of the People’s
Republic of China.
Dualistic and Non-dualistic Approaches
As Yang Zhong suggests, the potential for local deviation from central orders has
increased with China’s economic reforms, because the center has lost important
instruments linked to the central economic planning system. As a consequence, “the
only viable control mechanism that the center is counting on is Party organization and
discipline”,
7
and the central government has to rely chiefly on two instruments: hiring,
firing, promoting and rotating government employees; and the cadre responsibility
contracts (ganbu gangwei mubiao zerenshu
干部岗位目标责任书). As to the former,
O’Brien and Li have shown how the practice of leading cadres being appointed,
evaluated and recalled by the next higher administrative level has made them more
responsive to the demands of their superiors than to those of their constituency.
8
In
addition, they demonstrate how the regular rotation of top local cadres through the
cadre exchange system (ganbu jiaoliu tizhi
干部交流体制) can have the undesirable
effect of promoting a smash-and-grab mentality in which cadres emphasize
and Graeme Smith, “Political Machinations in a Rural County”, The China Journal, No. 62
(July 2009), p. 30.
7
Yang Zhong, Local Government and Politics in China: Challenges from Below (Armonk:
M. E. Sharpe, 2003), p. 61.
8
Kevin J. O’Brien and Lianjiang Li, “Selective Policy Implementation”, p. 171.
THE CHINA JOURNAL, No. 65
56
short-term gains over long-term consequences.
9
The cadre contract responsibility
system (ganbu gangwei mubiao zerenzhi
干部岗位目标责任制) provides benchmarks
against which cadre performance is assessed. In practice, local cadres sign
achievement contracts with higher-level governments, and the performance on these
contracts determines whether a leading cadre is rewarded or punished.
10
According to O’Brien and Li, a consequence of this system is that policies that
are “unpopular” with China’s rural population, such as birth control and mandatory
grain sales, are far more likely to be implemented than “popular” policies such as
burden reduction and improving rural elections. The reason for such “selective policy
implementation”, they argue, is that these control institutions work best with easily
quantifiable (hard) targets, which unfortunately tend to pertain to unpopular policies.
The realization of softer targets—and thereby popular policies—is much harder to
control and therefore more unlikely.
11
Later studies have refined the argument by
showing that the “softness” of a policy is not preordained. For example, Maria Edin
argues that selective policy implementation mirrors how the central government
prioritizes its policies.
12
In a similar vein, John James Kennedy shows how “soft
targets can become hard” if the central government is determined to implement a
popular policy.
13
While this influential (and perhaps dominant) conception of policy
implementation in China is useful in understanding the tools employed by the central
government to supervise and rein in its local agents, it fails to make explicit the fact
that selective implementation is at least in part a function of the control mechanisms
themselves. It does not take proper account of the effect of willing collaboration at the
local level, tending instead to see local resistance as the only way by which localities
can contribute to policy refinement: by endangering stability, they force the center to
adjust policies.
14
9
Kevin J. O’Brien and Lianjiang Li, “Selective Policy Implementation”, p. 175-76. Details on the
management of government employees and retrenchment attempts can be found in Pierre F.
Landry, Decentralized Authoritarianism in China: The Communist Party’s Control of Local
Elites in the Post-Mao Era (Cambridge: Cambridge University Press, 2008), Chapter 2, John P.
Burns, The Chinese Communist Party’s Nomenklatura System: A Documentary Study of Party
Control of Leadership Selection, 1979-1984 (Armonk: M. E. Sharpe, 1989), and Melanie
Manion, “The Cadre Management System, Post-Mao: The Appointment, Promotion, Transfer
and Removal of Party and State Leaders”, The China Quarterly, No. 102 (1985), pp. 203-33.
10
An excellent overview over the features and impacts of this system is found in Maria Edin,
“State Capacity and Local Agent Control in China: CCP Cadre Management from a
Township Perspective”, The China Quarterly, No. 173 (2003), pp. 35-52.
11
Kevin J. O’Brien and Lianjiang Li, “Selective Policy Implementation”, p. 174-75.
12
Maria Edin, “State Capacity”, p. 36.
13
John James Kennedy, “The Implementation of Village Elections and Tax-for-Fee Reform in
Rural Northwest China”, in Elizabeth J. Perry and Merle Goldman (eds), Grassroots Political
Reform in Contemporary China (Cambridge MA: Harvard University Press, 2007), p. 55.
14
See, for example, Kevin J. O’Brien and Lianjiang Li, Rightful Resistance in Rural China
(Cambridge: Cambridge University Press, 2006), Chapter 3.
UNEVEN POLICY IMPLEMENTATION
57
As Linda Li argues, such “dualistic” conceptions of central–local relations in
fact rule out endogenous institutional change: “there is a built-in reliance upon ad
hoc, circumstantial factors exogenous to the central–local relationship for change
to happen in the dualistic account, short of which changes are left highly
indeterminate”.
15
For this reason, Li champions a “non-dualistic” approach
emphasizing “the co-existence of central and local power in a diffuse, complex
decision-making process”.
16
Li provides several critical case studies to show that
central and local actors are “co-participants” in reform processes, united by norms
of co-operation and the desire to improve the Chinese polity. By means of a
thorough analysis of fiscal policy implementation in different locations, she
illustrates that workable policies emerging from “below” are likely to be adapted
as a national policy even if they violate existing rules.
17
Zheng Yongnian’s claim
of the existence of a “de-facto federalism” in China starts out from a similar
premise. Taking what he calls a “behavioral approach” to central–local relations,
he examines China’s more developed provinces to prove the presence of “norms of
interaction” that give the provinces considerable autonomy in return for their
adherence to general guidelines set up by the central government.
18
More recently,
Sebastian Heilmann has drawn up an heuristic model which he calls an
“experimentation-based policy cycle”, illustrating “how existing, and initially
deficient, institutions can be put to work, transformed, or replaced for economic and
social development in an open-ended process of institutional innovation that is
based on locally generated solutions”.
19
At the heart of most of these approaches is
the assumption that localities break rules, not to defeat the center, but to help correct
and adjust policies.
20
As a consequence, non-cooperation is absent in most of these
approaches, with the exception of Heilmann’s: he claims that central–local
cooperation only works with policies that allow local cadres to skim rents; for all
others he invokes the “dualistic” approaches outlined above.
21
Hence, although this
argument provides important insights as to the motivation of local actors to support
policies which are potentially harmful to them, it is as unconcerned with local
variation in policy implementation as the “dualistic” approaches: in the latter,
bottom-up policy change emanates solely from resistance, while the “non-dualistic”
theories explain such change solely by cooperation.
15
Linda Chelan Li, “Differentiated Actors: Central and Local Actors in China’s Rural Tax
Reforms”, Modern Asian Studies, Vol. 40, No. 1 (2006), p. 154.
16
Ibid., p. 153.
17
Ibid.
18
Yongnian Zheng, De Facto Federalism in China: Reforms and Dynamics of Central–Local
Relations (Hackensack: World Scientific, 2007), Chapter 2.
19
Sebastian Heilmann, “Policy Experimentation”, p. 2; see also Sebastian Heilmann,
“Maximum Tinkering under Uncertainty: Unorthodox Lessons from China”, Modern
China, Vol. 35, No. 4 (2009), pp. 450-62.
20
Linda Chelan Li, “Differentiated Actors”, p. 172.
21
Sebastian Heilmann, “Policy Experimentation”, pp. 19-23.
THE CHINA JOURNAL, No. 65
58
In sum, both approaches provide insights into different facets of central–local
interactions, but neither is concerned with theoretically capturing the fact that one and
the same policy works in one location, but not in another. In addition, they have
difficulties in establishing how both cooperation and resistance can contribute to
policy change and, by extension, policy outcomes. The most important implication of
these observations is that the two approaches can and should be integrated in a more
encompassing approach. This is easily done by applying existing classifications of
policy steering instruments.
Competition Under Hierarchy
A great number of public administrative controls have been identified in the public
administration literature but, as Christopher Hood points out, most fall into the three
“polar types”: markets, hierarchy and solidarity (more commonly known as
network).
22
According to Hood, each of the three instruments has particular
strengths and weaknesses (See Table 1).
Table 1: Strengths and Weaknesses of Policy Steering Instruments
Strengths Weaknesses
Hierarchy - Control
- Predictability
- Inflexibility
- Agency problem
Market - Flexibility
- Efficiency
- Market failure
- Individualism
Network - Feeling of empowerment
- Decisions sustainable
- Lengthy decision-making
- Unresolved feuds can break
community apart
Source: adapted from Christopher Hood, The Art of the State, pp. 24-28.
Hierarchy is the archetype of administrative steering and has, as a key feature
of the imperial Chinese bureaucracy, “outlasted any other system of public
management yet devised and in sheer longevity was the most successful model the
world has ever known”.
23
Its organizing principle can be characterized as a pyramid-
shaped, top-down system of ranks, each of which has a clearly specified authority
to make decisions and issue directives.
24
Administrative fiat and prohibitions
22
Christopher Hood, “Control over Bureaucracy: Cultural Theory and Institutional Variety”,
Journal of Public Policy, Vol. 15, No. 3 (2006), p. 226. See also Patrick Kenis and Volker
Schneider, “Verteilte Kontrolle: Institutionelle Steuerung in Modernen Gesellschaften
(Distributed Control: Institutional Steering in Modern Societies), in Patrick Kenis and Volker
Schneider (eds), Organisation und Netzwerk: Institutionelle Steuerung in Wirtschaft und
Politik (Organization and Network: Institutional Steering in the Economy and Politics)
(Frankfurt: Campus Verlag, 1996), p. 19.
23
Christopher Hood, The Art of the State, p. 77.
24
Manfred G. Schmidt, Wörterbuch zur Politik (Dictionary of Politics) (Stuttgart: Kröner,
2004), p. 300.
UNEVEN POLICY IMPLEMENTATION
59
underlined by threats of punishment are the most important means to influence
individual behavior and compel adherence to universally valid rules.
25
Hierarchies
provide control, expertise and predictability, and careful planning can help to prevent
the occurrence of “public management disasters”.
26
On the other hand, the more
elaborate these structures, the more inflexible and therefore vulnerable to
unanticipated events they become.
Command hierarchies can also produce information asymmetries. Principal–
agent theory has stressed the danger of agents exploiting this asymmetry to further
their own agendas, shirk their duties or even sabotage the assignments imposed
from above.
27
Since agents are seldom included in the formation of the values that
underlie the policies espoused by the principal, they often lack the intrinsic moral
motivation to help the principal realize his aims.
28
As supervision and coercion have proven costly and limited instruments against
agent deviation, proponents of steering by means of competition assume that
markets are more responsive and effective than hierarchies.
29
As Hood puts it,
“competition is most commonly used in attempts to contain costs and waste,
improve quality and avoid concentration of power”.
30
If agents are made to
compete, it is not the threat of coercive force which structures their incentives but
the expectation of rewards if they perform well. Typically, the flow of resources
to subordinate organizations is tied to the fulfillment of contracts or simply to their
ranking within the cosmos of like organizations. Of course, initiative in coming up
with innovations or best practices can be subject to such rewards as well.
31
However, market-like competition induces individualism and neglects the collective
benefit. Efficiency is deemed more important than equality, hindering co-operation
and furthering corruption.
32
The third ideal type (networks) is based on the recognition that principal and
agents need to share certain values in order for policies to be sustainable. Rather than
setting performance or output standards, the principal seeks to persuade his agents and
is, at the same time, open to persuasion. As a consequence, both parties feel bound to
cooperate in fulfilling the goals on which they have agreed. Control does exist,
25
Burkhard Eberlein and Edgar Grande, “Entscheidungsfindung und Konfliktlösung”
(Decision-making and Conflict Resolution), in Klaus Schubert and Nils C. Bandelow (eds),
Lehrbuch der Politikfeldanalyse (An Introduction to Policy Analysis) (München:
Oldenburg, 2003), p. 178.
26
Christopher Hood, The Art of the State, pp. 24-25.
27
John Brehm and Scott Gates, Working, Shirking, and Sabotage: Bureaucratic Responses to
a Democratic Public (Ann Arbor: University of Michigan Press, 1997).
28
Ibid., Chapter 2.
29
Christopher Hood, The Art of the State, p. 100.
30
Christopher Hood, “Control over Bureaucracy”, p. 216.
31
Christopher Hood, The Art of the State, pp. 50-51.
32
Ibid., pp. 55-60.
THE CHINA JOURNAL, No. 65
60
but rather in the form of mutuality: the parties involved hold each other accountable to
their negotiated contract.
33
Consensus-building not only helps to integrate the agent into the solution but
further serves to identify different perceptions of the nature of the problem.
What might be perceived a grave problem by the central government (for
example, rising local-level public debt) might not cause the county Party secretary
too much worry (because he will be promoted to another location soon).
However, decisions based on consensus tend to come about slowly, and the
participants’ unwillingness to accept a higher authority to break deadlocks can
lead to unresolved feuds that can split the community.
34
Comprehending the strengths and weaknesses of policy steering instruments
allows us to understand better why the central government has favored certain
instruments over others, and why their application has generated favorable responses
in some localities and resistance in others. For example, the implementation of
important reforms by means of competition under hierarchy is the result of a paradox
that has characterized central–local relations in China since “Reform and Opening”,
and even before. On the one hand, higher administrations need to rely on regulation,
supervision and punishment to prevent the localities from distorting central policies
or not implementing them at all. On the other hand, giving the subordinate
administrations a certain degree of autonomy has been essential for implementing
national policies across a country as large and heterogeneous as China.
35
There can be no doubt that competition under hierarchy has been immensely
successful in promoting economic growth in China. For example, since good
economic performance was vital to China’s development and seemingly easy to
measure, township- and village-level leaders were thrown into fierce competition
over meeting and surpassing industrial production targets. According to Jean Oi,
turning counties into “corporations” that operate in competitive markets has spurred
impressive economic growth in a diverse, hugely populated, authoritarian and
centralized polity, even in the absence of clearly defined property rights and
transparency.
36
However, as Jae-ho Chung has shown with respect to China’s
agricultural sector, localities, especially those with a profitable collective sector,
initially resisted market liberalization. Applying the tools of coercion identified
above, the center nevertheless managed to break local resistance and ensure the
reform’s uniform implementation.
37
Conversely, the risks inherent in these
instruments are also readily visible. For example, many underdeveloped township-
and county-level governments were forced to channel revenues into capital
construction instead of putting them to better use elsewhere, thereby flooding
33
Christopher Hood, The Art of the State, Chapter 6.
34
Ibid., p. 28.
35
Linda Chelan Li, “Differentiated Actors,” pp. 163-71.
36
Jean Oi, Rural China Takes Off: Institutional Foundations of Economic Reform (Berkeley:
University of California Press, 1999).
37
Jae-ho Chung, Central Control and Local Discretion, Chapter 6.
UNEVEN POLICY IMPLEMENTATION
61
local markets with unneeded goods of low quality.
38
Huge sums of money were
borrowed from organizations and individuals, often illegally, to meet the center’s
targets. As one Anhui township official put it: “At that time [in the latter half of
the 1980s], the forceful development of TVEs was promoted ... In those years, the
TVEs did indeed develop, but now they are basically all bankrupt. Actually,
though, it doesn’t matter if a TVE prospers or not, because the debt is never
repaid anyway.”
Thus, competition under hierarchy produced not only pioneers who built up
competitive industries, improved the investment climate and built up social
security systems for migrant workers, but also resisters, as well as bandwagoners
who followed the letter, but not the spirit, of such policies.
39
Arguably, the
manifestation of these strengths and weaknesses in different localities
contributed to the increase of regional inequality.
40
Of course, the lack of central
government funds and the endeavor to prevent administrative slack were good
reasons for fostering this competition of unequals, but this decision also
contributed to the increasingly serious problem of villagers being milked for
funds to finance projects that were often useless.
41
As has been shown repeatedly, it was precisely in regions with low degrees
of industrialization and hard budget constraints where local cadres increasingly
took to imposing levies on farmers.
42
This means that, despite generating
winners elsewhere, competition under hierarchy aggravated the rural burden
problem. Ironically, it was this same instrument that was utilized to induce local
governments to come up with policies aimed at remedying these negative
outcomes, including the RTFR.
38
Susan H. Whiting, Power and Wealth in Rural China: The Political Economy of
Institutional Change (New York: Cambridge University Press, 2001). The resemblance of
such target-setting activities to policy implementation during the Great Leap Forward is not
lost on observers. As Jonathan Unger points out, the setting and even increasing of
unrealistic quotas today bears considerable likeness to policy implementation during the
planned economy era. Jonathan Unger, The Transformation of Rural China (Armonk:
M. E. Sharpe, 2002), pp. 197-204.
39
Jae-ho Chung, Central Control and Local Discretion, Chapter 1.
40
Findings presented in Björn Gustafsson, Shi Li and Terry Sicular, Inequality and Public
Policy in China (Cambridge: Cambridge University Press, 2008), pp. 6-9, point towards
such an argument.
41
For a good example, see Graeme Smith, “Political Machinations”, pp. 52-54.
42
Zhao Shukai, “Xiangzhen gaige: jiantao yu zhanwang” (Township and Town Reforms:
Exploration and Prospects), in Wu Xin, Lu Xueyi and Li Peilin (eds), 2005 nian: Zhongguo
shehui xingshi fenxi yu yuce (Analysis and Forecast on China’s Social Development [2005])
(Beijing: Shehui Kexue Wenxian Chubanshe, 2005), pp. 65-78; Thomas P. Bernstein and
Xiaobo Lü, Taxation without Representation in Rural China (Cambridge: Cambridge
University Press, 2003); Jonathan Unger, The Transformation of Rural China, pp. 204-13.
THE CHINA JOURNAL, No. 65
62
The Rural Tax and Fee Reform: Intentions and Outcomes
Termed the “Third Revolution in the Chinese Countryside”,
43
the RTFR was a
major attempt by the central government to reduce the fiscal burden imposed on
China’s rural population. Like so many other reform policies, it had its origins in
experiments conducted by well-meaning local cadres and was appropriated by the
central government in 1998 after more than five years of local experimentation.
44
It was first tested province-wide in Anhui Province in 2000, and extended to
the rest of China in 2002 and 2003. The formative document of the reform
(“Document No. 7”) makes clear that the ultimate aims of the RTFR were not
only the improvement of rural stability but also the strengthening of the national
economy: by transferring a larger part of the GDP to the villagers, the purchasing
power of the majority of China’s population would be increased and agricultural
productivity enhanced.
45
Unlike earlier approaches to burden reduction, which had all failed, the
RTFR combined the simplification and formalization of local revenue
collection and redistribution with far-reaching institutional reforms at the local
level. As one document put it, “the RTFR not only implies the regulation of the
distributive relationship between national and rural income, but amounts to a
large transformation of the village superstructure”.
46
Thus, from the beginning,
the very specific aims prescribed by the “main reform” (zhuti gaige
主体改革),
most notably abolishing all local taxes, fees and levies except for the agricultural
tax, was accompanied by an imperative to implement far more generally
formulated “complementary reforms” (peitao gaige
配套改革) aimed at improving
local governance.
47
First of all, local governments were required to streamline
their operations, for example by shedding superfluous employees, privatizing
services, merging village schools and reducing the number of teachers. Second,
the fiscal administration at the county and township levels was to be improved.
43
Zhang Deyuan, “Wo kan ‘nongcun di san ci geming’” (My Viewpoint on “The Third
Revolution in the Countryside”), Shehui kexue zhanxian (Social Science Front), Vol. 2003,
No. 2 (2003), pp. 167-70.
44
For the intellectual origins of the RTFR, see Linda Chelan Li, “Path Creation? Processes
and Networks: How the Chinese Rural Tax Reform Began”, Policy and Society, Vol. 25,
No. 1 (2006), pp. 61-84, and He Kaiyin and Sun Li (eds), Zhongguo nongcun shuifei gaige
chutan (A First Exploration of the RTFR in China) (Beijing: Zhongguo Zhigong
Chubanshe, 2000).
45
Zhonggong zhongyang guowuyuan (Central Committee of the Communist Party of China
and State Council), Guanyu jinxing nongcun shuifei gaige shidian gongzuo de tongzhi
(Notification Regarding the Advancement of Work in RTFR Experimental Points), 2
March 2000, hereafter Zhongfa, Guanyu jinxing (2000), No. 7.
46
Guowuyuan bangongting (General Office of the State Council), Guanyu zuo hao 2002 nian
guangda nongcun shuifei gaige shidian gongzuo de tongzhi (Notification Regarding the
Orderly Expansion of the RTFR Experimental Points in 2002), 27 March 2002, (Guobanfa
[2002], No. 25).
47
Zhongfa, Guanyu jinxing (2000), No. 7.
UNEVEN POLICY IMPLEMENTATION
63
Third, a burden supervision system was to be established.
48
The aim of the latter
measures was to make the reform sustainable by re-centralizing local prerogatives,
but also to save administrative costs and thereby compensate for local-level revenue
losses resulting from the tax and fee reduction. In fact, as a senior official in
Anhui’s RTFR Leading Small Group (LSG) explained to me, the central
government at first did not intend to subsidize the reform. The bulk of the reform
costs were to be shouldered by the county and township governments themselves,
and necessary transfer payments were mainly the responsibility of the provinces and
cities. Thus, sustained burden reduction hinged on the localities’ proactive
collaboration in the austerity policies directed against them. As Document No. 7
puts it, “reduced revenue will affect expenditures. The county- and township-level
governments must solve this problem mainly by transforming government
functions, simplifying the administrative structure, reducing the number of persons
supported by public finances, and readjusting the expenditure structure.”
49
At first, the RTFR was celebrated as a great success. When it was tested in
Anhui, the rural burden was reported to have decreased by almost 38 per cent.
50
At the national level, average burden reduction even reached 45.8 per cent after
the reform’s extension in 2003,
51
testifying to the fact that implementing the
“main reform” had become a “hard target”.
52
However, a large variation underlies
these figures. For example, the average per capita rural burden in Anhui’s
Dangshan County declined by 75.6 per cent between 1999 and 2003, but the
corresponding figure for Dangtu County was only 3.9 per cent.
53
With the abolition
of the high tax on agricultural cash crops (nongye techan shui
农业特产税),
54
per capita burden was reduced more than 60 per cent in the tea-growing
counties of southern and western Anhui. In many central Anhui counties,
however, the burden reduction rate lay significantly below the national average.
48
Zhongfa, Guanyu jinxing (2000), No. 7.
49
Ibid.
50
Anhui Province, RTFR LSG, Anhui sheng nongcun shuifei gaige qianhou nongmin fudan
qingkuang biao (Situation of the Peasant Burden Before and After the RTFR in Anhui
Province) (Unpublished government document, 2003).
51
Zhu Shouyin, Zhang Haiyang and Yan Hui, “Nongcun shuifei gaige shidian he xiangcun
guanli tizhi gaige genzong yanjiu baogao” (Follow-up Research Report on the RTFR
Experimental Spots and the Reform of Rural Administration), Jingji yanjiu cankao
(Economic Research Reference), Vol. 2003, No. 40 (2003), pp. 2-24.
52
John James Kennedy, “The Implementation of Village Elections”, p. 60.
53
My own calculations based on Anhui Province, RTFR LSG, Anhui sheng nongcun shuifei
gaige, Anhui tongji nianjian 2000 (Anhui Statistical Yearbook 2000) (Beijing: Zhongguo
Tongji Chubanshe, 2000), table 4-14; Anhui tongji nianjian 2004 (Anhui Statistical
Yearbook 2004) (Beijing: Zhongguo Tongji Chubanshe, 2004), tables 4-19 and 8-10.
54
The role of the provinces in this process is analyzed in Linda Chelan Li, “Differentiated
Actors”, pp. 167-71.
THE CHINA JOURNAL, No. 65
64
Such a great variation would not have been problematic if the poorer villagers
had benefited from the larger reductions. As several studies show, however, this was
not the case. The poorer a locality was, the more the inhabitants actually suffered
from the impacts of the reform.
55
Problems in implementation are also revealed by the
increase in complaints that were lodged against the government of Anhui Province.
The senior official quoted above recalls that, during this phase, the number of people
coming to the provincial government was “enormous”, and that he talked to “several
dozen people” every day. Indeed, according to official figures, the number of
complaint visits increased from 222,145 in 1999 to 339,000 in 2003.
56
As John James Kennedy has shown, the rural population in poorer regions was
affected not only by continued fee-taking but also by the negative impact which the
reform had on the provision of medical services and basic education, problematic
even before the reform.
57
In fact, the higher medical and educational expenses
which these villagers had to shoulder offset the beneficial effects of burden
reduction.
58
At the heart of this problem was the disastrous impact which the RTFR
had on government revenues.
Again, Anhui Province provides a good example. As Figure 1 illustrates, the
poor and largely agricultural northern Anhui counties faced revenue losses of up to
60 per cent, which made it difficult for them to continue providing basic social
services. In fact, one of the negative effects of the reform was to widen further
55
Loren Brandt, Liu Haomiao, Scott Rozelle and Zhang Linxiu, China—Rural Public
Finance: The Township Perspective. Annex 8: World Bank Report. Fiscal Reform and Role
of the Township (Washington: World Bank, 2006); Wang Bing and Zhao Yang, “Nongcun
shuifei gaige dui zhongxi bu xiangzhen caili yingxiang de shijian yanjiu—jiyu 4 sheng 8
xian chouyang diaocha shuju de fenxi” (Empirical Research on the Fiscal Effects of the
RTFR on Central and Western Chinese Townships and Towns), Guanli shijie (World of
Management), No. 11 (2006).
56
During the same time, the number of complaint letters decreased from 85,301 to 73,500
(Anhui nianjian 2000 (Anhui Almanac 2000) (Hefei: Anhui Renmin Chubanshe), p. 30;
Anhui nianjian 2004, p. 34).
57
John James Kennedy, “From the Tax-for-Fee Reform to the Abolition of Agricultural
Taxes: The Impact on Township Governments in North-West China”, The China
Quarterly, No. 189 (2007), pp. 43-59.
58
There is a large number of descriptive, often fieldwork-based Chinese-language studies on
the implementation of the RTFR. As a tendency, these studies agree that the reform has
significantly reduced peasant burden. Simultaneously, however, they also tend to confirm
the problems mentioned so far. Book-length studies include Zhou Nongjian and Wu
Yemao, Shuifei gaige: nongcun zhili moshi de yueqian (The RTFR: The Transformation of
Rural Governance) (Beijing: Shehui Kexue Wenxian Chubanshe, 2007); Xiang Jiquan,
Zouchu “Huang Zongxi dinglü” de guaiquan: Zhongguo nongcun shuifei gaige de diaocha
yu yanjiu (Breaking Through the Vicious Cycle of Huang Zongxi’s Law: Investigation and
Research of the RTFR in China) (Xi’an: Xibei Daxue Chubanshe, 2004); Ma Xiaohe,
Huang Hanquan and Jiang Changyun, Wo guo nongcun shuifei gaige yanjiu (Researching
the RTFR in China) (Beijing: Zhongguo Jihua Chubanshe, 2002).
UNEVEN POLICY IMPLEMENTATION
65
the revenue inequality between Anhui’s counties and, by extension, the inequality
in the provision of basic infrastructure and social services.
59
Figure 1: Spatial Distribution of Per Capita Budgetary Revenue in 1999 (left,
in yuan) and Budgetary Revenue Decrease (right, in per cent), County Level,
Anhui Province (1999–2003)
Source: My own figure based on Anhui Province, RTFR LSG, Anhui sheng nongcun
shuifei gaige, Anhui tongji nianjian 2000, tables 4-14; Anhui tongji nianjian 2004,
Table 8-10.
It is safe to say that the RTFR did not bring about the desired results, and that it
was the uneven implementation of this policy which prompted policy-makers to
announce in early 2004, only one year after the policy had been implemented
nation-wide, that the agricultural tax would also be abolished. The abolition of the
agricultural tax was in many ways the opposite of what had been intended in the
initial reform design. Whereas the aim was merely to lighten the burden of the rural
population, in the end they were completely freed from contributing to financing the
state. Furthermore, the need to keep villages and townships functioning was
recognized as one of the “basic principles” (jiben yuanze
基本原则) of the reform,
but in many places this principle could not be upheld. In a related manner, the
center planned not to get involved in financing this reform, but ended up footing
the bill. In Anhui Province, for example, in the year before the reform county-level
59
Christian Göbel, The Politics of Rural Reform in China: State Policy and Village
Predicament in the Early 2000s (Abingdon: Routledge, 2010), Chapter 7. John James
Kennedy observed the same trend at the township level in Shanxi (John James Kennedy,
“From the Tax-for-Fee Reform”, pp. 43-59).
THE CHINA JOURNAL, No. 65
66
budgetary expenditures surpassed budgetary revenues by 26 per cent. In 2007 this
difference had reached 221 per cent and the deficit was mostly financed by the
central government.
60
Another ironic outcome is that the number of administrative
cadres increased between 2002 and 2005 after having stagnated for 10 years,
despite the fact that a main goal of the reform was to downsize the cadre
workforce.
61
A probable reason for this is that county governments added more
personnel in order to facilitate the implementation of the RTFR, while lower-level
cadres were not laid off, but simply transferred within the system. According to
one village Party Secretary, about 9,000 cadres were “sent down” to become
village branch secretaries.
62
Against this backdrop, it remains doubtful whether the adjustment in 2004
was indeed, as the central government portrays it, the “second step” of the RTFR.
63
It seems more likely that, as Linda Chelan Li has put it, a series of unintended
consequences resulting from strategic interaction in a multi-level system was
depicted in retrospect as “a succession of co-coordinated central measures with
coherent objectives”.
64
The framework elaborated above serves well not only to capture analytically
the variation in local implementation that led to these unintended outcomes but also
to relate this variation to the particular policy instruments applied by the central and
provincial governments. Competition under hierarchy was the predominant
instrument for steering the implementation and refinement of the RTFR, and, in
line with its strengths and weaknesses, it produced both pioneers and resisters.
It stimulated innovation, refined the RTFR and extended it even against massive
resistance; it also increased intraregional inequality and prompted attempts to
shirk and sabotage policy implementation. The central government eagerly
integrated policy innovations produced by the pioneers, but also had to address
the concerns of the resisters. This largely explains the considerable twists and
turns of RTFR implementation.
60
My own calculation from Anhui tongji nianjian 2000, table 8-05 and Anhui tongji nianjian
2008, tables 7-09 and 7-10. Insights into the bargaining process between the Center and the
provinces are found in Linda Chelan Li, “Working for the Peasants? Strategic Interactions
and Unintended Consequences in the Chinese Rural Tax Reform”, The China Journal, No. 57
(2007), pp. 100-05.
61
My own calculation from Zhongguo tongji nianjian (China Statistical Yearbook) (Beijing:
Zhongguo Tongji Chubanshe), 2003 (table 5-08), 2004 (table 5-08), 2005 (table 5-08) and
2006 (table 5-08).
62
The senior official quoted above confirmed this figure (Interviews, F County, 14 August
and Hefei, 17 August 2004).
63
State Council General Office, Report on the Work of the Government 2005,
http://www.gov.cn/english/official/2005-07/29/content_18351.htm
(accessed on 12 August
2010).
64
Linda Chelan Li, “Working for the Peasants?”, p. 90.
UNEVEN POLICY IMPLEMENTATION
67
Reform Design
According to Document No. 7, the reform combines two related features: it consists
of a centrally mandated “unified national policy” and concurrently demands the “full
incorporation of every locality’s unique circumstances [as well as] the reliance on
dispersed policy-making”.
65
This very much corresponds to hierarchical regulation
and the stimulation of competition.
The document clearly decreed which levies and fees had to be reduced and to
what extent, as well as which fees could be retained and at what rate. Also, with
regard to the “complementary reform” policies, it specified broad aims against
which local performance would be measured. However, there were no clear rules
about how this was to be achieved, and how local governments were to deal with
the extraordinary financial losses that were certain to follow.
66
As the former head
of the RTFR small group in Anhui’s W County put it: “This policy had the
highest priority and absolutely had to be implemented. As for the lack of revenue,
you had to find a way to solve this problem. However, under no circumstances
were you allowed to increase peasant burden.”
67
This is exactly where “dispersed policy-making” came into play. As shown
above, the aims formulated under the heading “complementary reform policies”
were far broader than those of the “main reform”. This provided much latitude for
local governments to experiment with concrete policies to overcome reform-
induced problems. However, the document also specified that such experiments
should be conducted on the basis of “broad consultation with grass-roots
[governments] and peasants”.
68
The RTFR was tested in Anhui Province from 2000, and it is interesting to see
how each level chose to adapt the “unified national policy” to “every locality’s unique
circumstances”. Less than one month after the RTFR had formally kicked off, the
government of Anhui Province passed nine supplementary documents to regulate
reform implementation at the county level.
69
The subject areas regulated by these
documents were quite comprehensive, ranging from township-level fiscal reforms
to issues of village governance. Like the documents promulgated by the central
65
Zhongfa, Guanyu jinxing (2000), No. 7.
66
Nevertheless, irregular and small-scale transfer payments had started as early as 2000. That
year, the central government transferred 1.1 billion yuan to Anhui, the provincial government
added another 100 million yuan (Zhang Ping, Anhui nongcun shuifei gaige shijian yu tansuo
[Practice and Exploration of Anhui’s RTFR] [Beijing: Dangdai Chubanshe, 2001]).
67
Interview, W County, 8 March 2006.
68
Zhongfa, Guanyu jinxing (2000), No. 7.
69
Zhonggong Anhui sheng bangongting, Anhui sheng renmin zhengfu bangongting (Office of
the Anhui Provincial Committee of the Communist Party of China, People’s Government of
Anhui Province), Guanyu yinfa Anhui nongcun shuifei gaige youguan peitao wenjian de
tongzhi (About the Printing and Distribution of Supplementary Documents Related to the
RTFR in Anhui Province), 29 September 2002, hereafter Wanbanfa, Guanyu yinfa (2000),
No. 11.
THE CHINA JOURNAL, No. 65
68
government, however, they provided few guidelines on how to tackle these issues,
and again left it to the next lower level to formulate and implement substantive
policies in line with local circumstances. In essence, the responsibilities outlined by
the central government were passed down the administrative hierarchy until they
could not be passed down any further. In this way, the lowest levels of government
became responsible de facto for the implementation of the RTFR.
70
To illustrate the
mixture of high expectations and vague instructions with which county-level
governments were confronted, it is worth quoting a passage from the supplementary
document guiding the key issue of county-township fiscal relations:
Consider all factors while planning; appropriately address the imbalance in
township and town finances [caizheng qingxie 财政倾斜]. Adjust correctly the
fiscal relations between county and township; sensibly reallocate county and
township fiscal resources. While ascertaining that the fiscal needs of the
counties are met, take the utmost care to protect the fiscal interests of the
townships and towns, and ensure that the basic expenditures needed to keep
township and town organization functioning are met.
71
In other words, these documents put forward a wish list of desirable policies, but
did not tell the counties how to achieve these lofty, and often incompatible, claims.
Their vagueness encouraged competition to come up with the best solutions for
improving local government, while implicitly threatening to call policy violators to
heel. This suggests that the central government sought to replicate the successful
combination of hierarchical steering and competition in earlier policies to implement
a rural fiscal and administrative reform that was national in character, but at the same
time sensitive to local contexts. However, policy-makers may have underestimated
the weaknesses inherent in these instruments. While some pioneers did emerge,
resistance eventually became so severe that the initial policy had to be adjusted in
ways that demanded significantly more involvement by the central government.
Pioneers
What were the motives of the pioneers in contributing to reform formation? First,
although the task of specifying workable reform measures eventually fell to the
county governments, this was not the level at which they were implemented. Rather,
the townships and villages became the sole targets of the austerity measures
implemented to finance the RTFR.
72
This strengthened the counties at the cost of
townships and villages, making the reform somewhat more attractive for the counties.
70
Linda Li describes this as the center’s abrogation of its responsibility in the name of
decentralization (Linda Chelan Li, “Differentiated Actors”, p. 167).
71
Wanbanfa, Guanyu yinfa (2000), No. 11.
72
According to Wu Licai, 83 per cent of the deficit occurred at the township level (Wu Licai,
“Nongcun shuifei gaige dui xiangzhen caizheng de yingxiang ji qi houguo: yi Anhui sheng
wei li” (The Effects of the RTFR on Township and Town Finances and Their Consequences:
Taking Anhui Province as an Example) (2004), http://www.usc.cuhk.edu.hk/
wk_wzdetails.asp?id=2114 (accessed on 12 August 2010).
UNEVEN POLICY IMPLEMENTATION
69
Second, the reform had the potential to improve social stability, which had become an
important factor in local cadre assessment. When asked about their motivations for
engaging or co-operating in the RTFR, leading cadres in pioneering localities
commonly answered that the relationship between cadres and villagers had worsened
to an extent that made rural governance difficult.
73
Third, local cadres who played a
leading role in designing and implementing a pioneering policy had a realistic hope of
being rewarded or promoted.
74
Fourth, localities which engaged in important reforms
received preferential treatment. In He County, a pioneer not only in implementing
the “main reform” but also in devising important complementary reforms,
75
the
government was allowed to break the strict moratorium on incurring new debt
and, within two years of the start of the reform, overall township-level liabilities
increased by almost one-third.
76
Hence, despite the problematic nature of the policy, there was no shortage of
pioneers who were crucial for devising best solutions that could then be
implemented on a larger scale. In Anhui, for example, the idea of putting
township-level finances under county management (xiang cai xian guan
乡财县管)
originated in Anhui’s He County in 2003, and the abolition of the tax on special
agricultural products was first tried in Wuhe County. Wuhe County also pioneered
devising personnel reduction schemes.
77
These are no isolated cases. In Anhui
alone, 274 officials and 178 units were honored in 2003 for their proactive role in
contributing to the development of the reform.
78
73
Worsening peasant–cadre relations were cited by Li Peijie, the protagonist of the first local
RTFR experiment in 1992 (Zhu Anming and Yao Changhui, “Nongcun shuifei gaige
shidian yixian zhuizong [yi]” [Tracing the Path of the RTFR Experimental Spots (Part
One)], Zhongguo caijing bao [China Finance Bulletin], 13 October 2003) as well as by two
leading cadres interviewed by the author in two central Anhui counties in 2004 (He County,
18 August) and 2006 (W County, 8 March).
74
Interview, W County, 8 March 2006. See also Linda Chelan Li, “Path Creation?”, p. 77.
75
In the first half of 2000, He County experimented with democratic procedures in raising
money for public projects (yi shi yi yi), which was publicly lauded by Wang Taihua, then
Party Secretary of Anhui Province (Interview, He County, 18 August 2004).
76
He County’s liabilities increased from 67.7 million yuan in 2000 to 81.0 million yuan in 2001
and 87.7 million yuan in 2002. See He xian zhengfu, He xian xiangzhen caizheng guanli
fangshi gaige gongzuo qingkuang huibao (Work Status Report for the Township-Level Fiscal
Administration Reform in He County) (Unpublished government document, 2004).
77
Chen Guidi and Wu Chuntao, Zhongguo nongmin diaocha (An Inquiry into the Situation of
China’s Peasants) (Beijing: Renmin Wenxue Chubanshe, 2004), pp. 384-94.
78
Zhonggong Anhui shengwei, Anhui sheng renmin zhengfu (Anhui Provincial Committee of
the Communist Party of China, People’s Government of Anhui Province), Guanyu biaozhang
quan sheng nongcun shuifei gaige shidian gongzuo xianjin danwei he xianjin geren de
jueding (Decision Regarding the Commendation of Progressive Units and Individuals in the
Provincial RTFR Experimentation Work), 19 March 2003 (Wan [2003], No. 38).
THE CHINA JOURNAL, No. 65
70
Supervision and Coercion
However, many local governments saw themselves unfit or unwilling to
implement even the “main reform” of burden reduction. Here, hierarchical
steering by the well-known means of supervision and coercion were the main
instruments. Villagers were called upon as collaborators to monitor the collection
of taxes and fees
79
Most notably, at the very start of the reform in 2000, the Office
of the provincial RTFR Leading Small Group (LSG) delivered a “Letter
Addressing the Peasant Masses of the Whole Province” to each rural household.
This letter explained both the policy and the rights and responsibilities of each
household very clearly, and gave hope that complaints would be heard.
80
In
addition, the reform was widely publicized in the newspapers, advertised on
provincial TV channels, and spread by word of mouth in its first year. Hotlines
for lodging complaints were installed. Finally, the reverse side of the “Tax
Notification Card” (Anhui sheng nongye shui nashui tongzhishu
安徽省农业税纳
税通知书
), which was handed out to each household, carried the phone numbers
of 17 provincial departments responsible for the administration of taxes and fees.
Coercion also played a major role in the implementation of the reform. In late
September 2000, an “emergency video and telephone conference” was convened by
the Anhui provincial Party Committee and the government. The purpose of this
conference was to “... address the serious contradictions that have emerged during the
RTFR and the extraordinary rise of collective petitions that have accompanied
them”.
81
The outcome of this conference was a “responsibility system” for the work in
letter and complaints. Those leading Party and government cadres who “did not take
seriously” such work would be “punished”. Depending on the severity of the
situation, the result would be “criticism in an internal circular”, “an instruction to
write a self-criticism”, a “warning of dismissal from office” or “punishment by the
Party or government disciplinary committee”.
82
The latter usually resulted in
dismissal from office or, in the worst case, the revocation of Party membership and
thus the end of one’s political career. These were no empty threats. According to
a senior official in Anhui’s RTFR LSG, the government had been decidedly
heavy-handed in their efforts to ensure the policy’s success:
We dealt with them [cadres violating burden reduction policies] severely.
Single cases involved more than ten, twenty, several dozen people. If we have
79
There is of course nothing new about enlisting the peasants’ help to supervise grass-roots
cadres. For example, this was the basic idea behind implementing village elections. See
Daniel Kelliher, “The Chinese Debate over Village Self-Government”, The China Journal,
No. 37 (1997), pp. 63-86.
80
Anhui Province, RTFR LSG, Zhi quan sheng guangda nongmin qunzhong de yi feng xin
(Letter Addressing the Peasant Masses of the Whole Province), available online at
http://xz4.2000y.net/114005/index.asp?xAction=xReadNews&NewsID=680
, accessed
9 November 2010.
81
Anhui nianjian 2001, p. 31.
82
Ibid.
UNEVEN POLICY IMPLEMENTATION
71
to punish them, we will punish them. The main aim is to ensure the continuity
of the policy … We were able to improve some cadres’ conduct by ways of
educating them. We do all we can to not have to punish people.
Most cases occurred in 2000 and 2001.The official pointed out that 822 cases
had been investigated and 224 people punished by 2003, most of them township-
level cadres. However, the actual number of cases was much higher. As the former
head of W County’s Policy Research Commission pointed out when confronted
with these figures, “people were punished pretty much everywhere, but these cases
were never recorded”.
While the combination of hierarchical steering and competition was successful
in refining the RTFR and spreading it beyond Anhui Province, even against massive
resistance, the negative impacts of these instruments were also very significant.
The drawback of competition was that it favored those counties that could mobilize
non-agricultural resources to finance the RTFR.
83
Agricultural counties not only faced
greater revenue losses than non-agricultural counties but also lacked the fiscal means
to compensate for these losses. As a result, they were put at clear disadvantage vis-à-
vis non-agricultural counties, and revenue- and expenditure-inequality increased
dramatically between 2000 and 2003.
84
Since there is a significant correlation
between rural income and government revenue,
85
the poorer villagers were indirectly
affected by the reform because they tended to live in the “hollowed-out” townships
described above. With regard to hierarchical steering, reform implementation was
quite vulnerable to local agents identifying loopholes in reform regulation that could
not be foreseen by the reform planners. In addition, the information asymmetry
between the spatial levels facilitated local-level shirking and sabotage.
Resisters
Resistance against the reform manifested itself in three kinds of strategies, which
can be distinguished by their degree of legality. Many governments continued to
levy various fees, which was clearly illegal. Another set of practices fell into a legal
grey zone, most notably exploiting legal loopholes to extract monies from
subordinate governments and, ultimately, villagers. Finally, many governments
sought to escape the financial conundrum not by downsizing their administrations
83
Christian Göbel, The Politics of Rural Reform, p. 137.
84
The Gini coefficients of per capita county-level budgetary revenue in Anhui Province almost
doubled from 0.134 in 1999 to 0.242 in 2003. The corresponding coefficients for county-level
budgetary expenditure increased less drastically from 0.147 to 0.218. It should be noted here
that with the abolishment of the agricultural tax, the Gini coefficient for budgetary revenue
further increased to 0.379 in 2006. The Gini coefficient for expenditures rose less drastically
to 0.233, signifying the prominent role that transfer payments have taken in balancing out
revenue inequality (my own calculations based on Anhui Sheng, RTFR LSG, Anhui sheng
nongcun shuifei gaige, Anhui tongji nianjian 2000, table 8-05; Anhui tongji nianjian 2004,
tables 8-10 and 8-11; and Anhui tongji nianjian 2007, tables 8-10 and 8-11).
85
Christian Göbel, The Politics of Rural Reform, p. 137.
THE CHINA JOURNAL, No. 65
72
but by reducing rural service provision. Although this ran counter to the original
intentions of the RTFR, leaders who saved money by spending less on local
development and providing vital services did not violate the law.
Illegal fee-taking continued exactly where rural income was lowest, which
caused an increase in the number of letters and complaints to the provincial and
central governments. Another sure-tell sign for the persistence of illegal fee-taking
was the passage by the government of Anhui Province of two “Urgent
Notifications” in 2001, which reaffirmed the central government’s moratorium both
on levying unapproved fees and on settling old accounts.
86
Many villagers had in
the past not been able to pay their full taxes, and governments sought to make up
for revenue shortfalls by demanding repayment of these arrears, often forcefully
and by confiscating property. For example, one interviewee in a rural Hebei village
reported that township officials entered his home and confiscated a DVD player
because his wife did not show up for the mandatory birth control exam and failed to
pay the fine. Of a more systematic nature was the enforcement of agricultural tax
collection quotas. These quotas were calculated on the basis of registered farmland,
the average yield in the five years before the reform started and the market prices of
the agricultural products. However, this calculation neither reflected the loss of
farmland that was abandoned or requisitioned for local development purposes nor
took into consideration villagers who had left the countryside or were unable or
unwilling to pay their taxes. If these shortfalls could not be compensated by relying
on alternative sources of revenue, they had to be apportioned among the actual tax
payers. This led to a worrying phenomenon which Zhang Deyuan termed the “tax
enforcement effect” (bi shui xiaoying
逼税效应):
87
village cadres coerced farmers
into paying their taxes even if they did not have any money to do so. As Li
Changping has noted, this practice may well have contributed to a rural suicide rate
much higher than that in the cities.
88
Despite such problems, enforcing the payment
86
Anhui sheng renmin zhengfu, Guanyu jin yi bu luoshi nongcun shuifei gaige zhengce zuo hao
wending nongmin fudan gongzuo de jinji tongzhi (Urgent Notification Regarding the Further
Implementation of the RTFR Policies and Improving the Stabilization of the Peasant Burden),
31 December 2001 (Wanzhengmingdian [2001], No. 20); Anhui sheng caizhengting (Anhui
Provincial Department of Finance), Guanyu zhanting xiang nongmin fentan he shouju
jiaqiang guangai nongye xiangmu huandai zijin de jinji tongzhi (Urgent Notification
Regarding the Temporary Cessation of Apportioning among and Obtaining Funds from the
Peasants for Paying Back Loans Obtained for Improving Rural Irrigation Projects), 20 June
2001 (Caiji [2001], No. 560).
87
Zhang Deyuan, “Shuifei gaige hou de ‘bishui xiaoying’” (The “Tax Enforcement
Phenomenon” After the RTFR), in Li Changping and Dong Leiming (eds), Shuifei gaige
beijing xia de xiangzhen tizhi yanjiu (The RTFR and the Fiscal System at the Township
Level) (Wuhan: Hubei Renmin Chubanshe, 2004), pp. 326-30; see also Zhang Deyuan,
“‘Bi shui’ hai zai jixu” (Tax Enforcement Still Continues), Gaige neican (Unpublished
government document of Reform Magazine), No. 31 (2003), pp. 20-24.
88
Li Changping, “Nongmin de pinkun: tudi, quanli, ziyou fazhan” (Peasant Poverty: the
Development of Land, Power, Freedom), in Zhou Yuan (ed.), Nongmin! Nongmin!
(Peasant! Peasant!) (Guangzhou: Huacheng Chubanshe), pp. 4-9.
UNEVEN POLICY IMPLEMENTATION
73
of tax arrears was not considered illegal before it was explicitly prohibited in an
Urgent Notification passed by the central government in 2002.
89
Besides illegal fee-taking, local governments found semi-legal ways to continue
extracting resources from the villagers. A study of four provinces (Jiangsu,
Anhui, Heilongjiang and Guizhou) by three researchers of the Agricultural
Ministry’s Office for Rural Reform Experimental Districts (Nongyebu nongcun
gaige shiyanqu bangongshi
农业部农村改革试验区办公室) illustrates this well.
Unclear regulations enabled rural cadres to demand road-building fees from
villagers to finance not only roads built within a village but also roads connecting
villages and even townships. In another crucial sector, rural education, the now-
illegal school fees were replaced by “voluntary donations” demanded from
parents to support their children’s schools.
90
The third strategy to compensate for missing revenue was reducing the
provision of services delivered by the government. One county chief implied
that he preferred this to decreasing his workforce: “Basically, we have stopped
building roads … We would do anything but fire people. How should we
decide whom to fire? Everyone in the township government has relationships
with someone at the county level. This would lead to a major conflict.”
A final strategy that probably best fits into the illegal type is manipulating
statistical data. Interviews with township officials in a central Anhui county
revealed that the extent of administrative downsizing and payroll consolidation
reported by local governments was often exaggerated. The leader of the
township’s Organization Department told me that the number of payroll positions
was indeed reduced in the course of the reform, but not as substantively as listed
in the official statistics. A cadre dispatched to the township by Bengbu City’s
Finance Bureau confirmed this, and added that the same was true for non-payroll
personnel (chaobian renyuan
超编人员). “They pose a much larger burden on the
diminished township finances than the payroll personnel, as the township receives
no funds from above to remunerate them. In order to pay them, the government
must sell public property like real estate and abandoned schools”, the official
confided. Resources are not endless, and this strategy will not work in the long
run. The local leadership, however, sees no alternative and hopes that the situation
will improve. When asked what they will do when everything is sold, the official
in charge of the township’s finances replied, “We’ll see then”. This explains the
widely held belief that, in underdeveloped regions, a government job is often the
only form of secure employment.
91
89
Guowuyuan nongcun shuifei gaige gongzuo xiaozu (State Council RTFR Working Group),
Guanyu nongcun shuifei gaige shidian diqu zhanting qingshou nongmin shuifei weiqian
gongzuo youguan wenti de jinji tongzhi (Urgent Notification Concerning Questions
Regarding the Temporary Cessation of Settling Small Tax and Fee Owings with Farmers in
the RTFR Experimental Spots), No. 10 (2002).
90
Zhu Shouyin, Zhang Haiyang and Yan Hui, “Nongcun shuifei gaige shidian”, pp. 13-16.
91
Chang Hongxiao, “2005: Zhongguo nongye nongcun nongmin xiandaihua zhi shang”
(2005: The Early Death of the Modernization of Agriculture, Villages and Farmers in
THE CHINA JOURNAL, No. 65
74
Adaptation
Resistance to the policy from below led to policy adaptation from above. This
dynamic was especially clear with respect to the question of who was responsible
for financing the reform. From the beginning, Minister of Finance Xiang Huaicheng
was adamant about keeping subsidies from the center to a minimum,
92
something
that local governments clearly did not appreciate. They demanded a more
substantial commitment by the central government, reasoning that, as the head of W
County’s RTFR Small Group retrospectively put it, “it was the center’s reform, so
the center had to pay for it”. Claiming to speak for the majority of local
governments, he criticized the complimentary reform measures as “unreasonable”
and “impractical”. Those townships that were eager to uphold the provision of vital
government services despite the grave reduction of revenues were forced to borrow
even more money. The head of the RTFR group of Anhui’s W County made clear
that, although it was forbidden, the county leadership fully endorsed this practice.
Figure 2: Per Capita Budgetary Revenue and Dependence on Transfer
Payments, Anhui County Level, 1999 (left) and 2007 (right).
Source: My own figure based on Anhui Province, RTFR LSG, Anhui sheng nongcun shuifei
gaige, Anhui Tongji Nianjian 2000, Tables 4-14 and 8-05, and Anhui Tongji Nianjian 2007,
Tables 4-25, 8-10 and 8-11.
The central government reacted to these worrying developments first and
foremost by increasing subsidies to the local level. In addition, greater care was taken
to ensure that poorer counties indeed became the beneficiaries of these subsidies,
especially after the agricultural tax was abolished. Using the difference between
county-level revenues and expenditures as a rough proxy for transfer payments, one
observes that the transfer payments received by Anhui’s counties increased more than
10-fold in the course of the RTFR, from 2.16 billion yuan before it began (1999) to
23.61 billion yuan after the agricultural tax was abolished (2007).
China), Caijing (Finance), 4 February 2005, http://finance.sina.com.cn/g/20050204/
15321349921.shtml
(accessed 12 August 2010).
92
“Xiang Huaicheng buzhang zai quanguo nongcun shuifei gaige gongzuo zuotanhui shang
de jianghua zhaiyao” (Summary of Minister Xiang Huaicheng’s Speech at the Symposium
for the Nation-Wide RTFR Work) (Unpublished government document, 2000).
UNEVEN POLICY IMPLEMENTATION
75
As Figure 2 shows, the poorer a county government is (measured by
government revenue per capita), the more its expenditures now tend to be
financed by transfer payments received from above. This is quite different from
the situation in 1999, when the two variables correlated only weakly.
In addition, the locally administered agricultural tax was abolished between
2004 and 2006, and reform implementation became significantly more centralized
after 2004. As the central-level document that heralded this step put it, “not all
problems in the RTFR pilot regions have been solved. The rural burden is still
rather heavy, and complementary reform implementation lags behind. The
fundamental issue of peasant burden reduction is not yet consolidated.”
93
As a
consequence, the central government decided to become more involved in
regulating rural service provision. Another State Council circular urged all relevant
ministries to form inter-ministerial “specialized small groups for drafting guiding
documents to deepen the work in the RTFR pilot regions”.
94
Each of these groups
was to devote itself to one of ten reform issues: structural reforms at the township
level, rural compulsory education, rural finances, rural public hygiene, grass-roots-
level liabilities, rural tax and fee arrears, “one undertaking, one reform” and rural
public services, state-owned farms, the overall tax system, and legal reforms.
Along with this centralization came a change of names. In 2006, the RTFR
seamlessly gave way to the Rural Comprehensive Reform (nongcun zonghe gaige
农村综合改革), which was part of the more centralized “Building a Socialist New
Countryside (BSNC)” program.
95
By order of the State Council, the RTFR groups and
offices were accordingly renamed on 24 August 2006.
96
Given that the reform greatly
reduced the ability of poor local governments to raise their own funds, they have
become overly dependent on transfer payments, which are predominantly financed out
of the central government’s coffers. According to Ahlers and Schubert, the BSNC
program was a direct consequence of the RTFR and “the gradual conversion of the
Chinese fiscal system into a transfer system that channels central government funds to
93
Guowuyuan (State Council), Guanyu zuohao 2004 nian shenhua nongcun shuifei gaige
shidian gongzuo de tongzhi (Notification Regarding Accomplishing the Intensivation of
RTFR Experimental Spot Work in 2004), 21 July 2004 (Guofa [2004], No. 21).
94
Guowuyuan bangongting, Guanyu chengli chenhua nongcun shuifei gaige shidian gongzuo
zhidaoxing wenjian qicao xiaozu he zhuanti xiaozu de tongzhi (Notification Regarding the
Establishment of Author- and Expert Small Groups for the Drafting of Guiding Documents
Related to the Intensification of RTFR Experimental Spot Work), 30 September 2004
(Guobanfa [2004], No. 68).
95
Zhonggong zhongyang guowuyuan, Guanyu tuijin shehui zhuyi xin nongcun jianshe de
ruogan yijian (Several Opinions on Promoting the Construction of a New Socialist
Countryside) (Zhongfa, Guanyu jinxing [2006], No. 1).
96
Guowuyuan bangongting, Guanyu tongyi guowuyuan nongcun shuifei gaige gongzuo xiaozu
ji qi bangongshi bianming de fuhan (Affirmative Reply to the State Council RTFR Working
Small Group and its Office Regarding a Change of Names), No. 6 (2006).
THE CHINA JOURNAL, No. 65
76
local governments”.
97
In their fieldwork sites, funds for rural development projects
were “completely channeled through the fiscal transfer system”.
98
Conclusion
This article argues that variation in local implementation of a policy reflects the
strengths and weaknesses inherent in the policy steering instruments used.
A detailed examination of the RTFR shows that it was implemented by mixing
hierarchical steering with the stimulation of competition. As expected, the
stimulation of competition incited several localities to design innovative sub-
policies, and the availability of rents, ideational factors, career options, being part of
a reformist network and fiscal privileges all prompted local leaders to support the
policy with pioneering efforts. In addition, hierarchical supervision and coercion
enabled the central government to enforce implementation of locally generated
innovations all over the country despite considerable resistance. The weaknesses of
these instruments also became evident: competition was shown to have
disadvantaged poorer localities, hierarchical control was vulnerable to shirking and
sabotage, and the combination of both led a significant number of localities to resist
reform implementation. Both pioneers and resisters contribute to shaping policy
outcomes, as both experimentation and resistance fed back into “fixing” policy.
Not only does the resistance of disgruntled farmers or workers lead the central
government to change or improve certain policies, but so does the resistance of
disgruntled local leaderships. Local leadership resistance led to the switch from
competition-under-hierarchy to a more hierarchical subsidies-cum-recentralization
steering in the case of the RTFR. Increased central control over local finances has
benefitted the farmers, but also necessitated a far larger financial commitment than
had initially been planned. In this respect, the risks inherent in hierarchical steering
suggest that the long-term success of such centralized government allocation of
substantive monies will depend on Beijing’s potential to monitor or, even better, win
over those local actors on which it depends to implement crucial policies.
99
97
Anna Ahlers and Gunter Schubert, “Building a New Socialist Countryside”, p. 36.
98
Ibid, p. 47.
99
John Brehm and Scott Gates, Working, Shirking, and Sabotage, Chapter 2.
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