The Politics of Expertise in China [1 ed.] 1138651869, 9781138651869

Table of contents :
Contents
Preface
List of abbreviations
1 Introduction
2 Outside-in enlightenment
3 Linear consultation
4 Locked-out
5 Civic activism
6 Conclusion
References
Index

Citation preview

The Politics of Expertise in China

Since the reform and opening-up policy was implemented in China, consultations have been increasingly carried out during the policy-making process. This often involves experts, many of whom are based in think-­tanks or similar institutions. The degree of access to the policy-­ making process varies, and consequently some experts influence the policy-­making process significantly and others not. This book explores how experts in China engage with the policy-­ making process and the circumstances, which affect how far they are able to influence policy-­making. Xufeng Zhu is Professor and Associate Dean at the School of Public Policy and Management, Tsinghua University, China. He serves as Director of the Think Tank Research Center of the school. He is the author of The Rise of Think Tanks in China (2013). His recent publications include articles in Journal of Public Administration Research and Theory, Public Administration, Governance, Policy Studies Journal, Policy Sciences, Public Management Review, The China Quarterly, Pacific Affairs and many others.

China Policy Series Series Editor: Zheng Yongnian

East Asian Institute, National University of Singapore

49 China–Africa Relations Building Images through Cultural Co-­operation, Media Representation and on the Ground Activities Edited by Kathryn Batchelor and Xiaoling Zhang 50 China’s Authoritarian Path to Development Is Democratisation Possible? Tang Liang 51 Foreign Policies toward Taiwan Shaohua Hu 52 Governing Environmental Conflicts in China Yanwei Li 53 Post-­Western Sociology From China to Europe Edited by Laurence Roulleau-­Berger and Li Peilin 54 China’s Pension Reforms Political Institutions, Skill Formation and Pension Policy in China Ke Meng 55 China’s New Silk Road An Emerging World Order Edited by Carmen Amado Mendes 56 The Politics of Expertise in China Xufeng Zhu For more information about this series, please visit www.routledge.com/China-­ Policy-Series/book-­series/SECPS

The Politics of Expertise in China

Xufeng Zhu

First published 2019 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2019 Xufeng Zhu The right of Xufeng Zhu to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-­in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-­in-Publication Data A catalog record has been requested for this book ISBN: 978-1-138-65186-9 (hbk) ISBN: 978-1-315-62454-9 (ebk) Typeset in Times New Roman by Wearset Ltd, Boldon, Tyne and Wear

Contents



Prefacevi List of abbreviationsx

1 Introduction 2

Outside-­in enlightenment

3 Linear consultation 4

1 42 85

Locked-­out

123

5 Civic activism

178

6 Conclusion

221



References233 Index244

Preface

The relationship between knowledge and power has always been a core topic in the intellectual history of human beings. In the science of public policy, this topic is thereupon extended as the role played by experts’ knowledge in the process of policy change. In the 1960s, when the development of public policy was still in its early stage, scholars were already conducting in-­depth studies on expert involvement in the political system. In the following decades, the theory of expert involvement has become an increasingly important branch in the discipline of public policy. Experts, however, are generally considered to be the cause of policy change: scholars place more emphasis on whether and to what extent policy changes have been influenced by experts. On the contrary, we want to answer a counter-­ intuitive theoretical question in this book: Do policy changes, in turn, influence expert involvement? In answering this theoretical question, we actually acknowledge the endogenous logic between policy change and expert involvement, that is, that policy change and expert involvement interact as both cause and effect. Experts are those special policy actors who influence the decision-­making process through their knowledge and expertise. Owing to the special administrative status taken on by experts during the policy change process, their behavioural patterns and strategic selection are quite different from those of other policy actors, such as government officials, entrepreneurs, non-­governmental organisations, citizen and other policy actors. Since the Communist Party of China and the central government first proposed the scientific and democratic decision-­making process, experts have become an integral part of China’s public life. They are also active in every corner of the public domain. On the one hand, they often participate in the policy consultation under the government’s invitation, undertake research as requested by the government and even give lectures to leaders of the Political Bureau of the Central Committee. On the other hand, they also write scholarly works to expound their viewpoints, which may differ from those proposed by the government. In fact, some of them have even openly criticised many government policies. Many experts have their special newspaper columns and television programmes and have taken to sharing their opinions in their blogs or microblogs. Nevertheless, there are very few follow-­up or theor­ etical studies about Chinese experts at home and abroad. In particular, overseas

Preface  vii scholars who have studied the issues on Chinese experts or intellectuals are mostly classified within the scope of ‘China studies’. Few China studies have opened dialogues with modern political science and public policy theories. Therefore, only a few studies have systematically explored the behavioural patterns adopted by Chinese experts to become involved in policy change and the selection mechanism from the level of general theories on public policy. In this book, we have managed to construct a theory on expert involvement in policy change with the aim of expounding on the acting strategies and selecting mechanisms employed by Chinese experts in different types of policy changes. Experts are always trying to identify the most effective actions to influence policies based on their own resources. Thus, previous studies have suggested that the control and reasonable use of certain resources can offer experts more opportunities to become the key participants who can eventually influence policies. Understandably, an expert will often submit their own research results to the government if he/she has a long-­term cooperative relationship with the government, whilst those without such a relationship could only seek for other ways to influence the government. Yet, resources owned by the expert could not act as a full explanation. There are individual experts or research organisations with different resource advantages in one policy area. In different areas of policy, however, we can still observe completely different patterns adopted by experts for involvement. Obviously, in their entirety, the nature of policy changes plays a decisive role in the process so that an expert can stand out in a given policy change by taking certain actions and strategies. Taking this clue as a starting point in consideration, I construct a theory based on the attributes of policy change and the mechanism relationship among patterns of expert involvement. In this study, I propose that two attributes of policy change, namely, loss embeddedness and knowledge complexity, influence the patterns of expert involvement. I then construct the theoretical model that can be applied to explain expert involvement on the aspect of policy. These two concepts resulted in the development of two theories: policy network and principal–agent theories. On the one hand, the main criticism against researchers engaged in policy network was that scholars never established a verifiable theoretical hypothesis for the connection between the structural attributes of the policy network and the states of the policy process. The concept of loss embeddedness proposed in this book is an attempt to establish a theoretical connection between a special structural attribute of the policy network and the behaviour patterns taken by experts to participate in policy process. On the other hand, principal–agent theory generally discusses the informational advantage held by an agent against the principal. This book indicates that policy makers, as the principal, may have a grasp of the key information on policy-­making and have an incentive to keep the information undisclosed as they invite experts to provide expertise and relevant information during policy advisory activities. Therefore, the information asymmetry existing in the principal–agent relationship during policy advisory activities may be bidirectional. Based on the principal–agent model with the state of bidirectional information asymmetry, this book proposes the concept of

viii  Preface knowledge complexity to interpret the limits and advantages held by policy makers and experts in terms of knowledge and information in the process of policy advisory. Accordingly, the involvement of Chinese experts on the aspect of policy can be categorised into four behavioural patterns: outside-­in enlightenment; linear consultation; locked-­out; and civic activism. In particular, this book innovatively distinguishes those two indirect action strategies that might be taken by experts who have failed to influence policy-­making through direct channels, namely, outside-­in enlightenment and civic activism. Although both adopted the mode of utilising the public consensus, they were essentially different. These theoretical contributions are innovative ideas in the field of policy processes and studies on expert involvement. Under the stakeholder analysis framework, this study tested the theoretical hypotheses mentioned above by applying comparative case studies. I carefully selected four major cases on policy change to present the four theoretical types of policy changes and the corresponding patterns of expert involvement. These four cases include the new urban medical and healthcare system, the pilot promotion of the new-­type rural cooperative medical care system, the affordable urban housing policy and the revocation of the detention and repatriation system. Case selection has strictly complied with the design of a standard comparative case study, fully considered the logic of theoretical replication and consciously ruled out various interference factors. For example, cases selected in this study are all social policies, thus minimising the interest bias of the experts. In order to speak with one voice for a discussion on comparative cases, all the cases on policy changes selected by this study are those issued, approved or officially replied to by the State Council (or together with the Central Committee of the CPC). Furthermore, efforts have been made to avoid reflexivity in the interviews. I would like to thank my wife, Su Yu, for her contribution to this book. The original thought and framework of the theory involved in this book were derived from the discussions I had with her. In 2008, while I was thinking about the extent to which the pattern of expert involvement may be influenced by policy changes, I shared my ideas with her for the first time. This topic soon became the main content of our daily lives during that period and the theoretical framework of this book was finalised through my constant discussions with her. Throughout the whole process of theory construction, research and writing of this book, numerous experts and scholars have offered me enthusiastic guidance and support. First of all, for the theory construction and empirical study, I want to thank my PhD advisor, Xue Lan, and some Chinese scholars, including Zhu Guanglei, Yang Long, Chen Zhenming, Wang Shaoguang, Zheng Yongnian, Lan Zhiyong, Ma Jun, Liu Yuanli, Ge Yanfeng, Su Tsai-­Tsu, Tom K. Liou, Hon S. Chan, Yang Mu, Deng Zhenglai, Gu Xin, Wang Hufeng, Cui Zhiyuan, Guo Zhenzhi, He Baogang, Bi Jianhai, Li Cheng, Sun Tongwen, Tang Xinglin, Bo Zhiyue, Yang Guobin, Lily Lee Tsai, Wang Zhengxu, Gore Lance Liangping, Huang Yipeng, Yang Lihua, Li Wenzhao, Guo Chao, Zhan Xueyong, Zhang

Preface  ix Zhibin, Wu Fengshi, Wang Qinghua, Liu Peng, Fan Peng, Ru Peng, He Jingwei and Hu Yinglian. I also wish to thank foreign scholars, including Elizabeth J. Perry, Joseph Fewsmith, Merle Goldman, Alasdair Roberts, David Shambaugh, Dan Guttman, Mitter Rana, Richard M. Walker, Jacques deLisle, John Kennedy and Thomas Kellogg. In addition, I would like to show my appreciation for my student research assistants, including Zhou Huijin, Hua Pengwei, Wang Qianru, Yu Xuesong, Chen Tingjia and Zhang Peipei, who have completed significant work in collecting data for this book. During the writing stage of this book, I gave academic reports successively at Nankai University, Tsinghua University, Sun Yat-­sen University, Hong Kong University, Chungnam National University, Shanghai University of Finance and Economics, Fudan University, Melbourne University, Singapore National University, Renmin University of China and Peking University, among others. Hereby, I would like to express my thanks to those experts and scholars who have participated in the reports and international academic seminars, joined in the discussions and shared their ideas. This book is a result of the integration and extension of many academic papers I have issued and the monographic work written in Chinese published by the Renmin University of China Press in 2012. Thus, I would like to acknowledge the chief editors, editors and anonymous reviewers of Policy Sciences, Public Administration and Journal of Contemporary China. I am very grateful to the staff of the Renmin University of China Press and its executive editors, namely, Zhu Haiyan and Ye Hua. I wish to thank them for their hard work and contribution, which facilitated the publication of the Chinese version. I would also like to thank Prof. Zheng Yongnian, the Editor-­in-Chief of the Routledge China Policy Series for recommending my book proposal to the publisher, and Peter Sowden, Editor at Routledge, for his efforts and patience during the book production stage. Finally, I would like to thank the National Science Fund for Distinguished Young Scholars of China (71625006) and the Innovative Research Group Project of the National Natural Science Foundation of China (71721002) for their sponsorship of this work. Xufeng Zhu March 2018

Abbreviations

ACWF BUEI CASS CPC CPPCC D&R HBV KFPE

All-­China Women’s Federation Beijing Unirule (Tianze) Economics Institute Chinese Academy of Social Sciences Communist Party of China Chinese People’s Political Consultative Committee Detention and Repatriation System Hepatitis B Virus Swiss Commission for Research Partnership with Developing Countries MOHURD Ministry of Housing and Urban–Rural Development NCMS New-­Type (Rural) Cooperative Medical Scheme NDRC National Development and Reform Commission NPC National People’s Congress NRCMC New Rural Cooperative Medical Care NTTCC New-­Type Think-­Tanks with Chinese Characteristics ORCMCS Old Rural Cooperative Medical Care System PRC People’s Republic of China RAWOO Netherlands Development Assistance Research Council RCMCS Rural Cooperative Medical Care System SASAC State-­Owned Assets Supervision and Administration Commission SOEs State-­owned enterprises UERMI Urban Employees and Residents’ Basic Medical Insurance UNDP United Nations Development Programme UNICEF United Nations International Children’s Emergency Fund WHO World Health Organization

1 Introduction

Puzzles on expert involvement In recent years, China’s economic reform has attracted worldwide attention, and with it, political system reforms that push for scientific and democratic decision-­ making have also advanced fruitfully. Such a historical change was initiated in 1986, when the People’s Daily published a speech titled ‘Democratic and Scientific Decision Making: An Important Topic of Reform on Political Systems’, which was delivered by the then Deputy Premier of the State Council Wan Li.1 Over the last forty years, party and state leaders have consistently stressed the role of experts in major policy decisions, advocating scientific and democratic decision-­making through the establishment of a whole set of strict systems and procedures on decision-­making. During his term, the then President Hu Jintao proposed important guidelines in the Report for the 17th National Congress, which included promoting scientific and democratic decision-­making, improving decision-­making information and intellectual support system, enhancing transparency and public participation in decision-­making and expanding the role of think-­tanks in the decision-­making process. In addition, President Xi Jinping has actively promoted the establishment of ‘New-­Type Think-­Tanks with Chinese Characteristics’ (NTTCC) and the improvement of policy consultation mechanisms since 2013. These high-­level declarations by the leadership of the Communist Party of China (CPC) and the Chinese government have considerably inspired experts’ passion on initiative participation in the policy decision-­ making process for China’s institutional change. In recent years, experts have been spotted during the decision-­making process for major policies concerning national economic and social development, such as mid- and long-­term plans for national education, science and technology; reforms in the medical and health systems; control over the emissions of greenhouse gases; agricultural modernisation and so on. The so-­called ‘experts’ are those special policy actors influencing decision-­ making with their expertise, including scientists, engineers, social science scholars, legal professionals and others. In China, scientists and engineers, especially academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering, often initiatively access the policy domains to

2  Introduction influence policies not only limited to those on science and technology.2 Social science scholars, including economists working in research institutions or universities, political scientists, policy analysts, jurists, public administration scholars and other experts, influence government decision-­making by relying on their own expertise. Legal professionals, such as lawyers, are also actively involved in activities influencing policies, especially under the current conditions in China, in which imperfect laws and institutions exist.3 Yet, those pure scholars in academic institutions who are not interested in influencing policies are excluded from the concept of ‘experts’ as defined in this book. In order to act out their roles, experts often assume different social identities, transiting among such roles as ‘idea brokers’,4 ‘public intellectuals’5 or ‘policy entrepreneurs’6 in addition to ‘government advisors’, ‘academics’ and ‘public advocates’.7 Owing to the special administrative status undertaken by experts in the policy process, their action logic and strategy selection are different from those of other policy actors. According to the actual situation of the policy process in China, policy makers in the government customarily regard being an ‘expert’ as a particular administrative status relative to an ‘agency’, which means policy makers in the government can decide whether to accept or deny experts’ advice with relatively freedom. However, a government agency has to either reply to or accept an advice made by other ‘agencies’ in accordance with organisational procedures.8 Furthermore, ‘experts’ are different from ‘interest groups’, although these two kinds of policy actors can promote or prevent the policy change by applying external influence on policy makers. Both ‘experts’ and ‘interest groups’ take the initiative to utilise media for the purpose of influencing policies. However, experts mainly realize their external influence through expressions on their expertise, whilst interest groups realize the same purpose largely through a private canvass based on the use of funds and resources or public advocacy activities.9 Therefore, experts’ behavioural logic and the mechanisms by which they realize their influence on policies is a highly noteworthy subject. Unfortunately, only a few systematic studies have been published on experts’ behavioural patterns and strategic selection in the process of policy changes in China, where a series of problems remains pending. What behavioural patterns are manifested by Chinese experts in the transition period during their involvement in policy changes? We can focus on the different behaviours of many experts in the policy process. For instance, some experts are able to participate in collective learning held by the Politburo and deliver face-­to-face lectures for Chinese senior officials. Some experts have participated in a number of government-­ contracted research projects. Other experts have published many papers at high levels in academic journals domestically and abroad and have enjoyed great popularity in the society, but their policy proposals have only had a slight influence on the government. Some experts have been recognised as the official ‘brain trusters’ at a high level, but their statements on the media appear to be very cautious. The behavioural patterns of some experts have gone beyond the scope of ordinary experts. They actively conduct social activities, set up non-­governmental organisations and run

Introduction  3 websites. Hence, it would be useful to determine the intrinsic link and classify the complicated behavioural patterns adopted by experts to outline the behavioural patterns of Chinese experts in the process of their involvement in policy changes.  Why are experts prone to choosing different behavioural strategies in various policy changes? We can also note that experts’ behavioural strategies present regular differences in different policy domains. In some policy domains, for example, experts are inclined to provide advice to decision makers through internal consultation. In other policy domains, experts impose influence onto decision makers through publicising their policy opinions on the media. Meanwhile, in some other policy domains, experts do not have substantive influence no matter what they do or what they say. Hereby, we can see that experts can gain the opportunity to successfully influence policies only by adopting actions and strategies with certain orientations in different policy changes, which might be due to some properties of a specific policy. If expressing their policy opinions without strategies rather than following inherent laws produced by policy properties, experts are less likely to achieve success. In addition, some behavioural strategies adopted by experts can have a more substantial impact on a policy due to some of its properties; hence, experts with greater resources on some action strategies are more likely to stand out in such a policy domain, thus transforming them into key figures in promoting changes on such a policy. Finally, expert involvement is generally regarded as one of the causes of policy changes. However, how do the policy changes, in turn, influence the behavioural patterns of expert involvement? Researchers in the fields of political science and public administration often focus on theoretical questions concerning experts and expertise, which can be summed up as ‘nature of expertise’ or ‘politics of advice’.10 For instance, the ‘School of Knowledge Utilisation’ that has gradually formed since 1970s is mainly concerned about the influence of expertise on policy changes.11 Specific research issues are all at the centre of their attention, such as how knowledge helps establish a ‘bridge’ in the process of influencing policies thus filling the gap between knowledge and policy, and what role a certain kind of knowledge plays in the policy outcome, when the decision makers would listen to the truth and so on.12 In relation to the issue we discussed above, one theoretical issue has more general significance and this is the main topic we aim to discuss: to explain what kind of influence the attributes of policy change will have on experts’ behaviours. Western observers used to hold biased ideas against relations between experts and political authorities in China. They believe that leaders in China are short of legitimacy during decision-­making due to the absence of democratic election. Hence, experts on China studies in the past generally considered traditional establishment experts as the ones who justify the legality of political authority in China’s political arena.13 In the recent Western literature, researchers hold the belief that political authorities take administrative and financial measures to simultaneously control and stimulate experts, thus allowing them to regulate the  intellectuals and guide experts from research institutions with an official

4  Introduction background, such as the Chinese Academy of Social Sciences (CASS), to exert more efforts into studies that serve the need of the political authorities.14 Moreover, the rise of non-­governmental think-­tanks was seen by Western scholars as the force enabling non-­ governmental experts to compete with establishment experts in the field of policy, thereby representing a force driving China towards democratisation and civil society.15 Another common view is that non-­ governmental experts are always at a disadvantage during competition with experts with an official background.16 Therefore, non-­ governmental experts usually complained that they were subjected to discrimination compared with decision makers on matters of research funding, social status and influence on policies. However, more recent empirical studies conducted by scholars have argued against this view. I have studied the role of experts in the policy process for over a decade and published a series of articles in academic journals to launch academic dialogues discussing the above-­ mentioned views. In these published articles, I have explored the mechanisms of Chinese experts who select various behavioural strategies at different levels. First, there were indeed differences in the behavioural orientation between experts with an official background and those without an official background at the organisational level, as I empirically explored in a paper published in Public Administration and Development in 2007. Differences in expert behaviours are determined by resource differences in the administrative relations due to the administrative capacities of the research institutions they work in. Owing to the existence of the innate administrative linkage between the government and semi-­ official think-­tanks, experts with an official background are more inclined to convey research results and ideas to the government through internal channels. The link between non-­governmental think-­tanks and the government exists but in a relatively loose state, so that the former are more likely to first express their views through the media and other indirect channels.17 Arguably, the experts’ behavioural patterns reflect their rational choices about which strategies they might use in order to maximise their influence on policies more effectively given the limited resources. Second, for the attitude expressed by Chinese experts, it is rather questionable that experts with different affiliations with the government have varying attitudes towards the government’s policies and opinions. In an article I published in the China Quarterly in 2011, I provided some facts that shall be discussed further. For example, it is not true that experts with an official background never criticise policies implemented by the government. One typical example is Ge Yanfeng, a researcher at the Development Research Centre of the State Council, who publicly released the results of his 2005 study and proclaimed that the national reform on medical system was ‘basically unsuccessful’. His further discussions in the media also exerted strong pressure on the government. Since 2006, China has officially launched studies on a new round of reforms for the medical system. In 2009, a reform proposal for the new system of medicine and health care in China was finally released after a period

Introduction  5 of three years. Notably, Ge Yanfeng was not marginalised by the government despite his criticism in the media for the basically unsuccessful reforms actualised by the government. In fact, Ge Yanfeng was subsequently promoted as the Director of the Social Development Sector of the State Council DRC. In 2010, he was invited to deliver a lecture to Hu Jintao and other central leaders during an event of collective learning in the Politburo. A leading role in another similar example is Yu Jianrong from the CASS, who is now a professor at the Rural Development Research Institute and Director of the Social Issues Research Centre. Yu Jianrong publicly criticised many of the existing institutions and local government officials and, acting as a well-­known public intellectual and social activist in China, even launched civic campaigns, such as ‘Rescuing Child Beggars via Microblogging’ and ‘Readily Sending Books to the Countryside’. Furthermore, some experts or public intellectuals – widely seen as purely non-­governmental think-­tankers – are also dedicated to providing consulting services for the government. The Beijing Unirule (Tianze) Economics Institute (BUEI), for example, has claimed to be an independent non-­governmental think-­ tank. Although experts from the BUEI (e.g. its former director and a famous liberalist economist, Mao Yushi) frequently criticise the government’s policies publicly, BUEI also often accepts government funding to carry out studies on consultation for the government.18 Another well-­ known public intellectual enjoying a good reputation domestically and abroad, Professor Cui Zhiyuan from Tsinghua University, accepted the invitation of the Chongqing municipal government and even took up the position of Assistant Director of the Chongqing State-­ Owned Assets Supervision and Administration Commission (SASAC) in 2010. During that period, he proposed to advance the ‘Appreciation of State-­Owned Assets’ and ‘Conceal Wealth in Public’ together. He also actively participated in multiple reforms implemented by the Chongqing government to promote the appreciation of state-­owned assets and social dividends as well as the management of state-­owned enterprises. Meanwhile, Cui maintained a personal special column titled ‘Liangjiang Observation’ published in Chongqing Times to discuss issues pertaining to the development of Chongqing. Mao Yushi has been nominated as one of the top fifty influential public intellectuals by Southern People Weekly.19 Cui Zhiyuan was nominated as one of the top 100 public intellectuals in the world by famous US magazine, Foreign Policy.20 Obviously, it does not make sense that Western scholars hold different attitudes towards experts with an official background and non-­governmental experts in China. In a paper published in The China Quarterly, I argue that the correct analytical framework with which to study Chinese experts should not only be based on their administrative status but also on their behaviours towards policy involvement.21 Third, in terms of the individual level of personal ability and resources, in another empirical research report published in Asian Survey, I find that experts’ knowledge and ability, administrative linkage and personal social networks play decisive roles in expanding the scope of their influence. Indeed, experts with an official background rely more on their administrative linkage to influence the

6  Introduction government’s decision-­making, given that their personal social networks do not have a substantial contribution to heighten their influence. Meanwhile, non-­ governmental experts do not have too much administrative linkage to rely on; their influence on the government and the society mainly depends on their personal social networks.22 Furthermore, the strength of experts’ official background does not have a significant and direct impact on individual social networks. In fact, factors that decide whether experts could associate with more  officials, social elites and media professionals are manifested largely through one’s social communication, occupational mobility and educational experience.23 Given that the personal social networks of experts are important, what kinds of social networks can better help them establish and strengthen their influence? Becoming acquainted with the top leaders of the state and the party will certainly help policy actors to achieve their influence, but to influence policies through suggestions proposed directly to the supreme leaders is merely an incidental event. We cannot expect that an expert’s policy-­related opinions can be proposed by disturbing the supreme leaders. In another empirical study, I reported that the officials above the ministry level in China’s bureaucratic system tend to pay more attention to major political issues, while officials at the bureau level focus more on issues regarding policy decision-­making and officials at the division level are more likely to consider issues on policy implementation. Meanwhile, during the adjustment process of its administrative organs, the Chinese government frequently reconstructs the central ministries and reassigns officials at the ministerial level, whilst officials at the bureau level are often kept in relative stability. Therefore, officials at the bureau level have more say in the policy-­making process in China. Consequently, maintaining good relations with officials at the bureau level is more effective in allowing experts to produce substantial impacts on the government’s policy decision-­making.24 Fourth, in terms of the personal psychological features of experts, I proposed a framework of ‘intrinsic motivation’ in analysing the roles of experts in public decision-­making consultation in the realm of policy reforms in China. I argue that previous theories on expert involvement are classically based on the assumption of extrinsic influence-­driven motivation. Thus far, the literature on the relationship between expertise and authority has focused on exploring the tendency of experts to play different roles in public decision-­making activities to maximise policy influence under various objective conditions, such as political environments, characteristics of policy domains and organisational and personal resources. However, previous studies on the impact of various individual motivations on the formation of expert roles are scarce. Hence, I constructed an expert behaviour theory to bridge the gap between intrinsic motivation and the behaviour of experts by identifying two dimensions: the attitudes towards the relationship between theory and practice and that between experts and officials. These two intrinsic motivations determine the four roles of individual experts, namely, technology communicators, theory demonstrators, idea entrepreneurs and knowledge brokers. The empirical strategy is based on a comparative study

Introduction  7 of four experts simultaneously involved in one case of public decision-­making consultation.25 Although we achieved progress in terms of explaining experts’ behaviour in the policy process and gained a general understanding about which experts are more likely to influence the policy and in which strategies in a certain policy domain, previous studies have yet to fully explain one important question mentioned above: How do policy changes, in turn, influence the behavioural patterns of expert involvement? The reason lies in the fact that those studies only focus on experts at the personal level or at the level of the research institutions they work in. At each time of policy change, different groups of experts possess different resources and capacity advantages. No doubt, the experts who have successfully influenced a policy will be those with advantages on some resources and the ones who are able to utilise such resources properly. However, they will still apply totally different involvement patterns in various policy changes. Therefore, the kind of key resources and action strategies that can help experts stand out in a given policy domain depends on the nature of the policy changes themselves. Indeed, the sole purpose of writing this book is to discuss the impact of the nature of policy change on the behavioural strategies of experts. In relation to this, a comparative policy case study as a research approach is needed to answer these questions in this book. Past studies on the Chinese policy process have usually attached more importance to a particular policy domain and placed relatively less emphasis on the variations of the nature of policy domains. For example, a classic study of Chinese policy-­ making carried out by Kenneth Lieberthal and Michel Oksenberg titled, Policy Making in China: Leaders, Structures, and Processes only focused on the energy sectors of China. At the end of Lieberthal and Oksenberg’s book, they reflected on such a limitation, pointing out that whether their theories could be applied to other social policies, such as educational policies, would require further verification.26 In this book, I will carry out a comparative study of four policy change cases and thereupon establish an expert involvement theory based on the properties of policy changes. Then, I will apply the stakeholder analysis framework to conduct empirical studies on each case of specific policy change.

Relevant theoretical issues Modern political science studies on the roles of experts in the process of decision-­making were initiated by Harold Lasswell,27 the founder of the discipline of ‘policy science’, which has achieved considerable progress during the past half-­century.28 In recent years, scholars have been fully aware that, as expert consultants, the roles of experts in the decision-­ making process no longer follows a simple linear mode. One’s expertise has influence on policy change, whilst the behavioural strategies selected by experts depend on their personal predilection and the nature of their expertise. This is the basic thought held by previous scholars of policy science as they discussed the interaction between

8  Introduction experts and decision makers. In this section, I study the existing literature about expert involvement to argue that shortcomings exist in these studies, based on which I will propose new research ideas. Theory on knowledge utilisation As an essential branch of public policy, knowledge utilisation theory focused on building a connection between knowledge and policy. The initial view taken by scholars of knowledge utilisation lies in the fact that it is hard for policy makers to utilise expert knowledge for policy-­making. Hence, the ‘two communities theory’ proposed by Nathan Caplan regards the application of knowledge per se, not the application of knowledge or research, as the mark of the cultural and behavioural differences between researchers and policy makers.29 Differing from the two communities theory, James L. Sundquist indicated that some forms of knowledge, such as idea, ideology, paradigm and world-­view, are neither unrelated with policy-­making nor able to become policy products immediately as they come into being, but require time to accumulate.30 A typical example of such theories is the ‘enlightenment model’31 brought forward by Carol H. Weiss. Afterwards, Björn Wittrock extended knowledge utilisation into four models: enlightenment model, classical bureaucratic model, technocratic model and engineering model.32 From the angle of power mechanics that drives knowledge into policy, the process of knowledge utilisation has been extended into the science push model, demand pull model, dissemination model and interaction model through the efforts made by many past scholars.33 Post-­modern knowledge utilisation theory began to develop in the middle of the 1990s. Such a post-­modern theory emphasises how the language or discourse can be expressed as policy proposals and how the issues and solutions can be understood by a target audience. Thus, Emery Roe developed a theory of policy narratives in 1994 to deal with how the policy experts could select tenable strategies in the process of communicating with experts’ studies in a ‘story-­telling’ manner.34 Policy narratives theory probed into speech skills that can produce positive or negative effects as influencing policies, with which experts can simplify any complex issue into detailed and precise narrations of ‘stories’.35 Meanwhile, this theory explains why the knowledge development often generates positive policy outcomes even though empirical evidence shows that it can lead to negative consequences.36 Experts hope their research results could eventually form a policy so that the value of their research can be reflected. This means that experts who study knowledge utilisation aim to identify the inherent laws that can help establish a connection between knowledge and policy as well as guide the researchers of other social sciences on the diffusion of expert knowledge. Therefore, many research institutions further developed some actionable procedures, such as a series of instructional manuals prepared successively by the Council on Health Research for Development,37 the Swiss Commission for Research Partnership with Developing Countries (KFPE),38 the International Institute for Environment

Introduction  9 and Development and the Netherlands Development Assistance Research Council (RAWOO),40 guiding scholars to output their research results towards policy tiers. Theory on knowledge utilisation plays a critical guiding role in the process by which experts push decision makers to develop and implement relevant policies through the utilisation of their research results. However, two setbacks seem to hinder the further development of this theory. First of all, previous studies placed more emphasis on the influence of experts in the process of transforming knowledge into policies generated by the nature of knowledge. Knowledge utilisation theory has been limited at the micro level; thus, it only offers an insufficient discussion of experts’ influence on knowledge utilisation generated by policy makers and other policy participants and structural factors of the decision-­making system. Second, scholars constitute the theory with a strong sense of purpose: to guide researchers to promote their research results to policy makers; hence, these scholars tend to pay too much attention on ‘what to do’ rather than ‘why it is’. For this reason, many researchers studying knowledge utilisation are kept on the operational level, and no further interpretative theories have been developed. 39

Expert involvement theory Different from knowledge utilisation theory, which is concerned about bridging the gap between knowledge and policy, expert involvement theory focuses more on the behavioural strategies taken by experts to become involved in the policy process, along with the relevant explanatory factors. For a long time, scholars have been exploring expert involvement models for public policies and the internal mechanisms of the policy process.41 They called the strategies taken by experts to become involved in the policy process the ‘nature of expertise’ or the ‘politics of advice’, based on which they have been classified into several major schools of thought. Micro factor: the attribute of expertise The attribute of expertise is one of the decisive factors that influences the models taken by experts to become involved in the policy, and this includes various properties of experts’ research outcomes and their personal knowledge of the relationship between science and politics. On the one hand, research outcomes with different characteristics determine the behavioural strategies taken by experts to become involved in the policy process, such as the influence on experts’ function generated by theoretical study or applied research, quantitative investigation42 or qualitative investigation43 and the reliability and feasibility of the studies.44 The research outcomes mentioned above eventually form a technique roadmap45 that can guide experts in the decision-­making process. On the other hand, experts’ understanding of the relationship between science and politics also determines their behaviours. Roger Pielke, a famous

10  Introduction environmental policy advisor, published his book, The Honest Broker: Making Sense of Science in Policy and Politics in 2007. He also published an article titled ‘Who Has the Ear of the President?’ in Nature magazine, in which he systematically expounded on various behavioural models and the limitations of the science advisor of the then US President George W. Bush and other scientists involved in policy and politics. Pielke asserts that, in democratic nations, the personal ‘view of democracy’ and ‘view of science’ held by experts can be used as two dimensions to illustrate their different behavioural patterns described below. 1 Pure scientists: They have no interest in being involved in the decision-­ making process and simply want to share some fundamental information about the factors involved. Furthermore, they believe that the policy makers are the ones responsible for politically dealing with such information. 2 Science arbiters: They help the decision makers by offering conclusive answers for related issues proposed by the decision makers, but do not tell the policy maker what he or she ought to prefer. 3 Issue advocates: They set limits to the scope of choice and try to persuade the decision makers to accept their suggestions. 4 Honest brokers of policy alternatives: They provide the policy makers with comprehensive information and allow the latter to face the challenge of reducing the scope of choices available.46 Although Pielke’s model has suffered some criticism,47 his theory provides an important basis for structuring the involvement behaviours of scientists (or experts) in the decision-­making process.48 Median level: policy domains and organisations of think-­tanks Rather than concerning themselves about the nature of experts, scholars of another school of thought have focused more on the policy domains’ attributes, which are taken as another crucial explanatory factor influencing the behaviours of expert involvement, mainly including policy types (distribution, redistribution or market regulation), policy orientations (domestic, foreign or national defence), time dimensions (urgent, short-­term or long-­term) and resource availability (internal or external participants within authority of the government).49 However, the attributes in these policy domains all consider policy as a static factor, whilst ignoring the directionality and selectivity of policy changes. How to develop these theories further shall become the development direction of this book. Policy research institutions also comprise an important aspect by which to study experts’ involvement in the policy process. Policy research institutions, commonly known as ‘think-­tanks’, are relatively independent research organisations outside the government that provide policy makers with professional analyses of policies being drafted. In the West, studies on experts’ involvement in the policy process have become an intensely hot topic in the last thirty years. In

Introduction  11 general terms, studies on think-­tanks conform to the following paths. First, researchers have analysed the political background explaining the emergence of think-­ tanks, such as government attitudes and social trends of thought, to observe the developmental process of think-­tanks from a historical perspective.50 Second, these studies have articulated the roles of experts in think-­tanks, along with the efforts they have made, in order to convey policy ideas to the government based on the formation and output of expertise.51 Third, these works selected the decision-­making processes of policy domains, such as a foreign policy, in order to sort out the relationships among think-­tanks, the government and the media.52 Fourth, they evaluated the behaviours and influences of think-­ tanks.53 Fifth, they studied and thoroughly compared think-­tanks in different countries.54 In China, one of my books titled, Think-­Tanks in China: A Study on Influence in the Policy Process, published in 2009, systematically described the behavioural models and influence mechanisms of experts in think-­tanks within the Chinese system.55 Structural level: policy networks and the principal–agent relationship Network relationships between the experts and decision makers are regarded as another significant variable deciding the behaviour and influence of experts. This analytical approach can be traced to policy network theory. According to definition offered by Rhodes, ‘policy network’ refers to the combination of stable relations among participants playing different roles in the policy process.56 Börzel generalised the policy network into ‘governance school’ and ‘interest mediation school’.57 The governance school advocates that policy networks can be considered as a special governance structure, wherein different participants belonging to different social statuses could interact with one another. The policy network theory held by the governance school is often utilised, using the method of statistical analysis, to explain how the behaviours of experts during the policy process are influenced by their organisations and personal networks.58 The interest mediation school assumes that the policy networks are a substitution for pluralism in the context of which interest groups interact with one another. This framework can be employed to determine the mechanisms allowing policy participants with different policy beliefs to learn from one another.59 However, a major criticism of the interest mediation school is that it cannot construct an explanatory theory that can link the structure of policy networks with the nature of the policy process.60 Therefore, this book also proposes the structural attributes of policy networks in an innovative manner to compensate for the shortcomings of the interest mediation school and to use the attribute to explain experts’ behaviours as they become involved in the policy process. Researchers also consider the structural relationship between decision makers and experts as a principal–agent relationship.61 Policy makers entrust experts with specialised knowledge to analyse complex problems on decision-­making and obtain incisive suggestions from them. However, one fundamental issue in the principal–agent relationship is the unbalanced knowledge or asymmetric

12  Introduction information between the two parties given that agents usually have better access to information compared with the principal.62 Whereupon, decision makers often cannot determine whether the views of experts can serve as the solution to maximise the decision-­making goals, and in the principal–agent relationship, this is known as the problem of ‘moral hazard’. Moreover, it is difficult for policy makers to make the best choice among competing expert views, and this is known as the problem of ‘adverse selection’ in the principal–agent relationship. Nevertheless, information asymmetry may be bidirectional, wherein policy makers entrust experts with the consultation duty. Sometimes, as the entrusting party, decision makers have the motivation to conceal the information on decision-­making. When explaining the behaviours of expert involvement with the principal–agent model, we shall not only pay attention to the unidirectional information asymmetry but also to the bidirectional information asymmetry. Previous studies on expert consultation for decision-­making paid less attention to the bidirectional information asymmetry, which is taken as a key point in this book in order to extend the theory on expert involvement by developing and enriching the principal–agent model. In summary, expert involvement theory deals with the interactive relationship among experts, policy makers and other policy participants in the policy process, along with the determining factors for the behavioural models of the experts. After decades of development, the academic circle has developed a multilevel and more comprehensive understanding of expert involvement in public policies. However, expert involvement theory still has some limitations. First, past studies have focused on static policy and research results achieved by experts, whilst future studies should strengthen efforts to identify the characteristics of dynamic policy changes. Second, past studies lack a proper analysis of the structural features of the networks involved in the policy process. Thus far, only descriptive studies about the behaviours of experts in the policy networks have been presented in cases where the causal theoretical hypotheses that are available for testing have been hampered. Third, past studies have all taken individual experts (or think-­tanks) as the unit of analysis. Such a strategy cannot help to explain why expert groups employ different strategies of collective actions in various policy changes. Therefore, the characteristic of this book is to take ‘policy change’ as the unit of analysis and take the interactions among policy makers, stakeholders and experts as an overall sample for the comparative case analysis. Fourth, previous studies have mostly investigated the behaviours of experts in Western developed countries but have been less concerned about the behaviours of experts involved in policy-­making in China and in other developing countries. Theory on citizen participation Expert involvement theory is related with citizen participation theory. This theory, which emerged from the West, repudiates the traditional classical model for public administration known as the ‘politics–administration dichotomy’.

Introduction  13 According to the traditional administrative system upheld by Woodrow Wilson and Frank Goodnow, the early proponents of public administration, politics exercises the function of decision-­making for policies that express the national will, whilst the role of administration is to implement these policies. At this point, government administration deals with the technical affairs that shall be handled by technocratic administrative officials. Based on this fundamental understanding of the relationship between politics and administration, administrative officials act as the neutral and professional executants. In this context, citizen participation is limited only to the realm of the democratic political process through voting during the electoral process and external pressure and is, therefore, separated from administrative matters. Since the 1960s, the traditional mode of citizen participation has encountered challenges from theorists. The reason is that administrative officials often consider themselves as elites and viciously shield the demands expressed by the vulnerable public.63 However, administrative officials who nominally take policy implementation as their sole responsibility are not indifferent from politics. Contrarily, politicians often demand administrative officials to offer advice in relevant fields. Thus, administrative officials not only frequently intervene in the political process of designing public policies, but also enjoy increasingly strengthened influence on relevant policy decisions. With the issues on public decision-­ making becoming increasingly complicated, policy makers have encountered unprecedented controversy from the public. Facing such challenges, the government has no other option but to redefine the position of citizen participation in public policy and public administration. Hence, ‘New Public Administration’ theory emerged as the times required. It was advocated by Dwight Waldo who, in 1968, convened an academic conference later called as ‘Minnowbrook Conference’ at Syracuse University in the USA, which protested in order to inject moral values into the administrative process and which placed emphasis on social justice.64 The New Public Administration theory advocated for the continuity between politics and administration and emphasised the values of citizen participation, policy formulation, decentralisation and authorisation and organisation development based on the principles of social equity and justice.65 Based on the fundamental ideas of New Public Administration theory, practitioners gradually developed a series of skills in public administration, such as ‘critical citizen contact method’, ‘citizen investigation’, ‘citizen conference’, ‘board of consultants’ and other mechanisms, to encourage citizens to be actively involved in public decision-­making.66 As can be seen, the concept of citizen participation advocated by theorists and practitioners is mostly focused on those mechanisms established and designed to motivate citizens to be involved in public decision-­ making.67 Taking cues from Western countries, visits and letters, public hearing, public opinion-­seeking for policy drafting, democratic talkfest, participatory budgeting, mayor mailbox and scoring appraisals by citizens for officials in the practice of citizen participation in China can also be regarded as mechanisms for citizen participation with Chinese characteristics. Supporters generally believe that citizen participation can

14  Introduction optimise the administration process during policy formulation.68 Citizen participation helps to lay a foundation more in line with citizen preferences for public policies – which might otherwise lower the public’s trust upon the government – thus allowing the government to obtain higher levels of public support and satisfaction, which in turn, reduces differences and conflicts.69 Nevertheless, whether mechanisms of citizen participation could really promote the government to present substantial changes remains questionable. For one thing, the main criticism against citizen participation is rooted in such problems as wasting time, high costs, and strong interference from interest groups objecting to a policy, among others.70 Besides, a systematic bias may exist in the representation of citizen participation. Large-­scale empirical studies in the USA have reported that citizens do not actively participate in large-­scale public affairs if relevant events have nothing to do with their own economic interests and needs.71 Furthermore, the substantial influence on government politics imposed by citizen participation could be radically minimised by manipulating procedures for citizen participation, such as participant selection, agenda-­setting and information provision, which can reduce citizens’ motivation to be involved.72 In turn, whether the government can truly trust those citizens serves as the premise for effective citizen participation, that is, government administrators who lack public trust tend to make citizen participation lose its real significance.73 The reason why we present the literature related to citizen participation in this book is that, under certain circumstances, citizen participation has a similarity with expert involvement. An early understanding of the limitations of citizen participation assumes that ordinary citizens cannot do anything about complicated public decision-­making (e.g. food and drug supervision).74 Hence, practitioners gradually developed a number of strategies to encourage citizen participation, such as inviting industry representatives and experts into the advisory committee or developing citizens’ expertise through education and training.75 In China, experts are specially arranged to attend public utility cost hearings. Even so, this book will illustrate the mechanisms for citizen participation contrary to those mentioned above. When faced with some affairs about public policy-­ making that are not so complicated, can experts still make a difference even if they do not have an integral role in the decision-­making process? In order to realize their goal of promoting policy changes, when public policy-­ making is not so complicated, experts may give up their capacities as  ‘experts’ and become involved in the social movement as common citizens  under the government’s institutional framework. Such a finding is one important theoretical contribution made by this book to the theories on citizen involvement. Study on the policy process in China When China entered the period of the reform and opening-­up policy, Western scholars expressed a wave of concern about the policy process in China. Many

Introduction  15 Western observers started to explain the transition process of economics, social systems and other aspects in China from the perspective of policy process theory. From the end of the 1980s to the beginning of the 1990s, a number of scholars, such as David Lampton, Kenneth Lieberthal and Susan Shirk, advocated the abstract evolving process of policy-­making in China into a fragmented authoritarianism model under the assumption that the competition among China’s bureaucratic organisations in fragmented authoritarian style acted as the force driving China’s policy changes.76 After the middle of the 1990s, when social elites began to play outstanding roles in the policy decision-­ making process, some other Western scholars like Joseph Fewsmith and David Shambaugh became increasingly interested in discussing elite politics and policy involvement.77 The latest studies on the Chinese policy process published in English have acknowledged that social participants have great power in terms of influencing policies with the revised framework of fragmented Authoritarianism 2.0.78 However, Western studies on the Chinese policy process have always been classified within the scope of ‘China studies’. For this reason, China theories on the policy process are seriously out of touch with current mainstream theories on the policy process. Comparatively speaking, Chinese scholars have more advantages than Western scholars in terms of access to empirical data concerning the policy process in China. However, the theoretical development of the policy process in China achieved by Chinese scholars has just begun. As Professor Xu Xianglin has said, the political context, system, basic variable, decision-­making criteria and conditions of the policy process are the main topics in the study of policy process acting as a middle-­level theory to analyse politics reform in China.79 At present, some Chinese scholars have already initiated investigations into the basic theoretical problems of the policy process. Several Chinese scholars have also proposed many models of policy process with Chinese characteristics, including ‘crossing the river by touching stones’,80 ‘integrated model for democratic decision-­making’,81 ‘up-­and-down interaction’,82 ‘up-­and-down, back-andforth model’,83 ‘policy learning and adapting model’84 and ‘consensus framework’.85 Generally speaking, policy process studies by Chinese scholars have placed more emphasis on ‘procedures’, which are different from studies on ‘processes’. This means that Chinese scholars need to employ a conceptual framework and analysis model to describe the policy process itself, however, only a few scholars seek the general rules of abstract policy process from the perspectives of theory, variable and causal relation, and they have then utilised sound methods to carry out relatively strict empirical research on the policy process in China. In summary, studies on the China’s policy process have long been out of touch with current theories on ‘public policy research’. Thus, another task that we have to execute is to initiate a ‘dialogue’ between China studies on public policy process and current theories on public policy process. We admit that current theories on public policy process are essentially Western theories on public policy process. In many cases, Western theories cannot fully explain

16  Introduction Chinese issues. The ‘dialogue’ mentioned here is not the act of studying issues about China’s policy process by mechanically applying Western theories. Rather, we aim to determine whether scholars can make a significant contribution to current theories on public policy process through studies on China’s policy process, thus helping Chinese theory become a part of the current theories. We also hope to advance theories on public policy process into a general theory that is applicable to China, Western countries and to other non-­Western countries. Therefore, from here on, initiating a ‘dialogue’ between Chinese policy process and current theories on public policy is the vital task confronted by researchers engaged in public policy. Chinese stakeholders A ‘stakeholder’ refers to an individual or organisation, who might either benefit or suffer from a policy change. Under the same political system, various stakeholders have common characteristics even in different policy changes. To analyse the behaviours of Chinese stakeholders, we can make general assumptions about their behaviours and specific institutional arrangements in China as a starting point for discussion, and then investigate the behavioural preferences and resource constraints of different types of stakeholders. Resource stakeholders can be mobilised in various ways, whilst resource constraints can determine the capacity and behavioural strategies held by stakeholders trying to influence different policy processes. In short, stakeholders manage to use their resources to influence the final policy maker, thus maximising their own interests. Once they have established direct contacts and interest links with the policy maker, stakeholders may use such resources to restrain policy changes that might be harmful to them, even if they are not using such resources to promote a policy, which might bring benefits for them. These common characteristics of stakeholders may be transnational or may have the distinct features of their home countries, which can be taken as the theoretical bases in making a comparative policy process analysis. In China, stakeholders in the process of policy change generally include state stakeholders and social stakeholders. State stakeholders consist of all the central and local bureaucracies involved in the decision-­making, except for the final policy makers. In terms of state stakeholders, a series of classical studies on Chinese policy processes have demonstrated that central ministries and local governments belong to bureaucratic structures and that persons in charge of such structures either promote or hinder policy changes, depending on their personal networks and administrative linkages embedded in the formal organisations.86 As a policy involves multiple ministries, one common strategy taken by the bureaucracies is to state the goal of competition for benefit distribution in a more objective and scientific manner. One example is the decision of the central government to break up the monopoly of the fundamental telecommunications industry in 1994. At that time, the Electronics Ministry, the Power Ministry and the Railway Ministry clamoured for the dissolution of the monopoly so that they could gain market

Introduction  17 shares in the telecommunications industry. Hence, they submitted a report to the State Council, claiming that the exclusive monopoly of China’s telecommunications industry led to inefficient services. However, the Ministry of Posts and Telecommunication, which supported the monopoly, also submitted a report claiming that breaking up the monopoly would generate redundant projects that, in turn, could lead to a huge waste of social costs.87 Hereupon, we can analyse the motivations of self-­interest when we analyse certain policy opinions expressed by bureaucracies to the final policy makers at a higher level. Social stakeholders include various social groups influenced by a policy, such as business circles, banks, multinational corporations and the general public. Some social stakeholders have successfully gained access to China’s policy-­ making process. For example, some enterprises have successfully established an interest linkage or opinion delivery channels with government agencies, which enabled them to influence the government’s decision-­making process. Although the quantity of state-­owned enterprises (SOEs) dramatically decreased in the process of China’s privatisation, SOEs still play major roles in industries and key fields dealing with national security and the national economy.88 The interests of these SOEs are directly related to the interests of government departments in charge of relevant industries. Moreover, a number of persons in charge of SOEs are former senior officials appointed by relevant government authorities, whose personal ties with government officials established in the past enable them to influence governmental decision-­making. Meanwhile, some private enterprises and foreign-­invested enterprises serve as the major source of financial revenue for local governments.89 Hence, these local governments are obliged to protect the interests of local enterprises which, in turn, have a considerable influence upon these local governments.90 Some entrepreneurs have either been elected as deputies of the National People’s Congress (NPC) or became members of the Chinese People’s Political Consultative Committee (CPPCC). Some others also established industry networks, through which they have developed channels for regularly expressing ‘opinions’ (i.e. lobbying) to government policy makers.91 The populace, as another category of social stakeholders, has even less resources to influence the policy process. For different policy domains, average individuals with related interests have different identities. Specifically, as policies on urban residence certificate change, they become part of the so-­called ‘floating population’: when prices of urban utilities change, they become part of the urban residents; as policies on education change, they become students or parents; and, finally, as policies on commodities of an industry change, they become ordinary consumers. Their common feature is that they do not have enough channels to influence policies, but only act as passive recipients of whatever polices are implemented by the authorities. Although some mechanisms (e.g. administrative proceeding, visits and letters and public hearings) allow them to express their views on policy decision-­making in China, these mechanisms do not give average individuals sufficient power to influence the final decisions being made.92

18  Introduction

A new perspective: expert involvement theory based on policy changes Basic model for expert behaviours As defined in this book, ‘experts’ are policy participants with interest neutrality for policy changes. Based on the classic model, ‘experts’ will not utilise their expertise to promote policy changes driven by their personal interests. Of course, assumption on the interest neutrality of experts is controversial in many cases. For instance, most experts are working in think-­tanks with a government background or are connected with university research institutions, whose policy viewpoints must comply with the country’s political guidelines. For some special policies relating to the personal interests of experts, we can hardly judge whether the experts’ efforts to promote a policy are, in fact, based on their own interests. Under national policies for attracting professionals (e.g. the ‘National Thousand Talents Program’) for attracting overseas senior talents, some experts qualified for the ‘Program’ act both as policy advocates and policy stakeholders. When actively promoting a major project or technological strategy at the national level, some scientists may be the authorities in that technological field, but they are also policy stakeholders of the relevant technology policies. Similar problems may also occur in some areas of economic policy. Some economists may have maintained good cooperative relations with many entrepreneurs. They will be invited to serve as independent directors of the enterprises, whilst entrepreneurs often support the research institutions economists work in to carry out studies in related fields. Then, economists may lose their interest neutrality and bind themselves to the interests of the industry – they may even openly advocate opinions on a certain policy for the interests of an industry group. By this time, they are no longer the ‘ideal’ experts. In fact, they have become part of the interest group. Thus, we need to carefully choose cases on expert involvement to avoid those involving experts with non-­neutral interests. However, the alleged interest neutrality of experts does not mean that experts do not have their own positions for a certain policy opinion or that their opinions have no impact on the policy stakeholders. We emphasise that the tendentious claims of the experts are derived from their objective analyses of the policy rather than their own personal interests. The different viewpoints on a policy held by experts may be rooted from their different perspectives concerning the relationship between the government and market or from a biased analysis made on the basis of limited information for decision-­making. Moreover, policy opinions held by an expert in one direction of a policy change may impose varying impacts on different stakeholders. A typical example is that the experts’ viewpoint supporting the appreciation of the RMB may be beneficial to consumers but, at the same time, it may be harmful to the export-­oriented enterprises. If experts support the devaluation of RMB, this trend might increase the prices of imported products in the domestic market and simultaneously increase the amount of exports. Debates

Introduction  19 among experts allow policy makers to balance the interest gains and losses of all parties after the implementation of different policy opinions and to formulate policies that can maximise the welfare of the state and society. At this point of time, the identity of experts is not that of stakeholders but that of observers or analysts with interest neutrality. In light of the above-­mentioned information, we must carefully select the policy domains and control the personal interests of experts involved in such policy domains. Comparatively speaking, those social policies concerned with ‘ordinary people’ are the better choice. As the main recipients of social policies, ordinary people do not have enough resources that can be used to embrace experts to canvass government policy makers. Those experts actively engaged in the research and promotion of social policies may have less personal interests involved. Even so, experts involved in the drafting of social policies are not exactly neutral when it comes to their interests. In each policy involved in the comparative policy cases in this book, experts have the right to enjoy benefits from relevant social policies just as ordinary people do. Briefly, this is a relatively critical assumption on experts’ interest neutrality. In reality, experts will have certain interest relations with policies they studied; however, this is an essential assumption for simplifying the complex research. Policy participants or experts display involvement behaviours with different characteristics. In this book, we roughly categorise the involvement behaviours of Chinese experts into two – that is, direct involvement and indirect involvement – according to the relationships between the identities of participants and the decision-­making process. The direct involvement of experts mainly refers to the experts’ behavioural pattern of conveying policy ideas to policy makers through direct channels. By establishing formal or informal channels of communication with the government’s policy-­making organs, experts provide the latter with their research results (in oral or written formats) and try to make policy makers understand and accept their policy opinions. Direct involvement behaviours include sending letters to the policy makers and research commissions, submitting study reports and participating in policy consultations and seminars organised by the government upon invitation. Indirect involvement refers to the act of exerting influence on other policy actors, rather than indirectly on policy makers, to influence policy. Indirect involvement behaviours include publishing articles for public access, accepting press interviews, publishing research outputs and expressing opinions on public blogs and other social media channels. On the one hand, experts can influence other social elites. They can show their research results to other peers and social elites through publishing academic papers in academic journals, publishing other works and convening academic seminars. If experts can convince other social elites to consent to and support their policy views, whilst uniting other research organisations to promote their academic ideas and policy insights, then their policy viewpoints will become a mainstream view at the decision-­making level of the government. As this happens, experts’ insights can then have an impact on the government’s final decision.

20  Introduction On the other hand, experts often express their views in front of the general public and hope to receive public support, indirectly imposing influence on policies through the mass media. In Western countries under the electoral system, the media exposure of experts plays a more obvious role in influencing policies than in undemocratic countries. Experts openly express their views to influence the general public on a certain policy through the television networks, print media or other media platforms. Most experts and researchers in Western countries are willing to accept interviews on public media channels; they also frequently take the initiative to write some reviews and essays and express their own views on topics concerning public welfare. As for experts enjoying a higher level of public popularity, the media are more inclined to quote their views in the reports, thus revealing the validity and authority of the media’s view orientation, where the public would be more likely to believe and accept these policy proposals. The behaviours manifested by contemporary Chinese experts as they become involved in the decision-­making process have the characteristics of cultural traditions. In general, Chinese experts are more willing to influence policy makers through direct channels rather than indirectly through public opinion. This is because the involvement model based on direct channels can lead to a higher level of influence on the policies being drafted. As a last resort, experts will take indirect channels by dint of public opinion to influence policy makers. One reason is that Chinese intellectuals (i.e. scholar–bureaucrats or Shidafu) follow the tradition of submitting written statements or memorials to the throne. Another reason is that intellectuals having experienced several political movements since the establishment of the People’s Republic of China (PRC) until the reform and opening-­up are still somewhat reluctant to give opinions publicly. Often, they feel that issuing public comments is such a risky move in that it could offend the government and expose them to public criticism.93 At the same time, the modernisation of China’s political ecology has also contributed to the diversification of experts’ behaviours since the reform and opening-­up, especially after the 1990s. This phenomenon mainly includes transitional processes on two aspects. The first is the rise and intensely strengthened influence of the commercial media. Along with the marketisation of the media, some media agencies started to gradually shake off the binding of official will, thus creating conditions that allow experts to express viewpoints that differ from those of the government in the official media outlets. The booming new media in recent years, such as the development of the Internet and the emergence of Internet-­ based platforms (blogs, microblogs, etc.) have become important venues through which experts publicly express their views. Another aspect is the progress made by the government on information disclosure in China. In the past, it has been difficult for experts outside of the establishment to fully access the government data required for their studies due to the shackles of the government’s secret-­keeping tradition. Back then, in order to carry out relevant studies, experts had to cooperate and share information with government departments. Recently, information disclosure has become an irreversible trend in the Chinese government, as with the rest of the world. A series of documents released by the

Introduction  21 Party and the government, such as new regulations on information disclosure, have provided experts with enough facilities and access to data, which they can then use in their research. More importantly, competition among experts is no longer for the ‘source of data’. This is because an expert can be more authoritative than others, as long as he/she can obtain more authoritative data, despite the information disclosure policy of the government. Today, debate among experts has gradually shifted into the competition on ‘views’. The level of analysis has also become an important criterion by which to judge the merits of an expert. We can see that the behaviours of Chinese experts are subject to the rational balance between direct and indirect involvement strategies. ‘Influence maximisation’ for experts is a relatively common assumption in current academic circles. In many scholarly works on experts and think-­ tanks, behaviours of experts involved in the policy process are all considered as the rational selection for strategies to maximise their influence in light of their own resource constraints.94 Traditionally, Chinese experts still tend to submit their views directly to the policy makers, because this is the most direct and effective way to influence decision-­making. Sometimes, however, they choose to declare themselves via public channels first. At first, the experts’ decision to publicise their views on the media while being at risk of offending the government and exposing themselves to public criticism seems like a problematic course of action. However, some experts tend to express their views in this manner in order to influence public opinion, especially when the direct channels lead to nowhere. The failure to communicate via the direct channels mentioned here refers to two scenarios: the experts do not have access to direct channel resources linking them to the government; or the expert suggestions which they delivered to the policy makers through direct channels encountered strong resistance. Experts could apply external pressure on the government by guiding public opinion. Along with the marketisation of China’s media industry and the emergence of some new media, the media has become a tool to amplify these external pressures.95 Therefore, even if experts cannot influence the government through direct channels, they can launch their policy agenda by influencing public opinion through media channels. Attributes of policy changes Thus far, few scholars have focused on the effects of the ‘attributes of policy change’ on the behavioural model of experts. On the basis of policy network theory and the principal–agent model, this book attempts to develop a theory explaining the behavioural models of expert involvement in policy changes in China by combining knowledge utilisation theory and the stakeholder analysis framework. In terms of theory, we propose that the two attributes of policy changes, namely, ‘loss embeddedness’ and ‘knowledge complexity’, are the key factors influencing the behavioural models of expert involvement in policy changes, where loss embeddedness is rooted in the policy network theory and

22  Introduction the concept of stakeholder, whilst knowledge complexity is developed on the basis of the principal–agent model. Figure 1.1 shows the origins of the core theory. According to theories on the policy process or policy cycle, the policy process can be largely divided into agenda setting, alternative selection, implementation and evaluation.96 Scholars engaged in public policy generally believe that experts play the most prominent roles in agenda setting and the alternative selection of the policy process.97 Therefore, we adopted analytical frameworks for these two stages. Agenda setting refers to a context, in which policy issue is noticed by the policy maker and included in the priorities of agenda to be handled and resolved through policy changes. Expert evaluation on policy implementation can be considered as the beginning of a new round of a policy change cycle. At the stage of agenda setting, some social problems drawing the attention of government officials, such as changes on trends in demographic statistics, disease rate and prices of consumer goods, major accidents and events might drive policy makers to launch different policy agenda. At this stage, experts define a policy issue (problem definition) either based on their findings concerning actual events or their evaluation of the implementation effects of a previous policy, as reported to the policy makers through different approaches.98 When a

Theory on policy process

Theory on expert involvement

Analysis on stakeholders

Theoretical context

Theory on knowledge utilisation

Theory on policy networks

Principal–agent theory

Loss embeddedness

Knowledge complexity Explanation model

Theory on expert involvement in China

Figure 1.1  Theoretical context of the new framework.

Introduction  23 political cycle, public mood and other factors meet relevant conditions, experts are likely to report their findings in a timely manner to maximise the chance of promoting policy changes.99 At this point, the political, policy and problem streams are gathered and a new policy window shall be opened through which a policy change can be launched.100 Alternative selection refers to a process in which policy makers choose one solution as the final policy from many alternatives being considered. This process is generally considered as a ‘decision-­making’ process. When policy makers begin to consider solving problems, experts can then offer the necessary knowledge and analytical support. In the model, we extracted two key attributes of policy change: loss embeddedness and knowledge complexity. Loss embeddedness The term ‘embeddedness’ refers to the extent to which a social individual exists in a network or structure.101 In the field of the policy process, ‘embeddedness’ refers to whether a participant for a specific policy is a member of a policy network.102 As a concept in network structure, ‘embeddedness’ has been applied in studies on the supply of public items by local governments in the rural areas of China.103 ‘Loss embeddedness’ relating to a policy change, as illustrated in this work, refers to whether those stakeholders closely tied with policy makers are the potential losers of interests brought by the relevant policy. Loss embeddedness is not only a concept of network structure, but also an attribute of policy change. Any policy change is accompanied by interest losers and beneficiaries. What we are concerned about is whether the interest loser has a close tie with the policy maker during the policy change. Table 1.1 explains the concept of loss embeddedness in the process of policy change. In order to facilitate understanding, we categorised the interests involved in a policy change into ‘loss’, ‘gain’ and ‘neutrality’. Networking relations between policy participants and policy makers (i.e. the embeddedness of the policy-­maker network) has been classified into the one ‘inside the policy Table 1.1  Embeddedness of losers during a policy change Potential loss and gain of interests

Embeddedness of the policy-maker network Inside the policy network (strong embeddedness)

Outside the policy network (weak embeddedness)

Loss

Embedded losers

Non-embedded losers

Gain

Embedded beneficiaries

Non-embedded beneficiaries

Neutrality

Non-stakeholders (embedded)

Non-stakeholders (non-embedded)

24  Introduction network’ and the one ‘outside the policy network’. As a result, there may be six types of policy participants in the process of any policy change. It is noteworthy that the policy change we have repeatedly mentioned here is a dynamic process that has direction and is slightly different from the static concept of ‘policy domain’. In the same policy domain, certain type of stakeholders may be potential losers in one direction of the policy change but may also be potential beneficiaries in the other direction. With analysis for each foregoing circumstance, we can understand their different reactions to expert advice. If some people only enjoy neutral interests of experts on a certain direction of policy change, they will have no incentive to promote or prevent the expert advice playing roles. Regardless of whether they are inside or outside the policy-­maker network, they will support the expert advice if the policy change suggested by the experts will bring potential interests to them, under which expert advice will work fairly smoothly. However, if a policy change suggested by experts will turn some people into potential victims, a discussion shall be carried out separately. For the non-­embedded losers of interests (i.e. populace), they are unable to mobilise resources within the decision-­making network to prevent further development of policy change, even if they are not satisfied with it. For embedded losers of interests, they can mobilise resources within the policy-­maker network to prevent the further development of policy change, if they are not satisfied with it. Whether there are embedded losers during a policy change is the key attribute of the policy change we are most concerned about, and this is represented by the shaded part in Table 1.1. One criterion for judging the intensity of the loss embeddedness of a policy change is based on the strength of the relationship between interest losers and policy makers during the policy change. An intensified relationship between losers and policy makers exists during a policy change, and at this point, stakeholders suffering from loss are able to express adverse opinions to policy makers and possibly block the further development of the policy change. Another criterion by which to judge the intensity of loss embeddedness is the extent of potential loss due to the policy change, which leads to stakeholders embedded in the policy-­maker network. With greater potential losses, the benefit losers will have greater incentive to mobilise their resources embedded in the network to prevent the further development of the policy change. When none of participants in the policy network are deemed to be potential losers under a policy change, consensus on this policy change can be reached quite smoothly within the policy network. When stakeholders – either beneficiaries or losers – who are affected by the policy change have weak embeddedness in the policy-­maker network, influential members within the network will neither use resources to promote nor try to stop the development of such a policy change. There are varying levels of loss embeddedness in different processes of policy changes. In some policy domains, potential losers from a policy change may be the ministries of the central government or local governments, large-­ scale state-­ owned business banks keeping a close relationship with the

Introduction  25 government or even those multinationals with strong abilities on government activities. If they believe that the policy change can lead to interest loss that is large enough for them, they tend to utilise linkages with key policy makers to prevent the further development of the policy change. For social policies in need of large amounts of financial funds granted by the government, in particular, the support or rejection of the financial sector often serves as the important condition for the successful release and effective implementation of a policy. On the contrary, some policy changes may impair the interests of some ordinary people, such as peasants, the urban population, students or common consumers. However, these interest losers only have remote relationships with government policy makers; thus, they are generally unable to alter the policy changes. The behavioural strategies of experts are influenced by the loss embeddedness of policy changes. When there is strong loss embeddedness of a policy change supported by experts, relevant losers within the policy network will try to prevent expert advice from playing an important role if the experts try to achieve influence only though direct channels. Under such a circumstance, experts must initiate and promote policy change through indirect means. Meanwhile, when there is weak loss embeddedness of a policy change supported by experts, expert advice will not be subjected to much resistance from members of the policy network and may even obtain the support of these members. Therefore, under such a circumstance, experts will enjoy smooth, direct channels to express their views to policy makers. Knowledge complexity Complexity refers to the degree of difficulty in understanding and applying a new thought,104 which can be embodied as intellective limitations of policy makers to understand relevant policy knowledge.105 The ‘knowledge complexity’ of policy change refers to the extent of the policy makers’ relative lack of expertise required in a policy change, which prevents them from fully understanding the situation and making independent decisions. Due to the complexity of the policy issue, policy makers need the expertise and analysis offered by experts.106 Regardless of other factors, policy makers could invite experts to strengthen their understanding and decision-­ making capacities in light of complex policy issues.107 Generally, when there is a higher degree of knowledge complexity involved in a policy change, this means that policy makers have a greater lack of expertise required in implementing such a change; hence, these policy makers have a more urgent need for expert advice on policy selection. In contrast, when there is a lower degree of knowledge complexity involved in a policy change, this means that the policy makers have sufficient capacity to make decisions; hence, expert advice may be rendered unnecessary. Knowledge complexity is a relative concept that serves as a barometer by which we can compare the extent of expertise possessed by policy makers (inside the government) and experts (outside the government) within a policy domain. For policy makers themselves, knowledge complexity can be expressed

26  Introduction as intellectual and practical limitations of the policy makers to understand relevant policy issues.108 Due to their varying degrees of expertise and experience in a policy domain, different policy makers hold different attitudes when it comes to expert or non-­expert opinions.109 Empirical studies show that those policy makers occupying a post for quite a long time and thus having greater knowledge of policy domain (as measured by their years in the position) are more inclined not to accept expert advice. If they have a strong professional background, the policy makers, such as technocrats or officials with professional technical titles in China, may become more reluctant to accept advice from non-­ professionals when faced with some decision-­making issues.110 For policy makers operating within the process of policy changes as a whole, knowledge complexity becomes an attribute of policy change. Knowledge complexity can be expressed from several aspects. First, knowledge complexity can be expressed as the required expertise for selecting policy issues and optional instruments, which can be classified into high-­tech issues and low-­tech issues.111 In general, experts have a more dominant voice when faced with issues in the fields of natural sciences, engineering, economics, management and laws with stronger theoretical sense, especially when a policy is related to interdisciplinary expertise. In practice, Chinese official documents also stipulate that expert authentication, technical advisory and decision-­ making appraisal for major issues must be done with a strong sense of specialisation and technical prowess.112 Second, knowledge complexity can be expressed as ‘ambiguity’ of the policy instrument.113 When there exists a large number of policy instruments or ambiguous options for a policy instrument along with a policy change, policy makers will encounter greater difficulties in calculating the costs and benefits resulting from the solution selection. By this time, experts will appear as the ‘external brains’ of the government to provide policy makers with a more accurate analysis of the ambiguous policy instruments. Third, knowledge complexity can be expressed as the ‘originality’ of the policy instrument.114 Even if a brand new policy option is well defined, there may still be considerable uncertainties regarding its success, especially when policy makers are unable to make a judgement from past experiences.115 Experts will appear at this time, helping policy makers by harnessing their expertise and presenting a profound analysis to predict the unknown scene. In addition, if the policy makers are not updated with similar trends in foreign countries, experts could help them gain a clearer understanding of the effects of a new policy instrument by introducing the former to foreign examples.116 Finally, information asymmetry during policy change is also an important manifestation of knowledge complexity. Information asymmetry refers to the unbalanced information possessed by the policy makers and the experts during a policy change. Asymmetric information is often employed as a concept to explain the information preponderance possessed by an agent within the principal–agent relationship. For example, a decision maker, as the principal, will possess less knowledge than the experts acting as the agent.117 However, the agent in the principal–agent relationship is not always the party enjoying

Introduction  27 information advantage. In the principal–agent relationship between policy makers and experts,118 particularly, both policy makers and experts are likely to be the parties possessing more information. On the one hand, the expertise possessed by experts and their field investigations can help policy makers to better understand the critical techniques required during the process of decision-­ making. When policy makers do not know much about the real situations, they will then refer to the experts for the necessary knowledge and information. On the other hand, not publicising information on decision-­making based on the institutional arrangement of the government will prevent experts from having an in-­depth understanding of issues surrounding a certain policy. This is why policy makers often complain about the ‘unrealistic’ research carried out by experts and, in turn, experts tend to frequently complain that the government does not provide valid information and data. Hence, information asymmetry in the process of policy change is another determinative factor influencing policy makers to seek expert advice.  Owing to the knowledge complexity of the policy issue and the constraints caused by limited information, policy makers need the expertise and analysis offered by experts to help them calculate the costs and benefits of the policy change more accurately.119 Knowledge complexity will not play a linear role in the requirement for expert advice sought by policy makers during policy changes. We can list four situations for the knowledge complexity of policy changes based on complexity and information asymmetry (see Table 1.2).  When a policy change has a weak complexity, has fewer and explicit options and the policy instrument only has a lower level of originality, policy makers can choose the policy option independently without expert advice. However, as Table 1.2  Knowledge complexity of policy change Information asymmetry

Complexity (specialisation, ambiguity, originality) Easy for policy makers to select the policy solution

Difficult for policy makers to select the policy solution

Policy makers possess more key information

Experts know; policy makers know even better: no need for experts

Experts do not know; policy makers know even less: experts are incapable, hence, decision-making is suspended, arbitrarily treated or handled by information disclosure

Experts possess more key information

Policy makers know; experts know even better: experts are invited to authenticate (endorse) the decision-making process that has been concluded

Policy makers do not know; experts know: expert advice is needed

28  Introduction we have stated earlier, information asymmetry also plays a part in policy makers seeking expert advice during policy changes. As policy makers obtain more key techniques to help them understand specific situations and make their own decisions, they have every reason to exclude experts from the decision-­ making process. When experts possess critical expertise, policy makers may invite them into the process to authenticate or validate the scientific nature of the decision-­ making process, although they have enough self-­confidence to make independent judgements themselves. The policy makers, in short, need the experts so that they can give the public a better explanation and heighten the legitimacy of their decision-­making process. It is often difficult for policy makers to select among different policy alternatives when the policy complexity is really strong. If policy makers possess more information than experts, the latter will not be able to help the former make a better decision because experts know the situation even less; thus, policy makers have difficulties while making a decision. At this point, three cases may occur during the decision-­making process: (1) inclusion of the policy will be set aside due to strong complexity; (2) policy makers will arbitrarily make decisions; or (3) policy makers will decide to disclose the information and invite experts to investigate internal data and help policy makers alternative selection. Only when a policy change is at a higher level of knowledge complexity and experts possess more key information will policy makers think expert advice is necessary (see the shaded part in Table 1.2). The ‘knowledge complexity’ of policy change will be really strong in such a case, and in turn, this shall drive policy makers to initiate procedures on expert consultation. We can also determine the extent of knowledge complexity of a policy change from two dimensions. On the one hand, we can decide that policy changes with stronger specialisation, ambiguity and originality will have higher levels of knowledge complexity. In a certain process of a policy change, the less key information policy makers have, the higher the level of knowledge complexity of the policy change will be. This will help us simplify the complicated concept of knowledge complexity. Accordingly, a higher level of knowledge complexity illustrated by a policy change means that the policy makers might even be short of expertise required in the policy change; thus, they will encounter more difficulties while calculating the costs and benefits in the process of the policy change. The higher the level of knowledge complexity involved in the policy change, the more urgent the policy makers’ need will be for expert advice on policy selection. On the other hand, when the knowledge complexity involved in the policy change is at a lower level, policy makers can make decisions on their own; here, experts are regarded as unnecessary by policy makers. However, it is not true that experts will passively appear in the policy process only at the time when policy makers consider that expert advice is necessary. When the knowledge complexity of the policy change is at a lower level (i.e. policy makers do not need expert advice to arrive at decisions), experts may also actively participate in the policy process with indirect strategies. Therefore, experts will choose the right strategy to achieve the purpose of influencing the policy.

Introduction  29 Theoretical hypotheses Based on the attributes of policy changes and related hypotheses, we can divide all policy changes into four categories, and in each category, experts adopt different behavioural patterns to successfully influence the policy. The two dimensions shown in Table 1.3 stand for the strength of loss embeddedness and the extent of knowledge complexity, respectively. The four quadrants illustrate the respective types of behavioural strategies taken by experts. Outside-­in enlightenment Agenda setting: Experts will be confronted with strong resistance from within the decision-­making network, if they submit their advice to policy makers only through direct channels. To circumvent this situation, they can use the indirect strategies instead. Moreover, because such policies are complex, they tend to publicise their research results to enlighten the public about the complex policy, from which public opinion can be strengthened. When this happens, the public can impose pressure on the government to open the ‘policy window’, which may ultimately initiate the policy agenda. Alternative selection: Once the agenda has been initiated, policy makers still have to seek help from experts during the decision-­making process due to the knowledge complexity of the policy. Different policy alternatives often result in varying degrees of impact on various stakeholders. During such a process, expert suggestions supporting different policy alternatives will enter the decision-­ making process simultaneously in an attempt to persuade policy makers.120 The ‘Outside-­In Enlightenment’ may be the model taken by experts at this moment, but the final decision made by the policy maker may be a relatively balanced programme. Linear consultation Agenda setting: Experts can smoothly provide the policy makers with professional analysis through direct channels, reveal problems, open the ‘policy window’ and thus initiate the policy agenda. Alternative selection: After the agenda is initiated, policy makers have to ask for help from experts during the decision-­making process, so that policy makers Table 1.3  Models of expert involvement in China’s policy change Knowledge complexity

High Low

Loss embeddedness Strong

Weak

Outside-in enlightenment Locked-out

Linear consultation Civic activism

30  Introduction often invite experts or organise expert consultation teams to obtain advisory opinions directly from experts. This model for expert involvement is the classic linear model taken by experts to influence the policy. Locked-­out Agenda setting: The policy is relatively simple and policy makers know how to make decisions. Meanwhile, stakeholders suffering from loss on the policy have a strong sense of influence, which will hinder the expert advice from having an important role. Therefore, the experts are actually ‘locked out of the door’, such that even though experts could express their views on various occasions, policy makers will not adopt their advice. Alternative selection: Policy makers place much more emphasis on how to balance interests among the embedded stakeholders during alternative selection. Once interest relations are properly handled, the process of decision-­making will be easier and the technical support of experts becomes unnecessary. Given that experts could influence neither the government nor the public, experts seeking to raise their social status are most likely to be captured by strong stakeholders under such circumstances. At this point, the ‘experts’ become part of the interest group rather than the group of experts we talked about, whose opinions are also most likely to be seen through and criticised by the public.121 Civic activism Agenda setting: The policy is relatively simple and policy change has nothing to do with stakeholders embedded in the decision-­making network, thus policy makers are totally unconcerned about expert advice. Experts have to take more aggressive actions, if they want to influence the agenda. Sometimes, experts may mobilise or participate in civic activism, in which the capacity of the expert counts for little. What is more essential is whether the behavioural pattern taken by experts could arouse enough attention from the media. Alternative selection: Once the agenda is initiated, policy makers could make a decision easily and expert advice is not necessary in this process.

Research design and comparative cases This study conducts comparative case studies to test the theoretical hypotheses proposed in this book together with the stakeholder analysis framework. With stakeholder analysis, scholars identify opportunities and constraints for calculating the likelihood that a strategy becomes successful in initiating or preventing belief and policy change.122 Stakeholder analysis generally assumes that the ultimate decision makers of the policy are the ‘arbitrators’, who will integrate and coordinate opinions of various stakeholders and other policy participants

Introduction  31 and finally make the decision. General steps are taken for the stakeholder analysis. First, we identify who the policy stakeholders are. Second, we analyse their interests, resources and constraints. Finally, we examine the review strategies they take to achieve their objectives.123 Under the framework of the stakeholder analysis, we conducted policy case studies in strict accordance with the procedures of a comparative case study and the principles listed below. First, the design of a comparative case study shall follow the logic of theoretical replication. In his classic book, Case Study Research: Design and Methods, Robert K. Yin indicated that ‘theoretical replication’ refers to the process of selecting four to six cases under different modes to test different results predicted by theoretical hypotheses.124 It is not necessary to follow the principle of representativeness for the case selection involved in the comparative case study. The criterion of ‘representativeness’ is often employed as the basis for judging the validity of the sampling process in the quantitative research and whether the samples taken could predict the overall situation. To realize the representativeness of the quantitative research, randomisation shall be maintained in the sampling process. In the comparative case study, however, case selection need not follow the principle of realizing representativeness for random sampling. Researchers do not intend to speculate on the overall situation through just a small number of cases. A sample that can be used to answer the study questions in a relatively complete and accurate manner serves as the key for case sampling.125 Hereupon, the selection for comparative case study deals more with the ‘diversity’ of each case, takes ‘purposeful sampling’ as the major technique and attempts to reveal the causal mechanism inside the cases. According to the theoretical hypotheses proposed by this book, there are two independent variables in the model for explaining expert involvement, where four sets of types categorising policy changes have been deduced. Therefore, we shall take ‘policy change’ as the analysis unit and select no less than four policy cases to verify the series of hypotheses mentioned above. Subject to the limitations on the extent of the study, we purposefully selected four major cases of policy changes on the basic premise of ensuring the study’s validity. In those cases, the attributes of the policy changes have obvious differences and experts are also expected to choose different strategies for involvement in the four policy changes. Second, I consciously avoided the confounding factors. All selected policy cases are social policies that changed within one decade (2002–2012). Furthermore, as previously described, cases selected in this study are all social policies, thereby minimising the interest bias of the experts. More importantly, we need to control the confounding factors produced by policy makers as conducting the comparative case study in view of the stakeholder analysis framework. Sometimes, a bureaucracy is the ultimate decision maker and also a participant in the policy formulation initiated by an agency at a higher level. For major policy decisions to be issued and forwarded by the CPC Central Committee or the State Council or approved in its executive meeting, relevant central ministries and local governments should become stakeholders rather

32  Introduction than simply decision makers. However, if a policy is issued by a central ministry or local government, these government agencies become the ultimate decision makers. Hence, in order to speak with one voice for discussion on comparative cases, all cases on policy change selected in this study are those issued, approved or officially replied by the State Council (or together with Central Committee of the CPC). This way, ministries and commissions in the central government and the local governments in all related regions have no final decision-­making authority but are merely participants in the decision-­ making process of the State Council. Third, efforts were made to avoid ‘reflexivity’ in the interviews. In the qualitative investigation, ‘reflexivity’ refers to the phenomenon wherein the interviewees answer questions regarding the intention of the interviewers on purpose, or those subjected to observation adjust or conceal their behaviours upon becoming aware of the observers.126 As mentioned earlier, interviews with officials and experts involved in relevant policy cases were also carried out whilst focusing on key experts on urban medical and health care and new rural cooperative medical care. In order to avoid the ‘reflexivity’ feedback made by the insiders, the empirical study reported in this book has not applied any restricted data or interview records, where evidence is all from the formal public information. The limitation caused by doing so might leave behind some information only available to insiders. During the interviews, this author noticed that experts may exaggerate their influence intentionally or unintentionally and may have scruples about disclosing some facts. One advantage of using publicly available information is that all evidence cited have passed a test of public opinion, so that we can ensure that the information has a higher credibility on academic ethics. The design for the study on comparative policy cases applied in this book is shown in Table 1.4. The milestones in all four policy change cases selected by this book are shown in Table 1.5. The following chapters will systematically analyse these four cases on policy change, the loss and gains of interests among stakeholders during policy changes, the behaviours of expert involvement and the behavioural logic adopted by experts during role playing. Table 1.4  Research design for comparative policy cases Knowledge complexity

Loss embeddedness Strong

Weak

High

Outside-in enlightenment New urban medical and healthcare system

Linear consultation Pilot promotion of the new-type rural cooperative medical care system

Low

Locked-out New affordable urban housing policy

Civic activism Revocation of detention and repatriation system

Notice of the State Council on the Issuance of Implementation Plans (2009–2011) for Recent Priorities of Medical and Health System Reform (18 March 2009)

Revocation of detention and repatriation system

New affordable urban housing policy

Notice on Several Opinions of the Ministry of Health and Other Ministries and Commissions on Establishment of New-Type Rural Cooperative Medical System forwarded by the State Council (16 January 2003)

Provisions for Detaining and Repatriating Urban Vagrants and Mendicants (12 May 1982)

Notification of the State Council on Promotion of Sustainable and Healthy Development of the Real Estate Market (12 August 2003)

Administrative Provisions for the Salvation of Urban Vagrants and Mendicants (20 June 2003)

On 17 December 2008, the State Council convened the executive meeting and decided to invest 900 billion RMB in the following three years to build national governmentsubsidised housing, of which 600 billion RMB were invested for the construction of affordable housing

Notice of the State Council on Further Deepening Reform Several Opinions of the State Council on Addressing the of the Urban Housing System and Acceleration of Housing Problem of Urban Low-Income Households Housing Construction (3 July 1998); (13 August 2007);

Notice on Several Opinions of the Ministry of Health and Other Ministries and Commissions on Development and Optimisation of Rural Cooperative Medical System approved and forwarded by the State Council (28 May 1997)

Pilot promotion of the Decision of the Central Committee of CPC and the State Decision of the CPC Central Committee and the State new-type rural cooperative Council on Health Reform and Development (15 January Council on Further Strengthening Health Work of Rural medical care system 1997); Areas (19 October 2002);

Decision of the State Council on Establishment of Basic Medical Insurance System for Urban Working People (14 December 1998)

Decision of the CPC Central Committee and the State Opinions of the CPC Central Committee and the State Council on Health Reform and Development (15 January Council on Further Strengthening Medical and Health 1997); System Reform (17 March 2009);

New urban medical and healthcare system

Milestones in policy changes

Milestones in former policies

Policy change case

Table 1.5  Decision-making milestones for each policy change case

34  Introduction

Notes    1 Wan Li, ‘Democratic and Scientific Decision-­Making: An Important Topic of Reform on Political System’, People’s Daily, 31 July 1986.   2 Cong Cao, China’s Scientific Elite (New York: Routledge, 2004).   3 Murray Tanner, The Politics of Lawmaking in Post-­Mao China: Institutions, Processes, and Democratic Prospects (Oxford: Oxford University Press, 1999).    4 James A. Smith, Idea Brokers: Think Tanks and the Rise of the New Policy Elite (New York: The Free Press, 1991).   5 Richard A. Posner, Public Intellectuals: A Study of Decline (Cambridge, MA: Harvard University Press, 2001).   6 John Kingdon, Agendas, Alternatives, and Public Policies, 2nd ed. (New York: Harper Collins, 1995); Michael Mintrom, Policy Entrepreneurs and School Choice (Washington, DC: Georgetown University Press, 2000).    7 Xufeng Zhu, ‘Government Advisors or Public Advocates? Roles of Think Tanks in China from the Perspective of Regional Variations’, The China Quarterly 207 (2011): 668–86.   8 Refer to Guanglei Zhu, Contemporary Government Process in China (Tianjin: Tianjin People Press, 1997); for status and role of ‘ministries’ in China during the government process, see Wei Hu, Government Process (Hangzhou: Zhejiang People Press, 1998).   9 Christina Boswell, The Political Uses of Expert Knowledge: Immigration Policy and Social Research (Cambridge: Cambridge University Press, 2009).   10 Anthony Barker and B. Guy Peters, eds, The Politics of Expert Advice: Creating, Using and Manipulating Scientific Knowledge for Public Policy (Pittsburgh, PA: University of Pittsburgh Press, 1993); Bruce A. Bimber, The Politics of Expertise in Congress: The Rise and Fall of the Office of Technology Assessment (New York: State University of New York Press, 1996); Kevin M. Esterling, The Political Economy of Expertise: Information and Efficiency in American National Politic (Ann Arbor, MI: University of Michigan Press, 2004); Sabine Maasen and Peter Weingart, eds, Democratization of Expertise? Exploring Novel Forms of Scientific Advice in Political Decision-­ Making (Dordrecht: Springer, 2005); Ole Jacob Sending, The Politics of Expertise: A Groundbreaking Analysis that Sheds New Light on Global Governance (Ann Arbor, MI: University of Michigan Press, 2015).  11 Carol H. Weiss and M. Bucuvalas eds, Using Social Research in Public Policy Making (Lexington: MA, D.C. Heath, 1977); Erik Alboek, ‘Between Knowledge and Power: Utilization of Social Science in Public Policy Making’, Policy Sciences 28, no. 1 (1995): 79–100; Peter M. Haas, ‘When Does Power Listen to Truth? A Constructivist Approach to the Policy Process’, Journal of European Public Policy 11, no. 4 (2004): 569–92; Andrew Rich, Think Tanks, Public Policy, and the Politics of Expertise (New York: Cambridge University Press, 2004); Rejean Landry, Moktar Lamari and Nabil Amara, ‘The Extent and Determinants of the Utilization of University Research in Government Agencies’, Public Administration Review 63, no. 2 (2003): 192–205.   12 Stephen P. Turner, The Politics of Expertise (London: Routledge, 2015).    13 Michel Bonnin and Yves Chevrier, ‘The Intellectual and the State: Social Dynamics of Intellectual Autonomy during the Post-­ Mao Era’, The China Quarterly 127 (1991): 569–93.   14 Margaret Sleeboom-­Faulkner, ‘Regulating Intellectual Life in China: The Case of the Chinese Academy of Social Sciences’, The China Quarterly 189 (2007): 83–99.   15 Bonnie S. Glaser and Phillip C. Saunders, ‘Chinese Civilian Foreign Policy Research Institutes: Evolving Roles and Increasing Influence’, The China Quarterly 171 (2002): 597–616; Barry Naughton, ‘China’s Economic Think-­Tanks: Their Changing Role in the 1990s’, The China Quarterly 171 (2002): 625–35; Makiko

Introduction  35 Ueno (ed.), ‘Northeast Asian Think Tanks: Toward Building Capacity for More Democratic Societies’, in Think Tanks and Civil Societies: Catalysts for Ideas and Action, ed. James McGann and Kent R. Weaver (New Brunswick, NJ: Transaction Publishers, 2000), 221–43.   16 Shai Ming Chen and Diane Stone eds, ‘The Chinese Tradition of Policy Research Institutes’, in Think Tank Traditions: Policy Research and the Politics of Ideas, ed. Diane Stone and Andrew Denham (Manchester: Manchester University Press, 2004), 141–62.    17 Xufeng Zhu and Lan Xue, ‘Think Tanks in Transitional China’, Public Administration and Development 27, no. 5 (2007): 452–64.  18 Xufeng Zhu, Think-­Tanks in China: A Study on Influence in the Policy Process (Beijing: Tsinghua University Press, 2009).    19 ‘Who are the Public Intellectuals’, Southern People Weekly, 8 September 2004.   20 ‘Top 100 Public Intellectuals’, Foreign Policy, 15 May 2008, www.foreignpolicy. com/articles/2008/05/14/top_100_public_intellectuals.   21 Zhu, ‘Government Advisors or Public Advocates?’.   22 Xufeng Zhu, ‘The Influence of Think Tanks in the Contemporary Chinese Policy Process: Different Ways and Mechanisms’, Asian Survey 49, no. 2 (2009): 333–57.   23 Xufeng Zhu, ‘Social Capital of Chinese Policy Elites: Analysis Based on Perspective of Structuralism’, Sociological Study 4 (2006): 86–116 (in Chinese).    24 Xufeng Zhu, ‘Bureau Chiefs and Policy Experts in the Chinese Policy Decision-­ Making Process: Making Guanxi More Influential’, The China Review 9, no. 2 (2009): 129–55.   25 Xufeng Zhu and Peipei Zhang, ‘Intrinsic Motivation and Expert Behavior: Roles of Individual Experts in Wenling Participatory Budgeting Reform in China’, Administration & Society 48, no. 7 (2016): 851–82.    26 Kenneth Lieberthal and Michel Oksenberg, Policy Making in China: Leaders, Structures, and Processes (Princeton, NJ: Princeton University Press, 1988).   27 Harold D. Lasswell, ‘The Political Science of Science’, The American Political Science Review 50, no. 4 (1956): 961–79.   28 Robert Gilpin and Christopher Wright, Scientists and National Policy-­ Making. (New York: Columbia University Press, 1964); John M. Logsdon, ‘Review: Influencing Government’, Science 175, no. 4028 (1972): 1351–2; Smith, Idea Brokers; Rich, Think Tanks, Public Policy, and the Politics of Expertise; Boswell, The Political Uses of Expert Knowledge.    29 Nathan Caplan, ‘The Two-­Communities Theory and Knowledge Utilization’, American Behavioral Scientist 22, no. 3 (1979): 459–70.  30 James L. Sundquist, ‘Research Brokerage: The Weak Link’, in Knowledge and Policy: The Uncertain Connection, ed. Laurence E. Lynn (Washington, DC: National Academy of Sciences, 1978).    31 Weiss and Bucuvalas Using Social Research in Public Policy Making.  32 Björn Wittrock, ‘Social Knowledge and Public Policy’, in Social Sciences and Modern States: National Experiences and Theoretical Crossroads (Advances in Political Science), ed. Carol Weiss, Peter Wagner, B. Wittrock and H. Wollmann (New York: Cambridge University Press, 1991), 333–54.   33 Carol H. Weiss, ‘The Many Meanings of Research Utilization’, Public Administration Review 29 (1979): 426–31; Stephen J. Kline and Nathan Rosenberg, ‘An Overview of Innovation’, in The Positive Sum Strategy: Harnessing Technology for Economic Growth, ed. Ralph Landau and Nathan Rosenberg (Washington, DC: National Academy Press, 1986), 275–306; Robert K. Yin and Gwendolyn Moore, ‘Lessons on the Utilization of Research from Nine Case Experiences in the Natural Hazards Field’, Knowledge in Society: The International Journal of Knowledge Transfer 1, no. 3 (1988): 25–44; Rejean Landry, ‘Barriers to Efficient Monitoring of Science, Technology and Innovation through Public Policy’, Journal of Science and

36  Introduction Public Policy 16 (1990): 345–52; Landry, Amara and Lamari, ‘Utilization of Social Science Research Knowledge in Canada’.    34 Emery Roe, Narrative Policy Analysis: Theory and Practice (Durham, NC: Duke University Press, 1994).   35 Diane Stone, Simon Maxwell and Michael F. Keating, ‘Bridging Research and Policy’, Paper presented at An International Workshop Funded by the UK Department for International Development Radcliffe House, Warwick University, 16–17 July 2001.    36 Stephanie Neilson, ‘Knowledge Utilization and Public Policy Processes: A Literature Review’, IDRC-­Supported Research and Its Influence on Public Policy: International Development Research Centre, 36, 2001.    37 Robert W. Porter and Suzanne Prysor-­Jones, ‘Making a Difference to Policies and Programs: A Guide for Researchers’ (Washington, DC: Support for Analysis and Research in Africa [SARA] Project, 1997).  38 KFPE, ‘Guidelines for Research in Partnership with Developing Countries’, Bern: Swiss Commission for Research Partnership with Developing Countries, 1998.   39 James L. Garrett and Yassir Islam, ‘Policy Research and the Policy Process: Do the Twain Ever Meet?’, Gatekeeper Series No. 74 (Washington, DC: International Institute for Environment and Development, 1998).  40 RAWOO, ‘Utilization of Research for Development Cooperation: Linking Knowledge Production to Development Policy and Practice’ (The Hague: Netherlands Development Assistance Research Council, 2001).   41 Gilpin and Wright, Scientists and National Policy-­Making; Dean Schooler, Science, Scientists, and Public Policy (New York: The Free Press, 1971); Dorothy Nelkin, ‘The Political Impact of Technical Expertise’, Social Studies of Science 5, no. 1 (1975): 35–54; Weiss and Bucuvalas, Using Social Research in Public Policy Making; Frank Fischer, ‘American Think Tanks: Policy Elites and the Politicization of Expertise’, Governance 4, no. 3 (1991): 332–53; Alboek, ‘Between Knowledge and Power’; Haas, ‘When Does Power Listen to Truth?’; Rejean Landry, Moktar Lamari and Nabil Amara, ‘The Extent and Determinants of the Utilization of University Research in Government Agencies’, Public Administration Review 63, no. 2 (2003): 192–205; Esterling, The Political Economy of Expertise; Éric Montpetit, ‘Policy Design for Legitimacy: Expert Knowledge, Citizens, Time and Inclusion in the United Kingdom’s Biotechnology Sector’, Public Administration 86, no. 1 (2008): 259–77.  42 Fritz Machlup, Knowledge and Knowledge Production (Princeton, NJ: Princeton University Press, 1980).   43 Landry, Lamari and Amara, ‘The Extent and Determinants of the Utilization of University Research in Government Agencies’.   44 Nathan Caplan, ‘The Use of Social Science Information by Federal Executives’, in Social Science and Public Policies, ed. G.M. Lyons (Hanover, NH: Dartmouth College, Public Affairs Center, 1975): 47–67; James A. Ciarlo, ed., Utilizing Evaluation: Concepts and Measurement Techniques (Beverly Hills, CA: Sage Publications, 1981); Carol Weiss and Michael J. Bucuvalas, ‘Truth Tests and Utility Tests: Decision-­Makers Frames of References for Social Science Research’, American Sociological Review 45, no. 2 (1980): 302–13; Laura Edwards, Using Knowledge and Technology to Improve the Quality of Life of People Who Have Disabilities: A Prosumer Approach (Philadelphia, PA: Pennsylvania College of Optometry, 1991); Haas, ‘When Does Power Listen to Truth?’.   45 Duncan MacRae, Jr. and Dale Whittington, Expert Advice for Policy Choice: Analysis and Discourse (Washington, DC: Georgetown University Press, 1997); Erik Mostert and G.T. Raadgever, “Seven Rules for Researchers to Increase Their Impact on the Policy Process,” Hydrology and Earth System Sciences 12, no. 4 (2008): 1087–96.

Introduction  37   46 Roger A. Pielke, Jr. The Honest Broker: Making Sense of Science in Policy and Politics (Cambridge: Cambridge University Press, 2007); Roger A. Pielke, Jr., ‘Who Has the Ear of the President?’ Nature 450 (2007): 347–8.   47 Andrew A. Rosenberg, ‘Four Ways to Take the Policy Plunge’, Nature 448, (2007): 867.   48 Kevin Currey and Susan G. Clark, ‘Book Review: The Honest Broker: Making Sense of Science in Policy and Politics’, Policy Sciences 43 (2010): 95–8.  49 Schooler, Science, Scientists, and Public Policy; Paul Sabatier, ‘The Acquisition and Utilization of Technical Information by Administrative Agencies’, Administrative Science Quarterly 23, no. 3 (1978): 396–417; David J. Webber, ‘Political Conditions Motivating Legislators Use of Policy Information’, Policy Studies Review 4, no. 1 (1984): 110–18; Yin and Moore, ‘Lessons on the Utilization of Research from Nine Case Experiences in the Natural Hazards Field’.  50 David M. Ricci, The Transformation of American Politics: The New Washington and the Rise of Think Tanks (New Haven, CT: Yale University Press, 1993); Richard Cockett, Thinking the Unthinkable: Think Tanks and the Counter-­ Revolution, 1931–1983. (London: HarperCollins, 1994); James G. McGann, The Competition for Dollars, Scholars and Influence in the Public Policy Research Industry (New York: University Press of America, 1995).   51 Weiss and Bucuvalas Using Social Research in Public Policy Making; Smith, Idea Brokers; Diane Stone, Capturing the Political Imagination: Think Tanks and the Policy Process (London: Frank Cass, 1996); Rich, Think Tanks, Public Policy, and the Politics of Expertise.   52 Donald E. Abelson, American Think-­Tanks and Their Role in US Foreign Policy (New York: St. Martin’s Press, 1996.).   53 Donald E. Abelson, Do Think Tanks Matter? Assessing the Impact of Public Policy Institutes (Montreal: McGill-­Queen’s University Press, 2002).   54 Andrew Denham and Mark Garnett, British Think-­Tanks and the Climate of Opinion (London: UCL Press, 1998); James G. McGann and Kent R. Weaver, eds, Think Tanks and Civil Societies: Catalysts for Ideas and Action (New Brunswick, NJ: Transaction Publishers, 2000); Diane Stone, Andrew Denham and Mark Garnett, eds, Think Tanks across Nations: A Comparative Approach (Manchester: Manchester University Press, 1998); Diane Stone and Andrew Denham, eds, Think Tank Traditions: Policy Research and the Politics of Ideas (Manchester: Manchester University Press, 2004).   55 Zhu, Think-­Tanks in China.   56 R.A.W. Rhodes, Understanding Governance: Policy Networks, Governance, Reflexivity and Accountability (Buckingham: Open University Press, 1997).   57 Tanja A. Börzel, ‘Organising Babylon – On the Different Conceptions of Policy Networks’, Public Administration 76, no. 2 (1998): 253–73.   58 Michael Keren, ‘Science vs. Government: A Reconsideration’, Policy Sciences 12 (1980): 333–53; Landry, Amara and Lamari, ‘Utilization of Social Science Research Knowledge in Canada’; Zhu, ‘The Influence of Think Tanks in the Chinese Policy Process’.   59 Paul Sabatier and Hank Jenkins-­Smith, eds, Policy Change and Learning: An Advocacy Coalition Approach (Boulder, CO: Westview Press, 1993).   60 Börzel, ‘Organising Babylon’, 266.   61 Dietmar Braun, ‘Who Governs Intermediary Agencies? Principal-­Agent Relations in Research Policy-­Making’, Journal of Public Policy 13, no. 2 (1993): 135–62; Chris Caswill, ‘Social Science Policy: Challenges, Interactions, Principals and Agents’, Science and Public Policy 25, no. 5 (1998): 286–96; David H. Guston, ‘Principal– Agent Theory and the Structure of Science Policy’, Science and Public Policy 23, no. 4 (1996): 229–40; David H. Guston, Between Politics and Science: Assuring the Integrity and Productivity of Research (New York: Cambridge University Press,

38  Introduction 2000); Barend Van der Meulen, ‘Science Policies as Principal–Agent Games: Institutionalization and Path-­ Dependency in the Relation between Government and Science’, Research Policy 27, no. 4 (1998): 397–414; Morgan Krishna, ‘A Model of Expertise’, Quarterly Journal of Economics 116, no. 2 (2001): 747–75.   62 Oliver E. Williamson, Markets and Hierarchies: Analysis and Antitrust Implications (New York: Free Press, 1975); James S. Coleman, Foundations of Social Theory (Cambridge, MA: Belknap Press of Harvard University Press, 1990).   63 Michael Lipsky, ‘Protest as a Political Resource’, American Political Science Review 62, no. 4 (1968): 1144–58; John J. Kirlin, ‘The Impact of Increasing Lower-­ Status Clientele Upon City Governmental Structures: A Model from Organizational Theory’, Urban Affairs Quarterly 8 (1973): 317–43.    64 Todd LaPorte, ‘The Recovery of Relevance in the Study of Public Organizations’, in Toward a New Public Administration: The Minnowbrook Perspective, ed. Frank Marini (Scranton, PA: Chandler Publishing, 1971): 17–48.   65 George Frederickson, New Public Administration (Tuscaloosa, AL: University Alabama Press, 1980).   66 John Clayton Thomas, Public Participation in Public Decisions: New Skills and Strategies for Public Managers (San Francisco, CA: Jossey-­Bass, 1995).    67 The concept of ‘citizen involvement’ ruled out those forms in a democratic society such as referendums, legal proceedings, strikes, illegal demonstrations and so forth, which are generally considered as an important part of civic activism but not the participation or involvement we talked about; see James L. Creighton, The Public Participation Handbook: Making Better Decisions through Citizen Involvement (San Francisco, CA: Jossey-­Bass, 2005), 8.    68 Sherry R. Arnstein, ‘A Ladder of Citizen Participation’, Journal of the American Institute of Planners 35, no. 3 (1969): 216–24; Cheryl Simrell King, Kathryn M. Feltey and Bridget O’Neil Susel, ‘The Question of Participation: Toward Authentic Public Participation in Public Administration’, Public Administration Review 58, no. 4 (1998): 317–26.   69 Richard C. Box, Citizen Governance: Leading American Communities into the 21st Century (Thousand Oaks, CA: Sage, 1998); Cheryl Simrell King, Camilla Stivers and Collaborators, Government is Us: Public Administration in an Anti-­Government Era (Thousand Oaks, CA: Sage, 1998).    70 Renée A. Irvin and John Stansbury, ‘Citizen Participation in Decision: Is It Worth the Effort?’ Public Administration Review 64, no. 1 (2004): 55–65.   71 Sidney Verba, Kay Schlozman, Henry Brady and Norman Nie, ‘Citizen Activity: Who Participates? What Do They Say?’ American Political Science Review 87, no. 2 (1993): 303–18; Carol Ebdon, ‘Beyond the Public Hearing: Citizen Participation in the Local Government Budget Process’, Journal of Public Budgeting, Accounting and Financial Management 14, no. 2 (2002): 273–94.   72 Ned Crosby, Janet M. Kelly and Paul Schaefer, ‘Citizen Panels: A New Approach to Citizen Participation’, Public Administration Review 46, no. 2 (1986): 170–8.   73 Kaifeng Yang, ‘Public Administrators Trust in Citizens: A Missing Link in Citizen Involvement Efforts’, Public Administration Review 65, no. 3 (2005): 273–85.   74 Crosby, Kelly and Schaefer, ‘Citizen Panels’.   75 Kaifeng Yang and Kathe Callahan, ‘Citizen Involvement Efforts and Bureaucratic Responsiveness: Participatory Values, Stakeholder Pressures, and Administrative Practicality’, Public Administration Review 67, no. 2 (2007): 249–64; Kathe Callahan and Kaifeng Yang, ‘Training and Professional Development for Civically Engaged Communities’, Innovation Journal 10, no. 1 (2005): 1–16.  76 David Lampton, ed., Policy Implementation in Post-­Mao China (Berkeley, CA: University of California Press, 1987); Lieberthal and Oksenberg, Policy Making in China; Kenneth Lieberthal and David M. Lampton, Bureaucracy, Politics, and Decision Making in Post-­Mao China (Berkeley, CA: University of California Press,

Introduction  39 1992); Kenneth Lieberthal, Governing China: From Revolution through Reform (New York: Norton, 1995); Susan Shirk, The Political Logic of Economic Reform in China (Berkeley, CA: University of California Press, 1993).   77 Joseph Fewsmith, Dilemmas of Reform in China: Political Conflict and Economic Debate (New York: M.E. Sharpe, 1994); Joseph Fewsmith, Elite Politics in Contemporary China (Armonk, NY: M.E. Sharpe, 2001); David Shambaugh, ‘The Dynamics of Elite Politics During the Jiang Era’, The China Journal 45 (2001): 101–11; Jonathan Unger, ed., The Nature of Chinese Politics: From Mao to Jiang. (New York: M.E. Sharpe, 2002); Bruce J. Dickson, Red Capitalists in China: The Party, Private Entrepreneurs, and Prospects for Political Change (Cambridge: Cambridge University Press, 2003); Cao, China’s Scientific Elite; Scott Kennedy, The Business of Lobbying in China (Cambridge, MA: Harvard University Press, 2005).   78 Andrew Mertha, ‘Fragmented Authoritarianism 2.0: Political Pluralization in the Chinese Policy Process’, The China Quarterly 200 (2009): 995–1012.   79 Xianglin Xu, ‘From Theory on Political Development to Theory on Policy Process – Discussion on Construction of Middle-­Range Theory for Studies on China’s Political Reform’, Social Sciences in China 3 (2004): 108–20.   80 Xianglin Xu, ‘Cross River Through Touching Stones and Policy Selection for Incremental Political Reform in China’, Tianjin Social Sciences 3 (2002): 6.   81 Xiangming Hu, ‘Opinion on Mode of Decision-­Making for Local Policy’, Academic Journal of Wuhan University 2 (1997): 8.  82 Mai Lu, Decision-­Making Process for Rural Reform in China, Face to Fields of Hope (Beijing: China Development Press, 2000).   83 Sao Ning, Science of Public Policy (Beijing: Higher Education Press, 2003).   84 Shaoguang Wang, ‘Learning Mechanism & Adapting Capacity: Enlightenment brought by Changes of Rural Cooperative Medical Care System in China’, Social Sciences in China 6 (2008): 111–33.   85 Ling Chen, Jing Zhao and Lan Xue, ‘Prioritizing or Compromising? An Interpretation Framework and Consensus Decision Model for China’s Policy Process in Transition Period’, Management World 8 (2010): 59–72.  86 Lieberthal and Oksenberg, Policy Making in China; Susan Shirk, The Political Logic of Economic Reform in China (Berkeley, CA: University of California Press, 1993); Kate Hannan, Industrial Change in China: Economic Restructuring and Conflicting Interests (London: Routledge, 1998); Yasheng Huang, Inflation and Investment Controls in China: The Political Economy of Central Local Relations During the Reform Era (New York: Cambridge University Press, 1999).   87 Xufeng Zhu, ‘Prospection and Result of the System: Analysis on Reform Process of Telecommunication Market in China’, Management World 10 (2003).   88 State Council [2006] no. 97 Document: Notification of General Office of the State Council on Forwarding Guidance of SAC for Promoting Adjustment of State-­ Owned Capital and Restructuring of State-­Owned Enterprise.   89 Yingyi Qian and Barry R. Weignast, ‘Federalism as a Commitment to Preserving Market Incentives’, Journal of Economic Perspectives 11, no. 4 (1997): 83–92.   90 Jonathan Unger and Anita Chan, ‘Inheritors of the Boom: Private Enterprise and the Role of Local Government in a Rural South China Township’, The China Journal 42 (1999): 45–74.   91 Kennedy, The Business of Lobbying in China; Yongming Zhou, ‘Social Capital and Power: Entrepreneurial Elite and the State in Contemporary China’, Policy Sciences 33 (2000): 323–40; Dickson, Red Capitalists in China.    92 Randall Peerenboom, China’s Long March toward Rule of Law (Cambridge: Cambridge University Press, 2002); Taisu Zhang, ‘Why Chinese People Prefer Petition in Administrative Disputes’, Sociological Study 3 (2009).

40  Introduction   93 Shaoguang Wang, ‘Changing Models of China’s Policy Agenda Setting’, Modern China 34 (2008): 56–87; William T. Golden, Worldwide Science and Technology Advice to the Highest Levels of Governments (New York: Pergamon Press, 1991).   94 Abelson, Do Think Tanks Matter; Zhu and Xue, ‘Think Tanks in Transitional China’.   95 Benjamin Liebman, ‘Watchdog or Demagogue? The Media in the Chinese Legal System’, Columbia Law Review 105 (2005): 1; Wang, ‘Changing Models of China’s Policy Agenda Setting’; Yongnian Zheng, Technological Empowerment: The Internet, State, and Society in China (Stanford, CA: Stanford University Press, 2007).    96 Michael Howlett and M. Ramesh, Studying Public Policy: Policy Cycles and Policy Subsystems (Don Mills, ON: Oxford University Press, 1995).  97 Kingdon, Agendas, Alternatives, and Public Policies.   98 David A. Rochefort and Roger W. Cobb, eds, The Politics of Problem Definition: Shaping the Policy Agenda. (Lawrence, KS: University Press of Kansas, 1994).   99 Paula J. King and Nancy C. Roberts, ‘Policy Entrepreneurs: Catalysts for Policy Innovation’, Journal of State Government 60 (1987): 172–9.  100 Kingdon, Agendas, Alternatives, and Public Policies. 101 Mark Granovetter, ‘Economic Action and Social Structure: The Problem of Embeddedness’, The American Journal of Sociology 91, no. 3 (1985): 481–510.  102 Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, NJ: Princeton University Press, 1995). 103 Lily Tsai, ‘Solidary Groups, Informal Accountability, and Local Public Goods Provision in Rural China’, American Political Science Review 101, no. 2 (2007): 355–72.  104 Everett M. Rogers, Diffusion of Innovations (New York: Free Press, 1995). 105 Peter F. Drucker, ‘The Discipline of Innovation’, Harvard Business Review 63, no. 3 (1985): 67–72.  106 Kingdon, Agendas, Alternatives, and Public Policies. 107 Xixin Wang and Yongle Zhang, ‘Expert, Populace and Knowledge Utilization – An Analytical Framework for Constitution of Administrative Regulations’, Social Sciences in China 2 (2003).  108 Drucker, ‘The Discipline of Innovation’.  109 Barker and Guy Peters, The Politics of Expert Advice.  110 Xufeng Zhu and Jun Tian, ‘Knowledge and Agenda-­Setting of China’s Public Policy: An Empirical Study’, China Public Administration 6 (2008): 107–13.  111 Shanthi Gopalakrishnan and Fariborz Damanpour, ‘Patterns of Generation and Adoption of Innovations in Organizations: Contingency Models of Innovation Attributes’, Journal of Engineering and Technology Management 11 (1994): 95–116.  112 Decision of the CPC Central Committee on Strengthening Governing Capacity of the Party. For those policy-­making issues with a weak specialisation and technical nature, the Decision didn’t make a special stipulation on the decision-­making mechanism for expert consultation. 113 Michael D. Cohen, James G. March and Johan P. Olsen, ‘A Garbage Can Model of Organizational Choice’, Administrative Science Quarterly 17, no. 1 (1972): 1–15. 114 Nigel King, ‘Innovation at Work: The Research Literature’, in Innovation and Creativity at Work: Psychological and Organizational Strategies, ed. Michael A. West and James L. Farr (New York: Wiley, 1990), 15–59. 115 Fariborz Damanpour and Marguerite Schneider, ‘Characteristics of Innovation and Innovation Adoption in Public Organizations: Assessing the Role of Managers’, Journal of Public Administration Research and Theory 19, no. 3 (2008): 495–522.  116 David Dolowitz and David Marsh, ‘Who Learns What from Whom: A Review of the Policy Transfer Literature’, Political Studies 44, no. 2 (1996): 343–57; Diane Stone, ‘Non-­Governmental Policy Transfer: The Strategies of Independent Policy Institutes’, Governance 13, no. 1 (2000): 45–69.

Introduction  41 117 Gary J. Miller and Terry M. Moe, ‘Bureaucrats, Legislators, and the Size of Government’, American Political Science Review 77, no. 2 (1983): 297–322; Krishna, ‘A Model of Expertise’. 118 Richard W. Waterman and Kenneth J. Meier, ‘Principal-­Agent Models: An Expansion?’ Journal of Public Administration Research and Theory 8, no. 2 (1998): 173–202.  119 Kingdon, Agendas, Alternatives, and Public Policies.  120 Nina P. Halpern, ‘Information Flows and Policy Coordination in the Chinese Bureaucracy’, in Bureaucracy, Politics, and Decision Making in Post-­Mao China, ed. Kenneth G. Lieberthal and David M. Lampton (Berkeley, CA: University of California Press, 1992), 126–49.  121 Experts who are widely criticised by the public are from these policy domains. Given that such policy issues are relatively simple, as experts make public advocacy evidently supporting a certain interest group, the public could easily judge whether the expert advocacies are consonant with objective truth or with tendentiousness. 122 Christopher M. Weible, ‘An Advocacy Coalition Framework Approach to Stakeholder Analysis: Understanding the Political Context of California Marine Protected Area Policy’, Journal of Public Administration Research and Theory 17, no. 1 (2007): 95–117. 123 Benjamin L. Crosby, Stakeholder Analysis: A Vital Tool for Strategic Managers. (Washington, DC: USAID, 1991); Ruari Brugha and Zsuzsa Varvasovsky, ‘Stakeholder Analysis: A Review’, Health Policy and Planning 15, no. 3 (2000): 239–46.  124 Robert K. Yin, Case Study Research: Design and Methods, 4th ed. (London, Sage, 2009), 54.  125 Xiangming Chen, Qualitative Research Methods and Studies on Social Science (Beijing: Educational Science Press, 2000): 104.  126 Yin, Case Study Research, 102.

2

Outside-­in enlightenment 

The reform of the urban medical and healthcare system has been a hot topic among the Chinese throughout the country. On 21 January 2009, Premier Wen Jiabao presided over and convened an executive meeting of the State Council, which discussed and approved in principle the ‘Opinion on Deepening the Reform of the Medical and Healthcare System’ and the ‘2009–2011 Implementation Plan on Deepening the Reform of the Medical and Healthcare System’. On 6 April 2009, the CPC Central Committee and the State Council officially published the ‘Opinions on Deepening the Reform of the Medical and Healthcare System’, which proposed a short-­term and a long-­term goal. The short-­term goal is to effectively reduce the medical costs borne by urban residents thus mitigating the difficulties and costs of seeking adequate medical care, whereas the long-­term goal is to offer the masses a wide range of safe, effective, convenient and inexpensive medical and healthcare services. The reform of the country’s medical and healthcare system entails complex interdisciplinary expertise on medical treatment, pharmacy, public health and insurance. In the beginning, the government did not know the actual situation after implementation. Thus, some government-­sponsored research institutions have been entrusted with evaluating the market-­oriented medical and healthcare system reform in urban areas. In the period since the design plan for the reform started in 2006 up to the year of 2009, experts and the public were actively involved in this process. Hence, this is a good case reflecting the scientific and democratised the construction of policy-­making in China.1

Urban medical and healthcare system The reform of the urban medical and healthcare system in China began in the initial period of the reform and opening-­up. This section provides a brief introduction on the history of the medical and healthcare system in China over the years. Since the founding of the PRC up to the reform and opening-­up period, the government had been managing the medical expenses charged for urban residents. Under the planned economy system, medical institutions are considered public undertakings directly run by the government, through which medical resources are uniformly allocated and medicines are subject to comprehensive

Outside-in enlightenment  43 control. As hospitals were financially sponsored by the government, they did not have enough motivation to provide citizens with adequate medical services. During that period, even though medicine costs were at low levels, urban residents faced difficulties in seeking medical treatment due to the lack of financial investments.2 The first stage: exploring methods to improve the economic management of hospitals (from 1979 to the end of 1980s)  After the reform and opening-­up was initiated, the urban medical and healthcare system of China underwent significant transformations. First of all, the economic management mechanism was introduced in the management of hospitals. In 1979, Qian Xinzhong, the Minister of Health at that time, proposed that economic means should be applied to ensure the effective public health management. Thus, from 21 March to 2 April 1979, the Ministry of Health held a meeting in Beijing for the directors of health bureaus across the country. In June of that same year, the State Council approved and forwarded the ‘Report of the Health Ministry on the Meeting for Directors of Health Bureaus’, formally requiring various medical and health units to strengthen their economic management practices. On 27 April, the Ministry of Health, the Ministry of Finance and the State Labour Bureau jointly issued the ‘Notification for Strengthening the Pilot Work on Economic Management of Hospitals’, thereby proposing that the quota management system must be actualised and that planning and accounting must be strengthened for the effective economic management of hospitals. Afterwards, the Ministry of Health launched the pilot work on the ‘Five Quota, One Reward’ plan (i.e. task, bunk, establishment, technical indicators for business, financial assistance and reward for task fulfilment) and the ‘fixed subsidy, economic accounting, reward and punishment based on regular assessment’. Throughout the 1980s, the central government applied the principles of ‘fixed subsidy’ and ‘decentralisation and profit-­surrender’ to the institutional reform of hospitals, mainly through the Ministry of Health. In 1980, the government issued the ‘Request for Instructions on Allowing Individuals to Practice Medicine’, which was submitted by the Ministry of Health and approved by the State Council. Through this initiative, private medical businesses initially obtained the authorisation of the government. In April 1985, the central government promulgated the Notification on Approval and Forward made by the State Council for the ‘Report on Several Policy Issues for the Reform of Health Work Undertaken by the Ministry of Health’. How to mobilise the initiative of hospitals to solve problems related to consultations, surgery and hospitalisation is the core matter of that report. The multi-­channel administration of hospitals was encouraged by that report. In addition to state investment, self-­raised funds, such as loans, were encouraged in the process of marketisation to develop hospitals, increase the number of rooms and hospital beds and purchase hi-­tech equipment, so that the shortage of healthcare resources could be addressed. In November 1988, the ‘Opinions on Relevant Problems Involved in Expanding Medical and Health

44  Outside-in enlightenment Services’ was promulgated by the Ministry of Health, the Ministry of Finance, the Ministry of Personnel, the State Administration of Commodity Prices and the State Administration of Taxation. This document proposed that contractor responsibility systems in various forms should be actively promoted and that health authorities could sign lump-­sum contracts with health authorities under fixed task, establishment, quality and funds. This document was subsequently approved and forwarded by the State Council as a national policy. The second stage: exploring the direction of marketisation (1990s) Debates on whether the reform of the national medical and healthcare system shall be driven by the government or the market have persisted over the years. As early as in the 1990s, within the Ministry of Health, many arguments were raised against hospitals placing greater importance on the beneficial results than public welfare. In September 1992, the Ministry of Health promulgated ‘Several Opinions of the Health Ministry on Deepening the Reform of Health’ to implement Deng Xiaoping’s ‘South Tour Speeches’ and held meetings for the Political Bureau of the CPC Central Committee. In accordance with this document, the Ministry of Health started to encourage hospitals to set up industrial subsidiary businesses or other industries to extend medical and healthcare services, ‘assist medical service with industries, complement major part with subsidiary parts’, ‘earn profits’ with less dependence on financial investments from the government. However, such reform did not effectively mitigate the difficulties in seeking doctors but brought about a new problem of higher consultation costs. The income-­generating items of the hospital were given various names, such as surgery by a designated doctor, special nursing care, special sickroom and so forth. Moreover, it also became difficult to sustain the formerly state-­sponsored medical security system. In the National Medical Administrative Conference held in May 1993, Yin Dakui, the Vice-­Minister of Health at that time, explicitly indicated that marketisation should be protested against and more consideration should be taken on the populace attributes of medical service and minimum social justice.3 The third stage: the leading role of the socialist market economy (1996–2005) On 9 December 1996, the CPC Central Committee and the State Council convened the national conference on health, which emphasised that social benefits should be the top priority amidst the seemingly one-­sided pursuit for economic interests. At the beginning of 1997, the CPC Central Committee and the State Council jointly issued the ‘Decision on the Reform and Development of Healthcare’, thereby initiating the comprehensive reform of the country’s medical and healthcare system. This round of reform is based on the principles of ‘providing medical services for the whole society, expanding the supply, initiating deregulation, strengthening the supervision and introducing competition’. Hence, with

Outside-in enlightenment  45 the reforms in the medical insurance system, medical institutions and drug distribution systems, the second round of reforms for the medical and healthcare system was actualised.4 In December 1998, the State Council held a working conference on the reform of the national health insurance system and issued the ‘Decision of the State Council on the Establishment of the Basic Medical Insurance System for Urban Working People’. This ‘Decision’ explicitly required that a basic medical insurance system covering all working citizens in the urban areas shall be established all over the country. Since 2000, a direction led by the socialist market economy had been set for the reformation of the medical and healthcare system in urban areas. In February 2000, the State Council forwarded the ‘Guidance on the Reform of Medical and Healthcare System in Urban Areas’ issued by the State Commission for Restructuring and other ministries, along with thirteen documents on coordinated sets of measures. The State Council hence proposed the reform goals of:  establishing the urban medical and healthcare system to meet the demands of a socialist market economy, promoting the development of health agencies and medical industries, offering the populace with quality medical services at reasonable prices and improving the health standards of the people.  The main measures included the following: (1) expanding the coverage of the basic medical insurance system to gradually replace the old medical services at state expense and the labour medicare system; (2) transforming the functions of the health administrative departments; (3) separating the government and institutional units; (4) gradually implementing industry-­wide management and conducting classified management for medical institutions; (5) introducing competitive mechanisms within public medical institutions; (6) relaxing the control and regulation; (7) classifying medical institutions into profitable and non-­profitable institutions; (8) designing relevant policies on finance, taxation and pricing based on the different natures and functions; (9) opening medical institutions to the market and allowing them to operate in standard ways; (10) implementing reforms on the drug distribution system; (11) strengthening supervision; and (12) actualising the separation of prescribing and dispensing. The fourth stage: a new round of medical reforms (from 2005–the present) Unfortunately, after eight years of implementation, the medical and healthcare system reforms had been assessed as an unsuccessful attempt by many domestic and foreign experts and research groups. According to the experts, rather than resolving the problem of rising healthcare costs, the healthcare reform actually exacerbated it. Indeed, after the market-­oriented medical and healthcare system reforms, the difficulties faced by the common people in consulting a doctor and paying for the high cost of consultation were aggravated.5 In 2005, a research report submitted by a topic-­based group on the ‘Reform of Healthcare System in

46  Outside-in enlightenment China’, which was led by Ge Yanfeng, a researcher of the Development Research Centre of the State Council, indicated that current medical service brought forward a declining level of justice with low macroeconomic efficiency of health investments. Their group concluded that the commercialised and market-­oriented thrust of the medical and health system was completely wrong, as it violated the basic laws of medical and health services. Later, Ge revealed the main points of the report to the media. On 28 July 2005, during the interview made by the China Youth Daily, Ge proposed the conclusion that the medical reform in China was ‘basically unsuccessful’. Shortly thereafter, the Xinhua News Agency published the full text of the special report titled ‘Contributing to a Harmonious Socialist Society by Developing the Country’s Medical and Health Services’, which was addressed by Gao Qiang, the Minister of Health, in a situation analysis conference held on 1 July 2005. For a time, public opinion regarding the future of medical reform was not very hopeful due to many other pressing issues that were reported successively. Hence, the central government was put under enormous public pressure. Soon, the government had to concur that this round of reform was essentially unsuccessful and promised a new round of reforms. In June 2006, the State Council announced the launch of a new round of reforms of the medical and healthcare system. In September, the Inter-­Ministerial Coordination Working Group for Further Strengthening Reforms on the Medical and Healthcare System was established. It consisted of sixteen ministries and commissions, such as the National Development and Reform Commission (NDRC), the Ministry of Health, the Ministry of Finance and the Ministry of Labour and Social Security, with Vice-­Premier Wu Yi as the group leader. The medical and healthcare system reforms in urban areas were organised and led by the State Council’s Coordination Group for Medical Reform of the State Council. Thanks to the joint efforts made by government decision makers and experts, the new reforms were gradually drafted. On 23 July 2007, the State Council issued the ‘Guidance on Implementing the Pilot Run of the Basic Medical Insurance of the Urban Residents’ and decided to conduct pilot activities in seventy-­ nine cities in 2007. This plan aimed to extend the coverage of basic medical insurance for urban residents and cover the whole country by the year 2010. In September 2007, the NDRC announced that the new programme for medical reform was finalised. It was then to be submitted to the State Council and publicised to the public. On 30 November 2007, Ma Kai, the NDRC Director, invited Gao Qiang, Xie Xuren (Minister of Finance) and others to discuss several diverging issues in the medical reform programme (e.g. the investment mechanisms of the medical and healthcare agencies at the primary level, the operating mechanism of public hospitals, the proportion of government investments on healthcare accounting for total financial expenditure). They reached consensus during that meeting. On 14 and 15 January 2008, Vice-­Premier Wu Yi chaired two symposia that discussed suggestions and opinions given by some members of the NPC Committee and the CPPCC Committee of Education, Science, Arts and Health regarding the Guidance given by the working group to further

Outside-in enlightenment  47 strengthen the medical and healthcare system reforms. On 29 February 2008, a report prepared by the coordination group was presented in the executive meetings of the State Council. In light of opinions given by leaders of the State Council, the Coordination Group for Medical Reform conducted further modifications. On 11 and 15 April 2008, Premier Wen Jiabao also held two symposia on medical reforms in Zhongnanhai, during which he welcomed opinions and suggestions given by medical workers, experts, persons in charge of enterprises for drug production and distribution and public representatives (e.g. teachers, urban residents, farmers and peasant labourers), with the aim of drafting medical reforms. On 10 September 2008, Premier Wen Jiabao presided over and convened an executive meeting of the State Council, which discussed and approved the ‘Draft for Advice Seeking the Opinion on Deepening the Reform of the Medical and Healthcare System’, and decided to publicly seek for advice from the whole society. In October of that same year, over 35,000 feedback opinions were received during the advice seeking process forum held in relation to the ‘Opinions on Further Strengthening Reform of Medical and Healthcare System (draft for advice seeking)’.6 On 21 January 2009, the new medical reform programme was approved during the executive meetings of the State Council held by Premier Wen Jiabao. On 17 March 2009, the CPC Central Committee and the State Council jointly issued the ‘Opinions on Deepening Reform of Medical and Healthcare System’, which aimed to establish and improve a basic healthcare system covering rural residents and offer the public a wide range of safe, effective, convenient and inexpensive medical and healthcare services. According to the ‘Opinions’, the basic medical and healthcare system shall be provided to all the people as a public product; furthermore, the responsibilities of the government in the basic medical and healthcare system shall be strengthened. On 18 March, the State Council printed and distributed the ‘Notification of the State Council on Issuance of Implementation Plans (2009–2011) for Recent Priorities of Medical & Health System Reform’. The ‘Implementation Plans’ indicated that emphasis shall be placed on five aspects of reform, including the following: boosting the construction of the basic medical and healthcare system, initially establishing a national system for the management and allocation of basic drugs, improving the medical and healthcare systems at the primary level, gradually promoting the equalisation of basic public health service and advancing pilot reforms in public hospitals. Upon the promulgation of the new medical reform programme, in order to strengthen the leadership, the Leading Group for Strengthening the Reform of the Medical and Healthcare System was tasked with the duties of organising and coordinating relevant works on reform. The Group included sixteen ministries under the leadership of Vice-­Premier Li Keqiang as the group leader and Zhang Mao, the Party secretary of the Ministry of Health, as the office director.7 The relevant policy documents issued during the medical and healthcare system reforms in the urban areas of China since the reform and opening period up are presented in Table 2.1.

Opinions on Strengthening Pilot Works for the Economic Management of Hospitals

28 April 1979

Ministry of Health with the approval of the State Council

Report for Instructions on Allowing Individuals to Practice Medicine

Interim Measures for the Economic Management of Hospitals

24 August 1980

18 March 1981

Ministry of Health

Ministry of Health, Ministry of Finance, State Administration of Labour

15 November 1979 Supplementary Notification on Pilot Works for the Economic Management of Hospitals

Ministry of Health, Ministry of Finance, State Administration of Labour

Notification of the State Council to State Council Approve and Forward the Report of the Ministry of Health on the Meeting for the Directors of Health Bureaus

25 June 1979

Issuing authority

Event or document

Date

Hospitals were required to implement economic management, adhere to the orientation of being under a socialist society, seriously execute the relevant national guiding principles and policies, heal the wounded and rescue the dying whilst actualising revolutionary humanism, maintaining the core position of medical service and promoting the quality improvement for health care and finally, persisting in the principle of not increasing unreasonably the economic burden for all patients

The government began to allow doctors to carry out private medical business

Each region shall expand the scope of pilot works under strict approval procedures

Strengthening the hospital’s economic management, implementing the quota management system, strengthening the planning and statistical work and actualising the ‘Five Quota, One Reward’ goal

Establishment of various medical and health units to strengthen the modernisation of medical and health services

Main content

Table 2.1 Relevant policy documents issued during the reformation of the medical and healthcare system in urban areas of China since the reform and opening-up period

Opinions on Expanding Medical The general office of the State and Health Services Related Issues. Council approved the Ministry of Health, the Ministry of Finance, Ministry of Personnel and the State Price Bureau, the State Administration of Taxation

15 January 1989

26 February 1994

Ministry of Health

Regulations for the Administration State Council of Medical Institutions

23 September 1992 Several Opinions on Strengthening Health Reforms

Opinions on Issues Related to the Expansion of Medical Services

9 November 1988

Encourage multi-channel running of hospital, delegate power to lower levels of health and medical institutions, surrender part of the profits to health and medical institutions, to enliven and execute the policy of encouraging incomegeneration and self-advancement and reforming the current charging system

Hospitals shall focus on the medical work and implement the director-in-charge system under the leadership of the Party committee

continued

Provisions on the approval and registration for layout and setup of medical institutions, supervisory management for practitioners and related legal liabilities

Assist medical service provision in the industries, complement major parts with subsidiary parts, encourage hospitals to earn profits and relatively cut down the proportion of financial investments given by the government

Actively carry out various forms of contract responsibility system

Ministry of Health, Ministry of Actively promote various forms of contract Finance, Ministry of Personnel, State responsibility systems Administration of Commodity Prices and State Administration of Taxation

Notification for the Report on Several Policy Issues on Health Work Reforms

Ministry of Health, as approved and forwarded by the State Council

National Regulations Concerning the Ministry of Health Work of Hospitals

25 April 1985

12 January 1982

Carry out pilot works in seventy-nine cities by the year 2007, extend the coverage of basic medical insurance for urban residents and strive to cover the whole country by the year 2010

Guidance on Carrying Out Pilot Works for the Basic Medical Insurance of Urban Residents

10 July 2007

State Council

Eight ministries, including the Set up a medical and healthcare system in State Commission for urban areas, whilst meeting the needs of a Restructuring forwarded by the socialist market economy General Office of the State Council

The State Council forwarded the ‘Guidance on the Reforms of the Medical and Healthcare System in Urban Areas’ issued by the State Commission for Restructuring and other ministries, along with thirteen documents containing coordinated sets of measures

Establishment of a basic medical insurance system covering all urban working people all over the country

Setting forth tasks and goals for the reform and development of healthcare tasks in the following fifteen years. Establish a relatively perfect health system by 2010; the system must meet the needs of a socialist market economic system whilst promoting people’s health

21 February 2000

CPC Central Committee and the State Council

Main content

State Council

Decision on Health Reform and Development

15 January 1997

Issuing authority

14 December 1998 Decision of the State Council on the Establishment of a Basic Medical Insurance System for Urban Working People

Event or document

Date

Table 2.1 Continued

CPC Central Committee and the State Council

Opinions of the CPC Central Committee and the State Council on Further Strengthening Medical and Health System Reforms

Notification on the Issuance of State Council Implementation Plans (2009–2011) for Recent Priorities on the Medical and Health System Reforms

17 March 2009

18 March 2009

Note The items in bold indicate significant national level policies, whereas others are ministerial level policies.

State Council

10 September 2008 Opinions on Further Strengthening the Reform of the Medical and Healthcare System (draft for advice seeking)

The ‘Implementation Plans’ indicated that emphasis shall be placed on five aspects of reform

According to the ‘Opinions’, basic medical and healthcare system shall be provided to all the people as a public product. Moreover, the responsibilities of the government in the provision of a basic medical and healthcare system must be strengthened

52  Outside-in enlightenment

Stakeholder analysis Official stakeholders In September 2006, led by the NDRC and the Ministry of Health, the State Council organised the Coordination Group for Medical Reform made up of fourteen ministries (later to become sixteen ministries) with the NDRC Director and the Minister of Health as the group leaders.8 This event marked the relaunch of a new round of reforms for medical and healthcare systems in urban areas. Among various ministries, the NDRC, Ministry of Health, Ministry of Labour and Social Security and the Ministry of Finance were major participants in the new rounds of medical reforms. However, these ministries held different attitudes towards such reforms. For example, many hospitals under the administration of the Ministry of Health serve as the ‘supplier’ of the medical and healthcare system; hence, the Ministry of Health hoped that the central government could offer financial funds to subsidise those suppliers, which would cut down the prices of medical services and ease the pressure passed onto the patients. In contrast, social security administrators hoped that the financial funds of the central government should be granted to patients (as consumers of the medical and healthcare system) as subsidy for medical insurance and that suppliers of medical services should compete with one another. These varying attitudes held by different stakeholders towards the reforms on the urban medical and healthcare system are shown in Table 2.2. Social stakeholders Public hospitals In nominal terms, public hospitals were public undertakings under the supervision and management of governmental departments for health administration. In reality, however, 90 per cent of funds for public hospitals came from patients. Due to the uneven distribution of medical resources in the country at that time, public hospitals were often overcrowded, which led to the decline of service quality. Patients also had problems setting appointments with doctors and paying for consultations, especially in public medical service institutions. However, governmental departments for health administration took on dual roles ‘as both players and referees’. Hence, their supervisory functions could not be effectively exerted. An important aspect of medical system reform being explored at that time was how to break off the administrative relationship between the government and its public hospitals. Under the new round of medical reforms, the management model separating ownership from the rights of operation for public hospitals would be explored. Under this plan, the government would gradually transfer the public hospitals to hospital management agencies that could perform entrusted management, by which the administrative relationship between the government and public hospitals

Outside-in enlightenment  53 Table 2.2 Attitudes held by different stakeholders towards the urban medical and healthcare system reforms1 Ministry

Reasons for the failure of past medical reforms

Further reform proposals

Health sector

Due to insufficient investments from the government in the field of medical and healthcare systems, hospitals had been running in an abnormal state of simply covering hospital expenses with medicine revenues.

More financial subsidies should be offered to the suppliers after the medical reform, that is, funds should be infused into medical institutions.

Social security sector

Subsidies for suppliers resulted in Financial subsidies should be low levels of medical services, offered to the patients inefficiency and unfairness. (‘consumers’), that is, subsidise the funds into a social security system.

The Ministry of Finance must Financial sector Given that healthcare systems subsidise the costs incurred by the generally had a deficit in consumers. accounts, financial resources allocated for medical reform were used for ‘plugging holes’, which did not change the problem of unequal treatment in health sectors and the overspending of financial expenditures. Note 1 Chen Sun, ‘New Medical Reform Program under “Difficult Delivery”’, Chinese Market 3 (2008).

could be relieved. Furthermore, the independent legal status of the hospital management agency would be established in accordance with the law. The organisational governance structure of public hospitals would then be set up, with hospital management committees serving as the core unit.9 As a result, public hospitals suddenly lost the protective umbrella of governmental departments for health administration; they also had to deal with the fact that governmental departments no longer had to cover hospital expenses with medicine revenues. Hence, only by optimising management and improving service quality could the public hospitals maintain their current status as suppliers of authoritative medical services. Community hospitals In addition to the treatment and rehabilitation of residents suffering from common diseases, community hospitals also carried out basic health services, such as health education on preventive health care and technical guidance for birth control. Community hospitals had been positioned as non-­profit welfare

54  Outside-in enlightenment medical and health organisations to highlight their social beneficial results. Compared with public hospitals, however, patients were unwilling to consider community hospitals as their first choice because they lacked better equipment. The government only offered an insufficient subsidy to community hospitals; and they could not make profits from patients. Under such circumstances, community hospitals had been struggling to maintain daily operations.10 Therefore, the government decided to build more community hospitals, to reconstruct the existing community hospitals and to strengthen competence training for medical personnel employed in these hospitals. The urban medical reform proposed the following: (1) the basic medical and healthcare system should be provided to all people as a public product; (2) the construction of an urban community health service network must be accelerated, with the community healthcare centre acting as the main body in order to improve the service functions; (3) two lines for revenue and expenditure must be actualised; (4) a standardised training system for resident doctors must be established; (5) the local government must explore different approaches on multi-­point practice of all registered physicians; (6) the local government should be encouraged to formulate graded standards on diagnosis and treatment as well as to conduct pilot work in community hospitals serving as the first place for diagnosis and, finally; (7) the community healthcare service centres and service stations must be subsidised in terms of quota, fixed items and purchases made according to capital construction, equipment purchase, personnel expense and operational funds in order to provide public health services stipulated by national provisions, wherein the wages of medical personnel should be connected up properly with the average wage level of staff in local public positions.11 Through these strategies, community hospitals should be relieved of their financial constraints. A number of patients flowed out of public hospitals to community hospitals, thus realizing the rational allocation of health service resources. Medical insurance system The medical insurance system played an important role in the medical and healthcare reform. On the one hand, it acted as the third party in addition to consumers and suppliers of medical services through payments and claim settlements of insurance benefits. On the other hand, medical insurance had its own particularity in the social security system, which not only took on public benefit and welfare, but also had distinct characteristics, including information asymmetry between suppliers and consumers, the lack of elasticity in the medical demand and the absolute dominance of suppliers for medical services. In such a special system, the government played multiple roles not only as a designer of the medical insurance system, insurer of the medical insurance and monitor of the medical insurance market, but also as the principal-­in-charge of the medical insurance, purchaser of the medical services and administrator of the medical insurance market.12 These multiple roles provided the government with convenience in rent seeking.

Outside-in enlightenment  55 Doctor group The labour value of Chinese doctors had been significantly underestimated in the past years. Some experts asserted that doctors bore the heaviest burden. With registration fees for outpatient services and operation fees at a very low level, doctors had to collect rebates by prescribing more drugs, including the expensive ones. The medical and healthcare system reforms would have a great impact on the doctor group which, in turn, only had a slight influence on the new policies included in the great medical reform. Yin Dakui, President of the Chinese Medical Doctors Association, published an investigation report on the practice status of Chinese physicians. Data provided by the report showed that 39.57 per cent of doctors in Mainland China believed that the current practice environment was worse, 24 per cent presumed it was extremely bad, 45.21 per cent supported the new medical reform and 22.38 per cent knew nothing about the new medical reform.13 Furthermore, great divergence had been generated in the society in terms of the vocational orientation of the doctor group. One view was that the doctors should be civil-­servant oriented. As long as medical personnel could enjoy the same treatment as teachers, doctors would focus on curing sickness to save patients’ lives.14 Another view was that doctors should become freelancers.15 The new programme on medical reform proposed that the traditional position-­ setting of medical staff should be changed and a multi-­point practice should be explored for registered physicians. It ushered in the significant changes in the Chinese physician system, which offered ‘weekend doctors’ with a chance to practise freely and openly. On the one hand, capable doctors could generate higher income by ‘performing for outside salary’ and ‘weekend practice’, where mobility of doctors could also mitigate the situation of unbalanced medical service resources.16 On the other hand, the multi-­point practice of registered physicians would break down the ‘permanent employment’ and physicians would be considered freelancers. Those with poor capabilities and low quality of service might be eliminated under the new system. Urban residents (ordinary patients) The previous round of the medical and healthcare system reforms exacerbated the ‘difficulties of seeing a doctor and the high cost of consultations’ – two common problems faced by urban residents. In particular, it was a more common problem for employees of private enterprises and peasant labourers living in the city to suffer from poverty caused by illness, because they were not included in the medical care system which was meant for urban employees. The original intention of the new round of medical reforms was to solve the above-­ mentioned problems. In the new medical reform, it was established that the government must increase its financial input. Although disputes still existed on whether the government investments should be provided to ‘consumers’ or to ‘suppliers’, the new programme was very popular among ordinary urban

56  Outside-in enlightenment residents because it helped solve the problems related to doctors’ consultations as a whole. In the process of finalising the new medical reform, the government called for advice from the public through the Internet. Through this initiative, over 35,000 individuals gave opinions and suggestions regarding the new programme, thereby manifesting the people’s expectations on the new programme for medical reform. Under the new programme for medical reform, the government had to gradually establish a basic medical security system covering all the people and achieve full coverage of medical insurance. The state would bring previously neglected sectors of society, such as employees of enterprises suffering from closure, bankruptcy and hardship; university students; employees of non-­public economic organisations; and people under flexible employment into the scope of medical insurance for urban workers or residents.17 Pharmaceutical companies Prior to the reforms, pharmaceutical companies were closely linked with various government departments in innumerable ways. In general, the relationships between the government and pharmaceutical corporations mainly included several forms: the ‘parent–child’, ‘sibling’ and ‘lobbying’ relationships. In the parent–child relationship, the state-­owned pharmaceutical corporations were set up by the government – the important fiscal source of the local government. The government would coordinate those corporations by formulating various plans. In the sibling relationship, privately operated pharmaceutical corporations forged an alliance of interests with some government departments, which offered expediencies to the corporations during the process of seeking administrative approvals for the manufacture and sale of related items. In the lobbying relationship, multinational pharmaceutical companies attempt to change medical policies issued by the government by lobbying the policy makers so that the policies were more beneficial for them.18 To make pharmaceutical corporations develop in a healthy way and to ease the situation of inflated prices for medicines, the interest chain between the government and pharmaceutical corporations needed to be broken off. Thus, breaking up the mode of ‘covering hospital expenses with medicine-­driven revenues’ was a focal point of the new round of medical reforms. Therefore, the new policies might provide pharmaceutical companies with prospects for further expansion whilst also forcing them to innovate and develop new business models. Table 2.3 presents the basic attitudes held by various social stakeholders towards the medical and healthcare system reforms.

Expert involvement with outside-­in enlightenment Experts promoted their agenda via outside-­in enlightenment In 2005, a research report titled ‘Healthcare System Reform in China’, concluded that medical reforms in China were basically unsuccessful. This report

Outside-in enlightenment  57 Table 2.3 Basic attitudes held by social stakeholders towards the medical and healthcare system reforms Social stakeholder Linkage with administration

Basic attitude

Public hospitals

Administrative linkages with healthcare departments

About 90 per cent public hospital funds come from patients. Abolishing the mode of ‘covering hospital expenses with medicine revenue’ was unacceptable for public hospitals.

Community hospitals

No close linkages with administrative departments

Large hospitals were overcrowded and unable to withstand the load. No one showed any interest in community hospitals. Difficulty in seeing a doctor was a structural problem.

Medical insurance Administrative linkages with system social security departments

Partly undertaken by the individual accounts for an overly high proportion and there was a huge amount of surplus of medical insurance fund, which should be solved properly.

Doctor group

Chinese doctors, who often bore the heaviest burdens, were some of the poorest in the world.

No administrative linkages but has a medical association

Urban residents No administrative linkages (ordinary patients) and communication channels

The public had been troubled by the problems related to medical consultations for many years and needed a fair, equal, inexpensive and safe medical and healthcare system.

Pharmaceutical companies

Maintain a ‘parent–child’, ‘sibling’ or ‘lobbying’ relationships with relevant authorities

The medical and healthcare system reforms gave pharmaceutical companies the prospect of expansion, but also exposed them to the risk of disrupting the former market pattern.

Veteran cadres

Strong linkages with policy makers

Reforms should be carried out to solve the problems related to medical consultations; however, the medical benefits enjoyed by the veteran cadre should not be affected.

was released by the group of Professor Ge Yanfeng, a research fellow at the Development Research Centre of the State Council and Deputy Head of the Research Department for Social Development at that time. Originally, the topic-­ based group issued eight thematic reports and one general report in the restricted publication of the Development Research Centre of the State Council in March 2005. However, conflicting opinions existed within the central government

58  Outside-in enlightenment against the conclusion that they presented and their reports did not draw too much attention from the policy makers.19 On 28 July 2005, during an interview with the reporters of China Youth Daily, Professor Ge announced that medical reforms in China continued to be unsuccessful.20 The report contained the overall evaluation of and reflections about China’s healthcare system changes and a new framework for another round of medical reforms.21 The topic of medical reform was discussed once again. As a researcher in an official research institute, Ge’s criticism against the current policy, which he released through the media, aroused widespread public concern almost immediately. As the stakeholder with the least willingness to admit the fact that the medical reforms had been basically unsuccessful, the Ministry of Health tried to guide the consensus on whether or not the success or failure of the medical reforms should be discussed, but this more only gathered more criticism from the public.22 Shortly thereafter, the Xinhua News Agency published a report prepared by then Minister of Health Gao Qiang. That report declared that the medical reforms of the past had aroused numerous problems. Henceforth, public clamour for a new round of healthcare system reforms in urban areas became a highly popular trend.  On 16 March 2006, the state issued the outline of the ‘11th Five-­year Plan’, which listed healthcare issues as a separate chapter for the first time. That chapter in the ‘11th Five-­year Plan’ consisted of 917 words, whereas the same chapter in the ‘10th Five-­year Plan’ only contained 208 words. Moreover, medical and healthcare system reform was prioritised as a strategy to promote a harmonious socialist society. Meanwhile, the ‘11th Five-­year Plan’ stressed the responsibilities of the government in providing public health and basic medical services and in setting the direction of medical and healthcare service reforms towards socialisation.23 In September 2006, the State Council approved the ‘Inter-­Ministerial Coordination Working Group for Further Strengthening the Medical and Healthcare System Reforms’, which was established by fourteen ministries and commissions (later increasing to sixteen), with the National Development and Reform Commission and the Ministry of Health as the leading agencies, thus signifying that the formulation of the new programme on medical reforms had officially entered the drafting stage.24 In October 2006, General Secretary Hu Jintao presided over the 35th collective learning of the Politburo. With the medical and healthcare system reforms as the main content, the collective learning invited Professor Li Ling, Assistant Director of the China Centre for Economic Research at Peking University, and Professor Liu Jun, Deputy Chairman of the Chinese Medical Association, to deliver lectures to members of the Politburo. The lectures discussed the current medical system and aimed to expound on issues pertaining to the foreign healthcare system and the development of public health undertakings in China. Hu Jintao stressed in his address that the medical and healthcare system reforms should be strengthened and a basic healthcare system covering urban and rural residents should be established to provide the populace with safe, effective, convenient and inexpensive medical and healthcare services. Previously, this

Outside-in enlightenment  59 medical programme had been included in the ‘Decision made by CPC Central Committee on Several Major Issues of Building up Harmonious Socialist Society’25 On 2 January 2007, People’s Daily published an article about the then Minister of Health Gao Qiang, who expressed his opinion on the medical reform and gave answers on four questions. Whilst talking about the core features of reform and development, Gao Qiang announced that four basic systems should be established during the medical reform: a basic healthcare system covering urban and rural residents, a national drug system, a multilevel medical security system and a comprehensive reform of all public hospitals.26 A few days later, on 8 January 2007, Gao Qiang reiterated these four basic reforms during the National Health Working Conference. In October 2007, the report of the 17th National Congress of the CPC placed the medical and healthcare services at a crucial position, proposing that medical care should be provided for the sake of public welfare. That report further clarified that the government’s responsibility and investment should be strengthened and that policies on public health care should be improved. Vice-­Premier Wu Yi of the State Council directly led the Reform Coordination Group. On 14 and 15 January 2008, she held two fora and listened to members of the Education, Science, Culture and Health Committees of the National People’s Congress and the CPPCC as they presented suggestions on deepening the health system reform. On 11 April 2008, Premier Wen Jiabao hosted seminars at the Zhongnanhai twice to listen to comments and suggestions on the healthcare reform draft from medical workers, experts and scholars, representatives of pharmaceutical production and distribution companies, teachers, urban residents, farmers, migrant workers and other sectorial representatives. ‘9 + 1’ alternatives by research institutes On 23 March 2007, in order to improve the scientific and operational qualities of decision-­ making for the alternative selection in the medical and healthcare system through consultations with various experts, the Coordination Working Group for Medical Reform commissioned the World Bank, the World Health Organization, the Development Research Centre of the State Council, Peking University, Fudan University, McKinsey & Company (China) and researchers from the Beijing Normal University to conduct independent and parallel studies on designing the overall framework to be adopted for the medical and healthcare system reforms in China.27 Tsinghua University, Renmin University of China and Harvard University also became involved in the design of the medical reform programme. On 2 February 2008, the medical reform programme titled, ‘Suggestions for the Existing Healthcare System in China’, which was designed by experts from the healthcare sectors of Guangdong under the project initiated by the Biology and Medicine Department of the Chinese Academy of Sciences, was submitted to the State Council, serving as the 10th expert alternative.28 The perspectives of these ten programmes can be approximately divided into the ‘market-­led’ and ‘government-­led’ proponents (see Table 2.4).

The intervention should be led Government investments should be made so that public hospitals can maintain their by the government. ‘public welfare’ nature. The government should provide free or partly subsidised services on public health care and basic medical security. A universal healthcare system, under which everyone could enjoy healthcare services, serves as the ultimate goal.

Peking University

This model places more emphasis on public domain and fairness in fund-raising, where the government would play the leading role. Meanwhile, competition and efficiency in supply provision should also be emphasised where the market plays an important role. The organic combination of the two would reflect the principle of combining fairness with efficiency.

Fudan University

The next step that China should take to initiate medical reform could be a third way of the ‘society-led’ model.

Experts from WHO defined targets for China’s reform on healthcare system under the principles of ‘fairness, efficiency (cost-effectivity) and quality’. They hoped to apply market mechanisms into the provision and pricing of government health services and encouraged private health institutions and private capital to be more involved in healthcare provision.

World Health Organization Market mechanisms should be (WHO) applied to realize the effective provision and pricing of government health services.

Development Research There should be government- Medical services must be led by government intervention so that the essence of the Centre of the State Council led intervention to provide providing public welfare can be preserved. Reforming the property rights of the medical services to the public. hospital is not the key to solving medical problems. Rather, the future direction of medical reform should aim at establishing a basic healthcare system for all people paid for by the government, thereby providing urban and rural residents with equal access to free health service and basic medical services, whilst requiring minimum payments as identified services should still be under government financial investment based on.

Market-led or government-led Major point reform

Research institution

Table 2.4  ‘9 + 1’ programmes for medical reform as prepared by various research institutions

The intervention should be led The contents had not been released yet. Relevant experts revealed that the programme by the government. was based on the model wherein the government subsidises the operations of medical institutions with tax budget.

There should be management- They suggest that the government should gradually retreat from the mature health type medical insurance led by insurance system for urban employees and take measures to promote private the market. management of medical insurance.

World Bank

McKinsey & Company

continued

The government-led model The government-led model and market mechanism should be appropriately matched. and market mechanism should Financial subsidy should be provided for both the ‘supplier’ and the ‘consumer’ (funds be appropriately matched. should be granted to both medical organisations and medical insurance firms). Policies should target the reform of hospitals, thus allowing doctors to survive and the hospitals to sustain their operations. Attention should be given to long-term reform and effective short-term policies. An active medical intervention policy system should be implemented, placing particular emphasis on early diagnosis, early treatment and preventive care for minor diseases. Finally, authorities should strive for progress that considers the balance between stakeholders during the medical reform.

The government should purchase services from medical institutions to achieve the targets of low operational cost and high efficiency, which in turn, ensures that all people can have access to basic health care. In the basic operating procedure, the government must be willing to purchase services directly from medical institutions, calculate the basic medical expenses for each within a year in accordance with the number of people involved in the medical insurance and, finally, make the payment directly to the medical institutions. Patients would not have to make direct payments to hospitals but, instead, pay the insurance premium directly to the health insurance agencies of the government.

Renmin University of China

Beijing Normal University The government should purchase services from medical institutions.

There should be an effective combination of government intervention and market mechanisms.

The government-led model should be combined with market mechanisms.

Tsinghua University/Harvard University

Chinese Academy of Sciences

Note 1 Shaoguang Wang and Peng Fan, ‘Policy Research Group and Policy Formulation – With New Medical Reform as the Example’, Political Studies 2 (2011); Ling Chen, Jing Zhao and Lan Xue, ‘Prioritising or Preferential? – An Interpretation Framework and Consensus Decision-Making Model for the Policy Process of China in the Transition Period’, Management World 8 (2010); Yoel Kornreich, Ilan Vertinsky and Pitman B. Potter, ‘Consultation and Deliberation in China: The Making of China’s Healthcare Reform’, The China Journal 68 (2012): 176–203.

Source: all data was collected from news items released by various media, articles on expert views and interviews with experts. There are three other important academic articles discussing expert involvement in the decision-making for medical reform.1

A universal healthcare system should be established and the problems related to consultations with doctors in large hospitals should be resolved by the insurance mechanism.

Government intervention should be effectively combined with market mechanism, and a credit guarantee system should be established to provide universal health care for the public. Furthermore, the development differences of various regions in China should be emphasised and appropriate measures for medical reform should be formulated.

Market-led or government-led Major point reform

Research institution

Table 2.4 Continued

Outside-in enlightenment  63 Different views of experts The central government brought its role as expert into full play during the formulation of the medical and healthcare system reform in urban areas. On 26 September 2006, the Coordination Working Group for the Medical and Healthcare System Reform opened a column titled ‘Offering Advice for Medical Reform’ on the official website of the State Development and Reform Commission and advertised a hotline number in order to solicit comments and suggestions from the community. Up until October 2008, the working group received 35,260 suggestions; of these, 56 per cent came from employees in the medical services sector, and 25 per cent came from the general public. Meanwhile, great disputes existed among the opinions held by different research institutions and experts regarding the development directions of the medical and healthcare system reforms. Disputes among experts mainly focused on several aspects, which are summarised and listed below. Government- or market-­led competition The proponents of the government-­led model asserted that providing medical and healthcare services was one of the major public service functions of the government. For example, Feng Zhanchun, then Associate Dean of the School of Medicine and Health Management, Tongji Medical College, Huazhong University of Science and Technology, preferred the medical reform initiated by the government, stating that the high cost of seeing a doctor was rooted in the fact that the commercialised and market-­oriented trend had violated the basic principle for the development of medical and healthcare services.29 Along with the introduction of the market mechanism into the field of medical and healthcare services, medical institutions began to maximise their profits, which seriously increased medical expenses, including consultations with doctors. As such, quality healthcare resources were centralised in cities and central hospitals rather than in undeveloped areas. Moreover, as the vast rural areas lacked the appropriate medical services, this resulted in difficulties in setting appointments with doctors. Hence, at least in the field of basic medical services, the government should take the leading role in providing medical and healthcare services by strengthening its financial investments and restoring the administrative management of hospitals. Thus, public hospitals should be restructured by combining the operating and management mechanisms. The hospitals were actually implementing ‘separate channels of revenue and expenditure’, where unified purchasing by bid invitation carried out by the government was executed for drugs and medical appliances, and public hospitals did not have the status of independent legal entities because they were under the supervision of the government. The dominance of the government and government investment inclined to the primary level were the only helpful measures to mitigate the high costs and difficulties in seeing a doctor. Furthermore, Dong Zhaohui, a researcher from the Research Centre of Medication Economics in Peking University, proposed that the

64  Outside-in enlightenment government-­led model did not mean that all expenditure should be settled through government investments, which might inappropriately expand the powers of the healthcare sectors. What the government should lead instead is the science-­based investment mechanism. Meanwhile, the proponents of the market-­led or market competition model presumed that the administrative monopoly of the public hospitals, the shortage of market competition, low efficiency and vitality caused by the institutional rigidities were the fundamental problems of the current medical and healthcare system. The service awareness of public hospitals could be improved and the organisational vitality of public hospitals could be stimulated only by introducing market mechanisms into the field of medical and healthcare services, with the aim of developing non-­public hospitals and for-­profit hospitals as well as encouraging the free and open practice of doctors. Marketisation would compel public hospitals to improve their service by means of strengthening management, reducing cost and unceasing innovation, which would in turn, solve the problems related to doctors’ consultations. Therefore, for the proponents of market competition, the idealised model of current medical and healthcare system reforms should be based on the introduction of non-­public hospitals into the healthcare system, which would allow medical institutions to compete in the same market. Meanwhile, the government should still subsidise the costs so that patients can make free choices on medical services in light of market rules. Finally, the government should continue to supervise the market-­led provision of medical services. Professor Gu Xin at the School of Social Development and Public Policy of Beijing Normal University (later transferred to Peking University) was the representative of the market competition camp. He agreed that there were three opportunities to breakthrough in China’s medical and healthcare system reform. First was universal health insurance. As long as the universal health insurance was realized, the problems related to doctors’ consultations could be solved. A universal health insurance system would not only reflect the welfare nature of medical reform, but would also provide the citizens with the funds to consult a doctor. The second strategy was to purchase medical services with health insurance. The mechanism of third-­party purchasing of medical insurance institutions could be derived from the universal health insurance. The key steps in such a mechanism were to replace the patient reimbursement system with the prepayment system with health insurance, replace the comprehensive arrangement for serious disease with the comprehensive medical service packages and replace item-­based charging by multiple paying modes. The third strategy was the marketisation of medical services. Once the medical institution obtained the status of a legal entity, the administrative relationship between hospital and health authorities could be eliminated. A board of directors, the core of this legal entity, should consist of all stakeholders of the hospitals, including investors and medical care personnel. Former departments in charge of the public hospital could also join the board of directors and serve as investors.30 From the dispute between those two camps, we found that arguments of both sides do make some sense. Professor Li Ling of Peking University revealed the

Outside-in enlightenment  65 reason for the past failures of medical and healthcare system reforms: both the government and the market failed in implementing the previous medical reform. The first issue was the malfunctioning of the government. Basic healthcare services should be undertaken by the government, and these should not only be responsible for raising funds, but also for providing public goods, such as supervisory management and the constitution of laws and regulations. With economic development as the central task, local governments in the past did not actively make investments in education, medical service and healthcare, thus leading to large amounts of medical expenses borne by the people themselves. Second, due to the inherent flaws in the market, many people were unable to afford the medical expenses. Professor Li argued that previous healthcare reforms failed not because of marketisation per se but because of the excessive profit-­ generating orientation of those involved. Professor Li further stressed that the government should take the leading role and public hospitals should restore their public welfare nature. She suggested that money should be effectively invested in hospitals and doctors, especially on the improvement of doctors’ salaries, which in turn, could motivate these doctors to take good care of people’s health.31 In addition to the mainstream arguments on the market-­led and government-­ led models, some experts suggested that both models were not mutually exclusive, but could actually be combined in a complementary manner. For instance, Professor Cai Jiangnan from the Public Economics Department of the Economics School of Fudan University proposed a third path for the new round of medical reforms: a society-­led model. The society-­led model places emphasis on public nature and fairness in the aspects of fund-­raising and investment, allowing the government to play a leading role. In terms of supply, this model emphasises the principle of competition and efficiency and allows market mechanisms to play more active roles. Hence, the society-­led model is a combination of the government-­led and market competition models. Professor Hu Shanlian from Fudan University also pointed out that a universal healthcare system should be carried out, as this was the only way we can move towards a fair and modern economic society. Both the urban and rural medical insurance systems can be considered to be manifestations of this brand of social fairness. Even the wide coverage at a low level was better than no coverage at all. Although a comprehensive arrangement for serious diseases could not be reached inclusively, basic medical insurance was just a way to address the heavy burdens caused by serious diseases.32 The commentator Tong Dahuan believes that the failure of the past medical reforms was not due to the contradiction between the government’s dominance and the market rules but due to the fact that the functions of the two were not fully realized. Specifically, the government did not provide enough guarantee on the welfare issues, whereas the market was filled with insufficient competition, where public hospitals were in a highly monopolised position, the distribution of medical resources was unfair and unreasonable and the best part of the resources was inclined towards hospitals at higher levels. No sound mechanisms were

66  Outside-in enlightenment established with regards to on-­site treatment for common diseases, resulting in several problematic situations, such as the Peking Union Medical College Hospital being overcrowded with people from all over China. The freedom of choice enjoyed by doctors and patients had been compromised. Whether in large cities or rural areas, all medical resources presented a high degree of tension. In large cities and high-­grade hospitals, such shortages resulted in congestion, whereas in small towns, villages and medical institutions at the primary level, there were shortages of both medical resources and patients. These two forms of shortages further exacerbated the extremely high medical expenses; thus, subsidising the costs incurred by consumers, with the purpose of establishing a sound system of universal health care, should be the fundamental consideration of the new round of medical reforms. Moreover, the realization of this goal to balance healthcare resources should be an essential part that must be improved during the new round of medical reforms.33 Fiscal investment for suppliers or consumers The proponents of market competition and government-­ led reforms shared some  consensus in the field of healthcare reform: both agreed that the state’s financial investment was far too low. About 6 per cent of China’s GDP was invested in medical services, of which only 17 per cent was offered by the government; in comparison, the global average was 50 per cent.34 Thus, whether the fiscal investment of the government should be for suppliers or consumers was another focus of debate among the experts. In this context, the ‘suppliers’ were the public hospitals, whilst the ‘consumers’ referred to ordinary citizens as patients, where the mechanism was based on the government’s duty to provide fiscal subsidy to enable ordinary citizens to avail themselves of medical insurance. Those supporting the move to subsidise the suppliers deemed that China had yet to establish a flawless mechanism. Moreover, they believed that the government should strengthen the financial allocation for public medical institutions and apply the performance appraisal from top to bottom to urge public medical institutions to cut down the prices of services, improve the quality of services and provide medical services for all citizens. Representatives holding the view ‘to subsidise suppliers’ included Ge Yanfeng from the Development Research Centre of the State Council and Professor Li Ling from Peking University. Ge suggested that a public health and basic medical service system that covers all the people should be set up within the medical and healthcare system of China. This system could be established by investing financial appropriations into a grass-­roots healthcare system comprising specialised public healthcare institutions at all levels, community healthcare institutions in the urban areas, township hospitals in rural areas and village clinics. Moreover, the government could offer deductions and exemptions for expenses paid by poor individuals. Professor Li Ling further explained her views on the long-­term aspects of institutional arrangements for subsidising suppliers

Outside-in enlightenment  67 or consumers. She believed that it would be a wise choice for China to subsidise the suppliers and consumers in the short term. Currently, the medical and healthcare system in China only covers a small scope and public hospitals are not in a perfect condition. Subsidising both sides would hasten the process so that more people can obtain actual benefits. Over the long term, a national insurance or universal healthcare guarantee should be the dominant model. In the long run, the model of a universal healthcare guarantee – with public hospitals as the main component – would be more favourable than the insurance model.35 Meanwhile, Professor Gu Xin from Beijing Normal University, a staunch advocate of subsidising consumers, proposed that the overall objective of further strengthening the medical and healthcare system reform must be the establishment of a basic medical and healthcare system covering urban and rural residents. This system would provide the populace with safe, effective, convenient and inexpensive public health and basic medical services and promote the provision of basic medical and healthcare services to everyone. As long as the universal health insurance is being realized, the problems related to consulting a doctor could be solved. In addition, the government’s financial resources should be invested as subsidies for patients, thus attracting the general public and the poor to join the medical insurance and medical insurance institutions to purchase relevant services from medical service organisations. Medical service organisations could then attract patients by means of market competition to obtain insurance benefits from medical insurance agencies. Implementing reforms by subsidising the consumers would promote the formation of third-­party purchase mechanism on medical services. With more professional knowledge and more powerful capabilities to negotiate with hospitals, medical insurance agencies could be regarded as the ‘gatekeepers’ of the quality of medical services accessible to patients. From these ideas, we could see that subsidising consumers was essentially the dominant mechanism for the government to participate in market competition on the basis of subsidising the patients. The programme for the medical and healthcare system reform also had some solutions integrating the models of subsidising suppliers and subsidising consumers, that is, the government would give dual attention to suppliers and consumers when increasing its financial investment in the healthcare system. The suppliers to be subsidised would only include grass-­roots medical service organisations, such as community healthcare institutions in urban areas. For large hospitals in cities, investment would be made only in infrastructure and equipment. The main operating costs of large hospitals would not be within the scope of government subsidies. The programme of subsidising consumers, under which urban residents could obtain fiscal subsidy when joining in the medical insurance, has been put into practice. One example is the basic medical insurance system for urban employees, which covers 170 million people. In the new programme on medical reform, the subsidies for the medical insurance of residents should be raised.

68  Outside-in enlightenment How do we reform the state’s pricing system for essential drugs? The national pricing system for essential drugs has long been a highly controversial issue. Scholars supporting the government-­led model (e.g. Professor Li Ling from Peking University) believe that governmental supervision should be strengthened for the whole process in relation to common drugs – from production, circulation, to usage – the national essential drug system should be established and government pricing and unified procurement should be actualised. During an international convention to develop the national essential drug system, more than 160 countries had developed the national essential drug list, which ensured that the prices of drugs were low and that the supply was stable. Scholars supporting the market-­led healthcare reform took exception on ideas of ‘fixed-­point production under bid invitation’ and direct distribution in the national essential drug system. Gu Xin and others adjudged that such a system was similar to a monopoly for grain purchase and marketing, which would not only impair the market mechanism in the production and circulation of drugs, but would also be conducive to more commercial bribery and power rent-­ seeking, because administrative departments would have more authority to appoint enterprises for production and distribution and to fix the prices or expenses for distribution. Furthermore, the circulation of essential drugs would face the administrative monopoly of governmental departments and public hospitals, which would weaken the enterprises’ functions of producing and distributing these drugs in China, and as a result, small and medium enterprises would be phased out. How to carry out reforms in public hospitals? Overhauling the public hospitals was the core aspect of the new medical and healthcare system reforms. In 2008, the draft of the medical reform programme for advice seeking emphasised the fact that public hospitals would maintain their welfare nature and that they should separate ‘management from enforcement’, ‘functions of the government from those of institutions’, ‘medical care from pharmacy operations’ and ‘for-­profit from non-­profit’. Moreover, these hospitals should have an independent legal status. Despite the consensus on these issues, however, experts held different views on the next step for the reform for public hospitals. For a long time, the health administrative departments of the government had been both the sponsors and superintendents of public hospitals, whilst also being responsible for supervising the medical institutions, which had built up a parent–child relationship with the government. For this reason, it was difficult for the government to effectively exert its functions on supervising public health. Thus, solving the problems related to doctors’ consultations, separating the functions of management from enforcement, became the basic directions for the reform of public hospitals. The relationship between government health departments and public hospitals should be transferred from a controlling to a

Outside-in enlightenment  69 supervisory one. Specifically, health departments should supervise the medical service agencies and ensure that they operate under laws and regulations and focus on providing quality effective medical services for citizens using different strategies. Nevertheless, there was a fierce controversy on the specific practices for breaking off this parent–child relationship between the government and public hospitals. For example, heated discussion had been aroused among experts with regards to the market-­oriented reform of the medical system, which was carried out in Suqian, Jiangsu Province in a manner that could be considered as a ‘selling out’. In March 2000, Suqian conducted a sale by auction on public hospitals for the first time. In 2003, the reform of hospital property right in Suqian had been basically completed and included the partnership, joint-­stock and sole-­ ownership hospitals. After such a medical reform, hospitals in Suqian began to cut down drug prices to attract more patients. Xue Fulun, the Vice-­Mayor of Suqian in charge of health care, claimed that Suqian had basically solved the problems related to doctors’ consultations. Appendicitis surgery, for example, only costs approximately 600 yuan in hospitals at the county or township level. Even in the best hospital of the city, it only costs about 800 yuan. (1 yuan equals roughly to 0.15 USD.) Meanwhile, in Xuzhou and Huai’an, which are near Suqian, the same surgery would cost nearly 2,000 yuan.36 However, from 6–10 April and from 28–30 April 2006, the topic-­based group on medical reform from the China Centre for Economic Research in Peking University, which was led by Professor Li Ling, went to Suqian twice. Based on their evaluation of the medical and healthcare services in urban areas of Shuyang County and rural areas of Suqian, they concluded that Suqian had failed in its medical reform.37 On 7 June 2006, Professor Li Ling held a lecture on the status quo, problems and measures to be implemented to improve the healthcare system at the Unirule Institute of Economics.38 Professor Li stated that the decline of the unit prices of medicines was totally different from the actual costs incurred by patients whilst on actual medical treatment. Owing to the information asymmetry between suppliers and consumers in the medical field, hospitals driven by profit might induce demands; hence, the people still suffered from rising medical expenses due to increased dosages prescribed by the doctor despite the drop in medicine prices. Soon after, Postdoctorate Wei Fengchun from Tsinghua University concluded that the medical reform in Suqian had ended with success. Over a period of time, reports on different conclusions by Peking University and Tsinghua University on medical reform in Suqian attracted much attention from the community.39 Essentially, debates on whether Suqian’s reform on public hospitals achieved success typifies the debates surrounding whether a government-­led model or a market-­led model should be considered in drafting healthcare system reform policies. Professor Li Ling from Peking University believed that the government should guarantee people’s health. Throughout these years, the government had failed to regulate the medical market, because there was no clear definition of the target at all. In fact, the ultimate goal for public hospitals was to ensure people’s health. Yet, Dong Chaohui, a researcher of medical economics

70  Outside-in enlightenment at Peking University and Gu Xin, an expert on medical reform, argued that more resources should be allocated by the market. The reform of public hospitals also needed to address the issue of the transfer of interest towards the hospital by pharmaceutical companies. The revenue sources of public hospitals in China mainly included government subsidies, charges for medical services and the profits from selling drugs. The first two items were a little flexible but were restricted by the level and scale of the hospital. Thus, the profits from selling drugs acted as the major means for hospitals to increase their revenues. In order to prevent hospitals from raising prices at will, the relevant authorities stipulated the maximum limit of 15 per cent could be added to the price of drugs. However, this policy actually encouraged hospitals to purchase high-­quality and expensive drugs, because hospitals could earn more profit from the price difference. Furthermore, the drug manufacturers had too many sales links. Pharmaceutical salesmen offered hospitals and doctors sales commissions and private rebates, which also resulted in the increasingly serious problems related to doctors’ consultations. Dismantling the alliance between the hospitals and pharmaceutical companies to break down the practice of using the revenue from the sale of medicines to cover hospital expenses was another focus of the reform on public hospitals. In order to ensure the normal operation of the hospitals after the reform, the new programme proposed that effective measures should be explored to gradually reform the use of revenue from the sale of medicines to cover hospital expenses; thus, service fees for pharmaceuticals should be organised and the prices for medical services should be adjusted. Meanwhile, the involvement of stakeholders relating to the reform of public hospitals made the ongoing debates on the reform directions of public hospitals even more complicated. On 3 November 2008, the presidents of thirty-­three pharmaceutical industry associations all over China submitted a joint letter, which essentially argued that no distinct route and reasonable system had been constituted for separating management from enforcement during the medical institution management system reform, which had been listed in the advice-­ seeking draft of medical reform programme. The system of covering hospital expenses with revenue from the sale of medicine was still the root cause of the difficulties and high costs in seeing a doctor. Therefore, the direct interest relationship between hospitals, doctors and pharmaceutical companies must be broken down and significant revisions should be made by the State Council.40 On 21 November 2008, 170 directors of public hospitals across the country jointly signed a ‘Letter of Proposal on Medical Reform Issued by Hospital Directors in China’. They hoped that this letter could be submitted to the decision-­ making level for medical reform, which would provide some perspectives from the medical frontline for the new medical reform programme that was being drafted. This letter of proposal listed five suggestions as follows: •

Clarification of the responsibilities of public hospitals in relation to public welfare and the improvement of the legal-­person-led management structure of public hospitals as a breakthrough.

Outside-in enlightenment  71 •

•

• •

Adjustment and expansion of the existing functions of the Ministry of Health in conducting the overall supervision on health, medical care, medication and health insurance as well as setting up health insurance organisations within the ministry after functional transformation. Acceleration of the ownership transformation of public hospitals, expansion of the financing channels for public hospitals and the government’s better supervision of the use of funds with all possible means to ensure that public hospitals can effectively use the funds raised for the purpose of ‘public welfare’. Rebuilding of the healthcare system so that a ‘specialised department + all other departments’ would cooperate based on the division of labour and suppliers would carry out effectual competition. Implementation of an advanced structural reform in the management of public hospitals, separation of the functions of the government from those of institutions and the implementation of the trial run for the professionalisation of senior managers working in medical institutions.41

How to hasten the medical and healthcare system reforms? The medical and healthcare system reforms involved a complex decision-­ making process. In addition to different opinions on system design for specific reforms, experts also held different views on the decision-­ making process. Balancing the interests enjoyed by different sectors, despite the numerous stakeholders involved, shall serve as the key to success of the medical and healthcare system reforms being initiated. Yu Mingde, Executive Vice-­Chairman of the China Pharmaceutical Enterprise Management Association (and former director of the Pharmaceutical Division in the State Economic and Trade Commission), stated that, because the advice-­seeking draft of the new medical reform programme was formulated by all stakeholders separately, the distinct bureaucratic interests of each party hampered the success of the programme.42 Regardless of whether the decision-­ making process involved eight (old programmes) or sixteen ministries (new programmes), related departments all had divergent opinions when it came to medical reform, which significantly affected the decision-­making process.43 Professor Hu Shanlian from Fudan University pointed out that many departments became involved in the current medical reform, and each department had its own interests, making it difficult to coordinate among departments. Only the organ at a higher level could play the role in coordination. Otherwise, there was a lack of overall consensus among departments in terms of reform orientation, objective and procedures.44 In summary, experts in the field of public health care publicly expressed their views in various ways. For so many views proposed by experts, we summarised some typical ones in Table 2.5.

Position

Deputy Director of the China Centre for Economic Research, Peking University; A leading expert of a topic-based group of the 9 + 1 Medical Reform Programs

Name

Li Ling

Advocated the ‘government-led’ model, under which the government should guarantee people’s health. A healthcare system covering all the people should be established, and the government should subsidise vulnerable groups in the basic medical system and high-end medical system. Moreover, the government should directly get involved in providing such services to those living in remote and poverty-stricken areas.

Major points

In October 2006, General Secretary Hu Jintao presided over the 35th collective learning of the Politburo in Zhongnanhai and invited scholars (including Li) to deliver lectures on medical system reforms.

From 6–10 April and from 28–30 April 2006, a topic-based group on medical reform, the China Centre for Economic Research of Peking University, led by Professor Li Ling, went to Suqian twice. Based on their evaluation of the medical and healthcare services in the urban areas of Shuyang County and the rural areas of Suqian, they concluded that Suqian failed in its medical reform programme.

Main public activities

Table 2.5  Perspectives and public activities of experts during the medical and healthcare system reforms in rural and urban areas

Deputy Head of the Research Department for Social Development of the Development Research Centre of the State Council; Leader of a topic-based group of the 9 + 1 Medical Reform Programs

Leader of a topic-based group for the 9 + 1 Medical Reform Programs; Professor of the School of Government at Peking University; former professor of the School of Social Development and Public Policy at Beijing Normal University

Ge Yanfeng

Gu Xin

Proposed a version of the Beijing Normal University in the 9 + 1 Medical Reform Programs. This is a representative figure of the camp supporting the market-led model on medical reform.

Acknowledged that there were three opportunities to breakthrough in China’s reform on medical and healthcare system, including universal health insurance, purchasing medical service with health insurance and marketisation of medical services.

continued

In July 2005, a research report submitted by a topic-based group on the ‘Reform of Healthcare System in China’ indicated that current medical service brought forward a declining level of justice with low macroeconomic efficiency of health investments. Their group concluded that the commercialised and market-oriented thrust of the medical and health system was completely wrong as it violated the basic laws of medical and health services. Later, Ge revealed the main points of the report to the media. On 15 October 2008, Professor Ge Yanfeng argued that government investment should be strengthened to directly share the service costs.

Integrate a public health and basic medical security system that covers all the people into the existing public health system (i.e. the state’s basic healthcare system, which could be established by specialised public healthcare institutions at all levels. There should be community healthcare institutions in urban areas, township hospitals in rural areas and village clinics. Urban and rural residents should be provided with equal public health service for free and basic medical services should only require minimal payments from individuals under a system of government financial investment based on identified services. Deductions and exemptions should be granted for poor individuals. Relevant services should meet the needs of the population and an open approach for service based on the actual residences of individuals should be adopted.

Position

Professor of Fudan University; Director of the Health Management Training Centre of the Public Health School at Fudan University; Leader of a topicbased group for the 9 + 1 Medical Reform Programs

PhD from the Public Health School at Harvard University, Director of the Health and Development Research Centre of the School of Public Policy and Management at Tsinghua University; Leader of a topic-based group for the 9 + 1 Medical Reform Programs

Name

Hu Shanlian

Liu Yuanli

Table 2.5 Continued Main public activities In 2005, Hu Shanlian proposed his opinion. At beginning of 2006, Hu described a ‘vision’ during an interview with China Business News. He emphasised that the increase of financial expenditure for lowprice hospitals and the new rural cooperative medical system was the key factor for the success of the pilot works.

On 24 March 2005, Liu Yuanli lectured on the ‘Research for the Health System and Rural Healthcare’ in Tsinghua University. On 14 May 2007, he opined that the new medical reform programme should not be too mysterious but must allow more people to get involved in the discussions.

Major points Universal health care should be carried out as this is the only way we can progress towards a fair society. Both the urban medical insurance and rural medical insurance can be a manifestation of social fairness. A wide coverage at a low level is better than no coverage at all. Although a comprehensive arrangement for serious diseases could not be made inclusively, basic medical insurance is just a way to address the heavy burden caused by serious diseases. The central government should set basic standards for different regions, ensure the universal coverage of basic health guarantee and partly subsidise the relevant expenditures. The process of designing for a specific reform programme should be led by the provincial government. Local governments at all levels should be responsible for the implementation of the programme and provision of subsidies for the corresponding financial expenditures.

Head of the Public Economics Department of the Economics School at Fudan University; Senior researcher engaged in health policies; one of the drafters of the 9 + 1 Medical Reform Programs

Director of the Research Centre for Medical Reform at Renmin University of China; Professor in charge of the orientation of the MPA programme; Leader of a topic-based group for the 9 + 1 Medical Reform Programs

Cai Jiangnan

Wang Hufeng

In May 2007, he directed the ‘Proposal for Medical and Healthcare Reform in China – Studies Based on the Spirit of Public Management, Social Medical Rules, Estimate for Reform Costs and Analysis For Risk Measures’ (the 8th proposal on medical reform submitted to the State Council). In July 2008, he was invited to conduct cooperative studies at the Public Health School of Columbia University in United States. During that time, he developed the teaching case for graduate students together with the Columbia University professors with regards to the medical and healthcare system in China.

The government-led model and market mechanism should be appropriately matched. Financial subsidies should be provided for both the suppliers and consumers. Funds should be granted to both medical organisations and medical insurance companies. An active medical intervention policy system should be implemented, placing particular emphasis on early diagnosis, early treatment and preventive care for minor illnesses.

continued

On 31 October 2006, Cai Jiangnan released a report titled ‘Orientation for Reform of Medical and Healthcare System in China’. On 23 March 2007, he participated in designing the programme for the healthcare system as a member of the group established by Fudan University for medical reform.

The next step that China should take to achieve medical reform is through the society-led model, which places more onto the public domain and fairness in fund-raising, where the government would play the leading role. More emphasis should also be placed onto competition and efficiency is the aspect of supply, where the market would play an important role.

Position

Director of the Research Centre for Medical Economics in China at Peking University

Professor of the Institute of Sociology and Anthropology at Peking University

Name

Liu Guoen

Qiu Zeqi

Table 2.5 Continued

On 8 April 2009, Liu Guoen pointed out that the multi-dimensional investment mechanism on health care under the guidance of the government proposed in this new programme reflected the government’s will to advance the overall public health and correspond with objective actual conditions. He said the so-called government-led investment mechanism was mainly reflected on the reassignment of resources by the government. For instance, health insurance would not be a choice under the tax revenue but under the full reassignment of power from the government, organisations and individuals.

Main public activities

Adopting the government-led model does On 7 April 2009, Qiu Zeqi was invited by Phoenix TV to interpret relevant details of not mean that the model of covering hospital expenses with medicine revenues the new medical reform for Internet users. would disappear in the short term. This is actually a major problem that deserves special attention in the new programme of medical reform.

The government should play a role in establishing a security system, under which common people would spend less money on seeing a doctor. Then, the people would not think it was too expensive to see a doctor, because most of expenses would be covered by health insurance. Such an institutional arrangement would not only solve the problems related to doctors’ consultations but also promote and ensure the development of medical service organisations in a sustainable manner.

Major points

Researcher of the Research Centre for A multilevel medical security system Health Policy of the Chinese Academy of should be set up to offer medical Medical Sciences assistance for some disadvantaged groups; the social charity nature of such assistance would be the due responsibilities of our society. A security system for medical and health care should be designed from multiple dimensions to allow everyone to obtain appropriate medical service and guaranteed health care acting as an important goal pursued by our society.

Executive Director of the Pharmaceutical Their immediate goal was to establish a Policy Research Centre of the Chinese basic healthcare system step by step and Pharmaceutical Association initially set up a basic drug system. Establishing a public healthcare security system and improving the fairness of our healthcare service meant that every citizen could enjoy equal service in basic medical and public health care, both in the long term and in the short term. Under the long-term goals, there should already be a relatively complete and unified basic medical security system that covers all common people by the year of 2020.

Dai Tao

Song Ruilin

continued

On 8 October 2006, Song Ruilin said during an interview that the government should be the purchaser for primary health care in order resolve the irrational system on drug payments in China. The government should establish the essential drug system and directly purchase drugs on behalf of hospitals and patients to prevent hospitals from seeking profits from drugs and medical services. On 22 October 2008, Song Ruilin also made a speech on policy research for the state medical industry. On 28 March 2009, Song Ruilin had an interview with the Finance Channel of Phoenix TV and discussed issues related to the new medical reform.

In November 2007, Dai Tao said during an interview that the new medical reform should focus on practical considerations in the current medical and healthcare system to address the problems of the common people, reform and continuously improve the existing medical and healthcare system and healthcare administration system as well as to pursue the goal of establishing a sustainable medical and healthcare system that suits China’s national conditions.

Position

Professor of the Public Health School at Peking University; one of drafters of the medical reform programme

Name

Zhou Zijun

Table 2.5 Continued

The system of planned economy could not mobilise the initiative of doctors and hospitals. Doctors and hospitals should be encouraged to provide more medical services only through the market approach. Of course, there was a contradiction. The government was very worried that things would be out of control, if the control was lifted and a price war broke out. Thus, what they proposed was to lift the control and let the social capital be more involved. In the future, some enterprise hospitals might be restructured, which would be done in the same way as the reform of some SOEs.

Major points

On 25 September 2006, Zhou Zijun stated that there were two major targets for the new medical reform: to establish a basic medical insurance system and to establish a basic medical service system. On 18 March 2009, Zhou Zijun was invited by the Finance Channel of Phoenix TV to talk about issues related to medical and healthcare system reform (i.e. new medical reform).

Main public activities

On 9 June 2009, Dong Zhaohui said to reporters that most regions had basically finished the merger of medical services and employee health insurance at the state’s expense except for Beijing, Guangdong, Jiangxi and three other provinces or cities.

What we could see from this round of medical reform was based on simple investment and the inappropriate expansion of powers of the health authorities. The government-led model did not mean that all should be under government investment. Rather, what the government should focus on was the science-based investment mechanism.

Dong Zhaohui

Research Professor of the Research Centre for Medical Economics at Peking University; Research Associate of the Social Security Research Institute of the Ministry of Human Resources and Social Security

On 11 November 2008, Feng Zhanchun expressed the opinion that the government should increase investments in rural areas. Government investments shall then serve as the basis for the welfare nature and basic fairness of medical services, which must be strengthened.

Prone to government-led health care reform, Professor Feng figured that the high cost of seeing a doctor is rooted in the fact that the commercialised and market-oriented trend has violated the basic law for the development of medical and healthcare services.

Feng Zhanchun Associate Dean, School of Medicine and Health Management, Tongji Medical College, Huazhong University of Science and Technology

80  Outside-in enlightenment

The new medical reform programme under balanced views In terms of expert involvement in the reform of the medical and healthcare system in urban areas, we can divide this process into two stages: agenda setting and alternative selection. Experts have taken various strategies and modes of action to influence the policy-­making process at different stages. At the stage of agenda setting, experts rendered proposals to decision makers only through direct channels and failed, then they had to take indirect strategies because of strong resistance from potential losers within the policy network. At this stage, they would try to enlighten consensus to exert pressures on the government by publishing their research results. On 28 July 2005, Ge Yanfeng, a researcher from the Development Research Centre of the State Council, revealed to the public during an interview with China Youth Daily that medical reform in China was basically unsuccessful – a comment that evoked strong repercussions in the society. On 13 August 2005, Xinhua News Agency published the full text of a special report titled ‘To Develop Medical and Health Services, Making a Contribution to Building up Harmonious Socialist Society’, which had been addressed by Gao Qiang, the then Minister of Health, in the situation analysis conference held on 1 July 2005. This report also claimed that medical reform in the past had aroused many problems. Henceforth, social concern on the future of healthcare reform became a hot topic. In 2006, even more widespread concern in society was aroused by the opposite conclusions made by Peking University and Tsinghua University on the medical reform in Suqian. The new round of medical reforms was officially launched specifically because the above-­ mentioned events enlightened the consensus of concern, which imposed increasingly stronger pressure onto the government. At the stage of alternative selection, the government needed expert advice as the reference for decision-­making because designing the reform programme was a very complex project, especially when experts had the opportunity to directly get involved in policy-­making advisory. During the process, many domestic and foreign experts and research organisations engaged in health care participated in the formulation of new medical reform programmes, making it a policy under the largest scale of expert involvement for decision-­making during recent years in China. In January 2007, the Medical Reform Coordination Group decided to entrust a number of research institutions to conduct independent and parallel designing tasks for the programme on medical and health system reform in urban areas. Meanwhile, experts continued to provide references for the government during the medical reform. Some experts were also invited to give lectures to the state leaders regarding the medical reform in Zhongnanhai. Enough attention had been given to the expert advice, and as such, experts played a pivotal role in the reform of medical and healthcare system. Although the goals of all the programmes on medical reform proposed by experts were to mitigate the difficulties and costs in seeking adequate medical care and to offer the masses with safe, effective, convenient and inexpensive medical and healthcare services, the experts’ views could be roughly divided

Outside-in enlightenment  81 into those advocating for ‘subsidising suppliers’ in a universal basic medical security system and those pushing for ‘subsidising consumers’ based on a universal social health insurance system. The difference between the two advocacies embodied the two main arguments on medical and healthcare system reform, that is, the government-­led model and the market-­led model. Having summed up the opinions from the relevant departments, experts and the public, the reform programme that was finally promulgated by the State Council adopted a model that gave equal importance to both suppliers and consumers. After three years of research and argumentation, the CPC Central Committee and the State Council finally completed the formulation of the medical and healthcare system reform programme. The document containing the ‘Opinions of the CPC Central Committee and the State Council on Further Strengthening Medical and Health System Reform and Issuance of Implementation Plans (2009–2011) for Recent Priorities of Medical and Health System Reform’ was published on 17 and 18 March 2009, under which five aspects of reform were set from 2009 to 2011. 1 Boost the construction of a basic medical and healthcare system. Within three years, participating rates of urban employees and residents’ basic medical insurance (UERMI) and the new rural cooperative medical care (NRCMC) would reach or even exceed 90 per cent. In 2010, the amount of subsidy for UERMI and NRCMC will reach 120 yuan/year per capita. By then, the individuals would pay a relatively higher rate for higher reimbursement and payment limits. 2 Initially establish a national system on basic/essential drugs. A scientific and rational list of essential drugs must be established and the selection, management mechanism and supply system should also be adjusted. All essential drugs should be included in the reimbursement list of medical drugs. 3 Improve the grass-­roots medical and healthcare system. Focus on the construction of hospitals at the county-­level (including Chinese medicine hospitals), township hospitals, village hospitals in remote areas and community health service centres in poor urban areas. 4 Gradually promote the equal provision of basic public health services. Develop and implement national basic services for public health care. Starting from 2009, unified resident health records across the country should be created, public healthcare services should be expanded, and Chinese medicine should be given a more important role in ensuing reforms. 5 Advance the reform pilots for public hospitals. Actualise reforms on the management system and the operation and supervision mechanisms of public hospitals as well as improve the services provided by public medical institutions. Promote reform on the compensation mechanism of public hospitals and accelerate the formation of a diversified medical pattern. Based on preliminary estimates, governments at all levels would invest 850 billion yuan for the implementation of the above-­mentioned reform. Although

82  Outside-in enlightenment the new medical reform programme had been enacted, debates on the reform of medical and healthcare system still raged on. Medical reforms have yet to be completed and the overall impact remains unknown. After the promulgation of the new medical reform programme on 6 April 2009, in order to strengthen the leadership, the Leading Group for Strengthening the Medical and Healthcare System Reform was set up in order to handle the tasks of organising and coordinating relevant works. Organising the Leading Group for Medical Reform required better coordination among various departments, which would promote the medical reform and ensure its success.

Notes   1 Yoel Kornreich, Ilan Vertinsky and Pitman B. Potter, ‘Consultation and Deliberation in China: The Making of China’s Healthcare Reform’, The China Journal 68 (2012): 176–203.   2 ‘Healthcare Reform Over the Last Twenty Years’, Caijing, 15 November 2007, www. caijing.com.cn/2007-11-15/100038054.htm.  3 Hufeng Wang, 30 Years of Healthcare Reform in China, 30 Years After the Reform and Opening of China (1978–2008) (Beijing: China Social Sciences Literature Press, 2008).   4 Caijing, ‘Healthcare Reform Over the Last Twenty Years’.  5 Topic-­based Group from the Development Research Center of the State Council: Appraisal and Suggestion on Reform of Healthcare System in China, China Development Review, 7th volume, 1st supplement in 2005; Shaoguang Wang, ‘Policy Orientation, Extractive Capacity and Health Fairness’, Social Sciences in China 6 (2005).   6 ‘Release of the New Program for Medical Reform Having Undergone 3 Years of Amendment’, Sina, 6 April 2009, http://news.sina.com.cn/c/2009-04-06/18461755 6444.shtml.   7 ‘Li Keqiang Working as the Chief of Leading Group for Medical Reform’, Sina, 8 April 2009, http://news.sina.com.cn/c/2009-04-08/074917566706.shtml.   8 Yimei Sun, ‘Attaching Hope to the First Year of New Medical Reform’, Chinese Business Community 2 (2008).   9 ‘Medical Reform Program in Shengzhen: Relieving the Subordination between Government and Public Hospital’, Southern Daily, 31 July 2009. 10 ‘Can the Community Hospitals Come Out of the Woods?’ Heyuan Evening, 4 September 2007. 11 ‘New Medical Reform Activated the Community Hospital, Residents Received Convenient and Cheap Medical Service Near Homes’, 17 April 2009, www.hljdaily.com. cn/xw_snyw/system/2009/04/17/010343989.shtml. 12 Xiaojie Wang and Jian Zhang, ‘Role to be Played by Government in the Health Insurance System’, Administrative Forum 5 (2006). 13 ‘About 90 per cent of mainland doctors believed that their rewards did not conform to their devotion, and over 20 per cent did not know anything about the medical reform’, Ifeng, 26 April 2009, http://finance.ifeng.com/topic/xylgg/news/hgjj/20090426/583 308.shtml. 14 ‘Advice Seeking for the New Medical Reform Program Finished, Much Concern Paid on Doctors’ Kickback Taking’, Ifeng, 15 November 2008, http://finance.ifeng.com/ money/insurance/hydt/20081115/212299.shtml. 15 ‘Professor Guoen Liu from Peking University Appealed to Make Doctors Become “Freelancers” ’, Ifeng, 16 October 2008, http://finance.ifeng.com/news/hgjj/2008 1016/180662.shtml.

Outside-in enlightenment  83 16 Huailing Liao, ‘The New Medical Reform to Study and Explore Approaches on the Multi-­ Point Practice of Registered Physicians: Is it a Blessing or a Curse?’ Yangcheng Evening News, 9 April 2009. 17 Guocheng Jiang, Tingyu Zhou and Jie Han, ‘Chinese Solution for a Worldwide Problem – Perspective View on Innovation of the Medical Reform Programme’, Xinhua News Agency, 6 April 2009, http://news.xinhuanet.com/newscenter/2009-04/ 06/content_11138748_1.htm. 18 Jie Wei and Junchao Zhao, ‘Relationship between Government and Enterprise After having Joined the WTO’, Theory Frontier 1 (2002). 19 Shaoguang Wang, ‘Models of Agenda Setting for Public Policy in China’, Social Sciences in China 5 (2006): 92.  20 Junxiu Wang, ‘According to State Council’s Latest Report: China’s Reform on the Medical System was Unsuccessful’, China Youth Daily, 29 July 2005.  21 Yanfeng Ge, ‘The Latest Report Indicating that Medical Reform in China was Basically Unsuccessful is About to Issue’, Xinhua News Agency, 30 July 2005, www.sn. xinhuanet.com/2005-07/30/content_4759779.htm.  22 Zongpin Li, ‘Gao Qiang: Don’t Argue the Success of Medical Reform’, Beijing News, 29 November 2005.  23 Shuli Wang, ‘Medical Reform: 22 Years Stringed by Six Changes’, News World 3 (2007): 17–19.  24 Miao Zhang, ‘New Medical Reform Like an Arrow on the Bowstring’, China Social Security 4 (2008).  25 Wang, ‘Medical Reform’, 17–19. 26 Qiang Gao, ‘Minister of Health Ministry Talked About Medical Reform by Writing an Article: Answers to Four “Whats” ’, People’s Daily, 23 November 2006.  27 Sina, ‘Release of the New Program for Medical Reform Having Undergone 3 Years of Amendment’.  28 Jialong Tan, ‘Nine Medical Reform Programs Up in the Air, Market-­Led Tendency Became Clear’, China Economic Weekly 43 (2007); ‘Overall Program for New Medical Reform: Summary of 10 Medical Reform Programs Proposed to the NPC and CPPCC Conference’, Health Times, 29 February 2008; ‘Ten Medical Reform Programs’, Social Science Journal, 13 November 2008.  29 ‘Reform on Medical System – Market-­led or Government-­led?’, Ifeng, 26 March 2009, http://finance.ifeng.com/blank/20090326/330.shtml.  30 Xin ‘Gu, ‘Leader of Topic-­Based Group for New National Reform on Medical System: There are Three Breakthroughs for Medical Reform’, China News, 25 September 2008, www.chinanews.com.cn/jk/ylgg/news/2008/09-25/1393916.shtml.  31 Ling Li, ‘Author of Medical Reform Program: Medical Reform has Nothing to Do with Money’, Ifeng, 25 March 2009, http://finance.ifeng.com/news/opinion/jjsp/ 20090325/476351.shtml. 32 Shanlian Hu, ‘Medical Reform, Plan and Market have Never been Antagonistic’, China Business News, 25 August 2005. 33 Dahuan Tong, ‘Both Government-­Led Model and Market Rules can be Accomplished Without Coming into Conflict for Medical Reform in China’, Beijing News, 15 November 2007.  34 Tuan Yang, ‘Thinking of How to Get Medical Reform Out of the Woods: Whole Society Shall Undertake Public Responsibilities’, Decision-­ Making Reference for Hospital Leadership 20 (2006).  35 Li, ‘Author of Medical Reform Program’. 36 ‘Medical Reform in Suqian after “Selling Out”, ’ China News Weekly, 17 July 2006. 37 Ling Li, ‘Survey on Medical Reform in Suqian in a Sold-­Out Style: The Problem of “Higher-­Costs of Seeing Doctors” Left Unsolved’, China Youth Daily, 22 June 2006. 

84  Outside-in enlightenment 38 Ling Li, ‘Status Quo, Problems and Countermeasures of the Medical System’, Unirule Institute of Economics, 31 March 2006, www.unirule.org.cn/Secondweb/ DWContent.asp?DWID=11. 39 ‘Scholars of Tsinghua University talk about Why They held Contrary Opinions on Medical Reform in Suqian Against Scholars of Peking University’, Sina, 11 December 2006, http://news.sina.com.cn/c/h/2006-12-11/171811759886.shtml. 40 Shubo Sun, ‘Upgrade of the Medical Reform Guiding Group to be a Foregone Conclusion, 33 Medical Associations Suggest In-­Depth Amendment for the Program’, First Financial Daily, 3 November 2008. 41 ‘170 Directors of the Hospital Jointly Suggest the Ministry of Health to be in Charge of Medicare Agencies’, Ifeng, 11 November 2008, http://news.ifeng.com/mainland/ 200811/1122_17_890433.shtml. 42 ‘The Column of Expert Forum’, Science and Technology Daily, 7 November 2008. 43 Mingde Yu, ‘Experts State Their Views Frankly: Department Interest if the Archenemy of Proper Medical Reform’, Sohu, 27 October 2008, http://health.sohu.com/ 20081027/n260261812.shtml. 44 Yanan Wang, ‘Model of New Medical Reform – Expert Advice’, Decision-­Making Reference for Hospital Leadership 20 (2006).

3 Linear consultation

The rural cooperative medical system has had a long history in China. However, its status has declined since the reform and opening-­up period began. This is a relatively new policy launched by the central government between late 2002 and early 2003. With reference to the policy process, the rural cooperative medical system at that time was only at the pilot stage. The reason was that policy makers of the central government needed to launch a pilot project and test the system schemes whilst facing difficulties related to complicated expertise required by the system. The rural health policy and the rural cooperative medical care system (RCMCS) required complex interdisciplinary expertise relating to medical service, economics, public health, insurance and governance of rural areas. Before the central government decided to launch a pilot project for the New-­ Type Rural Cooperative Medical Scheme (or New-­ Type Cooperative Medical Scheme (or New-Type Cooperative Medical Scheme, NCMS), the policy makers of the central government did not know too much about the medical and health conditions and the potential threats in the rural areas. They also did not have a definite idea as regards the most effective system and mechanism for a rural cooperative medical care that would suitable for those living in the vast Chinese countryside. Therefore, the direct involvement of experts played an important role both in agenda setting and alternative selection during the decision-­making process, which was undertaken by the central government prior to launching a pilot project for the NCMS.

Rural cooperative medical care system Comprehending the concept behind the NCMS has great significance. The RCMCS had been set up since the early period of the PRC, and the old version used to be called the old rural cooperative medical care system (ORCMCS). Prior to the reform and opening-­up, the ORCMCS enjoyed a glorious history. The NCMS promoted in pilot areas by China around the year of 2003 was just a modified version of the former traditional RCMCS, which was already in decline at that time.  In January 2003, the General Office of the State Council forwarded the ‘Opinions on the Establishment of a New-­Type Rural Cooperative Medical Care

86  Linear consultation Scheme’, which was submitted by the Ministry of Health and other ministries and commissions, based on which it decided to launch a pilot project. The definition of this system affirmed by the ‘Opinions’ is specified as follows:  It is a mutual-­aid and cooperative system of medical service provision for the peasantry, which gives priority to the comprehensive arrangements for the treatment of serious diseases, led and supported by government, voluntarily participated in by peasants and funded by individuals, the collective and government.  In terms of fund-­raising methods, the ‘Opinions’ defined the principles of ‘voluntary participation and fund-­raising by multiple parties’. Specifically, the peasants would voluntarily participate in the NCMS with the family as a vital unit, comply with relevant rules and regulations and pay for the cooperative medical care in full amount and on time. The collected funds from the townships and villages should provide fund support, whilst at the same time, the central and local governments at all levels must arrange special funds annually to support these endeavours. In contrast to the ORCMCS with in respect to fund-­raising, the NCMC proposed that the central government must provide financial support for the RCMCS for the first time, whilst the ‘government’ mentioned in relevant documents in the past only referred to the local government and not the central government. By the year 2008, the Social Insurance Law (draft) was published, which clearly defined that basic medical insurance must include basic medical insurance for employees, basic medical insurance for urban residents and new-­type rural cooperative medical care.1 On the whole, the NCMS was actually a kind of voluntary community health insurance that was highly reliant upon government subsidies.2 Although the State Council, the Ministry of Health, the Ministry of Finance and the Ministry of Agriculture all presented a well-­defined NCMS in the guidance document for its pilot project, government officials, researchers and health governors continued to have varying opinions about the concept of the NCMS to date. The argument lay mainly on several dichotomies: whether the government should play a dominant role in the NCMS implementation, whether the participation of peasants should be voluntary or mandatory, whether the system should aim to alleviate poverty or promote health and whether the carrier format should be based on community health insurance or social health insurance, among others.3 Due to these ongoing arguments, the NCMS policy released in 2003 was not a single model that should be tested according to specific circumstances in different regions.  Development history of cooperative medical care in China Stage I: germination of the cooperative medical care system (from the Anti-­Japanese War period up to 1954) Back in the period of the Anti-­Japanese War, the CPC had already initiated the innovation on the cooperative medical care system in revolutionary base areas.

Linear consultation  87 The earliest form of cooperative medical care system in China was the health cooperative, which was a cooperative medical care system run by the local people and subsidised by the state.4 In 1938, the CPC founded the ‘healthcare agency’ in the Shaanxi–Gansu–Ningxia (Shaan–Gan–Ning) border regions and set up the health cooperatives in 1939. In 1944, the government of the border regions commissioned commercial sales organisations in the local areas and these public cooperatives were allowed to manage cooperative medical affairs.5 In the early days of the establishment of the PRC, provinces in the north-­east also began to run health organisations at primary levels by actively advocating and utilising the cooperative system and the funds raised by the populace. According to the statistical data obtained by the health departments of the Northeast People’s Government, out of 1,290 clinics in the north-­east regions, eighty-­five cooperative clinics and 225 regular clinics were being funded by the populace in 1952, where the two combined accounted for 24 per cent of the total clinics in the entire north-­east region.6 These medical systems in the cooperative and the government-­funded modes can be considered as the prototypes of China’s RCMCS, which laid a foundation for the subsequent development of cooperative medical care in the country.  Stage II: formative period of the cooperative medical care system (1955–1958) The resolution on the Development of Agricultural Production Cooperatives issued by the CPC Central Committee on 16 December 1953 provided essential conditions for the formation of the cooperative medical care system. In just a few years, the number of rural production cooperatives increased to 750,000 in 1956 from just nineteen organisations at the beginning of New China. Rural production cooperatives in China gradually formed during this period. At the beginning of 1955, Mishan in Gaoping County, Shanxi Province, set up a joint healthcare station and executed the collective healthcare system, which combined the medical and social modes. This undertaking was funded by health fees paid by the populace and the public welfare subsidies provided by production cooperatives. In the winter of 1955, representatives from the Ministry of Health and the Shanxi Government Provincial People’s Committee jointly conducted a survey on this system, after which they summarised and approved the experience gained in Mishan, acknowledging that it helped achieve the goals of ‘early prevention during health’, ‘early treatment for illness’, ‘savings for both labour and money’ and ‘convenience and reliability’ for the collectivised farmers. It also helped to build a solid organising base with socialist characteristics for undertaking prevention and healthcare activities in rural areas.7 Afterwards, the experiences gained in Mishan were replicated in other regions in China. Hubei, Shandong, Guizhou and some other provinces successively established a number of collective medical care stations, cooperative medical stations or coordinating medical stations in the mutual-­aid and cooperative mode based on a ‘collective economy’. From 1955 to 1958, the coverage ratio of cooperative medical care  across the country increased to 10 per cent, setting off the first peak of cooperative medical care in China. 

88  Linear consultation Stage III: nationwide promotion and development of cooperative medical care (1959–1977)  In 1958, the cooperative medical care system in China entered a new stage of development along with the emergence of the first people’s commune in Henan. In 1959, the Ministry of Health held a national conference on rural health work in Jishan County, Shanxi Province. Afterwards, the Party Group of the Ministry of Health submitted to the CPC Central Committee the ‘Report on On-­the-Spot Meeting for Rural Health Work’ held in Jishan, Shanxi Province, along with the supplementary document titled ‘Opinions on Several Issues of Health Work in People’s Commune’. These documents presented an overall positive response for the collective healthcare system for members of the people’s commune. On 2 February 1960, the CPC Central Committee forwarded the report in the form of a central document, in which they called this system a ‘collective healthcare system’ and demanded that all regions should replicate such an effort, effectively promoting the development of RCMCS all over the country.8 Before and after the beginning of the Cultural Revolution, the supreme instruction given by Mao Zedong pushed the cooperative medical care to a climax. In June 1965, Chairman Mao made the instruction of ‘placing the keystone of medical and healthcare work into rural areas’. In 1968, he personally approved and praised the cooperative medical care system implemented by the Leyuan People’s Commune of Changyang County, Hubei Province. At that time, the Cultural Revolution had already begun, and under such a political context, the actualising of cooperative medical care not only focused on providing medical guarantee for farmers, but also on implementing Mao’s revolutionary road; as a result, various regions rushed headlong into mass action, bringing cooperative medical care into a ‘blooming state’.9 Indeed, the RCMCS made great contributions to meet the peasantry’s basic healthcare needs and also provided a reference for developing countries to address the healthcare issues faced by the poor. In this period, ‘cooperative medical care’ (system), rural ‘healthcare stations’ (organisations) and ‘barefoot doctors’ (personnel) were considered to be three magic weapons to mitigate the lack of medical personnel and medicine in the rural areas. The World Bank and the World Health Organization used to praise the medical and healthcare system in rural areas of China as a unique example of raising health appropriations in developing countries.10 By the year 1976, over 90 per cent of administrative villages (production brigade) in China had established the cooperative medical care system, which was the second climax in the development of cooperative medical care in China.11 Stage IV: decline of cooperative medical care (1978–1989) In 1978, after the Cultural Revolution and the ‘Gang of Four’ were crushed, China entered a brand new period of reform and opening-­up for development. During this period, the cooperative medical care system in the rural areas experienced a rapid decline. The main reasons were as follows: (1) in the early 1980s,

Linear consultation  89 rural areas began to conduct economic reforms, during which the household contract responsibility system was initiated and the collective economy based on people’s commune collapsed; and (2) rural cooperative medical care was repelled as a product of the Cultural Revolution. Governments at all levels immediately dissolved the rural cooperative medical system and relevant regulatory agencies. In 1989, the number of administrative villages maintaining the cooperative medical care system only accounted for 4.8 per cent of the previous total across the country.12 In the early 1990s, areas implementing the cooperative medical care system in China were mainly distributed in Shanghai and the southern part of Jiangsu,13 while the cooperative medical care system in other rural areas of China was in a serious recession and on the brink of collapse. Stage V: restoration and reconstruction of cooperative medical care (1990s–2002) By this time, the Chinese government and academia had come to realise the serious consequences caused by the recession of the RCMCS and began to conduct research on the NCMS in the 1980s. At that time, the central government could not fully determine the method of providing medical guarantee that was suitable for China’s rural areas; thus, it encouraged a number of related institutions and scholars to conduct research and provided support for such projects. As the Cultural Revolution ended, the household contract responsibility system was implemented and the market economy was introduced. At this point, the governments at all levels were no longer interested in cooperative medical care. The central government also held a laissez-­faire attitude with ambiguous standpoints. It was only until the 1990s that the attitude of the central government eventually began to shift. In the 1990s, problems stemming from the lack of medical personnel and medicine supplies, as experienced by farmers in the countryside, were exacerbated and increasingly became more prominent. Due to the worsening conditions of providing medical guarantee in the rural areas, the reconstruction of the cooperative medical care system was prioritised in the government agenda. In March 1990, the Ministry of Health and four other ministries jointly issued the ‘Notice on Achieving the Program Objective (trial) in Rural Areas of China’ so that everyone could enjoy Healthcare by 2000. That group definitely listed the ‘cooperative medical care’ as an item to be evaluated and included in the agenda. In January 1991, the ‘Notice on the Approval and Forwarding of the State Council for the Request Made by the Ministry of Health and other Ministries for Instructions about Reform and Strengthening Rural Medical Care’ indicated that the ‘cooperative medical care system shall be promoted steadily to provide social guarantee and meet the goal of providing adequate healthcare to everyone.’ In 1993, the Policy Research Office of the State Council and the Ministry of Health carried out comprehensive investigations across the country and set forth the research report titled ‘Expediting the Reform and Construction of Rural Cooperative Medical Care System’, which elaborated the process of

90  Linear consultation developing and improving the rural cooperative medical system in China.14 In May 1997, the ‘Notice on Several Opinions of the Ministry of Health and Other Ministries and Commissions on Development and the Optimisation of Rural Cooperative Medical System’, which was approved and forwarded by the State Council, affirmed that the RCMCS was suitable for China’s actual condition, and that various regions shall strengthen their leadership to promote the healthy development of rural cooperative medical care in a positive and sustainable manner. Although the central government attached great importance to the reconstruction of the RCMCS, the results of its implementation were not satisfactory. Up to 1997, the coverage ratio of rural cooperative medical care among administrative villages all over the country was 17 per cent and the number of rural residents participating in the system only accounted for 9.6 per cent of the total rural population.15 According to the results obtained from ‘The 2nd National Health Services Survey’, conducted by the Ministry of Health in 1998, the proportion of rural residents participating in the system all over the country was only 6.5 per cent. The Ministry also stated that the system had distinct regional characteristics, that is, it mainly covered eastern coastal areas with developed economic status, such as Jiangsu, Shanghai, Guangdong, Zhejiang and Shandong, where the coverage ratio reached 22.21 per cent. Furthermore, in the vast central and western regions, especially in the impoverished provinces, most of the coverage ratios were below 3 per cent, because it was difficult to restore the cooperative medical care system after being temporarily suspended.16 After 1997, the rural work conducted by the central government focused on the goals of alleviating the burdens of farmers and increasing their incomes; however, cooperative medical care was mistakenly taken as the arbitrary requisition of donations from farmers, which unfortunately added to their burden. Thus, rural cooperative medical care once again suffered from setbacks again and fell into a decline. In 2001, the relevant central ministries jointly issued documents to demand local governments to strengthen organisation and leadership for cooperative medical care in order to reiterate the principles of ‘giving voluntarily within their means, acting only as circumstances allow and establishing a system that is managed by the people and subsidised by the state’. This undertaking also aimed to actualise the comprehensive arrangement for serious diseases with each county or city serving as one unit in selected regions. However, in the past, the central government never really allocated funds for implementing the policy of RCMCS. Rather, the financial pressures generated by the system were entirely borne by local governments. Hence, before 2003, coverage ratios in the central and western regions, especially in the impoverished provinces, were always extremely low. Stage VI: promotion of the NCMS by pilot-­testing (2002 up to the present) In 2002, a rural health conference was held by the central government, after which the document titled the ‘Decision of the CPC Central Committee and the

Linear consultation  91 State Council on Further Strengthening Health Work of the Rural Area’ was published. In 2003, the ‘Notice on Several Opinions of the Ministry of Health and Other Ministries and Commissions on the Establishment of a New-­Type Rural Cooperative Medical Care System’ was forwarded by the General Office of the State Council. It was not until the promulgation of these two important policies that the NCMS was finally established and for the first time, a central budget was provided for the RCMCS. The main features of the NCMS differed from those of the traditional RCMCS, as summarised below. 1

The central government expressed its well-­defined political commitment and political will in dealing with the problems of poverty and re-­poverty experienced by the rural residents due to infectious and/or endemic diseases as well as other serious diseases. 2 The transfer payment made by the central government became the main source of fund-­raising (in central and western regions). 3 Rural residents voluntarily participated in the NCMS with the family as the unit; hence, they would partially bear the responsibilities pertaining to their acquisition of the medical guarantee. 4 Capital grants from the government were paid on an ‘individual’ basis; hence, each farmer was subsidised. 5 Local governments set up their own specialised management agencies to run the NCMS. 6 The system complied with the principle of ‘compensating for serious diseases’ and shared such risks with a county as an individual unit. 7 The established cooperative medical care and medical assistance systems complemented each other, wherein the voluntary participation and financial assistance by the central government were the most notable features. The NCMS was gradually promoted after the year 2003 (see Table 3.1). The data items listed in the China Health Development Statistics are not completely unified each year. Thus, the data in Table 3.1 are the common items listed in the data statistics issued annually. The specific data on construction of the NCMS in China each year since 2004 is shown in the following box. Table 3.1  Data sheet of the NCMS Year

Pilot counties

Actual number of farmers involved (100 billion)

Participation Payment of compensation rate (%) funds (100 billion yuan)

2004 2005 2006 2007 2008 2009

310 678 1,451 2,451 2,729 2,716

0.67 1.79 4.10 7.30 8.15 8.33

72.6 75.7 80.7 86.2 91.5 94.0

Source: China Health Development Statistics Bulletin of 2004.

13.94 61.75 155.81 346.60 662.00 922.90

92  Linear consultation Implementation instance of the NCMS in China since 2004 By the end of 2005, 678 counties (cities, regions) have launched pilot projects for the NCMS, covering a total population of 236 million. A total of 179 million farmers participated in the NCMS with a rate of 75.7 per cent. The medical-­ advice seeking and hospitalisation rates showed significant increase. The financial burden from medical care was thus mitigated and the NCMS was widely supported by the farmers. The number of farmers compensated through the NCMS reached 122 million across the country, with total capital expenditures of 6.175 billion RMB.17 By the end of 2006, 1,451 counties (cities, regions) implemented the NCMS, covering a total population of 508 million. A total of 410 million farmers participated in the NCMS with a rate of 80.7 per cent. The rates of medical-­advice seeking and hospitalisation experienced significant increase. The financial burden from medical care was mitigated and the NCMS was widely supported by farmers. The number of farmers compensated through the NCMS reached 272 million across the country, with total capital expenditures of 15.581 billion RMB.18 By the end of 2007, 2,451 counties (cities, regions) implemented the NCMS, covering a total population of 730 million, and recording a participation rate of 86.2 per cent. Compared with the last year, the number of counties (cities, regions) increased to 1,000, the number of farmers increased to 320 million and the participation rate increased to 5.5 per cent. In 2007, fund expenditure for the NCMS all over the country reached 34.66 billion RMB and 450 million individuals benefited from the compensation expenditure.19 By the end of 2008, 2,729 counties (cities, regions) implemented the NCMS, covering a total population of 815 million and posting a participation rate of 91.5 per cent. Compared with the last year, the number of counties (cities, regions) increased to 278, the number of farmers increased to 89 million and the participation rate increased to 5.3 per cent. In the year 2008, the total amount of funds raised reached 78.5 billion RMB, with a per capita amount of 96.3 RMB. Fund expenditure for NCMS reached 66.2 billion RMB all over the country. A total of 585 million individuals benefited from the compensation expenditure, including 51 million who claimed hospitalisation benefits, 486 million who claimed outpatient service benefits, 48 million who claimed physical examination benefits and other forms of compensation.20 By the end of 2009, 2,716 counties (cities, regions) implemented the NCMS, covering a total population of 833 million (increased for 18 million) and posting a participation rate of 86.2 per cent (increased for 2.5 per cent). In the year 2009, the total amount of funds raised reached 94.44 billion RMB with a per capita amount of 113.4 RMB. The fund expenditure for the NCMS reached 92.29 billion RMB all over the country and 760 million individuals benefited from the compensation expenditure, including 60 million who claimed hospitalisation compensation benefits and 670 million who claimed outpatient service compensation benefits.21

As can be seen from the data above, the implementation of the NCMS in China has showed a good development trend since 2003, such that by 2009, the NCMS

Linear consultation  93 had already covered all the farmers in China. The criteria on subsidies offered by the central budget for farmers having participated in central and western regions also increased annually. In 2009, funds raised for the NCMS reached 100 yuan/person/year, wherein the central budget subsidised each farmer from the central and western regions for 40 RMB and subsidised each farmer from the eastern provinces based on amounts proportionate to that given to the former. The amount of subsidy offered by the local government should not be less than 40 RMB. Individual payments by farmers increased by at least 20 RMB. The per capita funding levels of the eastern regions should be no less than those of the central and western regions.22 Specific details on important policy documents issued since the reform and opening-­up era relating to the RCMCS in China are shown in Table 3.2.

Stakeholder analysis Involvement of relevant agencies The central government established a management and operation mechanism led by governments from the central level down to the local levels, directed by health departments, coordinated by relevant ministries, operated by handling agencies, served by medical institutions and participated in by the peasant masses. In the central government, several ministries and commissions jointly participated in the management and implementation of the NCMS. The State Council also approved and established the system of inter-­ministerial joint conference for the NCMS. The joint conference was a standing body with an official seal, the daily operation of which was overseen by the Ministry of Health.23 Furthermore, the Ministry of Health also set up the office of inter-­ministerial joint conference for the NCMS, which handled the daily affairs. With the establishment of such a mechanism, the State Council granted the Ministry of Health with the right to organise a number of ministries for the joint conference. Based on the joint conference, the Ministry of Health then coordinated with several ministries to jointly resolve various issues on the NCMS. The Rural Health Management Department within the health authority was under the supervision of the Ministry of Health and was directly responsible for the new rural cooperative medical care. Its responsibilities included the following: drawing up laws and regulations relating to rural health; formulating the plan for the development of rural health and proposing relevant policies; conducting integrated management and assessment for basic health care in rural areas; drafting the scheme for rural basic healthcare provision and organising the implementation; carrying out the integrated management of rural cooperative medical care; formulating policies on the NCMS and conducting the coordination, organisation and guidance for implementation; being involved in planning and supervising the establishment of the rural health service system; guiding local governments in executing practitioner registration and relevant management for rural doctors in conformity with the laws; collecting

Event or document

Regulations (draft for trail implementation) on Rural Cooperative Medical Care

Notice on Achieving the Program Objective (trial) in Rural Areas of China so that everyone can enjoy basic healthcare services by the year 2000

Notice on the Approval and Forwarding of the State Council for the Request Made by the Ministry of Health and Other Ministries for Instructions on the Reform and Strengthening of Rural Medical Care

Notice on Several Opinions on Further Strengthening Health Work in the Rural Areas

Date

December 1979

March 1990

January 1991

September 1992

Clearly introduced a variety of minimum targets so that everyone can enjoy basic healthcare services by the year 2000; it included the so-called ‘coverage ratio of medical care under fund-raising’, which should reach 60 per cent and 50 per cent in economically developed and underdeveloped regions, respectively.

Based on the principle of voluntary and mutual aid, wherein funds were raised through the collective. The Brigade Office played the leading role and the central government offered the necessary support for poverty-stricken cooperatives and brigades.

Main content

Ministry of Health, Ministry of Finance

Established the rural cooperative medical care under the principle of voluntary and mutual aid, wherein the funds were raised by the beneficiary populace via national and collective public undertakings and social groups.

Steadily promoted the cooperative medical Notice on Approval and care system to provide social guarantee so Forwarding of the State Council for the Request Made by Ministry that everyone can enjoy basic health care. of Health and other Ministries for Instructions about Reform and Strengthening Rural Medical Care

Ministry of Health, Ministry of Agriculture, State Planning Commission, State Bureau of Environment Protection and National Patriotic Health Campaign Committee

Ministry of Health

Issued by

Table 3.2 Details on important policy documents on the RCMCS issued since the reform and opening-up period in China

Guidance on Health Reform and Development

May 2001

System Reform Office of the State Council forwarded by the State Council, State Planning Commission, Ministry of Finance, Ministry of Agriculture and Ministry of Health

Notice on Several Opinions of the Ministry of Health and other ministries under approval of the Ministry of Health and Other Ministries and Commissions on the State Council Development and Optimisation of the Rural Cooperative Medical System

May 1997

CPC Central Committee and the State Council

Decision on Health Reform and Development

January 1997

continued

Aimed to strengthen organisation and leadership for cooperative medical care and reiterated the principles of ‘giving voluntarily within their means, acting only as circumstances allow and establishing a system that is managed by the people and subsidised by the state’. This undertaking also aimed to actualise the comprehensive arrangement for serious diseases in selected regions, with each county or city serving as one unit.

This was a personal-investment-based system under collective support and appropriate government subsidy. The farmers voluntarily paid the cooperative to avail themselves of medical care. Those personal consumption expenditures were excluded from the township’s overall plan and village retention.

Proposed the notion that a cooperative medical care system must be developed and improved in a positive and sustainable manner. It established the goal of setting up various cooperative medical care systems in most rural areas by the year 2000. It was managed by the people, operated under voluntary participation and was subsidised by the state.

Opinions on the Reform and Management of Rural Health Institutions

Notice for Opinions on the Establishment of the NCMS

December 2002

January 2003

Ministry of Health and other ministries under approval of the State Council

Ministry of Health, State Development Planning Commission, Ministry of Finance, Ministry of Personnel and State Administration of Traditional Chinese Medicine

Decision on Further Strengthening CPC Central Committee and the Health Work in the Rural Areas State Council

October 2002

Issued by

Event or document

Date

Table 3.2 Continued

It involved voluntary participation and was planned as a whole, with each county or city as a unit. Each farmer paid 10 RMB/year and local finance offices offered each farmer with 10 yuan/year. The central budget subsidised each farmer (10 RMB/year) in the central and western regions, except for those living in the cities. Collective economic organisations provided appropriate support.

Public healthcare institutions were obliged to support the construction of a local RCMCS. Qualified private medical institutions were designated to provide rural cooperative medical care.

Established the NCMS and prioritised the comprehensive arrangement for serious diseases. It set up the central subsidy system to compensate farmers who participated in the NCMS in the central and western regions, except those in urban areas, at a rate of 10 RMB/person/year. The subsidy offered by the local government should not be less than 10 RMB/person/year.

Main content

Notice for Several Opinions on the Subsidy Policy for Rural Public Health

Notice on Pilot Projects for the NCMS Issued by the General Office of the Ministry of Health

Opinions on Implementing Medical Aid in Rural Areas

February 2003

March 2003

November 2003

This project aimed to have the NCMS basically cover all rural residents by 2010. Mechanisms of fund-raising, organisation, management and supervision for NCMS were established. Counties (cities) for pilot-testing projects on NCMS were appointed by the people’s government at the provincial level.

Subsidies for cooperative medical care and medical aid were provided by financing at different levels and these were included in the fiscal budget of that relevant level/office. Local financing agencies subsidised each person for 10 yuan/year. The financing agencies at the county level actualised medical aid for households enjoying the five guarantees and for impoverished peasant households as well.

continued

Ministry of Civil Affairs, Ministry of Governments at all levels were made to raise Health and Ministry of Finance funds to provide medical aid for poor households in rural areas. In areas implementing the NCMS, the expenses of the poor households were partially or fully covered by medical aid.

Rural Health Management of the Ministry of Health

Ministry of Finance, State Planning Commission and Ministry of Health

Notice on Well-Performing Pilot Projects for the NCMS

August 2005

Ministry of Health and Ministry of Finance

Notice on the Pilot Project in the General Office of the State Council 2nd Half of the Year for the NCMS Issued by the General Office of the Ministry of Health

August 2004

Inspection and appraisal were conducted in existing pilot areas. The pilot projects were fasttracked on the basis of standardised management.

Inspection and appraisal were carried out. The compensation plan for pilot areas was drafted in a timely manner. Additional counties (cities) for pilot-testing in 2005 were actively sought to prepare well for the pilot expansion in the same year. Fund-raising and management mechanisms were further improved. The capability of handling agencies were strengthened and developed.

A cooperative medical care system was developed and improved in a positive and sustainable manner. The set up adhered to the principle of voluntary participation for farmers. Reasonable funding criteria were proposed. Pooling funds and family accounts were proposed. It adhered to the principle of ‘determine the expenditures based on income, keeping expenditures within the limits of one’s income and gradually adjusting the appropriate guarantee to be provided’.

Ministry of Health, Ministry of Civil Affairs, Ministry of Finance, Ministry of Agriculture and State Development and Reform Commission

Notice on the Guidance of the Ministry of Health and Other Ministries on Further Strengthening the Pilot Projects for the NCMS Forwarded by the General Office of the State Council

January 2004

Main content

Issued by

Event or document

Date

Table 3.2 Continued

Notice on Accelerating the Promotion of Pilot Projects Related to the NCMS

Notice on Well-Performing Projects Related to the NCMS in 2007

January 2006

March 2007

Ministry of Health and Ministry of Finance

Ministry of Health, National Development and Reform Commission, Ministry of Civil Affairs, Ministry of Finance, Ministry of Agriculture, State Food and Drug Administration and State Administration of Traditional Chinese Medicine

continued

The NCMS was taken as an item for cadre evaluation.

More counties were added to the pilot project. The subsidies offered by the central and local finance agencies for each person increased to 20 RMB/year. The newly increased funds were used as subsidies for minor medical expenses. The construction and management of the handling agencies were strengthened, and their problems were resolved. Insurance companies were encouraged to participate in the pilot project for cooperative medical care. The rural medical assistance system was established and improved. The social forces to raise funds through multiple channels were given emphasis. The supervision of the provision of medical services and drugs in rural areas were strengthened. The development of the rural health service system and healthcare teams at the primary level was accelerated. The organisation and leadership of NCMS were strengthened.

Opinions on Further Strengthening CPC Central Committee and the the Reform of the Medical and State Council Healthcare System

March 2009

Ministry of Health and Ministry of Finance

Notice on Well-Performing Projects Related to the NCMS in 2008

March 2008

Issued by

Event or document

Date

Table 3.2 Continued

A basic medical and healthcare system was provided to all the people as a public product so that everyone can enjoy basic medical care services.

Starting in 2008, the amount of subsidy offered by finance agencies at all levels would be increased to 80 yuan/person/year. The central finance agency gave a 40-RMB subsidy for each farmer from the central and western regions and a proportionate amount for those in the eastern provinces. The funds offered by the local government were primarily distributed though the provincial finance agencies to minimise the difficulties faced by each county (cities, regions). The counterpart payment made by each farmer increased from 10 to 20 yuan/ person/year. This criterion was achieved in two years for areas with certain difficulties.

Main content

Opinions on the Consolidation and Development of the NCMS

July 2009

Ministry of Health, Ministry of Civil Affairs, Ministry of Finance, Ministry of Agriculture and State Administration of Traditional Chinese Medicine

State Council

Note The items in bold indicate significant national level policies, whereas others are ministerial level policies.

Notice of the State Council on the Issuance of the Implementation Plans (2009–2011) for Recent Priorities of Medical and Health System Reforms

March 2009

Starting from the second half of 2009, the compensation limit (maximum payment of compensation) for NCMS was set at six times (or more) the per capita net income of each local farmer. In the same year, the amount of funds raised for the NCMS all over the country reached 100 yuan/person/year. From the beginning of 2010, the amount of funds raised for the NCMS all over the country reached 150 yuan/person/year.

The participation rate in the NCMS reached more than 90 per cent within three years. In 2010, 120 yuan/year was provided for each person and this accordingly increased the payment made by each individual. The balance rate of pooling funds for the NCMS was controlled to within 15 per cent each year. The accumulated balance must not exceed 25 per cent of the pooling funds in each year.

102  Linear consultation and analysing information on the health status of farmers as well as inspecting and estimating the implementation of major health policies in rural areas; drawing out plans relating to public health, basic medical care and personnel training of rural areas in conjunction with relevant departments and guiding the overall implementation and, finally, undertaking the routine work of the State Council’s joint conference office for the NCMS.24 A cooperative medical care office was set up by the Rural Health Management Department of the Ministry of Health in June 2004 to deal with the formulation and administration of national NCMS policies. Local governments at all levels were responsible for the implementation of pilot projects of the NCMS. According to the ‘Notice on the Opinions for the Establishment of a New-­Type Rural Cooperative Medical Care System Submitted by the Ministry of Health and Other Ministries and Commissions’, which was forwarded by the General Office of the State Council, the specific stipulations about the NCMS were identified below. 1 NCMS was generally planned as a whole with the county (city) as the unit. In areas with unfavourable conditions, a comprehensive arrangement took the town as the unit at the initial stage and gradually transitioned towards taking the county (city) as the main unit. 2 The management system for the NCMS was established in a simplified and effective manner. The people’s governments at the provincial and regional levels organised the coordination group for the rural cooperative medical care, which consisted of the respective departments of health, finance, agriculture, civil affair, audit and poverty alleviation. A special management agency for rural cooperative medical care was set up within the health administrative departments at all levels. 3 The county government also set up the management committee for the rural cooperative medical care. The committee, which consisted of relevant departments and representatives of farmers participating in the NCMS, was made responsible for organising and undertaking coordination, management and guidance. Handling agencies for specific operational works were also set up under this committee. The staff of these agencies were mobilised by the county government, which also set up agencies (personnel) or entrusted relevant institutions in towns to conduct management as required. The working expenses of the personnel in the handling agency were also included in the fiscal budget at the same level, which shall not be withdrawn from funds for the rural cooperative medical care. 4 The rural cooperative medical care agency set up a special account in the state-­owned commercial bank recognised by the management committee in order to ensure the security and integrity of the fund for rural cooperative medical care; established and improved rules and regulations on the management of funds for rural cooperative medical care; reasonably raised, reviewed and made timely payments for rural cooperative medical care according to the stipulations.

Linear consultation  103 According to the survey conducted by Song Daping and colleagues involving local governments nationwide, the NCMS management systems in various regions were not exactly the same because of the following characteristics. First, the management and handling agency at the provincial level for NCMS was responsible for the planning, organising, management, supervision, guidance and training related to NCMS within the administrative region. However, agencies in various regions took different modes. For example, Guangdong, Hunan and Hainan established the cooperative medical care offices inside the provincial health departments with three–twelve personnel. Shanxi, Anhui, Hubei, Jilin, Hebei and Beijing established independent provincial handling agencies for NCMS, which acted as the full-­allocation public undertakings under the direct administration of the provincial health departments. Meanwhile, Shandong, Yunnan and Gansu also established agencies for NCMS under a working mechanism of ‘One Agency with Two Nameplates’ together with the functional offices of provincial health department. In other provinces (autonomous regions and municipalities), relevant offices within the health departments were still responsible for the management of the NCMS.25 Second, great differences also existed in terms of the construction of management and handling systems at the municipal (regional) level nationwide. Most areas took the approach of ‘county under the control of province’, where the provincial health department (bureau) directly managed and guided works on the NCMS for the county (city or region). However, in Gansu, Hubei, Jiangsu, Shanxi and Zhejiang, independent management agencies for the NCMS at the municipal level were established for the tasks of planning, organising, managing, supervising, guiding and training related to NCMS within the administrative region.26 Third, the management and handling agency for the NCMS at the county level serves as the basic unit at the most primary level. The health bureau at the county level is mainly responsible for the overall administrative management and the handling agency at the county level is responsible for the specific management of daily works related to the NCMS. Most counties (cities, regions) established the handling agencies for the NCMS at the county level under the management of the health administrative departments at the same level and mainly relied on financial allocation at the same level.27 The nationwide management and handling system for the NCMS is shown in Figure 3.1. Apart from the agencies of the ministries, commissions and local governments, other organisations were included, such as the supervisory committee made up of hospitals (non-­affiliated, appointed medical organisation), Chinese commercial banks, insurance companies, representatives of farmers participating in the NCMS, grass-­root cadres and so on.

104  Linear consultation

State Council Inter-Ministerial Joint Ministry of Education

State Development and Reform Commission

State Administration of Traditional Chinese Medicine

State Food and Drug Administration Ministry of Personnel

State Population and Family Planning Commission

Poverty Relief Office

Ministry of Civil Affairs

Disabled Federation

Ministry of Finance

China Insurance Regulatory Commission

Ministry of Agriculture Ministry of Health Office of InterMinisterial Joint Conference for NCMS Health Administration at Provincial Level NCMS Handling Agency at Provincial Level Health Administration at Municipal Level NCMS Handling Agency at Municipal Level Health Administration at County Level NCMS Handling Agency at County Level

Figure 3.1  Nationwide NCMS management and handling.

Interests of related participants The implementation of a policy certainly involves diverse stakeholders, including direct and indirect ones. At the same time, changes of any policy always translated to either gains or losses for multiple stakeholders. In this section, we discuss the major stakeholders’ potential gains or losses resulting from the implementation of the NCMS pilot project. According to my analysis of the previous section, the stakeholders involved in this policy change mainly include the central and local governments, the insurance companies and the consumers of medical services (i.e. farmers) among others.

Linear consultation  105 Central and local governments The pilot project for the NCMS was associated with a number of government departments. In general, the promotion of the NCMS can be considered as beneficial for the Ministry of Health because the Ministry could gain control over huge financial funds meant for the construction of the national rural health system, which could ultimately solve the long-­standing problems in the rural medical and healthcare system. The inter-­ministerial joint conference system, presided over by the Ministry of Health and under the approval of the State Council, granted the Ministry with the right to conduct agenda setting for the establishment of the NCMS. During the joint conference, the Ministry of Health heard opinions from the leaders of different departments, which had blocked other ministries from directly reporting different opinions to the leaders of the State Council at the upper level. Comparatively speaking, other ministries could only exert limited power during the promotion of the NCMS. Of course, they would then undertake limited responsibilities thereof. In the process of promoting the NCMS, sectors of central finance would be most impacted, because central finance had to allocate huge funds to support the construction of the NCMS. The ‘Decision on Health Reform and Development made by the CPC Central Committee and the State Council’, issued in January 1997, stipulated that the cooperative medical care system should be developed and improved in an active and sustainable manner and that individual investments should be the major source for fund-­raising under collective support and appropriate government assistance. According to the ‘Notice on Several Opinions for Developing and Improving Rural Cooperative Medical Care Approved and Forwarded by the State Council’, issued in May 1997, the ‘government’ mentioned here refers to local governments that ought to guide and support the establishment and development of rural cooperative medical care in different ways, based on their respective financial capacities. Moreover, ‘appropriate assistance’ meant that the provision of financial support by the government was not a mandatory task. Hence, local governments took full responsibility of public subsidies for rural cooperative medical care during the implementation of the former system. In the central and western regions relatively lacking in financial resources, in particular, there were very limited financial resources for providing the rural population with basic medical and healthcare services. There were reasons why central finance should actively invest in the construction of the RCMCS during the implementation of the ORCMCS. Before 1997, China’s central finance faced a formidable crisis. Under the policy of ‘power delegation and profit surrender’ during the reform and opening-­up era, the proportion of central fiscal revenue accounting for the national GDP declined each year. It was not until 1994, when the central government started to enforce reforms on tax distribution, that the rate of such a decline was mitigated. By then, the proportion of central fiscal revenue accounting for the GDP had started to rise slowly since 1996, at a time when this proportion had reached the lowest point. However, the Southeast Asian Financial Crisis of 1997 forced

106  Linear consultation central finance to allocate huge funds for other ministries, which rendered central finance unable to provide sufficient funds for the construction of the RCMCS. In 1999, state finance subsidised rural cooperative medical care for 35 million RMB only accounting for 0.36 per cent of the total health expenditures.28 In 2000, six years after the implementation of the financial system based on tax distribution, central fiscal capacity had been dramatically enhanced, which allowed central finance to offer greater support for the construction of the RCMCS. Moreover, a figure showing concern for the RCMCS appeared inside the Ministry of Finance – none other than Gao Qiang, the Vice-­Minister of the Ministry of Finance. He was very supportive of the mode adopted by central finance to support the construction of the RCMCS based on transfer payment, which operated with the goal of providing the majority of the farmers with access to basic medical and health care. In 2002, Gao Qiang was appointed to prepare the Central Conference on Rural Health Work.29 During the SARS-­ stricken period in 2003, the CPC Central Committee decided to relieve Zhang Wenkang of his duties as secretary of the Party Group of the Ministry of Health and his duty as the minister of the Ministry of Health based on voting during the second meeting of the 10th National People’s Congress. Afterwards, Wu Yi, Vice-­Premier of the State Council, began to hold concurrent posts as the general director of the headquarters in the State Council for SARS prevention and cure and as the minister of the Ministry of Health. Meanwhile, Gao Qiang began to hold the posts of Party Secretary and Administrative Vice-­Minister of the Ministry of Health. Gao Qiang then served as the head of the Ministry of Health from 2005 to 2007, whilst maintaining his post as party secretary of the Ministry until February 2009. Meanwhile, the NCMS appeased the conflicts between the policies of other central ministries and the current NCMS. In July 1999, the ‘Notice on the Opinions of the Agriculture Ministry for Reducing the Burden on Farmers Forwarded and Decreed by General Office of the State Council’ stipulated that illegal fund-­ raising and duty assignment towards farmers shall be strictly forbidden and that cooperative medical care shall not be carried out forcibly. From the perspective of the Ministry of Agriculture, individual investment as the major source of fund-­ raising, which was listed in the NCMS as presided over by the Ministry of Health, should be strictly forbidden as an arbitrary charge in the nature of illegal fund-­ raising and duty assignment towards farmers. However, the NCMS accumulated funds through transfer payments made by central finance under the new system, where ‘arbitrary charge’ became the ‘fiscal subsidy by the central government’ for farmers – a move that also gained the support of agricultural departments. Promoting the NCMS under the pilot project in various regions around the country needed huge financial resources provided by local governments, which certainly became a large financial burden for undeveloped areas in the central and western regions. During the period of the ORCMCS, the nationwide coverage ratio of the cooperative medical system was only 17 per cent. In the central and western regions, the coverage ratio was only 3 per cent.30 Under the NCMS, central finance subsidised the central and western regions with special

Linear consultation  107 transfer payments, thus dispelling the worries of the depressed areas with regards to locating financial resources for promoting the NCMS. Moreover, the financial transfer payment stipulated by the central government was granted based on the number of farmers involved, which greatly stimulated the enthusiasm of local governments. Thus, as long as more local farmers participated in the NCMS, local governments obtained more funds from appropriations offered by the central government, which were then allocated for subsidising the insurance fund for rural cooperative medical care and for replenishing the total reserves of the medical insurance  fund. Insurance companies Insurance companies were responsible for the commission and undertaking of specific business on the NCMS, including fund deposit, service management and capital grants under stipulations, which changed the inseparable management and enforcement actualised by the local government for business and the fund of the cooperative medical insurance in the past. In fact, governments and insurance companies achieved a win–win situation under the NCMS. On the one hand, the government realized the separation of management from the enforcement of medical insurance by outsourcing them to insurance companies, which created a protection mechanism for the NCMS funds. On the other hand, the government saved huge amounts of financial expenditures on personnel and operation through business outsourcing towards insurance companies, which reduced the financial burden on local governments. In addition, faced with the competition in the market, insurance companies must implement standardised professional and efficient service processes, which improved the service quality of medical insurance. For insurance companies, undertaking government business helped them to penetrate the potential insurance market in rural areas through the government’s outsourcing efforts. By conducting business related to the rural cooperative medical insurance, insurance companies were also able to widely set up outlets in rural areas and thus conduct other forms of business with the farmers. Moreover, owing to their competence in the management and operation of medical insurance funds, insurance companies also enjoyed the  brand effect of being officially recognised by the government, which provided good credit support for businesses carried out in other fields. Without doubt, power rent-­seeking and corruption cannot be avoided in the cooperation between local governments and insurance companies; hence, the design for a public management system should be strengthened and the market competition mechanism for public service outsourcing of the government should be introduced.  Farmers Why were the farmers willing to participate in the NRCMS? Participation rate was a crucial indicator of how successful the promotion effects of the NCMS

108  Linear consultation were. Maintaining a high participation rate was also a key factor in the healthy development of the NCMS. The participation rate essentially reflects whether the NCMS was perceived as an attractive option by the farmers. Since ‘voluntary payment by farmers’ and ‘voluntary participation’ were the contents listed in the NCMS, these two conditions must be met to maintain a high participation rate, that is, participation willingness and paying capacity. Although impoverished people in rural areas had low capabilities to make these payments, a level of individual fund-­raising at 10 yuan/person/year could be considered manageable for most non-­impoverished farmers. An intervention-­based experimental study carried out by Gong Xiangguang and his colleagues for cooperative medical care in eight provinces and ten counties showed that farmers had no troubles paying the small amount of insurance premium to receive cooperative medical care coverage.31 In fact, national statistics showed that expenditures in the non-­poor households on medical and health care reached over 100 RMB/ person/year, which enormously exceeded the participation criterion of 10 yuan/ person/year.32 This indicated that the individual fund-­raising for the NCMS was not at a high level at all. Hence, a low level of participation rate did not depend on the farmers’ capacity to pay but on their willingness to pay, such that a high participation rate indicated the farmers’ positive response to the NCMS as it took on real attraction. In upholding the principle of voluntary participation, the critical condition that should be provided with by cooperative medical care to attract farmers is the payment structure, which was commonly referred to as the ‘reimbursement of compensation’.33 If they could enjoy medical services with dependable quality and low cost, given that payment was affordable, the majority of farmers would be willing to participate in cooperative medical insurance. Indeed, participation rate had significantly increased after many years of promoting the NCMS and this demonstrated that the farmers had obtained real benefits from the NCMS. Embeddedness of the stakeholders Relations within the government There were quite a number of government departments involved in the policy-­ drafting pertinent to the NCMS, and these departments had comparatively complex relationships. In general, the interests of the relevant central departments and local governments were essentially independent of the influence generated from the promotion of the NCMS and different departments had voiced support for the promotion of this policy. First, the top body for this policy was the State Council, under which the inter-­ministerial joint conference for the NCMS was set up. The Ministry of Health played a leading role in the organisation, guidance, formulation, implementation and supervision of the policy, where other departments only provided consultations and assistance. The NCMS was jointly funded by the central government, the local governments concerned, the collective economy and the

Linear consultation  109 individual farmer–participants. The Ministry of Finance was mainly responsible for policy-­making, organising, enforcement and supervision. Such tasks must be properly coordinated through the support of other ministries and commissions. Second, the proportional relationship between the central and local governments in terms of financial contribution was established. The proportion of financial payment resulted in the interest entanglement between the central and local governments. Thus, it was important to effectively mobilise the enthusiasm of the two parties and rationally distribute payment proportions for governments at all levels. The central government acted as the policy maker and the local government served as the policy enforcer. In order to maximise their own interests, the latter may diverge the intention to some extent during policy execution. According to the provisions made by the central government, the financial proportion undertaken by the central government shall be reduced or increased depending on local economic levels throughout the country. For example, in the poorer areas of the central and western regions, extra time should be appropriately granted to local governments for fund-­ raising. Furthermore, in these regions, the financial proportions undertaken by the central government, local government and farmers involved should be 4:4:2. However, fund-­raising by local governments, especially in the central and western regions, may encounter some difficulties along with rise of the payment proportion and increased number of farmer–participants. Having recognised this situation, the central government had strengthened the financial payment over the years, along with the other reforms related to the NCMS. Relationship between the governments and the hospitals In the process of promoting the NCMS, three kinds of relationships emerged between governments at all levels and the hospitals: leadership, principal–agent and supervisory relationships. The first of these was the leadership relationship. A special health authority was set up within the government to lead and manage the designated medical institutions. Thus, the government served as the ‘leader’ and the hospitals being governed served as the ‘follower’. The government had the power to reward and punish any hospital, which then forced the hospitals to cooperate with the government rather than disobey the regulations and policies. As for the principal–agent relationship, the government granted funds to set up medical institutions and entrusted hospitals to provide medical services for the rural residents. In this process, a principal–agent relationship was established between the two entities. However, the hospitals might take advantage of their expertise and as such, the government might have an overall disadvantaged position in this relationship. For example, the government could formulate relevant policies to regulate the unreasonable fees charged by the hospital by virtue of its ‘leader’ position, but the hospital could still conceal such fees using various methods. Given that unreasonable charging could not be controlled by simple government ‘control’, hence this led to the third kind of relationship. Therefore, the third kind of relationship, a supervisory relationship, was established

110  Linear consultation between the government and hospitals. The main conflict between the government and hospitals was the contradiction between the hospitals’ intention to maximise their own interests under market conditions and the government’s intention to maintain public and social interests. The government hoped that rural residents could enjoy basic medical services at low costs, whilst the hospitals hoped to benefit from their patients. Their intention to maximise interests, however, contradicted the objective of the government. Therefore, the government must control the hospitals’ behaviour with regard to unreasonable charging using various methods. Relationship between the government and rural residents According to the ‘Decision of the CPC Central Committee on Further Strengthening Health Work of the Rural Area’, the government formulated a series of policies to improve the medical guarantee for rural residents and to help alleviate the poverty and re-­poverty caused by seeking medical care for serious diseases. To put it simply, the insurance fund for the RCMCS consisted of some money coming directly from the rural residents who voluntarily made payments and from the financial allocation provided by the central and local governments proportionately for each person. The insurance fund for rural cooperative medical care consisted of these two funding sources, with a special purpose of offering a certain percentage of reimbursement to rural residents so that they could consult a doctor. In order to prevent a local government from illegally obtaining central appropriation by making a false report on the population involved, the central government required the local government to report the amount of funds paid for by rural residents and then report the figures to the central government, which directly appropriated funds to the management agency based on the total number of people (and payments made). From the perspective of the rural residents, there was no stable legal protection for financial allocation, so they were reluctant to actively participate and pay for the expense. Holding little faith in the government, the rural residents hoped that the government would appropriate funds first, after which they would decide to participate in the NCMS, thus displaying a ‘wait-­and-see’ attitude. In response, the government offered them the opportunity to know more about the NCMS policy by launching pilot projects in some areas. The results proved that this policy was indeed beneficial for rural residents and did not result in a great burden on the payment required. Therefore, most rural residents participated in the new-­type rural cooperative medical insurance under the propaganda, guidance and encouragement of the governments at all levels, along with the village committees.34 Interestingly, the implementation of the NCMS policy was listed as an item for cadre evaluation in the ‘Notice on the Success of Works Related to New-­ Type Rural Cooperative Medical Care’ jointly issued in 2007 by the Ministry of Health and the Finance Ministry in March 2007. In this context, it was possible for local cadres to take a slightly mandatory approach to force rural residents to join the NCMS. Thus, the steady rise in the participation rate might not truly

Linear consultation  111 reflect the willingness of rural residents to participate in the NCMS. In the whole process, rural residents were actually unable to build up effective contact with the government’s policy makers and thus influence the formulation of this policy. Relationship between government and insurance companies The local governments of some pilot areas for the NCMS have established a principal–agent relationship with insurance companies. On 26 October 2005, the China Insurance Regulatory Commission indicated in Several Guiding Opinions on Improving Insurance Involvement in Pilot Project for New-­ Type Rural Cooperative Medical Care that insurance industries must adopt the mode of entrusted management in order to provide a handling service for the NCMS. Entrusted management was a principal–agent model under which the government served as the sponsor and insurance companies only provided specific services and did not bear the risk of profits and losses. Under such a model, insurance companies must sign with the government the entrusted management agreement, which stated the explicit rights and obligations of both parties. Based on the agreement, insurance companies must be able to provide management services, including scheme calculation, reimbursement management, settlement and payment and charges for relevant managing expenses. Handling insurance companies under the model of entrusted management should strictly fulfil the contract, must not be responsible for investment operations of funds for rural cooperative medical care, must not bear risks on the operation of the fund in any manner, and not share profits on the operation of the fund in any form. The balance of the fund generated within the settlement year should be accumulated into the fund account of the next year. The deficit of the fund should then be filled by the local government.35 In summary, the relationships among major stakeholders while promoting the NCMS are is shown in Figure 3.2.

Expert involvement with linear consultation Expert involvement was the key factor driving the central government to make a firm decision when it came to investing in pilot projects for the NCMS. The NCMS was generally considered to be a community health insurance system under the voluntary model and was highly subsidised by the government.36 The government recognised the necessity of reconstructing the ORCMCS as early as the 1990s. However, the transfer payment of central finance was not yet regarded as the only way to help the old system to achieve its goal of sustainable development. Throughout the 1990s, experts carried out a series of investigations and experiments on cooperative medical care in poverty-­stricken areas. The experts involved in such projects were not only those from the research institutions within the Chinese establishment, but also from overseas and local universities, think-­ tanks and international organisations, such as the Policy

112  Linear consultation

Central Government

Budget Appropriation

Ministry of Health Administration

China Insurance Regulatory Commission

Financial support

Supervision

NCMS Insurance Fund Compensation Heath Service (hospital/doctor)

Local Governments

Ministry of Finance

Mutual payment Service

Service

Participation

Pay for premium Farmer household

Figure 3.2  Relationships among major stakeholders involved in the NCMS.

Research Office of the State Council, the Planning and Finance Department of the Ministry of Health, the Department of Primary Health and Maternal and Child Health, the Health Statistics Information Centre, Fudan University, World Health Organization (WHO), UNICEF, the World Bank, the United Nations Development Programme (UNDP), the US RAND Corporation and so on. Based on the results of these studies, the government became convinced that the comprehensive extension of the RCMCS could not be realized without the involvement of central finance. Furthermore, the reports of some research teams provided very workable policy options. For example, in the poverty-­stricken areas, most peasant households were able to pay the cooperative medical expense at the highest level of 10 RMB/person/year. Hence, the government could adopt the investment model of providing 10 RMB annually for each farmer who participated in the system.37 We can summarise the studies on NCMS in the past decade into three aspects, as discussed in detail below. Regarding the principles of voluntary participation by farmers The basic principles followed by the NCMS include voluntary participation; fund-­raising by multiple parties; determining the expenditure based on income and appropriate guarantee; conducting pilot projects and ensuring step-­by-step extension. The principle of voluntary participation was under discussion. Under the sponsorship and leadership of the Ministry of Health, UNICEF and the World Bank, the Chinese Health Economics Training and Research Network carried out a study from 1992 to 2000 in collaboration with Harvard University.

Linear consultation  113 One policy recommendation proposed by this topic-­based group was that conducting cooperative medical care should adhere to the principles of ‘taking the family as the unit and ensuring the voluntary participation of farmers’ to prevent adverse selection, that is, non-­participation of healthy people and participation of unhealthy people.38 Meanwhile, the investigation carried out in Jiading Shanghai, Kunshan Jiangsu, Dushan Guizhou and Wuxue Hubei for the 2000–2002 study project with the cooperation of WHO, UNDP as well as the Planning and Finance Department and the Primary Health and Maternal and Child Health Department within the Ministry of Health also recommended that residents must voluntarily participate in the NCMS with the family as a unit.39 Regarding spending limits for farmer-­participants in the NCMS From 1985 to 1991, the Ministry of Health, in cooperation with the US Rand Corporation, implemented the Experimental Study on Chinese Rural Health Insurance in the rural areas of Jianyang and Meishan, Sichuan Province, under the health loan granted by the World Bank. The study reported that the insurance premiums to be charged must be 1–2 per cent of the per capita income of farmers, but that it was difficult to raise such a premium amount.40 Meanwhile, under the sponsorship of UNICEF and the World Bank, the Chinese Health Economics Training and Research Network, in collaboration with Harvard University, carried out a study from 1992 to 2000 on fund-­raising and organising efforts to provide health care in the poor rural areas of China. The topic-­based group initially conducted a baseline survey in 114 counties located in fourteen provinces and then carried out in-­depth investigations in 180 towns in thirty counties located in ten provinces thereafter. The study found that the majority of farmers in these poor areas were willing to pay for cooperative medical expenses at the highest level of 10 yuan/person/year.41 Regarding subsidies on the construction of the NCMS granted by government finance The results of studies conducted by many research groups all indicated that the investment of government finance was the essential condition that encouraged farmers to actively participate in the NCMS and for the system to realize sustainable development. A study on the ‘Reform of the Rural Cooperative Medical Care System in China’, conducted by the Policy Research Office of the State Council, the Ministry of Health and WHO from 1993 to 1998 in fourteen counties located in seven provinces, reported that financial support from the government and the collective improved farmers’ initiative to participate in cooperative medical care. At the same time, cooperative medical care was exposed to the risk of decline without extra investments in cooperative medical care offered by the government and the collective.42 In 1999, the Department of Primary Health and Maternal and Child Health of the Ministry of Health and UNICEF jointly carried out a study on the ‘Reform and Development of Cooperative Medical

114  Linear consultation Care under the Conditions of Market Economy’, through which they analysed the role played by capital input from government finance in rural medical guarantee. That study pointed out that the special fund set up under the finance investment was the key for the sustainable development of rural medical guarantee.43 Another study on ‘Fund Raising and Organising Activities to Provide Healthcare in the Poor Rural Areas of China’, carried out from 1992 to 2000 by the Chinese Health Economics Training and Research Network in collaboration with Harvard University, reported that rural residents agreed that the state, the collective and the individual shall raise a certain proportion of funds for cooperative medical care, wherein most people considered that the state should undertake the highest proportion.44 In addition, the ‘Project on Strengthening Basic Medical Care in the Poverty-­ Stricken Areas of China’, implemented by the Chinese government from 1998 to 2005 under a loan grant from the World Bank, conducted investigations in seventy-­one poverty-­stricken counties at the national or the provincial level of seven provinces (regions) in the central and western regions. The research group proposed the interventional experiment on the appropriate model of government investment. In five counties of Chongqing and Gansu, this project subsidised each farmer with 10 yuan/year to simulate the government investment for cooperative medical care. The pilot results showed that the government investment was conducive to the sustainable development of the RCMCS.45 From the description mentioned above, we found that all important topics are related to studies on pilot projects for the NCMS in various regions, which were conducted under the organisation of policy-­making departments and with the help of experts and capital both at home and abroad. Here, policy-­ making departments within the government were mainly the concerned departments of the Ministry of Health. Wang Shaoguang suggested that these academicians agreed that financial investment offered by government, especially by the central government, is the key factor in ensuring the success and sustainable development of the NCMS. However, Wang did not discuss how topic-­based groups interacted with policy makers and finally promoted the implementation of the NCMS policy.46 More precisely, how did the experts’ research findings and policy recommendations on the NCMS catch the attention of the central leadership at the higher level? We can find one of the clues on how expert involvement influenced government policy-­making from a situation recalled by experts working on those projects. Professor Liu Yuanli and his group participated in the aforementioned study on ‘Fund Raising and Organising Activities for the Provision of Healthcare in the Poor Rural Areas of China’ under the Chinese Health Economics Training and Research Network in collaboration with Harvard University. Due to the significant results achieved by the study, Liu and his team gained the trust of the Chinese government. In 2001, the Asian Development Bank entrusted Liu to conduct a study on the rural health security of China. That study also obtained support from the NDRC to establish the major objectives and strategies to achieve economic and social development in rural areas. In order to ensure the

Linear consultation  115 quality of research and information exchange for this project, Liu invited Rao Keqin (Director of the Health Information Statistics Centre of the Ministry of Health and a famous professor from Peking University engaged in sociological medicine) and Hu Shanlian (a professor from Fudan University and a famous health economist in China) as consultants to participate in the preparation of the research report. The final output of that project was a seventy-­page report, which indicated one key finding: the rural families’ financial bankruptcies due to high medical expenditures accounted for a significant portion (about one-­third). In July 2001, the NDRC organised an international seminar in Beijing to discuss the major results of this project, the recommendations given by the experts and how these findings can be delivered to the central government. To extend the influence of this conference, experts were invited to attend the conference, including those from WHO and Harvard University; senior officials from the Research Office of the State Council; the Economic Restructuring Office of the State Council; the Ministry of Health, Finance Ministry and Agriculture Ministry; representatives of central ministries and commissions as well as officials of local governments and famous economists. The then Minister for Health, Zhang Wenkang, also attended that international seminar and carefully read the report submitted by the research group. Due to his belief that the Chinese government should set a high value upon rural health security, he invited Rao Keqin to his office. He said,  I want you to do two things for me: first, make copies of this report for Chen Xiaohong (Director-­General of Finance and Planning) and Li Changming (Director-­General of Primary Care and Maternal and Child Health); second, I want you to reduce the 70-page report to a report of no more than five pages; and lastly, I’d like to work with you so that we can turn that 5-page document into a personal letter from me to President Jiang Zemin.47  Zhang Wenkang believed that President Jiang would spare some time to read his letter. Rao spent two days condensing the report into five pages, including the major findings and recommendations. Minister Zhang then modified it again before sending the final version to President Jiang Zemin. The next day, President Jiang called Minister Zhang and said, ‘Wenkang, I am totally shocked by what you said about the rural situations. Are you sure that family bankruptcies due to medical expenses accounted for a third of the rural poverty?!’ to which Zhang answered, Mr. President, I was only quoting results of an independent study. You might want to send out researchers to further investigate the issues. However, to be totally honest, I don’t think the party, or the government, has done an adequate job caring for the rural population. They have been left behind by the current health system. 

116  Linear consultation A few days later, two people from the Policy Research Office of the CPC Central Committee interviewed Rao to inquire about the details, data sources, policy recommendations and theoretical basis of the aforementioned research. They also interviewed other people involved in the preparation of the report. Two months later, the topic of ‘rural health care’ started to appear frequently in presentations made by China’s top leaders. In November 2011, the Economic Restructuring Office of the State Council began to take charge of the coordination and development of the new-­type rural health policy in China. In 2002, the central government held a national conference on the rural health care of China under the promotion of the Ministry of Health. The significance of this conference lay in the fact that financial support for rural healthcare policy was finally obtained from the senior leaders of the state and the Ministry of Finance.48 In this case, Rao Keqin and other experts successfully drew the attention of China’s senior leaders towards the status of rural health security through internal means, which drove the leaders to take appropriate measures to improve the situation in the rural areas. Some successful experiences can be summed up in this process. First, experts attached importance to major issues in urgent need of policy makers’ attention and proposed feasible programmes under certain economic and political environments. Although some studies successfully caught the attention of policy makers, they failed to propose feasible programmes. Second, experts utilised international conferences to extensively collect insights and suggestions from experts with different backgrounds, technocrats of the government and the Ministry of Health, which not only improved quality of the study report, but also created a form of collective wisdom, and obtained the support of key stakeholders as well. Third, experts must use the principal organs of the government, such as the NDRC and the Ministry of Health, to send out brief reports to central leadership at higher levels. After a period of time, the problems found in the reports must be promulgated to the public, so that the government can make a positive and comprehensive response to these problems. Fourth, researchers and the government must always work in partnership to achieve success. After the rural health work conference held in 2002 and in light of the ‘Decision on Further Strengthening Health Work in the Rural Areas’ proposed in the conference, the Ministry of Health issued seven supporting documents, including the Draft (2001–2010) on the Development of Rural Basic Healthcare in China’, ‘Opinions on the Establishment of the New-­Type Rural Cooperative Medical Care System’, ‘Opinions on the Reform and Management of Rural Health Institutions’, ‘Several Opinions on the Subsidy Policy for Rural Public Health’, ‘Opinions on Strengthening Personnel Training and Team Building for Rural Health’, ‘Opinions on Supporting Rural Health Work by Urban Health’ and ‘Regulations on Practice Management for Rural Doctors’.49 The efficiency with which these seven documents were issued was very impressive. In fact, this was also related to the accumulation of several major research projects on rural health in the 1990s. After the pilot project for the NCMS was implemented all over the country in 2003, in order to improve its enforcement in a better way, the Ministry of Health

Linear consultation  117 further issued the ‘Notice on Organising the Technical Guidance Group of the Ministry of Health for the NCMS’ proposed by the General Office of the Ministry of Health. The members of the technical guidance group for the NCMS are shown in Table 3.3. The members of the fixed contact groups in the four provinces are shown in Table 3.4. Most of these experts were engaged in various studies on the state of rural health care in China. The responsibilities undertaken by the technical guidance group for the NCMS mainly included the following. 1

The group provided technical guidance for the national pilot projects of the NCMS and carried out the promotion and implementation of various major policies and measures on the proposed system.

Table 3.3  Technical Guidance Group of the Ministry of Health for the NCMS (2007) List of members Li Changming

Director of the State Council’s Joint Conference Office for the NCMS

Wang Lusheng

Deputy Director of the Health Economics Institute of the Ministry of Health

Zhang Zhenzhong

Deputy Director of the Health Economics Institute of the Ministry of Health

Hu Shanlian

Professor of Public Health School, Fudan University

Hao Mo

Professor of Public Health School, Fudan University

Mao Zhengzhong

Professor of Public Health School, Sichuan University

Ye Yide

Professor and President, Anhui Medical College

Liu Shangxi

Researcher of the Research Institute under the Ministry of Finance, Deputy Secretary of the Chinese Finance Society

Ying Yazhen

Associate Professor of the Research Institute under the Finance Ministry

Yu Shenglong

Researcher and former deputy director of State Administration of Traditional Chinese Medicine

Liu Yonghua

Consultant of Hebei Provincial Health Department

Zhang Liming

Deputy director of Primary Healthcare Collaborating Center of World Health Organization in Jiading, Shanghai

Coordinators Nie Chunlei Fu Wei

Director of the Rural Health Management Department of the Ministry of Health Assistant Researcher of Rural Health Management Department of the Ministry of Health

Note Some experts were adjusted and the scale of the technical guidance group was enlarged in accordance with the document ‘HORHD[2007]69’ issued on 11 April 2007.

118  Linear consultation Table 3.4  Members of the fixed contact groups in four provinces (2007) Zhejiang Group leader

Hao Mo

Professor of Public Health School, Fudan University

Guo Qing

Professor and Assistant Dean, Hangzhou Normal School

Zhang Liming

Deputy Director of the Primary Healthcare Collaborating Centre of the World Health Organization in Jiading, Shanghai

Contact person Zhang Chaoyang Deputy Director, Rural Health Management Department of the Ministry of Health Hubei Group leader Members

Mao Zhengzhong Professor of Public Health School, Sichuan University Chen Yingchun

Associate Professor, Tongji Medical School of Huazhong University of Science and Technology

Jiang Jialin

Lecturer, Public Health School of Sichuan University

Contact person Zhu Hongming

Principal Staff Member of the Rural Health Management Department of Ministry of Health

Jilin Group leader

Liu Yonghua

Consultant of the Hebei Provincial Health Department

Members

Sun Pinghui

Associate Professor, School of Public Health, Jilin University

Yao Lan

Associate Professor, Tongji Medical School of Huazhong University of Science and Technology

Contact person Nie Chunlei

Director of the Rural Health Management Department of the Ministry of Health

Yunnan Group leader

Wang Lusheng

Deputy Director of the Health Economics Institute of the Ministry of Health

Members

Wan Chonghua

Associate Dean, Public Health School, Kunming Medical College

Xing Yuying

Assistant Researcher of the Health Economics Institute of the Ministry of Health

Contact person Fu Wei

Assistant Researcher of the Rural Health Management Department of the Ministry of Health

Note Contact provinces for the technical guidance group increased to five based on the document ‘HORHD[2007]69’ published on 11 April 2007.

Linear consultation  119 2

The group assigned individuals who conducted investigations, provided guidance and conducted appraisals for the pilot sites of the NCMS in the provinces of Zhejiang, Hubei, Jilin and Yunnan on a regular basis and summarised the experiences gained by the local governments to improve the programme. 3 The group reported the working conditions and major issues on the pilot projects to the Ministry of Health in a timely manner, proposed policy recommendations, and participated in discussions on the improvement of policies and measures. 4 The group participated in training and research for the NCMS all over the country.50 In 2005, the Ministry of Health issued the ‘Notice of the General Office of the Ministry of Health on Establishing the Research Centre for NCMS’. This Centre, which was affiliated to the Health Economics Institute of Ministry of Health with fifteen employees, was in charge of working reviews, direction and evaluation, operational guidance and training, information management and informatisation construction, consulting, investigation and study, experience summarisation for promotion, scientific research, international exchanges and cooperation to ensure the successful implementation of the NCMS all over the country. All expenditures were obtained by undertaking relevant work assignments and research projects. The main duties of the research centre for the NCMS include the following. 1

Under the unified leadership and organisation of the Ministry of Health, it should fulfil routine work on NCMS, supervise and guide the management of funding and finance for handling agencies in local governments, assist the Ministry of Health in organising and implementing the review and appraisal of the NCMS. 2 It should provide operational guidance for the NCMS of local governments, prepare and implement the training programme for the employees of handling agencies for cooperative medical care. 3 It should be responsible for the collection, reorganisation, analysis and management of information relevant to the NCMS as well as for the planning and construction of the information system of the NCMS. 4 It should handle the tasks of consultation, complaint handling and inspection for cooperative medical care. 5 The Centre should organise and implement the investigation, conduct theoretical study and summarise the experiences on implementing the NCMS in various regions in order to provide theoretical and practical bases for the development of rural health guarantee in the country. 6 Under the unified administration of the Ministry of Health, the Centre must conduct domestic and international exchange and cooperation in fields relating to rural medical guarantee; it should also organise foreign technical collaborations, personnel exchange and professional training. 7 Finally, it must finish other works assigned by the Ministry of Health.

120  Linear consultation The members of the NCMS Technical Guidance Group and the NCMS Research Centre were all government officials from the Ministry of Health and experts engaged in the studies on rural health care.51 Therefore, they acted as the think-­ tanks during the implementation of the NCMS policy. In summary, experts played a crucial role similar to the government in the process of studying the generalised NCMS policy up to the implementation of the resulting policy. The important experimental studies in the 1990s, mentioned above, were all supported by the major government departments, all of which invited worldwide experts and research organisations to participate and then submit results in the form of reports to the relevant government departments. Afterwards, the experts or research organisations drove the central government to focus on the issues on rural health care which were discovered in the investigations and to take the relevant measures to improve them. Certainly, even though the government was determined to improve the situation, it was difficult to develop appropriate policies due to the significant differences in the political, economic and cultural background of various regions. Thus, experts and research institutions in this field must participate in the formulation of this policy. Only in such a case could the NCMS policy be more suitable for the actual state of rural health care in China. Furthermore, through the cooperation and tireless efforts made by government experts and research institutions, the difficulties encountered during the implementation of the NCMS policy can be solved. Based on the literature and our empirical analysis, the unremitting efforts made by the experts and relevant research organisations produced significant achievements in scientific research, which played an integral role in further improving the NCMS policy.

Notes   1 ‘NCMS as Part of the Draft Social Insurance Law has been Included in the Specialized Chapter on Medical Insurance’, NPC, 23 December 2008, http://npc.people.com. cn/GB/8567055.html,; ‘Social Insurance Law’, 51 Labour, 5 November 2010, www.51labour.com/zhuanti/shebao/.   2 Adam Wagstaff, Magnus Lindelow, Jun Gao, Ling Xu and Juncheng Qian, ‘Extending Health Insurance to the Rural Population: An Impact Evaluation of China’s New Cooperative Medical Scheme’, Working Paper S4150 (Washington, DC: World Bank, 2007).   3 Refer to discussions made by many domestic scholars: Jingdong Ma, Jiang Zhang, Zhanchun Feng, Yingchun Chen and Pengqian Fang, ‘Review on Studies for Improving NCMS: Progress and Prospect’, Chinese Health Economics 5 (2008); Tuan Yang, ‘Reconsideration in Need for Policy on NCMS’, Scientific Policy-­Making 6 (2005): 15–18; Ying Zhu, Jianhua Wang and Cheng Jiang, ‘Analysing Cooperative Medical System from the Perspective of Cooperation’, China Social Security 6 (2006): 23–5; Dasong Deng and Xiaowu Wu, ‘Discussion on Role Played by Government in NCMS of China’, Jiangxi Social Science 2 (2006): 21–5; Mengtao Gao, Guangying Gao and Ke Liu, ‘Analysing the Implementing Effect of NCMS from the Perspective of Demand: Empirical Study for Three Pilot Counties in Yunnan’, Chinese Health Economics 5 (2005): 9–12; Xiaoyun Liu, Xueshan Feng, Xiaoting Jia, et al., ‘Analysis on Difficulties and Corresponding Causes during Development of Cooperative Medical

Linear consultation  121 System’, Chinese Health Economics 7 (2005): 31–3; Jun Tang, ‘Reflections on the NCMS’, China Health 2 (2007): 40–2; Dasong Deng and Guobin Zhang, ‘Reflections on Exploring the NCMS – Investigation based on Huojia and Qiufeng, Xinxiang, Henan’, Learning and Practice 2 (2007): 112–16; Shaoqun Ding and Zhongli Yin, ‘Rural Medical Security: Where Should the NCMS Go?’ Chinese Health Economics 3 (2005): 20–3; Qiguang Chen, ‘Discussion on the Objective of the NCMS’, CASS Graduate School Journal 6 (2005): 43–6.  4 Qi Zhang, Theory, System and Operation of Medical Security in China (Beijing: China Labour and Social Security Press, 2003), 147.  5 Ibid.  6 Zikuan Zhang, Zihui Zhu, Shucheng Wang, et al., ‘Review Study on the Rural Cooperative Medical Care System in China’, Chinese Rural Health Service Administration 6 (1994): 4–5.   7 Zikuan Zhang, ‘Review on the Early History of Cooperative Medical Care’, Chinese Health Economics 6 (1992): 21–3.  8 Xiaowu Song, 20 Years of Construction on China’s Social Security System (Beijing: Zhongzhou Ancient Books Publishing House, 1998), 181.  9 Renhua Cai, Practical Book on the Reform of Medical Care in China (Beijing: China Personnel Press, 1998), 344. 10 Zhang, Theory, System and Operation of Medical Security in China, 149. 11 Ibid. 12 Tao Gu, Jie Shan, Junshi Shi, et al., ‘Rural Medical Insurance: Analysis of the Problems Relating to the System and Policy Advice’, Chinese Health Economics 4 (1998): 42–3. 13 Topic-­Based Group, ‘Study on Fund-­Raising for Rural Health Service and Remuneration Mechanism for Rural Doctors’, Chinese Primary Health Care 7 (2000): 3–10. 14 Mu Yuan and Zhangmin Chen, ‘Accelerate the Reform and Construction of the Rural Cooperative Medical Care System’, Chinese Rural Health Service Administration 9 (1994): 1–4. 15 Zhenjiang Ma, ‘Discussion on the Primary Health Care System in Rural Areas with Chinese Characteristics’, Chinese Health Economics 5 (2000): 51–2. 16 Jiagui Chen, Report on the Development of China’s Social Security (Beijing: Social Sciences Literature Press, 2001), 282–4. 17 China Health Development Statistics Bulletin in 2005. 18 China Health Development Statistics Bulletin in 2006. 19 China Health Development Statistics Bulletin in 2007. 20 China Health Development Statistics Bulletin in 2008. 21 China Health Development Statistics Bulletin in 2009. 22 Opinions on the Consolidation and Development of NCMS, website of the Rural Health Management Department of the Ministry of Health, 13 July 2009. 23 Written Reply of the State Council on Approving and Establishing the System of Inter-­Ministerial Joint Conference for NCMS, P.R.C. Central People’s Government website, 3 September 2003. 24 Rural Health Management Department, 1 March 2005, www.moh.gov.cn/publicfiles/ business/htmlfiles/mohnc-­wsgls/pigzn/200804/34720.htm. 25 Daping Song, Donghui Zhao, Zhiyong Yang, Yonghua Liu and Zaoli Wang, ‘Situation and Countermeasures on Construction of Management and Handling System for NCMS’, Chinese Health Economics 2 (2008). 26 Ibid. 27 Ibid. 28 Yajing Liu, ‘Historical Thinking and Policy Advice on the Rural Cooperative Medical Care System in China’, Journal of Community Medicine 6 (2004): 38. 29 Yuanli Liu and Keqin Rao, ‘Providing Health Insurance in Rural China: From Research to Policy’, Journal of Health Politics, Policy and Law 31, no. 1 (2006): 86.

122  Linear consultation 30 Chen, Report on Development of China’s Social Security, 282–4. 31 Xiangguang Gong, ‘Study on the Paying Capacity of Farmers in Poverty-­Stricken Areas for Cooperative Medical Care’, Chinese Health Economics 10 (1998): 47. 32 General Group of the State Statistics Bureau for Social and Economic Survey in Rural Areas, Yearbook of Rural Statistics in China (Beijing: China Statistics Press, 2002), 16. 33 Ting Gu, Mengtao Gao and Yang Yao, Diagnosis and Prescription: Directly Facing the Healthcare System Reform of China (Beijing: Social Sciences Literature Press, 2006), 148. 34 Zhengzhong Mao and Jialin Jiang, ‘Characteristics and Current Challenges Against NCMS’, Chinese Health Economics 1 (2005). 35 Le Zhang and Lingzhong Xu, ‘SWOT Analysis for the Involvement of Commercial Insurance Agencies in the NCMS’, Chinese Health Service Management 5 (2009). 36 Wagstaff, et al., ‘Extending Health Insurance to the Rural Population’. 37 Shaoguang Wang, ‘Learning Mechanism and Adapting Capacity: Enlightenment brought by Changes of Rural Cooperative Medical Care System in China’, Social Sciences in China 6 (2008). 38 Xiangguang Gong, Shanlian Hu and Xiaoming Cheng, ‘The Role Played by the Government and Collective of Poverty-­Stricken Areas in Fund-­Raising for Cooperative Medical Care’, Chinese Health Economics 10 (1998): 516–17; Xiaoming Cheng, ‘Policy Advice for Cooperative Medical Care in Rural Poverty-­Stricken Areas of China’, International Medicine and Health Guidance 9 (2003): 17–18. 39 Topic-­Based Group on the Optimized Practice Model for Rural Cooperative Medical Care in China, ‘Study on Optimized Practice Model for Rural Cooperative Medical Care in China’, Chinese Primary Health Care 6 (2003): 15–16. 40 Study Group for the Pilot Project on Rural Health Insurance in China, ‘Report on the Experimental Study for Rural Health Insurance in China’, Chinese Health Service Management 2 (1994): 74. 41 Xiangguang Gong, Shanlian Hu and Xiaoming Cheng, ‘Willingness of Farmers in Poverty-­Stricken Areas to Pay for Cooperative Medical Care’, Chinese Health Economics 8 (1998): 11. 42 Jixian Yao, Yuming Wu and Jinpu Tang, ‘Analysis on Fund-­Raising, Use and Compensation of Rural Cooperative Medical Insurance in Qidong’, Chinese Primary Health Care 3 (1998): 21; Topic-­Based Group of Central Government for Study on Rural Medical Care Reform in China, ‘Study on Rural Cooperative Medical Care System in 14 Counties (I) (Periodic Report)’, Chinese Primary Health Care 11 (1996): 6. 43 Shidong Wang and Yide Ye, ‘Review and Study on the Development of a Rural Cooperative Medical Care System’, Public Health and Hospital Management 4 (2004): 12. 44 Heping Wang and Hongmei Ling, ‘Rural Residents Desire for Cooperative Medical Care’, Health Economics Research 6 (2000): 38–9. 45 Wang and Ye, ‘Review and Study on Development of Rural Cooperative Medical Care System’, 12. 46 Wang, ‘Learning Mechanism and Adapting Capacity’, 129. 47 Liu and Rao, ‘Providing Health Insurance in Rural China’. 48 Ibid. 49 Liang Zhang and Junguo Chen, ‘Process History of Rural Health Reform in China since the 1990s’, Medical Journal of National Defending Forces in Southwest China 6 (2005). 50 Notification Issued by General Office of Health Ministry on Setting Up Technical Steering Group for New-­Type Rural Cooperative Medical Care, 1 April 2004, www. moh.gov.cn/publicfiles/business/htmlfiles/zwgkzt/pncws/200804/31116. htm. 51 Website for the research centre of the NRCMCS of the Ministry of Health, www. ccms.org.cn (accessed December 2010).

4

Locked-­out

In this chapter, we use the case of the new affordable urban housing policy to describe the locked-­ out model of expert involvement. The so-­called ‘new policy’ mentioned here refers to the decision made by the State Council at the end of 2008. That decision aimed to deploy policy measures to promote the healthy development of the real estate market, strengthen the construction of government-­subsidised housing, investing 900 billion RMB in the next three years for government-­subsidised housing and increasing the supply of affordable housing. The most important measures involved in the reform of this policy included the financial investment, land supply and the distribution of purchase opportunities. The affordable housing policy has been criticised for quite a long time because so many problems emerged during the implementation of these three policy instruments. These three policy instruments did not have a strong sense of knowledge complexity. Compared with the complicated policy instruments and technical issues involved in the two policy cases relating to public health, which we discussed in the previous chapters, the policy instrument of the affordable housing policy was relatively explicit with a less technical nature. More importantly, the government possessed more key information on financial allocation, land supply and purchase opportunities than the external experts. Therefore, the policy makers did not require the technical analysis of experts during the policy instrument selection for the housing policy. Instead, the most important consideration for policy makers was how to strike a balance among the interests of different stakeholders during the reform. Due to the lack of necessary information, the experts’ recommendations often do not have practical significance. Unlike the policies discussed earlier in Chapters 2 and 3 (i.e. NCMS and the new-­type urban medical and health care system), although the experts delivered policy opinions in a variety of ways during the change of the housing policy in the current policy case, their suggestions were eventually blocked out of the decision-­making process. Hence, we call this the ‘locked-­out’ model of expert involvement.

124  Locked-out

Policy on affordable housing Evolution of the affordable housing policy (1998–2009) On 3 July 1998, the State Council issued the Notice of the State Council on Further Deepening Reform of the Urban Housing System and Acceleration of Housing Construction, marking the reformation of China’s housing system into one based on ‘monetisation-­based distribution’. After this policy change, the housing consumption which had not been contained in the wage income of the past was directly included into the wages of the employees in the form of monetary compensation, thus realizing the transition of employees’ housing from physical distribution to monetisation-­based distribution. That document proposed to establish and improve the housing supply system based on affordable housing. In 2003, the State Council further issued the Notification on Promoting Sustainable and Healthy Development of the Real Estate Market (ND[2003] No. 18), which changed the concept of what constituted affordable housing from being the ‘main part of the housing supply’ included in the No. 23 document promulgated by the State Council in 1998 into a ‘policy-­based commodity housing classified as social security’. The term ‘Affordable housing’ referred to residential buildings that were listed into the national plan to be sold at low prices to low-­and middle-­income families. These structures were constructed by real estate development enterprises or fund-­raising construction divisions under the management of rural governments. The main element of this reform was that it aimed to group housing supply into categories, where families with the lowest income could rent the low-­rent housing provided by the government or by companies, mid- or low-­ income families could purchase affordable housing and high-­income families could purchase or rent commodity housing at the prevailing market prices. Affordable housing can be classified as commodity housing characterised by a social security policy. How could we understand the concept of ‘affordable housing’? On the one hand, the price of affordable housing was relatively low compared with the market price and was considered affordable by mid- and low-­ income families. On the other hand, affordable housing placed emphasis on the practical effects on the design, area setting of a single unit and the construction standards. Affordable housing units were also sold at prices with meagre profits for the government/companies; such prices were also determined based on the construction costs and were strictly controlled by the government. Construction costs include land acquisition, survey, design and pre-­ construction fees; expenses of construction; construction costs on infrastructure in the housing estate; loan interests, tax, management fee (1–3 per cent) and profits less than 5 per cent. Affordable housing units were for sale and not for lease. In selling the affordable housing, property developers also followed the government-­guided price. This was determined and regularly issued by governments at the county or city level by integrating the factors mentioned above, so that the developers would not raise the prices without permission. 

Locked-out  125 In November 2002, the State Planning Commission and the Ministry of Construction jointly decreed the Administrative Measures on the Price of the Affordable Housing, which clearly defined that affordable housing refers to ‘ordinary residential buildings supplied to mid- and low-­income families and have been included in the government’s plan to construct affordable housing with land for construction under administrative allocation and with preferential policies offered by the government’. The construction of affordable housing follows the concept of the principal guaranteed with meagre profits. In order to standardise the price mechanism of affordable housing, the measures stipulated that the benchmark price of affordable housing must consist of development cost, tax and profit, where corporate management fee and profit included in the house price must be based on land acquisition fee and compensation for demolition; survey, design and pre-­construction fees; expenses of construction and erection and construction cost on infrastructure in the housing estate, which should be controlled within 2 per cent and 3 per cent, respectively. The costs as elements of the price for affordable housing should exclude construction expenses on operational facilities within the residential district, construction and installation costs and various expenses to be allocated for office building and business premises reserved by the development and operation enterprises, the funds to be raised, sponsors, donations and other expenses not related to housing development and operation, compensation payment, penalty, fines for delayed payment as well as fines and expenses remitted according to the existing stipulations. Based on the ‘administrative measures’, the government departments in charge of pricing should strengthen the supervision and inspection of the prices of affordable housing and charges for real-­estate projects. Government departments in charge of pricing can also penalise those acting against price regulations in accordance with the Price Law of People’s Republic of China and Administrative Sanctions for Illegal Activities on Price.1 As the State Council policy on Real Estate Market (ND[2003] No. 18) issued in 2003 redefined affordable housing into a ‘policy-­based commodity housing classified as social security’, such a description not only weakened the function of the housing policy to provide urban residents with housing but also established a market structure dominated by commodity housing and affordable housing as just a supplementary option. In May 2004, the Ministry of Construction, the National Development and Reform Commission, the Ministry of Land and Resources and the People’s Bank jointly issued the Administrative Measures for Affordable Housing (CH[2004] No. 77) on the basis of the ND [2003] No. 18 document. Up to this point, the vast majority of urban residents in need of housing, who could have benefited from affordable housing, were pushed to look for options in the real estate market. Indeed, the issuance of the ND[2003] No. 18 document laid the foundation for the rapid development of China’s real estate market in the following years. Indeed, the sudden and sharp increase in housing prices in China started in 2003. Faced with massive public opposition against the affordable housing policy, the State Council promulgated Several Opinions of the State Council on

126  Locked-out Solving the Difficulties of Low-­Income Families in Housing (ND[2007] No. 24), which had the following stipulations: urban low-­ rent housing system should be further established and improved, an affordable housing system should be improved and standardised, shanty towns and old residential areas for urban low-­income families would be rebuilt and further strengthened. With a basically unchanged system on affordable housing, the central government began to make huge investments into the construction of urban low-­ rent housing. Within a few years, the Ministry of Construction, the National Development and Reform Commission, the Ministry of Supervision, the Ministry of Land and Resources, the People’s Bank of China and the State Administration of Taxation jointly issued the new Administrative Measures for Affordable Housing (CH[2007] No. 258), which stipulated that the construction administration department of the State Council should manage the guidance and supervision of nationwide works on affordable housing. The construction or real estate administration departments of local governments above the county level were also made responsible for the management of affordable housing within their administrative regions. Hence, the construction was no longer the sole responsibility of the local government. From 1998, when the concept of ‘affordable housing’ was defined, up to 2008, the central government issued a number of policies to promote the healthy development of the real estate market. However, the central government had yet to make heavy investments into the large-­scale construction of affordable housing across the country. Thus far, the construction works were undertaken by local governments, which displayed low-­level enthusiasm and motivation. In the second and third year of implementation of the ND No. 23 Document, different regions’ investments in affordable housing accounted for 11 per cent of the total investments in real estate. However, some problems emerged during the construction, sale and use of the first batch of the housing units produced. Since 2001, although the central government has been strengthening relevant policies, the proportion of the actual investments on affordable housing, which account for the total real estate investment, has gradually declined year by year, dropping to as low as 4.7 per cent by 2005. With the drop of the economic indicators, opinions on cancelling the affordable housing system began to surface among pundits.2 By 2007, the central government no longer assigned the mandatory tasks related to the construction of affordable housing to the local governments. By the end of 2008, things changed completely. The central government decided to invest huge amounts of financial resources to accelerate the construction of indemnificatory housing, such as affordable housing. Henceforth, we can call the policies on affordable housing issued after 2008 as the ‘new policies on affordable housing’. On 9 November 2008, the State Council held an executive meeting to study and deploy measures on further expanding domestic demand and promoting rapid but sustained economic growth. In that meeting, the authorities decided to implement ten measures to further expand domestic demand and promote economic growth. One of the measures was to accelerate the

Locked-out  127 construction of indemnificatory housing project for low-­income families. Based on preliminary calculations, investments amounting to 4,000 billion RMB were made by the end of 2010 in order to implement these ten measures. On 17 December 2008, the State Council again held another executive meeting to study and deploy policy measures on promoting the healthy development of the real estate market and decided to strengthen the construction of indemnificatory housing. On 20 December 2008, the General Office of the State Council promulgated Several Opinions of the State Council on Promoting Healthy Development of the Real Estate Market (SOD[2008] No. 131), through which they demanded various regions to increase the supply of affordable housing based on the actual situations. The General Office also planned to invest 900 billion RMB in the next three years in order to accelerate the construction of indemnificatory housing, which included affordable housing, low-­rent housing and shanty towns. Under this plan, from 2009 to 2011, there was an increase of 1.3 million units of affordable housing each year. At the beginning of June in 2009, the National Development and Reform Commission and the Ministry of Finance jointly issued the Low-­Rent Housing Security Plan (CS[2009] No. 91), under which low-­rent housing units were to be built for 7.47 million households from 2009 to 2011. The No. 91 Document assigned the task of building low-­rent housing for 7.47 million households in three years to all provinces who then assigned their own tasks down to city or county governments based on the actual situations. The document titled ‘Several Opinions on Promoting Healthy Development of the Real Estate Market’, which was promulgated by the State Council, clearly stipulated that 1.3 million affordable housing units must be built annually for the next three years. However, even with the construction mode for low-­ rent housing as explicitly subsidised by central financial allocation (400 RMB/m2 for the western region, 300 RMB/m2 for the central region, 200 RMB/m2 for the areas in Liaoning, Shandong and Fujian with financial difficulties), the construction of affordable housing units was still accompanied by the problems of indefinite fund sources and model uncertainty. The evolution of the affordable urban housing policy is shown in Table 4.1. Problems during the implementation of the affordable housing policy Affordable housing is a special kind of commodity housing with the dual attributes of policy security and commodity trading. First, different from low-­rent housing, affordable housing is ‘not for lease but for sale’, taking on the same property right attribute as commodity housing, that is, buyers have the right to possess the entire property (as stipulated by the initial policy plan). Yet, pricing for affordable housing is strictly controlled by administrative measures, which cannot be determined by the market in the same way as commodity housing. Furthermore, buyers of the affordable housing were prohibited from making the houses available in the market within five years.

Administrative Measures on the Price of Affordable Housing

Notification on Promoting the Sustainable and Healthy Development of the Real Estate Market

Administrative Measures for the Ministry of Construction, Affordable Housing Development and Reform Commission, Ministry of Land and Resources and People’s Bank

Several Opinions of the State Council on Addressing the Housing Problem of Urban Low-income Households

17 November 2002

12 September 2003

13 April 2004

7 August 2007 State Council

State Council

State Planning Commission and Ministry of Construction

State Council

Notice on Further Deepening the Reform of the Urban Housing System and the Acceleration of Housing Construction

3 July 1998

Ministry

Policy document

Date

Table 4.1  Evolution of the affordable urban housing policy

Further established and improved the urban lowrent housing system; improved and standardised the affordable housing system aimed at low-income families living in urban areas

Detailed the provisions for the affordable housing system in light of the definition of affordable housing policy as ‘policy-based commodity housing with the nature of social security’

Changed the content of affordable housing from being the ‘main part of the housing supply’ into ‘policy-based commodity housing with the nature of social security’, specified the status of commodity housing as the main component of market supply

The benchmarked price of affordable housing consisted of development cost, tax and profit, where the development profit did not exceed 3 per cent

Ceased the physical distribution of housing, actualised the monetisation-based distribution, defined the systems of commodity housing, affordable housing, low-rent housing and affordable housing as the main component of housing supply

Important content

Notification of General Office of the State Council on the Promotion of the Sustainable and Healthy Development of the Real Estate Market

2009–2011 Low-rent Housing Security Plan

12 November 2008

22 May 2009

Ministry of Housing and UrbanRural Development, National Development and Reform Commission and Ministry of Finance

State Council

Ministry of Construction, National Development and Reform Commission, Ministry of Supervision, Ministry of Finance, Ministry of Land and Resources, People’s Bank of China and State Administration of Taxation

Aimed to build low-rent housing for 7.47 million households in three years; specified the construction mode with subsidies provided by central financial allocation

On 9 November, the executive meeting of the State Council launched plans to invest 4,000 billion RMB, where 900 billion RMB was allocated for indemnificatory housing; On 17 December, the State Council held the executive meeting to study and deploy policy measures to promote the healthy development of the real estate market and decided to strengthen the construction of indemnificatory housing; On 20 December, the SOD[2008] No. 131 Document laid out the master plan for a specific scale of lowrent housing and affordable housing and for rebuilding shanty towns

Affordable housing was no longer the enforced task of local governments

Note The highlighted items indicate significant national level policies, whereas others are ministerial level policies.

New Administrative Measures for the Affordable Housing

19 November 2007

130  Locked-out The implementation of the affordable housing, which originally aimed to solve the difficulties of mid- or low-­income families to procure housing, encountered many problems and caused many social conflicts. The main problems caused by the policy’s implementation are listed and described below. Abandonment of purchase 1 On 14 July 2007, 204 units of affordable housing in Jinan were abandoned by prospective buyers. 2 In August 2008, 20 per cent of affordable housing units of the first phase of a project in Hangzhou were abandoned by prospective buyers. 3 In December 2008, 1,170 units of affordable housing of the first batch of a project in Guangzhou were abandoned by prospective buyers. 4 In 2008, 388 units of affordable housing in Shenzhen were abandoned by prospective buyers. 5 In August 2009, Shijiazhuang constructed a large supply of affordable housing units, but more than 1,000 of these were abandoned by prospective buyers. The abandonment of prospective buyers can be attributed to many different factors, of which exorbitant pricing was the most important one. In August 2009, a sale fair for affordable housing was held in Guangzhou, where 590 units of affordable housing at the favourable location were on sale. Unfortunately, each set had an area of over 70 m2. According to pricing provisions on the sales of affordable housing in Guangzhou, an area of 70 m2 was considered a watershed for house prices. Those with areas less than 70 m2 enjoyed the benchmark price reaching down to one-­ third of the market price, which was about 4,000–5,000 RMB/m2. However, those areas beyond 70 m2 were purchased at the market assessment price, which was more than 9,000 RMB/m2 at the very least. Thus, many prospective buyers were unable to afford these units due to limited financial resources. Rather, they had hoped that the government could build more small houses: ‘It would be alright if the house was small as long as the total price was affordable.’3 Moreover, most of the affordable housing units were built in the suburbs or relatively remote locations with less than ideal facilities, such as public transportation, schools, hospital and shopping centres, making prospective buyers hesitant to purchase the units. As another example, in the 600,000 m2 affordable housing project located in Changying, Chaoyang District, Beijing, although the ceiling price was only 4,550 RMB/m2, most of the buyers were hesitant because the Gaoantun garbage dumping field was just one kilometre away. Illegal leasing Illegal leasing of affordable housing was also quite common, and the media has disclosed many such events in large cities, such as Beijing. In Daping, Yuzhong

Locked-out  131 District of Chongqing, only about half of the 322 sets of affordable housing in Xincheng Mansion have been leased within eight months after the house delivery. Hou Ximin, Director of the Housing Security Department of the Ministry of Housing and Urban–Rural Development (MOHURD), stressed that illegal leasing resulted from the fact that some competent authorities did not place much emphasis upon or carry out enough follow-­up management for indemnificatory houses.4 Essentially, such illegal activities were due to house buyers trying to seek profit by leasing units they purchased at low prices, especially if they obtained another unit. As a result, many families with money and houses were able to avail of these affordable housing units whilst the real beneficiaries had to wait in line to avail of the units.5 Overall, such a problem can be attributed to poor management and poor monitoring on the part of the authorities and administrators.  In addition, many affordable housing units were being covertly sold in the market. At the beginning of sales for such units in Tiantong Yuan Residential Area, Beijing, buying and reselling the lots for profit was rampant. In March 2003, the Ministry of Construction, the former State Planning Commission and the Ministry of Land and Resources jointly conducted a study on these housing units in eleven provinces and cities, with the aim of solving problems that emerged in different regions (e.g. lack of supply versus huge demands, reselling lots or units at a really high profit in order to purchase houses with online registration).6 Consequently, a policy that was supposed to benefit the low-­income earners only benefited the already wealthy citizens. Quality problems in large areas Another problem that emerged was the poor quality of construction. For example, of the 800 units sold in the Lanqiao Ming Yuan Residential Area in Hangzhou, over 500 owners were asking for maintenance. The owners found eleven kinds of quality-­related problems, such as cracking, water seepage on the roof and so on.7 Frequent incidents of fraud In the process of allocating the purchase opportunities, some administrative offices engaged in malpractice for their personal gains by manipulating the proceedings.8 Some examples are listed below. 1

In March 2009, a file issued by the command post for the old-­town reconstruction of Wenzhou in Zhejiang was publicised on the Internet; in that document, the qualified buyers for over 140 resettlement houses were dozens of cadres at the municipal and county levels and a number of ‘affiliated persons’ only.

132  Locked-out 2 On 12 June 2009, units with six consecutive numbers were drawn out for a project located in Wuhan, Hubei Province, where the accident probability was less than a quadrillionth. Finally, it was proven to be a case of corruption under collusion between officials and businessmen. 3 On 29 July 2009, lots with even rare ‘14 consecutive numbers’ were drawn out for a project in Laohekou, Hubei Province, in which one of the unit owners was found to be a minor (only seventeen years old) at the time of purchase. Simple units were changed into villas Although government departments drafted the land layout for the housing units, the developers often did not follow the master plan. For example, on 18 June 2009, the municipal government of Zhengzhou organised a joint investigation team, which found that Henan Tianrong Property Co. Ltd constructed fourteen villas, including 124 houses without the Construction Project Planning Permit and Construction Project Commencement Permit. As reporters conducted interviews, local officials questioned the reporters in a really unexpected manner (‘Are you ready to speak for the party or for the people’?).9 Policy innovation in various regions The development of affordable housing units focused on large- or medium-­sized cities. Despite the unceasing appeal to promote affordable housing in small towns, it was quite difficult to carry out, because this was mandated by the state but had to be completed and paid for by the local governments. Specifically, land transfer fees constitute the main source of income for local government funding. Thus, if local governments made investments in such construction projects, they would be unable to transfer the land employment rights at higher prices, which can lead to the partial shrinkage of their revenues. Therefore, faced with such a dilemma encountered, many local governments looked for alternative reforms. Huai’an: common property right In August 2007, the local government of Huai’an in Jiangsu Province proposed a model based on common property right and was connected with the market for affordable housing. Under such a plan, mid- or low-­income families that could not easily purchase a house could share the property right based on the proportion between individual and government investments. The model of allocation is changed into transfer for the land. The price difference between land transfer and land allocation and the preferential policy granted by the government for the unit are manifested as government investments that, in turn, served as the base for property shared by the government. The model based on common property right was made more widespread in other regions of Jiangsu Province. Jiangyan, Rugao and Suzhou all successfully carried out pilot projects under this mode.10

Locked-out  133 Hebei and Shandong: merger of affordable housing and low-­rent housing Among the reforms in different regions, the one carried out by Shijiangzhuang in Hebei Province took on the most far-­reaching significance. Under this system, the requirements in applying for low-­rent housing and affordable housing were integrated; housing security certificates were then granted to eligible low-­ income families, who could then choose between affordable houses or low-­rent houses. This policy has been strongly supported by the government of Hebei Province since its implementation. In November 2008, the provincial government of Hebei issued Several Opinions on Promoting the Healthy and Stable Development of the Real Estate Market, which stipulated that cities and counties throughout the province should unify the security conditions for low-­ rent housing and affordable housing by 1 January 2011, so that eligible low-­income families could choose between affordable houses or low-­rent houses and cities and counties with proper conditions could conduct the merger process in advance.11 Shandong Province and some other localities also stopped building the affordable housing units and proposed an expansion of the guarantee scope of low-­rent housing. Jining and some other cities, meanwhile, merged the application conditions for low-­rent housing and affordable housing, and gradually pared down the scale of construction and distribution of such housing units. Shenyang, Changsha, Zhengzhou and Changzhou: offering oriented subsidy on house purchasing In 2008, Shenyang City in Liaoning Province established the new approach on guaranteeing the affordable housing by ceasing the construction of the affordable housing and by granting each family 55,000 RMB as a subsidy for house purchase under predetermined orientation. With such a subsidy, the qualified families could enjoy the security of affordable housing whilst still being able to purchase commodity houses on the market. Changsha in Hunan Province also decided in 2008 to stop building these units and instead, to provide low-­income families without houses with a subsidy of over 80,000 RMB to purchase houses at the prices lower than 3,500 RMB/m2. Four months after this new policy was implemented, over 5,000 families applied for the housing subsidy. On 28 April 2009, the Housing Administration Bureau of Zhengzhou, Henan Province, published Several Opinions of Zhengzhou Municipal Government on Further Accelerating Healthy Development of the Real Estate (referred to as Opinions). The ‘Opinions’ stipulated that families that had obtained the Certificate on Purchase Qualification for Affordable Housing before 31 December 2007 could get 600 RMB/m2 for the areas within 90 m2 of the house purchased. However, they must follow several conditions: they must voluntarily give up the right to purchase affordable housing and only purchase the commodity houses;

134  Locked-out monetary subsidy would be granted based on the property ownership certificate and house purchase contract in the principle of ‘subsidising right after the purchase; no purchase, no subsidies’; the purchased units should not be resold within five years (violators must return the total subsidy amount); and subsidy applicants must agree that the property right of the house would be changed into the property right of the commodity house five years after the purchase.12 Similarly, in February 2009, the municipal government of Changzhou in Jiangsu Province officially announced its new policy on affordable housing, where the construction of affordable housing would cease and subsidies in the form of money would be directly granted to eligible families to help them purchase commodity houses. Concealed subsidies became explicit subsidies, in order to help 10,000 low-­income families who qualified to avail themselves of affordable housing units to solve their housing problems. Under the new approach, subsidies were granted, and each qualified family was given a subsidy of 80,000 RMB to purchase newly built ordinary commodity houses within the urban areas.13 Zhengzhou: simultaneous development of lease and sale By the end of 2009, Zhengzhou in Henan Province enacted Administrative Measures (on trail) on Low-­Rent Housing Physically Subsidised in Zhengzhou, which aimed to implement the simultaneous development of lease and sale of low-­rent housing. Under such administrative measures, indemnificatory houses can be leased or sold. The lessee can seized their limited property right by one-­ time payment or instalment under a certain proportion. However, the house can be made available on the market. Five years later, owners of low-­rent housing units that were sold could acquire full ownership and sell the units on the market after the preferential taxes and fees, land profits and other costs had been compensated for.14 By summing up policy innovation for affordable housing in various regions, we find that one common thread among the reforms in different regions is to reconcile the property-­right contradiction between the ‘indemnificatory house’ and the ‘commodity house’ under the system of affordable housing in China. This step mitigated the pressure from capital input for constructing the affordable housing. The singular mode of constructing and selling affordable housing was transformed into multiple modes: ‘giving priority to leasing’, ‘subsidising the house buyers’ and ‘granting common property right’, which consciously differentiated and balanced the nature of ‘indemnificatory house’ and ‘commodity house’. 

Stakeholder analysis Disagreements between the central and local governments The central and local governments held different attitudes towards affordable housing and low-­rent housing. Low-­rent housing was directed by the central government, which took on a strong sense of ‘rigidity’ as it enforced a

Locked-out  135 mandatory quota for local governments. Before launching the new policy in 2008, the construction of affordable housing totally depended on the investments of the local government, so the latter’s initiative played a leading role. As a result, disagreements on the policy of constructing affordable housing emerged between central and local governments. First of all, as explained earlier, the local governments had little enthusiasm for this policy and even wanted it abolished. During the National Political Consultative Conference held in 2005, Fu Jide, Chairman of the Xi’an CPPCC at that time, submitted a proposal to abolish the policy on affordable housing on behalf of the local governments. In November 2008, the Executive Meeting of the State Council approved the investment of 4,000 billion RMB to stimulate economic development, where a funding of 900 billion RMB was earmarked for the construction of indemnificatory houses. In addition, the SOD[2008] No. 131 document demanded that various regions increase the supply of affordable houses based on the actual situations. From 2009–2011, 130 sets of affordable housing units were added each year. However, various regions still showed poor support for the policy. Up to the first half of 2009, newly built affordable houses in various regions covered an area of 33.88 million m2, which contained about 480,000 units that accounted for 37 per cent of the annual target.15 In comparison, the construction of low-­rent housing was faster. By the first half of 2009, 1.05 million low-­rent houses were completed, accounting for 59 per cent of the annual target. Why did local governments have little enthusiasm for the construction of affordable housing? The main reasons are discussed below. Pressure on financial resources Pressure on financial resources was the direct reason for the lukewarm support of the local governments for the housing policy. Before the new policy was launched, the construction of affordable housing totally depended on the investments of the local government. As with indemnificatory housing, affordable houses did not bring about actual earnings but rather used up large chunks of local financing. Unfortunately, local financing usually did not have much capital to support the large-­scale construction of affordable housing. Furthermore, the central government liberalised the mandatory construction-­related tasks previously assigned to local governments. Thus, the weakened supervision from the central government made local governments even more reluctant to invest large amounts of funds in the construction of these housing units. Compared with the affordable housing, the construction of low-­rent housing only required small investments, because the local governments could construct low-­rent houses by rebuilding old ones. Moreover, the local governments could be subsidised by the central government for the following: special subsidies for low-­rent housing and subsidies for the construction of low-­rent housing within the budget allocation for newly built projects. Therefore, local governments showed far greater enthusiasm for the construction of low-­rent housing than for affordable housing.

136  Locked-out Loss of land-­transfer fee The construction of affordable housing also resulted in the loss of profits brought forth by land transfer fees. When the tax distribution system was implemented in 1994, the land-­transfer fee became the important source of local financial revenue (also called ‘land finance’). Moreover, under the circumstance of extremely scarce land supply, affordable housing is not an option for the efficient use of land. In comparison, tenants of low-­rent housing may move out when their economic situation has improved, thus leaving the old houses to help the poor. Yet, the government’s mission would be fulfilled once the affordable houses were sold out.16 Meeting the housing needs of other low-­income families only depended on continued building, which meant that the government also continually lost huge amounts of land-­transfer fees. A more serious problem also emerged: not having have enough land to sustain such development. In response to public criticism against the negative attitudes held by local governments in relation to the affordable housing, Zhao Luxing, a researcher and chief of the Housing and Real Estate Research Department of the Policy Research Centre of MOHURD, stated that: it was quite difficult for the government to prepare a piece of land. First, this land resulted in the loss of land transfer fees. Then, land acquisition and relocation were carried out for the land to be habitable. Thus, most of the time in the first half of the year was spent on land allocation.17 Competing for more support from central government by dint of low-­rent housing Since 2008, some local governments have proposed several policies to cope with the housing problems of low-­ income families through the expansion of the coverage of low-­rent housing. Hebei, Liaoning and Shandong Provinces ceased building operations one after another. Meanwhile, Shijiazhuang in Hebei, Jining in Shandong and some other cities merged application conditions for low-­rent housing and affordable housing and gradually pared down the scale of construction and distribution of the latter.18 The construction of affordable housing was based on land offered by local governments and investments made by developers. The central government did not offer support for construction even though Several Opinions of the State Council on Addressing the Housing Problem of Urban Low-­Income Households stipulated that the construction of low-­rent housing should be supported by central and local financing. Wang Hongxin, Assistant Director of the Real Estate Research Centre of Beijing Normal University, pointed out during an interview that the trend of local governments towards enhancing the security standards of the low-­rent housing became increasingly obvious since the State Council issued the document in 2007, which gradually evolved into a kind of appeal for the achievement of the local government. He stated, 

Locked-out  137 At present, construction of low-­rent housing mainly depends on financial support, which put forward high requirements for the financial sustainability of the local government. If the local government had difficulties in  financing, it became inappropriate to enhance security standards unconditionally.19 At the beginning of June 2009, the National Development and Reform Commission and the Ministry of Finance jointly issued the Low-­Rent Housing Security Plan of 2009–2011, under which low-­rent housing was built for 7.47 million households. In addition, the central government allocated 33 billion RMB for the construction of low-­rent housing. Consequently, building low-­ rent houses not only became a mandatory task assigned by the central government, but also qualified for matching funds from the latter. Meanwhile, the incomes generated by local governments from the public accumulation fund and land leasing could be used to invest in low-­rent housing, so that construction of the latter could be sustained by such funds. In some cases, local governments that merged the affordable housing and low-­rent housing hoped to obtain more financial support from the central government by building low-­ rent houses.20 Commercial banks Generally speaking, commercial banks held little interest in providing loans to affordable housing projects. Commercial banks provided loans to the real estate developers, but also provided mortgage loans to buyers of commodity houses. After obtaining the permit for land development and use from local governments, real estate developers then applied for a loan by mortgaging the land to the bank that would provide a series of loans based on the developers’ needs. Once they obtained the pre-­sale permit for commodity houses, the real estate developers then pre-­sold the houses to actual buyers. Part of the payments made by buyers during the pre-­sale was used to repay the loans from the bank, but most of the profits were used to purchase land employment for the next real estate project. From such an analysis, we can see that maintaining an integrated capital chain was crucial for real estate developers. The key to maintaining an integrated capital chain relied on selling as many houses as possible during pre-­ sale so that the capital could be withdrawn as soon as possible. Moreover, banks could provide buyers of the commodity houses with mortgage loans for merchandise housing. For commercial banks, mortgage loans for merchandise housing was a type of high-­quality loan that brought about low bad-­debt rates and high repayment rates. As long as housing prices rose stably, banks did not worry about the buyers’ inability to repay loans. Even if the house buyers with loans committed a breach of contract, banks still regained the mortgaged house property from the buyers and then made profits from auctioning off the houses at higher prices. In theory, banks were more pleased to offer buyers of commodity houses mortgage loans for merchandise housing.

138  Locked-out However, affordable houses were a special kind of commodity house. It was a different case for commercial banks to offer loans for affordable houses than for ordinary commodity house. Affordable houses were also built by real estate developers. The government transferred the land employment right to the developers at low prices and demanded that the developers only build affordable houses with a very low profit margin. As previously described, affordable housing could not bring many benefits for low-­income families and were often met with massive cases of purchase abandonment. Moreover, scandals such as power rent-­seeking and skulduggery frequently occurred in the process of building affordable houses. Thus, the government had to freeze some development projects. With all these problems, real estate developers were unable to withdraw surplus money from circulation, which led to tensions in the capital chain and the increased probability of bad-­debt rates. Therefore, commercial banks were highly cautious when it came to offering loans to real estate developers working on affordable housing projects. Moreover, the banks had to reduce the credit supply for such projects and tighten the credit standards. Furthermore, commercial banks were not that willing to provide commercial mortgage loans for buyers of affordable houses. First, buyers applying for affordable houses were mostly mid- or low-­ income families without stable incomes. They also had relatively weak abilities to resist external economic risks; hence, when macroeconomic fluctuations occurred, mass defaults from these buyers might arise. Second, affordable houses only took on limited property. Even if banks regained the houses under mortgage loans, they were still unable to liquidate them easily.21 Hereupon, few offers were obtained by citizens lucky enough to qualify for the purchase of affordable houses in many cities. Hence, in order to promote the development of affordable housing projects, local governments generally designated commercial banks to provide mortgage services for buyers of affordable housing. For example, CITIC Bank and China Construction Bank provided special mortgage services for the Wansong Park Project of Guangzhou; CITIC Bank and China Minsheng Bank were in charge of offering mortgage loans for the Dang’en New Street Project.22 This kind of system was called the administrative intervention of the government on the economic activities of commercial banks. Real estate developers Limited profits of less than 3 per cent As a ‘pro-­people project’, affordable houses were a special kind of commodity house that could be traded in accordance with the market mechanism. On the one hand, land for the construction of affordable housing was supplied by government allocation according to the Administrative Measures for Affordable Housing. In this case, land cost was not included in the price of the affordable house, which generally made the prices lower. On the other hand, government

Locked-out  139 policies stipulated that developers could not arbitrarily change the price of housing units. Profits from such houses were strictly controlled within a 3 per cent margin. Moreover, different types of affordable housing projects had different profit margins. At the end of June 2009, the Shanghai Municipal Development and Reform Commission and the Shanghai Administrative Bureau of Housing Security and Housing Management jointly issued the Trial Measures on Price Administration for Affordable Housing in Shanghai. This document stipulated two kinds of development organisations for affordable housing: those appointed by bidding and whose settlement price could reserve a profit margin of 3 per cent, and government-­appointed organisations that directly undertook construction projects; for the latter, no profits were included in the settlement price which only consisted of costs and taxes for construction and development.23 As the government had set profit limits for developers and did not place much emphasis on supervision and monitoring, developers often lowered the level of quality during construction to maximise their profits. Yi Xianrong, an economist and Head of the Financial Development Office, Finance Institute, Chinese Academy of Social Sciences, argued that even though the profit rates of affordable housing were absolutely higher than 3 per cent, developers still wanted to reap huge profits through these projects. Yi pointed out that: we should never forget that developers would always want to get windfall profits. It is impossible that affordable houses only have a profit margin of 3%. If the profit margin is that small, then developers would never get involved in affordable housing. They want to gain huge profits so they may sacrifice quality to do so, which is one of many other problems that emerged.24 In order to maintain the low profit margin at 3 per cent and to attract developers, local governments usually bundle together the affordable housing project and the price-­capped housing project for bid invitation. In other words, once they obtained the right to develop affordable housing, real estate developers also obtained the right to develop the price-­capped housing. The relatively high profit margins from the latter were then used to compensate for the profit loss absorbed from the former.25 Nevertheless, even though real estate developers consider affordable housing as low-­profit projects, they have shown support for such projects since the outbreak of the economic crisis. First, in the context of the international financial crisis, real estate development enterprises face great pressure in terms of maintaining their capital chain. Despite the limited profit margins, affordable housing did not require land costs for development enterprises and only needed low proportions of capital, taxes and marketing expenses, thus making them attractive projects for cash-­strapped developers. Second, the main development enterprises involved in the construction of affordable housing were the SOEs in various regions. Most of state-­owned real estate groups had their own construction and

140  Locked-out building material companies. Thus, by investing in the development of affordable housing, these enterprises were able to bring orders for their subsidiary companies and ensure high rates of operation even amidst the international financial crisis. Difficulty in returning funds Gu Yunchang, Deputy Director of the Housing Policy Expert Committee of MOHURD and Vice-­Chairman of the China Real Estate and Housing Research Association, said during an interview that the construction progress of an affordable housing project mainly depended on three factors: land quota approved by the government, land acquisition and relocation and the developers’ construction fund.26 As mentioned earlier, developers rely heavily on the capital chain for their survival. Many developers with meagre capabilities went bankrupt because of the unsustained operations, which were caused by a disrupted capital chain brought about by difficulties in obtaining bank loans and the uncertain capital return resulting from poor sales. The main part of the funds used by real estate developers for development comes from commercial bank loans; hence, if houses are not sold in time, developers would be unable to return the capital for repayment. Unlike low-­rent housing, affordable housing could not obtain the required financial funding. Local governments only provided policy support and land for construction. Construction funds were completely supplied by the developers. In general, real estate development enterprises paid some funds in advance or seek bank financing with the local government’s support. The developers then recovered the capital input by selling out the affordable houses. However, due to frequent purchase abandonment, developers faced the problem of a disrupted capital chain. Specifically, for those private real estate companies without government background, they often found it more difficult to obtain loans with no guarantee based on government credit. Developers had no other choice but to pay out a huge amount of capital in advance. In the construction process, paying funds in advance was considered a high risk that often led to financial troubles for the developers. The slow progress was another reason for the delayed return of capital. Compared with commodity housing, approval procedures for affordable housing projects were more complicated. The administrative approval procedures of different ministries tend to be very cumbersome. The procedures that ultimately allowed low-­ income families to purchase affordable houses were also very complex, and included lot drawing, queuing and so on. According to media reports, events on skulduggery and corruption frequently occurred during the construction and distribution of such housing units. If such scandals were reported, the local government would require developers to stop work and consolidate, which led to indefinite delays. All these resulted in the slower progress of affordable housing projects compared with those on commodity housing.

Locked-out  141 Close relationship with local governments The complexity of land issues also led to a subtle relationship between developers and local governments. Under current fiscal and institutional arrangements, affordable housing projects were in a very awkward position. On the one hand, the government did not provide funding but provided a piece of land upon which the developer completed construction. The government could not obtain revenue from land finance as they could in commodity housing. On the other hand, due to limited profit margins, problems related to illegal activities frequently occurred during development, including lower quality, illegally built villas and luxurious commodity houses and construction of high-­profit real estate projects on plots of land meant for affordable housing projects. In the process of real estate construction, there existed a complex relationship between the developer and local government. On the one hand, some local governments had established a coalition of interest with the developers. Real estate development could promote the development of local economy and employment. Many local governments also obtained revenues from land granting. Hence, local governments often turned a blind eye to certain violations made by developers. On the other hand, serious corruption was rampant in the real estate industry. Local officials controlled various approval procedures during real estate development, and money–power exchanges occurring between developers and officials in charge of land, layout and municipal administration were occasionally disclosed by the media. Cheng Siwei, a famous economist and Vice-­ Chairman of the Standing Committee of the NPC, indicated that profits generated by developers accounted for only 30 per cent of the total cost of real estate development, but ‘part of the 30% is the grey cost, bluntly speaking, that was the cost for bribe offerings’.27 State-­owned real estate enterprises became ‘land kings’ Real estate enterprises were in need of credit to serve as the guarantee for their loans. Commercial banks were more inclined to grant loans to SOEs in the real estate industry because they were guaranteed by the government’s credit. In contrast, private developers could only rely on mortgage credits, such as land use certificates, to maintain their credit. In the bid invitation and auction for land, SOEs appeared to have deep pockets. Although they were unable to compete with these state-­owned real estate enterprises, private developers did not submissively hand over the land during auction: the latter often raised the offer in a hostile manner to increase the land costs for the former. This is why ‘land kings’ are often created by state-­owned real estate enterprises. In 2009 alone, several events on the emergence of ‘land kings’ emerged. On 30 June, Sinochem Fangxing Investment Management Limited won the bid for the No. 15 plot on Guangqu Road of Beijing with 4.06 billion RMB. In August, the state-­backed Jindi Group in Shenzhen obtained the No. 10 plot of Zhaoxiang Qingpu with 3.048 billion RMB. The central enterprise, China Resources Land,

142  Locked-out obtained the Nanxiang Plot in Jiading, Shanghai with 3.522 billion RMB. On 10 September, China Overseas Property won the Changfeng Plot with 7.006 billion RMB, in which the average price of the floor price was 22,409.3 RMB/m2 with a premium rate of 129 per cent. Staff of government agencies, SOEs and public institutions Since 1998, when China initiated the housing system reform and the focus was on the ‘abolition of welfare housing distribution and monetisation-­basedbased distribution of residential housing’, the institution of ‘welfare housing distribution’ gradually became obsolete. However, the resurgence of welfare housing distribution re-­emerged in government and SOEs. Models for the construction and distribution of affordable housing mainly included the following: construction, distribution and management centrally organised by the government; construction and distribution by working units under the supervision of the government; and the construction and distribution by working units. Since the reform, affordable housing projects occupied an extremely small proportion of total construction on commodity housing. In most cities, the construction of such projects mainly took the third mode, that is, government offices, enterprises and SOEs conducted ‘semi-­welfare housing distribution’ in the name of building houses under funds collected by the buyers and affordable houses, so that staff members could buy new houses at low prices. In most cases, land plots used by the semi-­welfare affordable houses were not obtained from local government by tendering. Some plots were owned by agencies and some were allocated by the government for other projects. The distribution of such affordable houses was also not conducted openly, such that the ordinary low-­income families – the supposed beneficiaries – did not have the chance to purchase such houses. In 2009, when the economic stimulus plan worth 4,000 billion RMB was launched, the construction of affordable housing presented ‘totally different’ images across the country. Beijing, Guangzhou and some other cities reduced the construction of such houses, whereas Shanghai and some cities began to vigorously promote the construction. In Beijing, plots of land for affordable housing built in 2009 only accounted for half of the areas in 2008. In Guangzhou, due to the fact that 1,170 out of 2,145 houses were abandoned in 2008, Huang Xinjing, Assistant Director of the Housing Construction Office and Housing Reform Office of Land and Housing Management Bureau, revealed that the proportion of low-­rent housing and affordable housing had changed from 1:9 to 2:1. Several provinces, such as Hebei, Liaoning and Shandong, also reduced or completely ceased the construction of these projects. However, some large-­scale projects continued or were relaunched in other cities. For example, in Shanghai, a project that was previously terminated for five years was restarted in 2008 with a planned scale of 4 million m2. By the year 2009, another plan for a 4 million m2 piece of land was initiated. Jiangsu also built 150,000 affordable houses by 2012, while Chongqing built 10 million m2 of

Locked-out  143 affordable housing. Yunnan and Fujian also initiated their own affordable housing projects. In the large-­ scale construction of affordable housing, the resurgence of welfare housing distribution also emerged in these cities. Many properties in Shanghai were purchased in groups by SOEs as talent apartments or indemnificatory housing. On 22 November 2008, the Shanghai Lujiazui (Group) Ltd purchased 180 houses inside the housing project of ‘Xingtian Park’ originally developed by Xincheng Real Estate Co. Ltd from Shanghai Zhongxin (Group) Co. Ltd. The units were used as apartments for finance talents in the Lujiazui Area. Meanwhile, authorities from the Shanghai Pudong New Area also planned to invest 2 billion RMB within three years with the aim of helping talents solve their house renting problems and providing lessees with a rent subsidy. These talent apartments were built to attract high-­quality talents. Obviously, ordinary low-­income families were unable to enjoy such high-­end affordable houses.  In contrast with the policy that was openly proposed by Shanghai to build affordable houses to attract high-­end talents, Beijing dramatically reduced the construction of affordable housing. However, its staff members employed by government offices, SOEs and other state-­owned institutions were given the opportunity to enjoy affordable houses with low prices and high quality. The only difference was that these housing units were not listed in the urban construction plan, hence, they were not publicised to ordinary people. One example was Yifengyuan, a high-­quality residential area near Liuliqiao, West Third Ring Road of Beijing, which was located in the downtown area but with a quiet environment. It was originally classified as an affordable housing project funded by the Beijing Municipal Development and Reform Commission and the Beijing Municipal Construction Committee in the name of ‘housing cooperatives’. Under the build and transfer (BT) mode, the developer was in charge of raising funds for the construction and building, after which it should transfer the project to a development organisation when construction was completed. The new development organisation would then pay the developer for the costs of engineering construction and financing. Such ‘civil servant housing’ similar to Yifengyuan was common in Beijing. A large number of affordable houses enjoyed by civil servants from China’s state organs used to be built in established living areas located in downtown areas, such as Guanganmen, Guangqumen, Sanlihe and Xinjiekou. Such houses were listed as affordable housing plans of that current year, although these were only offered to civil servants.28 The ‘housing cooperative’ mentioned here refers to a housing model that had been widely adopted before the housing reform in China. With the support of the government and agencies, adhering to the principle of shared responsibilities among the state, its departments and individuals in a reasonable manner, housing cooperatives dealt with the housing problems of urban low-­income earners by taking measures of mutual aid and strength of staff members. In 1992, The State Council Leading Group for Housing System Reform promulgated the Interim Measures for Management of Urban Housing Cooperatives. After 1998, welfare housing distribution was gradually replaced by the

144  Locked-out affordable housing system. Through this initiative, housing cooperatives were included in the scope of affordable housing projects and became important components of such projects. Housing cooperatives consisted of housing construction projects under fund-­raising, wherein the houses were distributed among members who offered the funds.  In addition to the models of building houses with money raised by state or local administrative agencies, SOEs and public institutions, another model adopted by some departments and enterprises to grant special welfare for their staff was to offer staff members the opportunity to purchase commodity houses in groups at prices far below the market price. As reported by CCTV in 2009, Beijing Huayou Service Corporation, which was subordinated to China National Petroleum Corporation, spent 2.06 billion RMB purchasing eight apartment buildings, two commercial buildings and two underground parking lots from the third phase of Taiyang Xingcheng, Chaoyang District of Beijing. Staff members were given the option to purchase the houses as a group at the price of 9,000 RMB/m2 (the actual market price was 23,000 RMB/m2).29 Serious unfair practices also occurred in the allocation process of these houses. In fact, only the leaders could enjoy the benefits of the group purchase.30 Moreover, such a large-­ scale purchase caused tension in the housing supply, which led to soaring market prices of the other houses in the same residential area. One example was the Taiyang Xingcheng project purchased by PetroChina. Staff members could purchase at the group price of 9,000 RMB/m2, whereas the actual market price was over 20,000 RMB/m2. One and a half years later, the price for the same estate reached 45,000 RMB/m2, which was much higher than the average commodity housing price in Beijing.  Mid- and low-­income families High prices and few opportunities The prices of affordable housing units were generally calculated in two ways. First was through ‘cost plus’, which was used to calculate the price with a profit margin of 3 per cent for developers based on tax relief. The second was by calculating the price by cutting a certain percentage off the price of a commodity house of the same type nearby, taking market factors and social security factors into consideration. Generally speaking, the certain percentage to be cut had to be over 20 per cent. Otherwise, it would have been difficult for mid- or low-­income families to purchase the affordable houses, which might eventually lead to the abandonment of purchase.31 By the time of the housing system reform in 1998, system designers divided consumers of the houses into three categories: (1) high-­income earners who possessed the capabilities to buy commodity houses or invest in real estate; (2) lowest income earners who had an urban minimum living allowance, but were unable to purchase houses and whose housing problems could be solved by the low-­rent housing provided by the government; and (3) mid- and low-­income

Locked-out  145 earners who could apply for affordable houses under specific provisions of the policy.  In the current policy environment, ‘retention or abolition’ of affordable housing did not have a great influence on the high- and lowest-­income earners. For the former, they had the capabilities to buy commodity houses or to invest in real estate. Of course, they were not qualified to apply for affordable housing. For the latter, their incomes were not high enough for them to purchase affordable housing within a certain period, so the low-­rent housing was still their best choice. Unfortunately, although mid- or low-­income earners were the beneficiaries of affordable housing, the policy was still unable to solve the housing problems of these population groups. On the one hand, they could only avail themselves of the opportunity to purchase affordable houses by grading, lot casting and queuing. Those facing a more difficult situation would be more eligible to purchase, but they were more worried about the price. For families faced with difficulties among mid- and low-­income earners with higher grades, they may manage to collect sufficient down payment for the purchase. However, banks were still reluctant to grant loans to these families, so they eventually had to give up their slots. On the other hand, in the policy practice, affordable housing cannot cover relatively affluent groups among the middle class and low-­income earners due to a very small proportion of construction. We call the groups who are ineligible to enjoy affordable housing but not able to afford the houses either the ‘sandwich class’. The sandwich class consists of people who are relatively affluent among mid- and low-­income earners but they could only obtain fewer grades and occupy a place at the back, so they did not qualify to purchase the affordable houses even after several rounds of lot casting. The emergence of the sandwich class reflects the inherent flaws that exist in the institutional design.  Another noteworthy housing issue was the one faced by non-­native populations coming into the cities for work. Fresh graduates and demobilised soldiers account for about 20 per cent of the urbanised population. Especially in Beijing and Shanghai where there are many colleges and universities, a large number of graduates stay in these cities every year. There are also many farmers coming into the city, and they account for 80 per cent of the non-­native population. Thus, finding ways for these sectors of the population to live and work in peace and contentment in large cities has also become an important problem for the authorities. Indeed, no housing policies for these people have been designed.  From the analysis above, we can see that policy on affordable housing could not actually benefit all mid- and low-­income earners. This policy could only provide low-­cost houses for mid- and low-­income earners and only in small quantities. For most mid- and low-­income earners, they may either lose the chance to purchase the affordable houses, or may be unable to make the purchase, so they eventually abandon their purchase rights.

146  Locked-out High costs on purchase out of the price Even if buyers had already purchased affordable housing units, they still had to pay for additional costs. First, because these houses only had limited property rights, special requirements and procedures had to be fulfilled if one wanted to sell or rent these houses after some time had passed. The Administrative Measures for Affordable Housing issued by the Ministry of Construction and six other ministries in 2007 explicitly stipulated that affordable houses purchased by individuals could be rented out even before they had acquired ownership of the full property; meanwhile, if the house was to be sold, the owner must hand in the profit accounting for a certain percentage of the price difference between the affordable housing unit and the ordinary commodity housing in the same area to the government. The period and the proportion of the limited property right were both determined by the municipal and county governments. The local governments of Beijing and Shanghai stipulated that the period of limited property right for their affordable housing units should last for five years. In 2009, Shijiazhuang stipulated that ‘internal recycling’ would be implemented in selling affordable housing units, where buyers who purchased two houses could make them available for sale on the market at any time, however, the price had to be determined by local price authorities; moreover, qualified buyers must apply for affordable housing based on their ranking in the queue.32 Although documents issued by the State Council further standardised the security function of the affordable housing through the ‘cyclical policy’, flaws still existed and unfair distribution was still rampant.33 Due to the restriction of limited property rights, what the buyers acquired was just part of their property, even though they purchased the house at a price lower than the market price. For most buyers, such houses are economical but cannot bring about other benefits. Second, there were huge differences between affordable housing and commodity housing in terms of location, construction quality and society grade. We have mentioned these problems in previous sections. Some residential areas of affordable houses were far away from the downtown area or were closer to landfills. The size, structure, construction quality, neighbourhood plot ratio, matching facilities and surrounding environments of the affordable houses were also far poorer than those found in commodity housing. Thus, buyers of affordable housing actually purchased housing commodity with poorer quality at a lower price. In particular, the prices of some affordable houses were actually similar to those of commodity houses nearby. Under the comprehensive comparison on limited property right and the quality of the housing, buyers winning the lots made the choice to abandon their purchase right, indicating that affordable housing did not bring about greater economic benefits than commodity housing for the buyers. There were also some extra costs for selecting affordable housing. As a kind of scarce product under an administrative monopoly, buyers of such houses had to wait in a queue or try to bribe those in charge. If the price of the affordable

Locked-out  147 housing was significantly lower than that of commodity housing, a considerable rental potential would be formed between both housing types with enlarged price gaps. All buyers of the former could enjoy such rental only by paying an extra cost, called a rental dissipation. Ordinary people could do nothing but patiently wait for the opportunity to have this ‘right’ by queuing and lot casting, whereas those who were ineligible but had authority and/or money could illegally obtain such a right by offering bribes. Although a buyer could fast-­track the process, this was actually a mode of rental dissipation. The extra income obtained by holding onto a scarce product, that is, rental, would be partially dissipated to persons holding the power of distributing the property. This was the kind of pervasive corruption that affected the policy’s ability to help the actual beneficiaries.

Expert involvement of being ‘locked-­out’ Initially, the affordable housing policy was established to ‘favour and benefit the people’. In reality, it became a problematic issue. Naturally, debates among experts on the ‘retention or abolition’ of this system followed. Controversies about affordable housing were mainly concentrated on three aspects: (1) its policy design, which was regarded as the reason for the unfair distribution of the houses (power rent-­seeking), provoked mass appeals for its abolition; (2) the property rights issue; and (3) the central government’s failure to provide financial support because of the policy’s attribute as an indemnificatory system. Controversies on the system design Inherent defects Since 1998, when the reform on the housing system was implemented, the fundamental role played by the market in the resource allocation of real estate has become increasingly prominent. Over the years, the real estate industry had developed rapidly as an important economic industry. However, the housing security system in China had yet to be fully established. Hence, along with prosperity of the real estate market and the rise in housing prices, mid- and low-­ income families were faced with increasingly prominent housing purchase and renting problems. The original intention of the affordable housing policy was to solve the problems faced by such families, however, the transition period in China resulted in the inherent contradiction between security and the marketisation of the affordable housing policy. Such a contradiction not only exists in China: Yang Hongxu, Director of the Integrated Research Department of the Yi Ju Real Estate Institute, adjudged that designing the housing security system and coordinating the relationship between indemnificatory housing and market-­ oriented housing has always been a baffling problem across the world, and has endured decades of exploration in many countries, including the developed countries in Europe and America.34

148  Locked-out The experts’ criticisms against the design of the affordable housing system mainly originated from the unfair distribution of purchase opportunities and accompanying corruption and fraud. For these reasons, many scholars have proposed abolishing the existing system. Mao Yushi used to state bluntly that ‘affordable housing is neither effective nor fair’. Zhang Shuguang, Chairman of the Academic Committee of the Beijing Unirule Institute of Economics, also believed that: ‘affordable housing has no practical values. It is prone to breed corruption that can only lead to unfair distribution. It has already lost its necessity to exist.’ Xu Dianqing, a famous economist, wrote an article in which he pointed out that the non-­market operations of the affordable housing system allowed government to have a larger room for operation, which once was an important resource for civil servants and government authorities to seek for benefits as there was no supervision at all. Affordable housing had several drawbacks, including disturbance in the price system, destruction of the social credit system, widening the gap between the rich and poor and breeding corruption based on rent-­seeking, all of which must immediately come to an end.35 Liang Jiyang, a researcher of the Geographical Sciences and Natural Resources Research Institute of CASS and a CPPCC member, also asserted that this housing policy violated a basic criterion that currency money in the same amount and type held by different people should have co-­equal use value.36 Zheng Bofan, a member of the Guangzhou Municipal CPPCC, also held the belief that affordable housing had to be abolished, because it led to the loss of state-­ owned assets and to social injustice resulting from improper management.37 Dr Zhao Yanjing, Chief of the Xiamen Planning Bureau and the Executive Director of the China Real Estate Association, asserted that there were inherent flaws existing in this housing policy even at the operational level. The first and most obvious problem was that it undermined the existing market mechanisms. The improvement of the housing system in our country followed the market-­oriented process. A price lower than the market price would lead to actual unfairness. The second problem had to do with price difference: different prices for the same item induced corruption and fraud. The third problem was that affordable housing was unable to manifest one’s true financial condition on the technical level. As one’s personal income changed, the government was unable to confirm whether this person was still entitled to enjoy the housing property with prices lower than the market price. Hence, the only way the government could control this was to restrict its transfer.38 In view of the different violations relating to the policy, experts also suggested that it be replaced by other indemnificatory housing systems. Wang Dongjing, Director of the Academic Department of the CPC Central Party School, former Director of the Economics Department and Chief Editor of China Economics Review, suggested that capital serving as subsidies for developers should instead be granted to low-­income earners as a house-­purchase coupon, so that they can purchase the commodity housing directly.39 Professor Zheng Gongcheng from Renmin University of China and a member of the NPC Standing Committee pointed out in his article that the housing policy not only

Locked-out  149 distorted the housing market but also influenced the supply of public housing. Policies on affordable housing and low-­rent housing must thus be replaced by a unified policy on public housing.40 In the symposium attended by municipal officials of Guangzhou at the beginning of 2009, Shen Chang’an, a CPPCC member from Hong Kong, proposed the granting of house renting subsidies to citizens, to allow them to make their own choices on their place of residence, rather than forcing them to move into low-­rent housing.41 Nevertheless, some experts defended the policy, stating that it can help to stabilise real estate prices. They further argued that, although the policy had flaws that needed revision, thus, there was no need to abolish the system entirely. Lang Xianping, a famous economist, stated that the government should not focus on saving the market but on building as many low-­rent and affordable houses as possible: ‘Saving or not saving the housing market would count for little if low-­ income earners did not have houses to live.’42 Hui Jianqiang, researcher of the Shanghai Yi Ju Real Estate Institute, stated that housing security that was only undertaken by low-­rent housing did not satisfy the people’s needs for long-­term residence, so the prevailing housing was not likely to disappear anytime.43 Chen Guoqiang, Director of the Real Estate Institute of Peking University, argued that there were still many flaws in the existing policy, for example, the responsibilities of developers, consumers and supervisors should all be clearly identified. As a relatively scarce housing product, the policy should follow transparent procedures for planning, construction, sale and transfer, and avoid black-­box operations at all costs.44 Meanwhile, a review article in the China Securities Journal indicated that the housing policy was not perfect given that fraudulent purchasing, reselling and other problems that frequently occurred. However, the policy should not be demonised and abolished entirely based on these corruption cases. The causes for corruption in this policy mainly include the following. First, there was insufficient supply compared with the huge demand and the scarcity had paved the way for corruption. Second, the relaxed review system offered opportunities for corrupted entities to exploit the loopholes. Third, some local authorities put money above everything else; they were not interested in the policy, if it did not bring them benefits. Hence, they arbitrarily twisted the policy for their own gains. To solve the problem of corruption, the system should be improved and the supply should be increased following the central philosophy in order to reduce the incentives for corruption.45 Some experts also stated that the reform should be implemented to resolve one restriction: that only those holding permanent urban residence certificates were qualified for housing units. Chen Guoqiang suggested that the policies on affordable housing and low-­rent housing could not benefit all groups due to the strict household register system, so the reform should proceed in an orderly way. He believed that the government’s capacity to uphold fairness would certainly be tested through this issue. Chen Yunfeng, General Secretary of the China Real Estate Professional Managers League, also believed that indemnificatory housing, including affordable housing and low-­rent housing, should be made

150  Locked-out available for all members of society, that is, just the locally registered permanent residents.46 Central departments used to respond to problems on the review, distribution and use of the affordable housing. For example, in response to some appeals, Hou Ximin, Director of the Housing Security Department of MOHURD, believed that strengthening admittance and supervision was the key issue in improving the policy. Different regions should continuously improve the working mechanism on admittance review for the prospective buyers; establish open, fair and impartial procedures on review; tighten the building standards and administrative provisions on transaction in the market; and strengthen the penalties for violations. He added that the authorities should severely investigate and punish reported incidents of purchasing affordable houses by cheating and collusion with administrative personnel seeking personal benefits, among others. For the next step, related departments must guide different regions to determine the admittance conditions, accurately identify the living and housing difficulties faced by low-­income families, establish a review mechanism under the joint efforts of different departments, improve the admittance and exit system as well as prioritise low-­income families in order to achieve distribution in an open, fair and impartial manner.47 With such responses, the government actually acknowledged that there were indeed serious problems in the distribution of housing units that needed improvement. However, the government did not think that the system should be completely abolished. People’s Daily also made an official response to the prevalent view of abolishing the housing policy. It published an article, in which the writer, Wang Wei, proposed that the supervision of the policy should include a better review system. In practice, government-­ appointed supervisors generally had little understanding of the varied living conditions of the applicants. The review process for the admittance qualification for indemnificatory housing was confined to a simple material review. The main channel by which to identify the applicants’ problems was through public survey data. Although some regions carried out housing surveys, this data was not used during the admittance qualification review for indemnificatory housing. At present, only a few cities, such as Qingdao and Shanghai, established a sophisticated information system on housing security, through which the government could easily access dynamic information on the housing and income status of urban families. By establishing such a database, government departments were able to gain more accurate information about the prospective buyers, which in one way, helped solve problems in the review process.48 On the same day, People’s Daily also issued an article about a dialogue between the Editor, Wang Mingfeng, and the reporter, Wang Wei. Wang Mingfeng thought that the historical mission of affordable housing was far from being fulfilled with the current version of the system. He argued that many low-­income families did not have access to low-­rent housing, nor could they afford the commodity housing or price-­capped housing. Especially in large or middle-­ sized cities with higher housing prices, the price advantage of the affordable housing was still very evident. Moreover, the

Locked-out  151 purchase abandonment on affordable housing in some cities did not mean that the housing problems of this group were already resolved. The fiery scenes on application and lot casting for affordable housing units in various regions indicate that these needs were still not met. If the housing policy were abolished, it would be more difficult to solve the housing problems faced by many low-­ income families.49 This view is consistent with the statement given by officials of the MOHURD. Local governments also implemented a series of measures against the illegal leasing of the affordable housing units. For example, the Beijing Municipal Housing Construction Commission released regulatory policies to address the illegal leasing of units. Meanwhile, measures for submitting complaints and reports were also strengthened.50 Article 28 of the Trial Measures on Price Administration for Affordable Housing in Shanghai stipulated that real estate holders and companions of the affordable housing should not arbitrarily transfer, lease, lend, grant the houses to others, or change the use of the houses and should not set extra mortgage rights except as loan guarantees for affordable housing. This meant that the house owner should be consistent with the other applicants.51 Non-­standard pricing mechanism for affordable housing According to the National Administrative Measures on the Price of Affordable Housing, the price of the affordable housing should be fixed and published before the commencement of the project by government departments in charge of pricing, together with the departments responsible for construction and real estate, in accordance with the relevant provisions indicated in the ‘Measures’. In practice, the price of these housing units was generally determined by referring to the market price upon completion of the project. In particular, such a pricing mechanism excluded the direct stakeholders: the eligible urban mid- and low-­ income groups. The pricing process should not be made public and only the final results were announced. Among the government, developers and eligible urban mid- and low-­income groups, the latter were the most vulnerable party as they only had two options: ‘to buy’ or ‘not to buy’. Affordable housing was a kind of quasi-­public product, and the number of people who wanted to get a purchase right was much larger than the actual number of houses on sale. In the application stage, the number of applicants was often several times larger than the actual number houses on sale. Thus, the administrative departments had to assign the purchase qualifications using policy instruments, such as lot casting, lottery or queuing. Thus, the chance of purchasing a unit could not be easily obtained. Furthermore, the demand mismatch between housing products launched in the market and the housing buyers often resulted from the exorbitant price and the lack of necessary survey data on customer demands before large-­scale construction, which then led to the widespread abandonment of their purchase right by some buyers. For example, in the sale process of a phase-­I affordable housing project in Zijun Village, Kunming in August 2009, a large number of mid- and

152  Locked-out low-­income families made the choice to abandon the purchase opportunities they had obtained. There were 5,300 houses in that project but only 2,510 houses were sold.52 Hu Xianjun, President of Gaowu Real Estate Consultants, said that his organisation had conducted some analysis on the topic of public welfare real estate in Kunming over the past two years. In December 2008, they assessed the fact that affordable housing in Kunming could eventually become unsellable. Hu himself also expressed the same sentiments in one of his blog entries. Six months later, their judgement proved to be true. In their opinion, the main reason for the low sales was the system itself. Affordable housing units were not ordinary products and may be restricted by such factors as remote location, incomplete facilities, higher prices, limited property rights, curtailment of transfer and additional payment for land profit. Furthermore, the relevant government departments had no back up plans because they failed to conduct market surveys prior to construction.53  In addition, the sales of the affordable housing units also revealed problems caused by the pricing mechanism. In the case of Kunming, the developer believed there was more demand than supply, because there were too many applicants. Therefore, they fixed a relatively higher price. Later, with the purchase abandonment, the prices of the houses continued to change from high to low levels, which further discouraged the buyers to buy right away. Repeated price changes thus exposed serious shortcomings on pricing. Under state regulations, the profit of the affordable housing units should be controlled within 3 per cent margin. In the case of Kunming, the developers obviously did not follow the stipulations of the Ministry of Housing and Urban–Rural Development. Meanwhile, some developers raised the development costs by fabricating financial statements in order to obtain higher profits. For this reason, Hu Xianjun proposed that affordable housing also required the so-­called ‘sunshine pricing’. This meant that the price of each unit should not be fixed by the developer or the government, but should be calculated by several qualified cost consulting firms, who would determine an accurate mean value. Based on the calculation conducted by a third-­party professional agency, the price of each unit could be guaranteed to be objective and fair, more in line with the national policy, and would be more acceptable for the beneficiaries.54 Unfortunately, the introduction of a third-­party cost consulting firm into the pricing mechanism had not gained much support from others. Regarding the social aspects of the housing policy problems, the heads of central departments also offered several responses. Hou Ximin, Director of the Housing Security Department of the MOHURD, indicated during an interview with the Xinhua News Agency that the pricing mechanism for the housing policy would be further strengthened. He also stressed the reasons behind the purchase abandonment in some cities. First, families were unable to afford the units. Some regions simply took the data published by local statistics department as the admittance standard for prospective buyers, however, the eligible families were still unable to afford the resulting prices. Moreover, commercial banks did not provide these families with loans due to risk considerations. Third, the

Locked-out  153 current cost-­based pricing mechanism had some flaws. For instance, there was an obvious difference among prices for adjacent locations due to the different costs of relocation. Fourth, location selection that did not meet the living and working needs of prospective buyers was also an important reason for purchase abandonment. Furthermore, there was an obvious gap between the prices of affordable housing and commodity housing in middle or small cities. Hence, Hou Ximin suggested that all regions must define the supply objects objectively, properly select the project site and construction scale and further improve the pricing mechanism.55 In addition to the responses made by officials of the MOHURD, local governments also released some policies to standardise the pricing mechanism for the housing policy. After two years of advice seeking and revision, the Shanghai Municipal Development and Reform Commission and the Shanghai Municipal Housing Security and Housing Administrative Bureau jointly promulgated the Trial Measures on Price Administration for Affordable Housing in Shanghai. This served as a supporting document for the Trial Administrative Measures on Affordable Housing in Shanghai. These ‘Measures’ stipulated that affordable housing projects undertaken by developers should follow the principle of principal guaranteed with meagre profits during price settlement. The settlement price should consist of the costs of development and construction, profits and taxes, where profits should be strictly controlled within a 3 per cent margin. These Measures also stipulated that the shares of the property right held by housing buyers must be fixed based on the proportionate relationship between the benchmark sale price and house prices in nearby locations, where the computing formula is as follows: share of the property right held by housing buyer = benchmark sale price/(house price nearby by 90 per cent). The pricing plan for the sales of projects under municipal coordination (including benchmark sale price and the share of the property right held by housing buyer) should be drawn out by municipal housing security agencies together with housing security agencies of relevant regions (counties), under the supervision of the municipal price authority and the municipal housing authority. The pricing plan for the sales of self-­ funded projects at the regional (county) level should be drawn out by housing security agencies at the regional (county) level and reviewed by price and housing authorities at the same levels, where the results should be submitted to the region (county) government for approval and serve as records in the municipal price and municipal housing authorities.56 Publishing the land price of real estate projects In 2009, the Ministry of Land and Resources published a special survey on land used by real estate projects, which stated that the ‘average proportion of land price accounting for housing price among 620 real estate projects in 105 cities was 23.2%’.57 Over the past decade, the Ministry of Land and Resources established a nationwide monitoring system for urban land price indexes. However, such data was simply used as a reference within the system and was never

154  Locked-out disclosed to the public. Hence, this marked the first official disclosure of the land prices of real estate projects. On this account, the China Land Surveying and Planning Institute submitted a letter of proposal to the Land Utilisation Department of the Land and Resources Ministry, suggesting that the land price of each real estate project must be publicised at the time of house selling in order to solve the problem of asymmetric information on the market. Zou Xiaoyun, Deputy Chief Engineer of the China Land Surveying and Planning Institute, said that it was easy to publicise the land price of each real estate project on the technical level, as this can be completely fulfilled by the existing national monitoring system for urban land price indexes. Under the initiative of the China Land Surveying and Planning Institute, technical cooperation agencies were set up in each city to be monitored. These agencies, which included the intermediary assessment agencies that operated separately from the land and building systems in the past, had a huge network of appraisers and were very familiar with land prices. Precedents on the disclosure of land resource information have already emerged in foreign countries. In China, real estate can also be defined as a limited public resource, so the land prices were not considered to be confidential data. Furthermore, Zou Xiaoyun said that land can be sold openly as a public resource, so the operation and management should be transparent.58 Moreover, experts advised that land prices must be publicised in a detailed and accurate manner. However, debates on the obtained figures after determining the proportion of land price accounting for housing price (as released by the Ministry of Land and Resources) resulted from the fact that the data were only related to land bargain prices and excluding the taxes, which easily led to unclear information disclosure. Yang Chongguang, Vice-­Chairman of the China Society of Urban Economy and researcher of the Urban Development and Environment Research Centre of CASS, opined that the positive sense of publicising land information on each project cannot be denied, but the data must be accurate and detailed, otherwise, greater social conflicts may arise. Unfortunately, this proposal was not approved by the Land Utilisation Department of Land and Resources Ministry. Experts estimated that the largest obstacle preventing relevant ministries from adopting this proposal was the large amount of technical work involved.59 Solving drawbacks by ‘second-­time housing reform’ In relation to the issues of the housing system, some experts have proposed the ‘second-­time housing reform’. Li Daokui, Director of the China and World Economy Research Centre of Tsinghua University, stated that local governments relied on land selling to obtain financial revenue in the current real estate market; however, the common people were prone to complain if the land was sold at high prices and the local governments cannot obtain financial revenues if the land is sold at low prices. For such a system, ‘second-­time housing reform’ must be conducted.60

Locked-out  155 In August 2009, fourteen experts and scholars from the real estate sector submitted a joint letter to the Ministry of Land and Resources and the Ministry of Housing and Urban-­ Rural Development proposing the implementation of a second-­time housing reform and the establishment of a housing system in the ‘three by three pattern’. The so-­called ‘three by three pattern’ aimed to actualise the ‘three housing systems, three ways of land supply and involvement of three teams’ based on three social classes. Such houses would be provided mainly to the mid-­income families, which comprise 60 per cent of the urban population.61 The second-­time housing reform was designed mainly for the ‘sandwich class’. Liming, the initiator of this joint letter and an expert on the Housing Act, figured that while the current indemnificatory housing system could basically meet the housing needs of low-­income families and the commodity housing system could meet the housing needs of high-­income families, there were no systems to solve the housing problems of the mid-­income families. Li Daokui stated that the basic direction of the second-­time housing reform should be towards housing services led by the government. In addition to low-­rent housing and affordable housing, the government was suggesting to build more moderate-­ rent houses that could cover the mid-­income groups and ease the pressure of the high housing prices.62 Liu Huiyong, Vice-­Chairman of the China Investment Association, explained in detail the basic idea of the second-­time housing reform. He pointed out the three flaws of the current urban housing system of China. First, policies on monetary subsidies were seriously out of line with market rent and housing prices. Second, there were no institutional protection measures for the construction and supply of indemnificatory housing. Third, prohibiting agencies from supplying physical housing also had its drawbacks. Liu Huiyong proposed that four objectives should be achieved by the second-­ time housing reform, to provide: housing for staff members living in the neighbourhood; full coverage of housing security; housing upgrade; and more standard housing exchange.63 Understandably, the second-­time housing reform proposal was challenged by the real estate industry. Li Shuiyuan, Vice-­Chairman of the Shijiazhuang Real Estate Association, claimed that the ‘three by three patterns’ and ‘four fixing and two competing’ modes proposed in the second-­time housing reform did not reflect national conditions. First, there was nothing new in the contents of the three types of land supply. Government allocation was already executed in the construction of affordable housing and low-­rent housing. The land ‘bidding, auction and leasing’ modes were already implemented through the practice of granting land, whereas the ‘four fixing and two competing’ mode showed poor feasibility. The contents of the latter mode did not consider the construction cycle of the house and influence of price changes in that cycle onto the construction costs, and as a result, the ‘four fixing and two competing’ mode had lost its original significance. Second, it remained to be seen whether state-­ owned housing investment corporations, non-­profit welfare construction agencies and developers would jointly participate in housing construction. State-­ owned housing investment

156  Locked-out corporations might monopolise the market by dint of their abundant economic power as they became more involved in the real estate market. In addition, the involvement of non-­profit welfare construction agencies directly contradicted the principles of the ‘four fixing and two competing’ mode. Generally, such a proposal was viewed as a hasty one that lacked thorough investigation.64 Ma Hongman, PhD in Economics, and the commentator and moderator of the Shanghai First Financial Channel, believed that the second-­time housing reform aimed to develop the useful and discard the useless aspects of the first housing reform. However, he criticised the proposal of allowing administrative departments to assume more responsibilities. If administrative intervention was enhanced in the indemnificatory housing system, greater risks and more instances of power rent-­ seeking could be generated.65 To sum up, industry insiders generally held a negative attitude towards the second-­ time housing reform. The Shanghai Business Daily even criticised such a reform as an unnecessary move.66 From the current development situation, proposals regarding the second-­time housing reform did not obtain an official response from the Ministry of Land and Resources and the Ministry of Housing and Urban–Rural Development. Dispute on the property system with affordable housing replaced by rental housing The limited property rights provided by the affordable housing policy had always been a key issue. What housing buyers obtained was the property right to affordable housing, which could be traded in the market. However, some extra conditions have to be met if the housing buyer wants to resell the unit. For example, some local governments stipulated that the house could only be sold five years after the purchase. Then, upon selling the house, the owner should hand in the profit accounting for a certain percentage of the price difference between affordable housing and ordinary commodity housing in the same area to the government. Nevertheless, as they can be resold, affordable housing can be considered as a long-­term investment. Hence, affordable housing has become the object of power abuse. For instance, some high-­income earners with good connections have managed to ‘qualify’ for purchasing the affordable houses. In order to solve the problems in the implementation of affordable housing policy, some experts made recommendations to change the property system. Zou Xiaoyun, Deputy Chief Engineer of the China Land Surveying and Planning Institute, indicated that the housing policy was prone to power abuse amidst rising prices in the real estate market. Therefore, he suggested that selling the residence rather than land ownership during the development and sales of the affordable housing units could reduce the investment value of the houses, thus also reducing the potential for abuse.67 Wen Linfeng, a researcher at the Policy Research Centre of the MOHURD, proposed that the sale-­oriented attribute of indemnificatory housing should be gradually shifted to a lease-­oriented one. With subsidies granted by the government, low-­income families would be able

Locked-out  157 to afford the rent, so that 80 per cent of applicants would rather rent the house than purchase it.68 Some other experts proposed the construction of public rental housing, which could cover the needs of low-­income families not covered by the original low-­ rent housing system. Gu Yunchang, Deputy Director of the Housing Policy Expert Committee of the MOHURD and Vice-­Chairman of the China Real Estate and Housing Research Association, said during a talk show that, including public rental housing into the scope of indemnificatory housing could provide security for the urban mid- and low-­income groups.69 In this case, some low-­ income families among the groups covered by the affordable housing policy, but who could neither afford the units nor apply for low-­rent housing, could also enjoy the benefits of the indemnificatory housing via public rental housing. This idea is similar to the elaboration made by Chen Huai, Director of the Policy Research Centre of the MOHURD, who stated that this solution could help everyone have their own place to live in. Specifically, this entailed enlarging the scope of rescue-­based security housing to cover the groups with a certain capability but a relatively larger gap between the income and cost of purchasing.70 Xiong Jinqiu, a senior economic researcher, also stated that rental-­type housing is a good direction towards a better housing policy. Relative to the existing sale-­oriented mode, the lease-­oriented mode allows the flexible adjustment of occupants and rental levels for the distribution of security resources in light of family incomes and changes among the supply subjects. Meanwhile, lease-­ oriented affordable housing could weaken the function of the entire security system in terms of wealth redistribution, which would then squeeze out the corrupt entities, thus leading to a more equitable distribution of the security resources.71 In addition to the public rental housing policy, some scholars also suggested replacing the affordable housing with low-­rent housing. During the NPC and CPPCC conferences held in 2009, three CPPCC members (Wang Chaobin, Jin Zhengxin and Cai Jiming) jointly proposed stopping the construction of affordable housing and immediately implementing the low-­rent housing system. They pointed out the fact that because the policy gave priority to sales this led to power abuse, given that the rights on pricing and distribution were all in the hands of the local governments and their agencies. Therefore, it was recommended that the purchase behaviour for affordable housing should be turned into rental behaviour and that everyone should be encouraged to support low-­rent housing, thus eliminating the issues on property rights.72 That joint suggestion was also supported by insiders in the real estate industry who were also CPPCC members. Yu Lianming, a CPPCC member and President of the China City Construction Holding Group, clearly stated that the construction of affordable housing should be terminated and low-­rent (or even zero-­rent) housing should be developed. However, He Ping, a CPPCC member and President of the China Poly Group Corporation, argued that awarding the property rights to housing units built under state financing to individuals seemed inappropriate.73 Zhang Li, a CPPCC member and co-­ chairman of R&F Properties, advised during an

158  Locked-out interview with Beijing News that the government should build less affordable houses but more low-­rent houses; he also proposed that house-­purchase coupons could be granted in a trial among civil servants.74 In fact, ceasing the construction of affordable housing and actualising the low-­rent housing system were also in accordance with the interests of local governments. Providing indemnificatory housing was a mandatory task assigned by the central government to local governments, who explored every means to reduce costs whilst attempting to fulfil the task. Before 2007, both affordable housing and low-­rent housing were built in accordance with the requirements of the central government. The actual situation, however, was that the investment and construction of affordable housing dropped down completely and the construction of low-­rent housing also lagged behind. The construction of affordable housing seemed like a heavy burden for local governments who lost their profits from the land transfer fees. Here, the administrative and institutional fees were charged with half a discount during the construction and operation of the affordable housing. Expenses for the construction of infrastructural facilities were also borne by the local governments. Moreover, the exit mechanism for affordable housing was also imperfect. Local governments needed to constantly provide more land for affordable housing, which meant that they suffered from an endless loss of land revenue. According to the data issued by the National Bureau of Statistics, the proportions of housing units sold accounted for only 21 per cent, 20 per cent, 13 per cent and 6 per cent of the total recorded values in 1999, 2001, 2003 and 2006, respectively, indicating a dramatic declining trend. In contrast, although low-­ rent housing also needed substantial capital granted by local governments, it gave priority to monetary subsidy supplemented by physical matching on lease, that is, long-­term subsidies to persons in small amounts, which could mitigate the pressure on local financing compared with the mode of one-­shot subsidies granted in large amounts. Furthermore, the centralised construction of low-­rent housing had to be carried out on a small scale because there was no need to sell the property rights to the buyers. Local governments could conduct physical matching on leases by spending less money acquiring the second-­hand housing. Without the need to do large-­scale construction, both financial funds and lands would be saved. More importantly, investments in low-­rent housing would be granted by central and local financing with continued income from public accumulation funds and land transfer fees, where capital could be ensured in a better way. The central government stipulated that local governments must use part of their net incomes to build low-­rent housing. Cities and towns in central and western regions were granted fiscal transfers from the central government under the circumstances of a lack of funds for building low-­rent houses. To conclude, ceasing the construction of affordable housing and actualising the low-­ rent housing system were in accordance with the interests of the previously burdened local governments. However, the MOHURD held completely different opinions regarding the proposed reform of the affordable housing policy by experts both inside and

Locked-out  159 outside the system. The MOHURD prepared a report and submitted this to the State Council and departments in charge. This report noted that affordable housing was still an effective approach enabling residents to obtain houses in cities with higher housing prices, thereby justifying the continued existence of affordable housing.75 On 7 May 2009, Qi Ji, Vice-­Minister of the MOHURD, emphasised during an interview that both affordable housing and low-­ rent housing were forms of indemnificatory housing; hence, the local governments should fix the proportion between affordable housing and low-­rent housing according to local conditions.76 This meant that there would be no mandatory indicators for local governments on affordable housing. Hou Ximin, Director of the Housing Security Department, MOHURD, said that they took note of the discussions regarding the proposal to abolish the affordable housing system and conducted careful studies. He deemed that the housing policy belonged to the category of social policy, which was different from the real estate policy. Supporting qualified residents to possess houses was necessary in helping these low-­ income families to obtain basic properties and should be the achievements of reform and development that uphold the principles of optimising the social structure and promoting social harmony and stability.77 On 7 August 2007, the State Council issued Several Opinions on Addressing the Housing Problem of Urban Low-­Income Households (ND[2007] No. 24). The Opinions indicated that the construction of the urban low-­rent housing system lagged behind other projects and that urban low-­rent housing system was the principal pathway through which low-­income families can address their housing problems. One major change included in the Opinions was the proposal to take urban low-­rent housing as the main method for addressing housing problems. The capital for low-­rent housing should still be granted by local governments and the central government should offer subsidies to poverty-­ stricken areas in the middle and western regions. There were no provisions related to the abolition of the then version of the housing policy.  Suggestion to increase the central government’s financial support In view of the resistance of local governments against the affordable housing policy, some experts suggested that the central government should increase financial investments in the construction of these houses. During the NPC and CPPCC conferences held in 2007, Recommendations on the Government’s Involvement and Investment in Affordable Housing and Low-­Rent Housing, which was submitted by the Central Revolutionary Committee of the Chinese Kuomintang (Kuomintang Revolutionary Committee) was set down as the No. 1 proposal by the CPPCC Proposal Group. This proposal suggested that funds for the indemnificatory housing should be included in the national budget. In response to the CPPCC No. 1 Proposal in 2007, the State Council issued Several Opinions on Addressing the Housing Problem of Urban Low-­Income Households (ND[2007] No. 24) on 7 August 2007. Compared with expert advice, we can find that this policy neither adopted the proposal of abolishing

160  Locked-out the current policy nor decided to increase the central finance support. Hou Director Ximin responded to these two kinds of social opinions during an interview and stated that, although it aimed to help qualified residents have their own houses, the central government failed to adopt those two kinds of opinions due to its limited financial capacity; moreover, he stressed the fact that affordable housing was still an effective way to address the housing problems faced by urban low-­income families in the current period.78 Brief summary: why did experts attempt nothing and (therefore) accomplish nothing? The reforms in the affordable housing policy were closely related to various stakeholders. From the analysis of stakeholders in this chapter, the populace (especially the urban low-­income earners) was more concerned about the possibility of procuring a house. The open and fair manner by which the government officials formulated and implemented relevant policies served as the key factor in the success of the housing policy. However, the policy’s institutional flaws created huge opportunities for power abuse carried out by government officials and staff within the system. Fundamentally, they were not willing to thoroughly abandon the practical interests brought by the affordable housing policy. The local governments’ support for the policy has weakened over the years due to the loss of profits from the land transfer fees and the tremendous financial pressures they have faced. Based on the special attributes of the land, developers and local government formed subtle relations. The government stipulated that the profit margin of developing affordable housing should be less than 3 per cent. However, the developers were able to shift the development costs to ordinary mid- and low-­income housing buyers due to inadequate price supervision and the lack of quality surveillance systems, which led to fewer houses being built for the intended buyers and a smaller coverage ratio. Together with restrictions on the price and conditions for a mortgage loan, some ordinary citizens were incapable of purchasing the houses and had to give up their rights to purchase them. All these reasons resulted in the marginalisation of the housing policy. On the one hand, affordable housing only covered a small ratio of beneficiaries, many of whom chose to abandon their purchase rights. On the other hand, staff members of the government agencies, state-­owned enterprises and institutions enjoyed the benefits of the policy even though they were not the intended beneficiaries, thus resulting in a situation of social injustice. For many years, experts with or without official backgrounds already expressed concerns about this policy, actively submitted proposals to the government through their own channels and even expressed their views to the media. These experts included those from the Expert Committee of the Housing Ministry and even some members of the NPC Standing Committee, all of whom wielded considerable influence. The most important policy measures involved in the reform of the housing policy included financial investment, land supply and the distribution of purchase opportunities. These three policy instruments did not

Locked-out  161 have a high level of knowledge complexity. The retention or abolition of the affordable housing policy was not a very complicated problem and the government only had to make decisions on two things: whether to build the houses; and how much of its financial resources should be invested in the construction projects. Compared with the complicated policy instruments and technical issues in the two public health policy cases in the previous chapters, the policy instrument of the housing policy is relatively explicit and was less complex. More importantly, the government possessed more key information on financial allocation, land supply and purchase opportunities than the external experts. Therefore, the policy makers did not require excessive technical analyses from the experts during the policy instrument selection for the housing policy. As the decision-­ making and policy adjustment have already been concluded, it was difficult for expert opinions to influence the policy agenda and change the benefit distribution of those with vested interests. Rather, policy makers had to focus on how to balance the interests of the different stakeholders during the housing policy reform. Due to the lack of necessary information, the recommendations made by experts often did not have practical significance and were thus rejected by the government’s policy makers. Nevertheless, expert recommendations were not totally disregarded by the government. From some of the practices implemented by the central and local governments and the related statements given by officials, we can see that they were all trying to create a good image by listening to what the experts had to say. For the power abuse caused by the flaws in the policy’s institutional design, instances of which were highlighted by experts, the government also made quite positive pronouncements. The policy has become a focus of public criticism due to several problems discussed elsewhere in this chapter. In this regard, central government officials repeatedly pledged to strengthen the admittance management and supervision, to severely punish the responsible individuals caught abusing their positions and to improve the pricing system. Unfortunately, as the recommendations of the experts required in-­depth changes, such as publicising the development costs of real estate projects, jointly signing a letter for the second-­time housing reform and so on, the relevant departments did not offer any response or resolution. Disagreements formed between the central and local governments because of the property reforms proposed by the experts, especially with regards to the proposal to replace affordable housing with low-­rent housing. From the local government’s perspective, affordable housing was not an optimal choice. First, this policy could not obtain the support of central finance. Second, local governments were required to provide free land for construction and thus lose the huge profits from land transfer fees. Meanwhile, financial constraints appeared in some places because different taxes and fees for affordable housing were remitted according to the requirements of the central government. In contrast, the construction of low-­rent housing only needed a smaller capital input and was able to gain the support of central finance; hence, the local governments were more willing to address the housing problems of low-­income families by

162  Locked-out building affordable houses. Experts have forwarded queries on the unreasonable system of affordable housing from various aspects, and the local governments seemed pleased to see that experts gave similar opinions. Many local governments created opportunities for experts to discuss the irrationality of the affordable housing during the NPC and CPPCC conferences and even held specialised seminars and workshops. However, the central government was placed in a relatively awkward situation. On the one hand, increasing the low-­rent houses meant more investments had to be made by the central government. On the other hand, chaos frequently occurred in different regions given the frequent delays and terminations of construction. To choose the lesser of two evils, the central government maintained that the affordable housing should not be abolished and the innovative attempts made by various regions to reform the indemnificatory housing system were beneficial. Thus, the affordable houses changed from being the main part of the housing policy to being the main part of the indemnificatory housing and ultimately became a marginalised component of the policy. Specific contents on views held by various experts and stakeholders are shown in Table 4.2.

New affordable housing policy of 2008 Although the policy on affordable housing was a locked system, it was not completely unresponsive to the outside world. In the second half of 2008, the outbreak of the international financial crisis opened another window for the affordable housing policy. On 15 November 2008, the State Council held an executive meeting to study and deploy ten measures on further expanding domestic demand and promoting stable and rapid economic growth. This proposal included a plan to allocate 4,000 billion RMB in investments by 2010. Accelerating the construction of the indemnificatory housing project for low-­ income families was ranked in first place, for which about 900 billion RMB was invested in indemnificatory housing for the next three years. Of this amount, 215 billion, 100 billion and 600 billion RMB were allocated for low-­rent housing, shanty towns and affordable housing, respectively.79 On 17 December 2008, the State Council held an executive meeting to study and deploy policy measures on promoting the healthy development of the real estate market. On 20 December 2008, the State Council decreed the Notification of the General Office of the State Council on the Promotion of the Sustainable and Healthy Development of the Real Estate Market (SOD[2008] No. 131), which proposed that the construction of low-­renting houses should be increased, maintenance and reconstruction of shanty towns should be accelerated and the construction of affordable housing should be strengthened. From 1998 to 2008, the changing course of the affordable urban housing policy in China was plagued by the funds allocation dilemma between the central government and the local governments, where expert advice only played a limited role. Before 2008, the central government had never adopted any expert recommendation, choosing neither to abolish the policy nor to invest in

Institutional identity

Major point

Director of the Policy Research Centre of the MOHURD, Director of the China Urban and Rural Economic Research Institute

Deputy Director of the Housing Policy Expert Committee of MOHURD, Vice Chairman of the China Real Estate and Housing Research Association

Chen Huai

Gu Yunchang

Chinese Academy of Social Sciences

He proposed the inclusion of public rental housing into the scope of indemnificatory housing.

He stated that the housing objective of the ‘12th Five-year Plan’ (2011–2015) was still effective as ‘everyone had a place to live’ and that the ‘centre of the housing security system should properly move up’ after the housing problems of low-income families were solved; he also proposed a broader scope of rescuebased security to cover the groups with certain capability but with a relatively larger gap between income and the cost of purchasing a house.

In the City Blue Book of 2009, CASS queried whether ministry benefits were greater than the national interests in the land reserve system.

Category I: real estate experts affiliated with government research institutions

Name

Table 4.2  Collection of views held by various experts and stakeholders

continued

Issuance of the blue book on a regular basis

Main activity

Category II: economists Cheng Siwei Former Vice-Chairman of the NPC Standing Committee, a renowned economist

Deputy Chief Engineer of the China Land Surveying and Planning Institute

Zou Xiaoyun

He revealed that the profits of the developers only accounted for 30 per cent of the total cost for real estate development, but part of the 30 per cent included ‘bribe offering’.

The government must up a new agency to implement a unified management for the development, construction and sale of the affordable housing, so that ministries of planning, land or construction would not shift their responsibility onto others. Selling the residence right rather than land ownership during development and sales of the affordable housing can reduce the investment value of the houses.

Researcher, Chief of the Housing and The reasons for rejecting the affordable Real Estate Research Department of the housing system included the following: Policy Research Centre of MOHURD the real estate market situation would worsen after the abolishment; affordable housing could help stabilise the prices of commodity apartments nearby; and affordable housing had addressed the housing problems faced by many midand low-income families each year.

Zhao Luxing

Major point

Institutional identity

Name

Table 4.2 Continued

The China Land Surveying and Planning Institute submitted a letter of proposal to the Land Utilization Department of the Land and Resources Ministry, suggesting that the land price of future real estate projects should be publicised at the time of house selling.

Main activity

Head of the Financial Development Office, Finance Institute, CASS

Chair Professor of the Chinese University of Hong Kong

A member of the Central Bank Monetary Policy Committee, CPPCC member, Director of the China and World Economy Research Centre of Tsinghua University

Yi Xianrong

Lang Xianping

Li Daokui

High prices placed the developers in a disadvantageous position. The current rules for the game were unsustainable. The second-time housing reform must be carried out and geared towards housing service led by the government. In addition to low-rent housing and affordable housing, the government should build more moderate-rent houses, which can cover the mid-income groups to ease the pressure of high prices experienced by the so-called ‘sandwich class’.

The government should build a large number of low-rent houses and affordable houses.

The profit margin enjoyed by developers was definitely more than 3 per cent. Developers could still gain profits from building more affordable housing units.

A professor from Renmin University of Affordable housing policy had not only China and member of the NPC Standing distorted the housing market, but also Committee influenced the supply of public housing, which had fulfilled its historic mission. Policies on affordable housing and lowrent housing must be replaced by the unified policy on public housing.

Zheng Gongcheng

continued

Institutional identity

CPPCC member, Economics Professor from Tsinghua University

Director of the Academic Department of the CPC Central Party School, former director of the Economics Department and Chief Editor of the China Economics Review

Chairman of the Beijing Unirule (Tianze) Economics Institute

Chairman of the Academic Committee of Chairman of the Beijing Unirule (Tianze) Economics Institute

Name

Cai Jiming

Wang Dongjing

Mao Yushi

Zhang Shuguang

Table 4.2 Continued

Affordable housing had no practical value. It was prone to corruption and had only led to unfair distribution. It had already lost its necessity to exist.

Affordable housing was bound to breed corruption. This policy was actually meant to subsidise the mid-income groups rather than the low-income groups with social resources, which appears to be unfair.

Capital, as subsidies for developers, should be granted to low-income earners as house-purchase coupons, so that they could purchase commodity housing instead.

So many problems and drawbacks were produced by the affordable housing policy. Hence, construction should be terminated.

Major point

During the NPC and CPPCC conferences held in 2009, three CPPCC members (Wang Chaobin, Jin Zhengxin and Cai Jiming) jointly proposed that the construction of affordable housing units should be terminated and the low-rent housing system should be immediately implemented.

Main activity

Tenured professor at the Huron College of Western Ontario University in Canada

PhD in Economics, commentator and moderator of the Shanghai First Financial Channel

Xu Dianqing

Ma Hongman

The second-time housing reform aimed to develop the useful and discard the useless aspects of the original housing reform. However, he criticised that greater risks in the form of power rentseeking may be produced if administrative intervention for indemnificatory housing was enhanced.

The non-market operations of the affordable housing policy allowed the government to have a larger room for operation, which once was an important resource for civil servants and government authorities to seek benefits because of the lack of supervision. Affordable housing had eight drawbacks, including disturbance of the price system, destruction of the social credit system, expanded gap between the rich and poor and breeding corruption via rent-seeking, among others. Hence, it should come to an end.

continued

Institutional identity

Major point

President of the Gaowu Real Estate Consultants

Researcher of the Shanghai Yi Ju Real Estate Institute

Hu Xianjun

Hui Jianqiang

Housing security was only undertaken by low-rent housing so it did not meet the national conditions and was unable to satisfy the people’s need for longterm residence. Thus, affordable housing would not disappear anytime soon.

The cause of dull sales was still due to the inherent flaws of the system. The demand mismatch between housing products launched in the market and the housing buyers led to abandonment of purchase rights. Affordable housing also needs the so-called ‘sunshine pricing’.

Category III: real estate experts from unofficial research institutions Chen Guoqiang Director of Real Estate Research There were still many flaws in the Institute at Peking University existing system so the responsibilities of the developers, consumers and supervisors should be clarified. As the relatively scarce housing product, affordable housing must follow transparent procedures for planning, construction, sale and transfer, and black-box operations should be avoided.

Name

Table 4.2 Continued

On December 2008, they made an adventurous judgement that affordable housing in Kunming would be inevitably unsellable. Six months later, their judgement came true.

Main activity

Former Deputy Director, Enterprise Management Office, Foreign Trade and Economics Department, Liaoning, an expert of the Housing Act

Li Ming

He proposed the ‘three by three pattern’ which aimed to actualise ‘three housing systems, three ways of land supply and involvement of three teams’ based on three classes. He also proposed the public housing under four fixing and two competing modes, that is, houses built on the land supplied and tendered in the manner of fixing the land price, fixing the building criterion, fixing the tax rate, fixing the profit margin at 5 per cent, competing for the housing price, competing for the development scheme and offered to those with higher grades.

Vice-Chairman of the China Investment Four objectives should be achieved by Association the second-time housing reform, including staff members living in the neighbourhood, full coverage of housing security, abstemious housing upgrade and more standardised housing exchange.

Liu Huiyong

continued

An initiator of the joint letter issued by 14 real estate experts suggested the implementation of the second-time housing reform.

Fourteen experts and scholars from the real estate sector submitted a joint letter to the Ministry of Land and Resources and Ministry of Housing and Urban– Rural Development, proposing the implementation of the second-time housing reform.

Assistant Director of the Real Estate Research Centre of Beijing Normal University

Wang Hongxin

The construction of low-rent housing gradually evolved into a kind of appeal for the local governments’ achievements. The construction of lowrent housing mainly depended on financial support, which had imposed high requirements for the ‘financial sustainability’ of the local governments. If a local government had difficulties this area, it would be inappropriate to enhance security standards unconditionally.

Major point

Main activity

Hou Ximin

Director of the Housing Security Department, Ministry of Housing and Urban–Rural Development

Affordable housing was an effective way to address housing difficulties faced by urban low-income families in the current period, thus bestowing upon the policy a sense of practical feasibility.

Category IV: perspectives of the central government, local governments and industry pundits He made the statement during an online Qi Ji Vice-Minister of the MOHURD Both affordable housing and low-rent housing were forms of indemnificatory interview by the Chinese Government Network on 7 May 2009. housing. Local governments must fix the proportion between affordable housing and low-rent housing according to the local conditions.

Institutional identity

Name

Table 4.2 Continued

Chief of the Xiamen Planning Bureau

President of the Henan Zhonglu Real Estate

General Secretary of the China Real Estate Professional Managers League

Member of the national CPPCC, Affordable housing projects should be President of the China City Construction terminated and low-rent (and even zeroHolding Group rent) housing should be developed instead.

Zhao Yanjing

Wang Chaobin

Chen Yunfeng

Yu Lianming

Indemnificatory housing, including affordable housing and low-rent housing, should be open to all sectors of society rather than just the locally registered permanent residents.

To protect the vulnerable groups, the government should build more low-rent houses. Poor families could not afford the affordable houses, thus making the system susceptible to corruption.

There were inherent flaws existing in the design of the housing system policy so it should be abolished.

Chief of the Construction Department of The coverage area of the Anhui indemnificatory housing should be defined as a law.

Ni Hong

He proposed the abolishment of the policy on affordable housing.

Former Chairman of Xi’an CPPCC, a member of the National CPPCC

Fu Jide

continued

During the NPC and CPPCC conferences held in 2009, three CPPCC members (Wang Chaobin, Jin Zhengxin and Cai Jiming) jointly proposed that the construction of affordable housing units should be terminated and the low-rent housing system should be immediately implemented.

During the NPC and CPPCC conferences held in 2005, he submitted a proposal that the affordable housing policy should be abolished.

A CPPCC member and President of the China Poly Group Corporation

He Ping

It seemed inappropriate that the property right of the affordable housing system built under state finance belonged to the individual.

A CPPCC member and Co-Chairman of Less affordable houses but more lowR&F Properties rent houses should be built. He also proposed a trial system, which would grant house-purchase coupons to civil servants.

Zhang Li

Major point

Institutional identity

Name

Table 4.2 Continued Main activity

Locked-out  173 the construction of housing projects. Although the urban housing policy was a system locked-­out of expert advice, the subsystems of this policy were not completely closed, within which policy makers still made quick responses to the changes in the outside world. For example, after the international financial crisis broke out in 2008 and the construction of affordable housing was redefined as a means of expanding domestic demand, the central government finally decided to invest huge amounts of capital into these housing projects. Thus, it became more obvious that other factors rather than expert advice influenced the changes to the policy made by the central government. While promoting the rapid development of the affordable housing and other indemnificatory housing, the central government already began to amend the Housing Security Law. In May 2009, the Ministry of Housing and Urban–Rural Development convened over forty representatives from the Ministry of Civil Affairs, the State Development and Reform Commission, the Ministry of Finance and other central or local agencies to initiate the ceremony for the revision of the Housing Security Law in Beijing. Although he was within the field of construction and management of indemnificatory housing, Zhao Luxing, a researcher and chief of the Housing and Real Estate Research Department of the Policy Research Centre of MOHURD, pointed out that the Three-­Year Plan for Indemnificatory House and the Housing Security Law were not on the same level.80 Technically speaking, the revision of the Housing Security Law was far more complicated than just simply dealing with how many financial resources should be invested to build affordable houses in 2008, and its legislation needed quite a long time. As the central government decided to initiate the revision of the Housing Security Law, it seemed a rational idea to invite expert involvement in the revision process of the law. From 31 July to 1 August 2008, the Ministry of Housing and Urban–Rural Development invited experts and held the second-­time expert meeting in Shenzhen.81 In the revision process, the experts were also divided into two schools of thought: the retention or abolition of the policy and whether laws should be enacted for the policy on affordable housing.82 At this point, the model taken by experts to participate in the Housing Security Law revision should be outside-­in enlightenment rather than a locked-­out model.

Notes   1 ‘Notification of the State Planning Commission and Ministry of Construction on Administrative Measures against Price of the Affordable Housing’, 17 November 2002, www.china.com.cn/PI-­c/237658.Htm.   2 ‘Why are Affordable Houses Neither Economic nor Applicable? Low-­Rent Housing to Play a Leading Role’, Chinese Business Morning View, 19 August 2009.   3 ‘Exploring the Truth of Affordable Housing: Who have Benefited from the Affordable Housing?’ World Financial Report, 21 August 2009.   4 ‘MOHURD Officials Talked about the Abandonment of Purchase for Affordable Housing and Demanded to Improve the Pricing Mechanism, Leju, 8 August 2009, http://gx.house.sina.com.cn/news/2009-08-18/1616882.html.

174  Locked-out   5 ‘Muren: EAH Policy Benefiting the People in Favour of Low Income Earners Became into a Red Packet for the Rich’, 19 August 2009, http://bi.house.sina.com.cn/ bzzf/2009-08-19/1044325243.html.   6 Kai Xu, ‘Affordable Housing Gave Way to Low-­Rent Housing’, 17 March 2009, http://news.sina.com.cn/c/2009-03-17/13391742354-2.shtml.   7 Hongman Ma, ‘Construction of Affordable Housing Shall not Give up Halfway’, China Business News, 21 August 2009.   8 ‘Scandal of Power Abuse on Affordable Housing’, China Youth Daily, 5 August 2009.   9 ‘A Deputy Director of Zhengzhou Queried the Reporter: Speak for the Party or for the People?’, 17 June 2009, http://society.people.com.cn/GB/1062/9493799.html. 10 ‘Huai’an Launched the “Housing with Common Property Right” to Resolve Difficulties on Housing Purchase’, Xinhua News Agency, 17 March 2010, www.js.­ xinhuanet.com/xin wen zhong xin/2010-03-17/content1926014.html. 11 ‘Notification of People’s Government of Hebei Province on Promotion of Sustainable and Healthy Development of the Real Estate Market’, 12 November 2008, www. hebei.gov.cn/article/20081127/1104243,html. 12 ‘Twelve New Policies on the Real Estate Market of Zhengzhou were Issued and put into Practice Yesterday, Where Affordable Houses can be Transacted in the Market Without a Hitch’, Orient Today, 29 April 2009. 13 ‘Changzhou of Jiangsu CEASED the CONSTRUCTION of Affordable Houses, Needy Families Could Obtain 80,000 yuan for House Purchasing’, Modern Express, 27 February 2009. 14 ‘Administrative Measures (on trail) on Low-­Rent Housing Physically Subsidised in Zhengzhou will be Implemented in the Coming Month’, 13 November 2009, http:// henan.people.com.cn/news/2009/11/13/4337911.html. 15 ‘No More “Discount” shall be made for the Construction Progress of Affordable Housing’, China Business Times, 2 September 2009. 16 Jun Zhang, ‘Whether the Affordable Housing should be Sentenced to Death?’ Yangcheng Evening News, 16 August 2009. 17 ‘In 2009, only 37 per cent of Affordable Housing has been Finished and Local Governments are Censured to be Negative’, 21 August 2009, http://news.sina.com. cn/c/2009-08-21/000818478230.shtml. 18 Shengxiang, ‘Will Abandoning Affordable Housing Promote the Construction of Low-­Rent Housing?’ Wuhan Evening News, 11 December 2008. 19 ‘MOHURD Tried to find out the Real Situation on Price-­Capped Housing and Public Rental Housing for the First Time’, Jinan Daily, 27 August 2009. 20 ‘Local Governments Stopped Building Affordable Houses and Started to Build Low-­ Rent Houses, Because They can Gain Financial Support.’ China Real Estate News, 17 August 2009. 21 ‘Unable to Obtain Mortgage Loan Serves as the Main Reason, 2777 Affordable Houses in Kunming were Abandoned by Prospective Buyers’, City Times, 19 August 2009. 22 ‘590 Affordable Houses are to Sell, More than 10,000 Families are Waiting in Line’, Southern Daily, 20 August 2009. 23 ‘New Regulations in Shanghai: Selling Price of Each Affordable House shall not Exceed the Benchmark Price for 20%’, Oriental Morning Post, 12 August 2009. 24 Xianrong Yi, ‘Profit Margin of Affordable Housing is more than 3%: Developers Have Been Enjoying Extortionate Profits for a Long Term”, 20 August 2009, http:// wh.house.sina.com.cn/news/2009-08-20/09178779.html. 25 Mingfeng Wang and Wei Wang, ‘Will the Affordable Housing Step Down from the Stage of History?’ People’s Daily, 13 August 2009.  26 ‘Only 37% of Affordable Housing has been Finished and Local Governments are Censured to be Negative’, 21 August 2009, http://news.sina.com.cn/c/2009-08-21/ 000818478230.shtml.

Locked-out  175 27 ‘Problems on Right to Know the House Price shall be Solved in Time, How Many Grey Costs will there be?’, China Securities Journal, 2 June 2009. 28 ‘Welfare Housing Resurged: Why the Construction of Civil Servant Houses Never Stops’, Outlook Newsweek, 26 March 2009. 29 ‘PetroChina Spent 2 billion yuan Purchasing 8 Apartment Buildings at a Prime Location in Beijing: Where Unit Price is 9,000 yuan/m2’, 26 August 2009, http://business. sohu.com/20090826/n266248924.shtml. 30 Fei Xing, ‘PetroChina was Accused Against Interest Transfer During House Purchase, Only Leaders can Enjoy the Benefits’, Beijing Morning News, 28 August 2009. 31 Hongman Ma, ‘Construction of Affordable Housing shall not give up Halfway’, China Business News, 21 August 2009. 32 Wei Guan, ‘Over 1,000 Affordable Houses in Shijiazhuang were Abandoned to be Purchased due to Higher Fixed Prices’, Beijing News, 3 August 2009. 33 Jinqiu Xiong, ‘Affordable Housing is not a Fair Mode, Housing with Common Property Right is an Alternative’, Shanghai Securities News, 11 May 2009. 34 ‘Affordable Housing: Try to Find a Balance Between Indemnificatory Nature and Marketisation’, Xinhua News Agency, 18 August 2009, http://news.xinhuanet.com/ house/2009-08-18/content/11901386.html. 35 ‘Nearly 50% of Houses of an Affordable Housing Project in Chongqing have been Leased within 8 Months after the House Delivery’, Southern Weekend, 24 June 2009. 36 Xukai, ‘Commissioners said that Affordable Housing is Prone to Result in Power Abuse and shall be Ceased’, Oriental Outlook, 17 March 2009. 37 ‘Commissioners from Hong Kong Suggested to Replace the Low-­Rent Housing with Rent Subsidies’, New Express Daily, 25 February 2009. 38 ‘There are Congenital Defects in the Affordable Housing System: Indemnificatory Houses are Better for Rent than for Sale’, Guangzhou Daily, 4 September 2009. 39 Dongjing Wang, ‘Expert Opinion: How to Improve the Policy on Affordable Housing to be More Favourable to People’, Overseas Edition of People’s Daily, 28 March 2007. 40 Gongcheng Zheng, ‘What is the Key for Dealing with Difficulties on Housing’, People’s Forum, 15 March 2007. 41 ‘Commissioners from Hong Kong Suggested Replacing the Low-­Rent Housing with Rent Subsidies’, New Express Daily, 25 February 2009. 42 ‘Nearly 50% of Houses of an Affordable Housing Project in Chongqing have been Leased within 8 Months after the House Delivery’, Southern Weekend, 24 June 2009. 43 ‘Local Governments Stopped Building Affordable Houses and Started to Build Low-­ Rent Houses, Because They can Gain Financial Support’, China Real Estate News, 17 August 2009.  44 ‘MOHURD gave Stalwart Support to Affordable Housing: Experts said that not Selling the Land Ownership may be an Option’, National Business Daily, 7 August 2009.  45 ‘Comments: Affordable Housing can’t be Sentenced to Death for Corruption’, China Securities Journal, 12 August 2009. 46 ‘MOHURD gave Stalwart Support to Affordable Housing: Experts said that not Selling the Land Ownership may be an Option’, National Business Daily, 7 August 2009.  47 ‘MOHURD Acclaimed that Violations on Affordable Housing shall be Severely Punished’, People’s Daily, 5 August 2009.  48 Wei Wang, ‘Supervision on Affordable Housing shall not only Depend on the Review System’, People’s Daily, 13 August 2009.  49 Mingfeng Wang and Wei Wang, ‘Will the Affordable Housing Step Down from the Stage of History?’ People’s Daily, 13 August 2009. 50 Si Chen, ‘Municipal Government of Beijing is Considering to Issue Supporting Policies to Deal with Lease of the Affordable Housing’, Legal Evening News, 28 July 2009. 

176  Locked-out 51 Dong Yan, ‘Municipal Government of Shanghai Clearly Stipulated that Affordable Housing shall not be for Lease’, Evening News, 23 July 2009. 52 ‘Why were 2,777 Affordable Houses in Hezijun Village Abandoned by Prospective Buyers?’ New Lives Newspaper, 18 August 2009. 53 ‘Affordable Houses in Kunming were Abandoned by Prospective Buyers and Became a Hot Potato for Government, Which Reflected the System Flaws’, China Youth Daily, 23 September 2009.  54 ‘Why were 2,777 Affordable Houses in Hezijun Village Abandoned by Prospective Buyers?’ New Lives Newspaper, 18 August 2009.  55 ‘MOHURD Officials Talked About the Abandonment of Purchase for Affordable Housing and Demanded to Improve the Pricing Mechanism’, 18 August 2009, www. chinanews.com/estate/news/2009/08-17/1822315.stml. 56 ‘Notification on Issuing Administrative Measures Against Price of the Affordable Housing in Shanghai’, 3 March 2011. 57 ‘The Ministry of Land and Resources Carried Out Special Investigation to Reveal the Ratio Between Land Price and House Price in the Real Estate Project’, 28 July 2009, www.china.com.cn/policy/txt/2009-07/28/content-­18220689.htm.  58 ‘Land Price Index as the Internal Reference for Ten Years, Experts Suggest the Ministry of Land and Resources to Publish the Index’, China Real Estate News, 17 August 2009.  59 Ibid. 60 Fei Xing and Daokui Li, ‘Deadlock in the Property Market must be Broken Down, the Second-­Time Housing Reform shall be Implemented’, 30 July 2009, http://house. people.com.cn/GB/9750475.html.  61 Pan Jian, ‘14 Experts and Scholars in the Real Estate Sector Submitted a Joint Letter for the Second-­Time Housing Reform’, Beijing Business Today, 26 August 2009.  62 ‘Professors of Tsinghua University: High House Prices are also Detrimental for Developers, the Second-­Time Housing Reform must be Conducted’, Beijing Morning Post, 29 July 2009.  63 Huiyong Liu and Hongxian Sun, ‘To Launch the Second-­Time Housing Reform is Imperative Under the Situation’, China Financial and Economic News, 7 August 2009. 64 Yanan Wang, ‘Shuiyuan Li Interpreted the Second-­Time Housing Reform: Far Apart from National Conditions in China’, Hebei Youth Daily, 3 September 2009.  65 Hongman Ma, ‘The Second-­Time Housing Reform is to Develop the Useful and Discard the Useless of the First-­ Time Housing Reform’, Guangzhou Daily, 27 August 2009. 66 ‘Shanghai Commercial News: The Second-­Time Housing Reform as an Unnecessary Move’, Shanghai Commercial News, 29 August 2009. 67 ‘MOHURD gave Stalwart Support to Affordable Housing: Experts said that Not Selling the Land Ownership may be an Option’, National Business Daily, 7 August 2009.  68 Kai Xu, ‘Seesaw Battle About Affordable Housing’, Oriental Outlook, 17 March 2009.  69 ‘MOHURD Experts said that Public Rental Housing shall not Subject to Household Register’, 19 March 2009, http://news.dichan.sina.com.cn/2009/03/19/15709.html. 70 Huai Chen, ‘Center of the Housing Security System shall Properly Move Up’, 17 August 2009, www.clr.cn/front/read/read.asp?ID=169263.  71 Jinqiu Xiong, ‘Affordable Housing is not a Fair Mode, Housing with Common Property Right is an Alternative’, Shanghai Securities News, 11 May 2009. 72 ‘CPPCC Members Proposed to Cease the Construction of Affordable Housing: It is Difficult to Promote the Changzhou Mode’, Yangzi Evening News, 9 March 2009.  73 Kai Xu, ‘Commissioners said that Affordable Housing is Prone to Result in Power Abuse and shall be Ceased’, Oriental Outlook, 17 March 2009.

Locked-out  177 74 Zhang Li, ‘House-­Purchase Coupon shall be Granted to Mid- and Low-­Income Families’, Beijing News, 15 March 2009. 75 Haifeng Jia and Wenwen Zhang, ‘To Prepare the Housing Security Law: MOHURD is Formulating the Three-­Year Plan for Housing’, 21st Century Business Herald, 18 August 2009. 76 ‘Vice-­Minister of MOHURD – Qiji Talked About Speeding Up the Indemnificatory Housing Project for Low-­Income Families to Improve People’s Livelihood and Economic Development’, 7 May 2009, www.gov.cn/zxft/ftl172/. 77 ‘MOHURD gave Stalwart Support to Affordable Housing: Experts said that not Selling the Land Ownership may be an Option’, National Business Daily, 7 August 2009. 78 ‘Person in Charge of MOHURD Answered Questions Proposed by Reporters from Xinhua News Agency on Affordable Housing’, 18 August 2009, www.gov.cn/ jrzg/2009-08/18/content1394688.html. 79 Whereas it included 10 billion yuan in the fourth quarter of 2008, 910 billion yuan in total were invested into the construction of indemnificatory housing; Wei Wang, ‘How to Spend the 900 billion yuan on Indemnificatory Housing’, People’s Daily, 13 November 2008. 80 ‘Experts said that Housing Security Law is still in the Research Stage’, 21 August 2009, http://news.sina.com.cn/c/2009-08-21/001918478257.shtml. 81 Ibid. 82 ‘Housing Security Law: Three-­Year Plan is Expected to Issue’, 21st Century Business Herald, 19 August 2009.

5 Civic activism

In 1981, the State Council officially established the ‘detention and repatriation’ (D&R) system for urban vagrants and mendicants. Its implementation, which stretched for a period of over twenty-­one years, resulted in various problems. Although experts made long-­term efforts to persuade the government to abolish the D&R system, they were not successful in this endeavour. After the Sun Zhigang Incident occurred in 2003, legal experts submitted two proposals for a constitutionality review. Soon afterwards, the State Council decided to abolish the D&R system and replace it with the salvation administration system. This famous incident in China has been interpreted by many scholars from various perspectives. However, due to the lack of design for standardised comparative case studies, the scholastic pursuit of the logic between the Sun Zhigang Incident and the abolition of the D&R system has not provided a good explanation for the key dynamics for institutional changes. This chapter focuses on the involvement strategies taken by experts. For this, we propose one main strategy taken by experts as ‘civic activism’. Moreover, this chapter discusses the comparative analysis of several cases based on a detailed discussion of the behavioural strategies taken by experts during the process of changing the D&R system and the relevant mechanisms for success. On the basis of the analysis of those comparative cases, we can then obtain a clear outline of the roles played by experts, using the civic activism strategy, in similar public policy-­making events.

Detention and repatriation system Background for establishing the D&R system The D&R system in China began in 1951, with the aim of controlling the disbanded soldiers of the Kuomintang, the prostitutes and the vagrants before the founding of the PRC. The government set up the ‘Municipal Detention Administration Group’, which was responsible for organising those people to accept labour reform, thereby transforming them into employees and offering them job opportunities. In 1953, the State Administrative Council issued a document, stipulating that the administration should strengthen its control over farmers

Civic activism  179 ‘flowing’ into the cities. From 1953 to 1957, the State Council and the relevant departments successively issued six documents to control rural population flowing into cities. In September 1954, the first session of the National People’s Congress made the decision to rename the State Administrative Council the ‘State Council’ in accordance with the Constitution. In April 1953, the State Administrative Council issued the Directives on Discouraging Farmers from Blindly Inflowing into Cities, which used the concept of ‘blindly floating population’ for the first time and prohibited urban organisations and enterprises from recruiting rural employees arbitrarily. In March 1954, the Ministry of Internal Affairs and the Ministry of Labour issued the order on Further Implementing the Directives on Discouraging Farmers from Blindly Inflowing into Cities. Until then, the administrative instructions had not set any restrictions on freedom to change one’s residence but focused on persuasion and discouragement. In autumn 1956, to address the increasingly serious problem of the massive numbers of rural residents migrating into cities, the State Council successively issued three documents in one year: the Directives on Preventing Rural Population from Blind Outflow (30 December 1956), the Additional Directives on Preventing Rural Population from Blindly Flowing into Cities (2 March 1957) and the Directives on Preventing Rural Population from Blindly Flowing into Cities (14 September 1957). However, these still failed to curb the number of rural residents flowing into the cities. On 18 December 1957, the CPC Central Committee and the State Council jointly promulgated the Directives on Restraining Rural Population from Blind Outflow. Obviously, the tone adopted in these documents became more severe: whereas the previous documents used the words ‘discourage’ and ‘prevent’, the latest document now used the word ‘restrain’. This change in tone indicated that the implementation of the policies on constraining floating population was already a problematic situation and that the government’s attitude towards the inflow of the rural population into the cities was becoming increasingly tougher. On 9 January 1958, in order to resolve the problem of large-­scale population mobility, the 91st conference of the NPC Standing Committee approved the PRC Household Registration Regulations, which identified the legal measures based on the household register system. Article I of the Regulations stipulated that these regulations were constituted to maintain social order, protect the rights and interests of the citizens and serve the socialist construction. Section 2, Article X of the Regulations stipulated that citizens migrating from rural areas to the cities must have an employment certificate issued by urban labour departments and an enrolment certificate issued by the school or a certificate of in-­ migration allowance issued by the urban household registration office. They must also apply for out-­migration formality from the household registration office located in their usual residence. However, as a large number of disaster victims from the ‘Three Years of Natural Disasters’ swarmed into the cities, the CCP Central Committee approved and forwarded the Report on Restraining People from Free Mobility submitted by the Ministry of Public Security on 11 November 1961. This document adopted the very harsh tone of ‘restrain’. When

180  Civic activism the document was approved and forwarded, the government decided to set up D&R stations in large- or medium-­sized cities for the first time. During that time, the D&R centres were under the administration of the civil affairs departments, which took on responsibilities for social relief, where the detention objects would be reviewed and identified by public security organs. On 22 March 1963, the Ministry of Internal Affairs actualised the policy of detaining on site as well as resettling and transforming the long-­term vagrants.1 Meanwhile, the Ministry of Internal Affairs, the Ministry of Public Security, the Ministry of Food, the Ministry of Labour and the Ministry of Commerce issued the Joint Notification on Addressing Household Registration, Provision and Other Issues of Persons in Resettlement Stations Led by the Civil Administration Departments. Through these joint efforts, farms and other resettlement places were prepared to sustainably accommodate the long-­term vagrants and help them lead stable lives. From the early 1960s to the early 1980s, the D&R system in China had no formal specific stipulations but only found its way in policy documents issued by various ministries and commissions. Policy documents on D&R were issued one after another by the Ministry of Internal Affairs, the Ministry of Public Security, the Food Ministry, the Ministry of Labour, the Ministry of Commerce, the Ministry of Civil Affairs, the Supreme People’s Court, the State Administration of Labour, the State Planning Commission, the Ministry of Finance and others. These policy documents included, among others, the Notification on the Temporary Provisions for Budget Management of Resettlement Farms Affiliated to the Civil Administration Departments, which was issued by the Ministry of Internal Affairs and the Ministry of Finance (3 March 1964); the Opinions on Shifting the Focus of Civil Administration Departments issued by the Ministry of Civil Affairs (10 March 1979); the Detailed Rules on Visit Reception issued by the Petition Office of the Supreme People’s Court (20 June 1980); Several Provisions on Maintaining Order of Petition Work, which was issued by the State Council (22 August 1980); the Trial Procedures on Post Allowance of Urban Social Welfare Institutions issued by Ministry of Civil Affairs and State Administration of Labour (6 October 1980); the Report on the Survey and Solutions for Urban Beggars, which was issued by the Ministry of Civil Affairs and approved and forwarded by the State Council (24 July 1980); the Notification of Civil Affairs Ministry on Seriously Implementing the Report on Survey and Solutions for Urban Beggars approved and forwarded by the State Council (15 August 1980); the Notification on Practically Addressing Issues on the Reconstruction of Dangerous Buildings of Urban Social Welfare Institutions, which was issued by the Ministry of Civil Affairs and the State Planning Commission and Ministry of Finance (10 October 1981). The initial objective of the D&R system was to combat all types of criminal offenders among the unchecked flow of population. Since the reform and opening-­up, the floating population had dramatically increased with a rapidly changing structure. The number of beggars and vagrants due to worsening poverty increased, and with them came an increase in activities like violating

Civic activism  181 birth control regulations, begging, running away, truancy and debt evasion. The D&R system provided powerful institutional arrangements for preventing and controlling the population flow.2 Moreover, works on D&R revealed other problems, including inadequate funding, corruption of staff members in the D&R stations and so on. Those documents mentioned above are just some of the adjustments on earlier activities pertaining to D&R. In 1982, the State Council issued the Notification on the Release of Measures on the Detention and Repatriation of Urban Vagrants and Mendicants (SD [1982] No. 79), which marked the formal establishment of the D&R system. These ‘Measures’ aimed to identify, educate and resettle urban vagrants and mendicants in order to maintain social order, stability and social harmony in urban areas. The Measures were meant for formerly rural and urban residents roaming the streets to beg and for others roaming around the streets with no guaranteed livelihood. On 15 October 1982, the Ministry of Civil Affairs and the Ministry of Public Security jointly issued the Notification Issued by the Ministry of Civil Affairs and Ministry of Public Security on Issuing the Executive Regulation (Trail) of Measures on the Detention and Repatriation of Urban Vagrants and Mendicants (C[1982]Yu No. 82), which stipulated that the expenses incurred during the D&R implementation shall be listed as a civil administration expenditure, and that the revenues gained by the detained individuals and repatriation stations shall be used mainly as meal allowance and travelling expenses during repatriation. Afterwards, the D&R activities were mainly subscribed under the administration of public security and the civil administration departments. Over thirty years after the issuance of the Provisions for Detaining and Repatriating Urban Vagrants and Mendicants (hereafter referred to as ‘Provisions’), the D&R system was supplemented and modified by all departments concerned in almost every year. A more important one was the Opinions on the Reform of Detention and Repatriation (SY[1991] No. 48) issued by the State Council in May 1991. That document proposed the mode of ‘constraint management’, under which those without lawful certificates, fixed abode or stable income shall be included in the subjects for D&R. According to incomplete statistical data, from 1982 to 2002, twenty-­five policy documents were issued by central departments, more than thirty policies were issued as local laws and regulations on for the D&R system and 199 local laws and regulations were formulated for the D&R system. Some local laws and regulations did not directly aim at the D&R system, however, their purpose was to constrain and control the floating population by using the D&R as an important measure. Such a state did not come to an end until 2003.  In March 2003, shortly after the Sun Zhigang Incident, an executive meeting was held by the State Council, which deliberated and ultimately approved the Administrative Provisions for the Salvation of Urban Helpless, Vagrants and Mendicants (draft), and abolished the Provisions for Detaining and Repatriating Urban Vagrants and Mendicants issued by the State Council in May 1982. Two  days later, the State Council officially promulgated the Administrative

182  Civic activism Provisions for the Salvation of Urban Helpless, Vagrants and Mendicants, which was implemented on 1 August 2003. The new policy focused on providing relief and managing the salvation policy, where the approach of detaining was not allowable. To be specific, major elements of that new policy included the following: (1) renaming the detention centre a ‘salvation station’; (2) including the expenditures of the salvation station in local funding; (3) allowing the subjects to know about the provisions on salvation and escorting them to the salvation stations rather than forcibly detaining them as in previous policies; (4) requiring the salvation stations to offer help; and (5) prohibiting salvation stations from charging the aided persons and their relatives in any form or forcing the subjects to undertake productive labour. Details on important documents related to the D&R system are shown in Table 5.1. Problems that emerged during the implementation of the D&R system Many migrant workers were detained for no reason and the scope of ‘subjects’ became seriously out of control The legislative intent of measures on the D&R issued in 1982 was to help vagrants, mendicants and those with unguaranteed livelihood. Unfortunately, this system eventually degenerated and changed into a D&R system that did not provide any help but compelled those subjects to participate in labour. After the issuance of the Opinions on the Reform of Detention and Repatriation in 1991, the detention of subjects gradually evolved from the detention of vagrants, mendicants and those with unguaranteed livelihood into the detention of those without lawful certificates, fixed abodes or stable incomes. In the process of implementation, the criteria for identifying the ‘three-­no’ personnel were changed into those who had no identification card, no temporary residence permit and no worker certificate. Finally, the criteria based on the absence of all three certificates were further changed into the absence of one of those three certificates; hence, law enforcers were able to detain someone who could not simultaneously present all three certificates. As a result, the detaining scope dramatically expanded. According to the description by an official from the Ministry of Civil Affairs, 2.93 million person-­times of D&R were realized all over the country in 2000, including 580,000 person-­times in Guangdong, where migrant workers or those without temporary residence permits accounted for over 85 per cent of the population, whilst the vagrants and mendicants comprised 15 per cent; some areas were only at a proportion of 5 per cent.3 In many regions, the absence of a temporary residence permit was the only basis for detaining subjects without reference to vagabondism or begging. In order to fulfil the task, executors in some regions even tore the certificate to shreds and detained people by force. Some migrant workers were detained right after getting off the train even though they were not yet able to obtain their permits or were still looking for a residence.4

Issued by

State Administrative Council

Ministry of Internal Affairs and Ministry of Labour

State Council

State Council

State Council

CPC Central Committee and the State Council

NPC Standing Committee

Ministry of Public Security forwarded by the CPC Central Committee

Ministry of Internal Affairs, Ministry of Public Security, Food Ministry, Ministry of Labour and Ministry of Commerce

Ministry of Internal Affairs and Ministry of Finance

Ministry of Civil Affairs

Date

17 April 1953

March 1954

30 December 1956

2 March 1957

14 September 1957

18 December 1957

9 January 1958

11 November 1961

22 March 1963

3 March 1964

10 March 1979

Table 5.1  Important documents related to the D&R system

Opinions on Shifting the Focus of the Civil Administration Departments continued

Notification on Temporary Provisions for the Budget Management of Resettlement Farms Affiliated to the Civil Administration Departments

Joint Notification on Addressing Household Registration, Provision and Other Issues of Persons in Resettlement Stations Led by the Civil Administration Departments

Report on Restraining the People from Free Mobility

PRC Household Registration Regulations

Directives on Restraining the Rural Population from Blind Outflow

Directives on Preventing the Rural Population from Blindly Flowing into the Cities

Additional Directives on Preventing the Rural Population from Blindly Flowing into the Cities

Directives on Preventing the Rural Population from Blind Outflow

Directives on Further Implementing the Directives on Discouraging Farmers from Blindly Inflowing into the Cities

Directives on Discouraging Farmers from Blindly Inflowing into the Cities

Title

State Council

Ministry of Civil Affairs and State Administration of Labour

Ministry of Civil Affairs forwarded by the State Council

Ministry of Civil Affairs

Ministry of Civil Affairs, State Notification on Practically Addressing Issues about the Reconstruction of Dangerous Planning Commission and Ministry Building of Urban Social Welfare Institutions of Finance

State Council

Ministry of Civil Affairs, Ministry of Public Security

General Office of Civil Affairs Ministry

Ministry of Civil Affairs and Ministry of Public Security

Ministry of Civil Affairs, Ministry of Railways and Ministry of Transportation

22 August 1980

6 October 1980

24 July 1980

15 August 1980

10 October 1981

12 May 1982

15 October 1982

14 September 1983

10 May 1984

2 July 1985

Notification on Further Improving the Work of Detention and Repatriation

Notification on Strengthening the Work of Detention and Repatriation

Notification on Actively Cooperating to Combat Criminal Activities that Seriously Endangered Public Security and Strengthening the Work on Detention and Repatriation

Notification on Issuing the Executive Regulation (Trail) of Provisions on the Detention and Repatriation of Urban Vagrants and Mendicants

Notification on the Release of Provisions on the Detention and Repatriation of Urban Vagrants and Mendicants

Notification of the Civil Affairs Ministry on Seriously Implementing the Report on Survey and Solutions for Urban Beggars

Report on the Survey and Solutions for Urban Beggars

Trial Procedures on the Post Allowance of Urban Social Welfare Institutions

Several Provisions on Maintaining the Order of Petition Work

Detailed Rules on Visit Reception by the Petition Office of the Supreme People’s Court

Supreme People’s Court

20 June 1980

Title

Issued by

Date

Table 5.1 Continued

General Office of Civil Affairs Ministry

Ministry of Civil Affairs

Ministry of Civil Affairs

State Council

Ministry of Civil Affairs

Ministry of Public Security

Ministry of Finance, Ministry of Notification on Issuing the Notification on Payment for Expenditures Needed by CrossCivil Affairs and Ministry of Public province Repatriation in the Process of Detention and Repatriation Security

Ministry of Civil Affairs

Ministry of Civil Affairs

Ministry of Civil Affairs

Ministry of Public Security

4 July 1989

14 July 1989

14 March 1990

May 1991

14 October 1991

14 August 1992

24 December 1992

13 January 1994

30 November 1994

11 February 1995

10 August 1995

continued

Notification on Strengthening Administration for Country-to-city Migrants Without Definite Prospects

Written Reply on Adding 11 New Detention and Repatriation Stations in Qiqihar and other Cities as National Counterpart Stations for Detention and Repatriation

Notification on Strengthening the Works on Detention and Repatriation during the Spring Transportation Period

Notification on Strengthening the Works on Detention and Repatriation

Notification on Revising the Grievance Procedures Followed by Prostitutes and Whoremasters if Refusing to Accept Interning Education

Notification on Further Improving Works Dissuading and Returning Outflow Victims

Opinions on the Reform of Detention and Repatriation

Notification on the Success of Works Related to the Relief and Repatriation for BeggarsWell Doing Works Related to the Relief and Repatriation for Beggars

Notification on Further Improving the Work of Detention and Repatriation

Notification on Regularly Reporting the Situation of the Interned Personnel

Notification on Strictly Forbidding Abandoning Dementia and Mental Disorder Patients

General Office of Civil Affairs Ministry

30 June 1987

Notification on Issuing ID Cards for Employees Engaged in Detention and Repatriation and Badges for Detention and Repatriation

Ministry of Civil Affairs

16 July 1985

General Office of the Labour Ministry

General Office of the Labour Ministry

State Planning Commission Notification on Report on Progress of Levelling Protective Embankments to Facilitate forwarded by General Office of the Flood Discharge, Returning Farmlands to Lakes, and Building Towns for Resettlement State Council in Hubei, Hunan, Jiangxi and Anhui

Ministry of Public Security

State Council

27 September 1996

17 July 1999

30 May 1997

12 June 2001

20 June 2003

Note The items in bold indicate significant national level policies, whereas others are ministerial level policies.

Administrative Provisions for the Salvation of Urban Helpless, Vagrants and Mendicants

Written Reply on Whether the Time for Detention and Repatriation can Offset the Period of Indoctrination through Labour

Reply to the Letter for Issues Relating to the Wages and Welfare of Prostitutes and Whoremasters during Interning for Education

Reply to a Letter issued by the General Office of the Labour Ministry for Instruction on Whether Enterprise can Relieve the Labour Contract with Staff Members Interned by Public Security Organ

Opinions of the Central Committee for the Comprehensive Management of Social Security on Strengthening Administration for the Floating Population

General Office of the CPC Central Committee and General Office of the State Council

19 September 1995

Title

Issued by

Date

Table 5.1 Continued

Civic activism  187 Instances of crude treatment carried out by the D&R stations and other brutally vicious incidents continued to occur From 2000 to March 2003 (before the Sun Zhigang Incident), the media reported multiple news items about inmates dying from assault, beating and illness in the D&R stations, but these did not catch the government’s attention in any way. For example, in 1999, a woman with a surname of Su was detained by the police when she lost her certificate at the Guangzhou Railway Station. She was gang-­raped by other people detained in the D&R station two days later.5 In the same year, a twenty-­five-year-­old man with a surname of Zhang, who had worked in Guangzhou for many years, was detained because he left his identification card at home. Soon, he was beaten to death in the D&R station.6 In 2000, a young man with a surname of Lin from Zhejiang was also beaten to death in a D&R station at Lianyuan County in Hunan because he refused to pay the ‘ransom’.7 Similarly, a peddler with a surname of Piao was detained in a D&R station at Fushun in Liaoning, where he was beaten to death by other detainees at the station.8 In the D&R station where Sun Zhigang died, quite a number of patients had already died from October 2002 to the first twenty days of January in 2003.9 The cases of arbitrary charges and illegal profit-­seeking through D&R worsened This system had long been troubled by financial deficit. Expenses on D&R were listed under civil administration expenditures according to relevant laws promulgated in 1982. Under the original plan, such funds would be allocated by the central government according to the actual needs of various regions. Over the years, local D&R stations operated under tough conditions and relied on the capital budget supplied by the central government. Later, the expenses of the D&R stations were gradually borne by local funding. The lack of adequate funds became increasingly serious in many local D&R stations. Except for a few large cities, most local governments were unable to provide the resources necessary to operate the D&R. Things would become even more difficult as different provinces negotiated about the payment for cross-­provincial repatriation. In the mid-­ 1990s, the Ministry of Finance, the Ministry of Civil Affairs and the Ministry of Public Security issued a policy, which stipulated that the costs of cross-­ provincial repatriation should be borne by the outflow province (native province of the detainee). Unfortunately, outflow provinces were usually economically backward areas with tight public financing, so the policy was not implemented properly. Thus, many detainees had to wait for a long time to be repatriated, some of whom were even abandoned midway through the repatriation. Moreover, the insufficient budget held by D&R stations also led to poor facilities, such as shabby furnishings and dark and damp cells in the detention areas. As the detainees stayed in the stations for indefinite periods of time, prominent antagonism, hunger strikes and prison breaks occurred now and then.10

188  Civic activism To ease the financial pressure, the State Council promulgated the Opinions on the Reform of Detention and Repatriation in 1991, which stipulated that non-­ social relief subjects among those being detained shall be charged for ‘three expenses’ (food, lodging and transportation). Unfortunately, that only fuelled activities related to excessive demands and unlawful charging. Although local governments actualised the strategy of developing the economy run by stations and seeking supplementary funding through the industries,11 some departments under the D&R seized the opportunity to accumulate wealth by unfair means and continued to bully and oppress the weak. For example, many regions formulated local laws and regulations to stipulate that the detained people and their family members must pay for the costs on transportation and other services, where the average level of charging continuously increased with an expanding scope. Despite the fact that the detainees came from poor families, administrative personnel would not let them go if they failed to obtain the money. Some staff members of local D&R stations often called or sent the telegram to the family members of the detainees and suggested that they pay the required fees. Others treated the detainees as a cheap labour force, arbitrarily prolonged their detention and considered them to be a means of income generation through forced labour.12 Repeatedly unsuccessful attempts made by experts to suggest improvements Scholars had already found the defects of the D&R system and made proposals to the government to modify the system through their own channels. As early as 1989, Professor Wang Sibin of the Sociology Department of Peking University and a member of the Advisory Committee of the Civil Affairs Ministry, already expressed such a concern to government officials, pointing out that problems existed in the D&R system, but the officials at that time did not pay much attention.13 In addition, scholars were already alarmed with reports that the D&R system violated the constitution and the Legislation Law, even before the Sun Zhigang Incident. No sooner than the Legislation Law was issued in 2000 that Liu Renwen, a legal expert of the Law Institute of CASS, and Zhou Wangsheng, a Law School professor from Peking University both indicated that this system violated the Legislation Law.14 In almost every NPC and CPPCC conference, some NPC deputies and CPPCC members made strong recommendations to the government to improve the implementation of the D&R system. Many studies also made suggestions on how to improve China’s identification system, mainly proposing to repeal the temporary residence permit and the household registration system.15 However, the most common recommendation from academic circles was to abolish the D&R system altogether.16 Apart from this, Ma Huaide, Xiao Han and colleagues suggested that a law on public security measures must be formulated whilst abolishing the original system. Thus, the government could adopt legal means to restrict the freedom of persons breaking the law to a minor extent under the judicial procedures, where public security administration could play an important role.17 Despite the fact that complaints and suggestions from

Civic activism  189 the academic point of view seemed ineffective, some officials of the Civil Affairs Ministry were already aware that the scholars’ proposals made sense. Faced with unfortunate incidents, a leader from the Civil Affairs Ministry expressed concern but admitted that there were indeed some difficulties.18 Hence, we know that scholars must wait for a proper opportunity to promote further changes on the policy.

The Sun Zhigang Incident and expert involvement through civic activism The Sun Zhigang Incident The major turning point for the overhaul of the D&R system occurred after the Sun Zhigang Incident in 2003. Sun Zhigang, a college graduate who majored in Art Design at the Arts Department of Wuhan University of Science and Technology, came to Guangzhou in 2003 to pursue employment. As he just arrived at Guangzhou, he was not yet able to apply for a temporary residence permit. On the evening of 17 March, he went out without that ID card. At about 11 p.m., he was caught and sent to Huangcun Street Police Station and then transferred to the D&R station. Three days later, Sun Zhigang died in a medical station for people who have been detained. Initially, hospital officials insisted that he had died a sudden death brought about by a cerebral vascular accident or a heart attack. The news about the accidental death of Sun Zhigang in the detention station was first published by an insider in a Bulletin Board System (BBS) called Xisi Hutong. Later, Chen Feng, a reporter of the Southern Metropolis Daily, noticed this piece of news and then took the initiative to contact the poster, from whom he obtained the contact details of Sun’s family.19 On 25 April, Chen Feng and Wang Lei published their survey results in the Southern Metropolis Daily; the autopsy results showed that the victim had been beaten violently seventy-­two hours before his death.20 This report caused widespread concern in the community. Major media outlets successively reproduced this article on the next day. Soon, Xinhua News Net, Beijing Youth Daily and other important national media platforms began to conduct follow-­up reports on this event. Relevant authorities were left with no choice but to order a re-­investigation, which eventually confirmed that Su Zhigang was indeed beaten to death by Qiao Yanqin, who was a care worker (security guard employed by the hospital) of the medical station, and by Li Haiying who was detained in the same room. On 9 June, the first instance of the Sun Zhigang case delivered verdicts that the principal offender, Qiao Yanqin, was sentenced to death and permanent deprivation of political rights, whilst Li Haiying was sentenced to postponed death. Another inmate, Zhong Liaoguo, was sentenced to life imprisonment, whilst nine other defendants were sentenced to imprisonment ranging from three–fifteen years. The police chief, doctors and nurses of the medical station involved in the case were also sentenced to two– three years of imprisonment for dereliction of duty.

190  Civic activism Strategy of ‘civic activism’ taken by experts The Sun Zhigang Incident provided experts with the impetus to open the window of policy change. In order to achieve the goal of abolishing this policy altogether, they adopted a relatively new strategy. Differing from some practices in the past, such as submitting motions or making direct suggestions to government officials, a few legal scholars took some seemingly radical and risky actions. On 14 May 2003, three young legal scholars (Xu Zhiyong from the Liberal Arts and Legal College of Beijing University of Posts and Telecommunications, Yu Jiang from the Law School of Huazhong University of Science and Technology and Teng Biao, from the Law School of Beijing University of Political Science) submitted a proposal letter to the NPC Standing Committee on behalf of the Chinese citizens. This proposal contained stipulations listed in the D&R provisions to restrict the personal freedom of citizens who violated the Constitution and relevant laws, and for the NPC Standing Committee to conduct a review of the constitutionality of the D&R system upon the people’s rights. On 22 May, another group of five famous legal experts (He Weifang and Shen Kui from the Law School of Peking University, Sheng Hong and Xiao Han from the Beijing Unirule Economics Institute and He Haibo from the National School of Administration), also rendered a proposal letter to the NPC Standing Committee on behalf of the Chinese citizens, which requested a comprehensive investigation into the constitutionality of the D&R system based on the Sun Zhigang Incident. These two letters were widely supported by China’s official media, such as the China Youth Daily, People’s Net and Guangming Daily.21 So many requests were made for a constitutionality review towards a policy and this activity was considered to be an unprecedented move. The questions whether and how the NPC Standing Committee would give an official reply thus became the focus of greater public attention. In fact, the requests made by legal experts were in accordance with the prevailing political environment and legal framework. On 4 December 2002, President Hu Jintao gave a public address to celebrate the twentieth anniversary of the Constitution; during that speech, he stressed the progress made by China in terms of respecting the Constitution and its authority.22 Thus, the authors of the second letter mentioned above cited Hu Jintao’s speech and that of Wu Bangguo, Chairman of the NPC Standing Committee, in order to emphasise the fact that their suggestions followed the position of China’s top leadership. In addition, legal experts also emphasised the problems of the D&R system by referring to the current constitutional framework. They carefully explained how and why the D&R system violated the Constitution. Article 37 of the Constitution states that the individual freedom enjoyed by citizens of the People’s Republic of China must be inviolable. The Legislation Law of the People’s Republic of China (2002) highlighted that no laws shall infringe upon the Constitution. Article 88 in Chapter II of the Legislation Law indicated that the NPC Standing Committee has the right to revoke the administrative statute infringing the Constitution. Scholars pointed out that only those laws approved

Civic activism  191 by the NPC can constrain individual freedom. However, the D&R system was not a law but a mere administrative statute formulated by the State Council. Article 6 of the ‘Provisions’ stipulated that urban vagrants and mendicants shall be subjected to the D&R and must comply with the regulations of the D&R stations where they were detained. The last and the most important factor cited was that the activities of the legal scholars fall under the protection of Legislation Law. Article 90 of the Legislation Law stipulated that if citizens believe some administrative statutes, local laws and regulations, regulations on autonomy or specific regulations were in conflict with the Constitution or its laws, then they can submit a written proposal to conduct a review to the NPC Standing Committee. As citizens of the People’s Republic of China, legal scholars enjoy the right to submit written statements to the NPC Standing Committee and petition for a review of administrative statutes that they thought were in conflict with the Constitution or its laws. In other words, legal experts carried out their appeals by carefully indicating that their appeals were ingrained in the existing political and legal framework guaranteed by the Constitution. Therefore, the authorities had no reason to disregard the experts’ proposals nor to view their activities as politically unacceptable. However, this appeal was also confronted with considerable technical difficulties. To be specific, although the Constitution and its laws provided institutional arrangements for a constitutionality review, such a review could only be done for laws or regulations that were not yet enacted. The D&R provisions had come into being before the promulgation of the Legislation Law in 2000, and as such, it was beyond the scope of the requested review. The Legislative Law (2000) did not provide an effective mechanism to review laws, regulations or policies that had already come into force prior to its promulgation, and the D&R system was one prominent example. More importantly, the Legislative Law did not clearly articulate the relationships among the court (Supreme People’s Court), legislature (NPC) and central government (State Council) and how the review process should be carried out. Just like the problem between the court and legislature, the Constitution endowed the NPC with the highest authority. Although the Administrative Procedure Law endowed the People’s Court with the authority to review decisions made by administrative agencies, the people’s courts shall not accept and hear a case for the appeal of citizens, legal persons or other organisations concerning administrative statutes, regulations or decisions and orders with a universally binding force issued by administrative organs. Similarly, the power of the court to assess the reasonability of some laws and regulations was definitely limited. The NPC is China’s highest legislative body under the Constitution and the State Council also has a very important status. In actual operations, however, it is the State Council and not the NPC that serves as the principal organ formulating regulations closely bound up with the people’s daily lives. In some cases, some provisions may be in conflict with laws approved by NPC. In a sense, Legislation Law is an attempt to balance the power between the NPC and the State

192  Civic activism Council: it tries to regulate the power of the State Council on law formulation by reviewing the administrative statutes and organising public hearings prior to promulgation.23 Before the Legislation Law was promulgated in 2000, the existing laws of the State Council were never abolished by the NPC. The appeal of legal experts for a constitutionality review highlighted the potential conflict between the NPC and State Council. There were some fundamental concerns that emerged from the operation of the Chinese government. First, such a review may reduce the State Council’s sense of authority among the public and encourage them to propose new appeals for constitutionality reviews.24 Second, there were very close relationships among officials of the NPC and the State Council. Many important decision-­makers and staff members of NPC used to work in government ministries and commissions or agencies directly under the State Council.25 Moreover, reviewers in the NPC may have worked for or with policy makers for the regulations and policies being reviewed, some of which even directly participated in the formulation of the regulations and policies under review.26 Nevertheless, the strategy of submitting the proposal letter to the NPC Standing Committee as an innovative approach for promoting constitutionality reviews was carefully considered by legal experts. Xu Zhiyong, a legal scholar involved in the proposals, described his team’s planning process in the recollection article he wrote in 2011 titled ‘Citizen Suggestion on Constitutionality Review’. After the Sun Zhigang Incident came to light in 2003, Yu Jiang, from Huazhong University of Science and Technology Law School, made a call to Xu Zhiyong and reminded him that Article 90 of the Legislation Law granted citizens the right to propose a constitutionality review. Subsequently, Yu Jiang, Xu Zhiyong and Teng Biao gathered and prepared to draft the proposal for a constitutionality review, ensuring careful consideration and planning whilst doing so. First, they decided to control the full text within 1,000 letters; the final letter only contained legal procedures rather than any social problems in the practice. Second, the proposal must draw public attention and generate strong public opinion. Third, the proposal letter must be signed only by the three legal scholars, rather than signed by more people especially by some legal experts (the plan was that the letter should be more like a litigation rather than an appeal). Fourth, they filed the proposal as citizens of the People’s Republic of China rather than observers making appeals and recommendations. Thus, they acted as subjects for a formal legal instrument. This proposal had nothing to do with their occupations and knowledge backgrounds. Their ID numbers were also written down at the end of the proposal, and this singular act served as the most powerful symbol among the citizens. Fifth, the account was taken into the proper department that was the target of the submission. As the final decision, Teng Biao sent a fax to the Commission of Legislative Affairs of the NPC Standing Committee, which confirmed by phone that they had received the fax. They also sent another copy via post office. Meanwhile, Xu Zhiyong got in touch with Legal Daily and China Youth Daily, hoping they could give attention to this very important endeavour.27

Civic activism  193 As legal experts, those submitting the proposal clearly knew that there were no technical mechanisms for a constitutionality review against the legitimacy of the D&R system. He Weifang, a jurist and collaborator of the second proposal letter, admitted during an interview with the People’s Net that they did not entertain any wild hope that this action could drive the NPC Standing Committee to launch a national mechanism for a constitutionality review.28 However, their action drew so much attention across the country and this led to a policy change in the D&R provisions. Teng Biao, a collaborative author of the first proposal letter, pointed out that this time of submitting the proposal letter implied dual purposes from the very beginning: first, it aimed to launch a review of the D&R system; and second, it aimed to establish a precedence based on and promoting the establishment of a regular mechanism by which to conduct constitutionality reviews in the future. However, the review procedure of the NPC Standing Committee also seemed to end up with nothing definite.29 Xu Zhiyong, another author of the joint letter on the Sun Zhigang Incident, said during an interview with the New York Times that they had hoped that this minor and specific problem could promote the process of constitutional rights in general.30 Briefly, in the case of the Sun Zhigang Incident, legal experts adopted a set of strategies – albeit technically unfeasible – under the political and legal framework, which aroused great interest from among the public and the government, finally succeeding in driving through an important policy change. Here, we need to pay further attention to an important detail. In those two proposal submissions to the NPC Standing Committee, jurists and lawyers rendered the study reports or policy viewpoints to policy makers not as experts but as citizens of the People’s Republic of China, who were actually making appeals to the NPC Standing Committee. On the one hand, the Legislation Law stipulated that citizens of the People’s Republic of China have the right to request the NPC Standing Committee to conduct constitutionality reviews for laws and regulations. More importantly, it also proved that having an ‘expert’ status was not necessary to promote policy change and that launching an appeal as an ordinary citizen with no legal background or knowledge was a legitimate strategy. With such a realisation, civic activism actors with insufficient expertise were unable to identify the political boundaries in a reasonable manner, find flaws in the Constitution and the legal system and thus seize the opportunity to launch innovative civic activism. Teng Biao used to expound that what they did was not to submit a written statement to a higher authority but to exercise their civic rights, as conferred by the Constitution and Legislation Law; not to protest but fulfil the laws as citizens; not to arouse emotions but to trigger in-­depth discussions to promote institutional changes; not to offer advice but to carry out deliberate legal actions by utilising their expertise and taking the social environment into consideration.31 This innovative civic activism launched by experts resulted in a great media reaction. The whole society waited for the response of the NPC after it received the letters and how the government and the State Council would react to these as well, which subsequently imposed great pressure onto the policy makers.

194  Civic activism Opening of the policy window: official responses from the authorities Although the experts’ proposal for constitutionality review had a very solid legal basis, there were technically unfeasible problems in promoting such a review in practice. In fact, a spokesman for the NPC mentioned in a published article that it was almost impossible for the NPC to demand the State Council to repeal the Provisions. He also predicted that if the NPC Standing Committee agreed that the Provisions contradicted with the Constitution or the laws based on results of the review carried out by the relevant committees, then the NPC Standing Committee would submit written review comments to the State Council, which would then make its own decision on whether to withdraw or modify the policy.32 As we have mentioned earlier, this would place the State Council in an embarrassing situation. Thus, we need to evaluate whether the results of the review would lead to an imbalanced relationship between the State Department and the NPC. Given that the knowledge complexity of this policy was at a low level, an official response was soon given after the submission of the second proposal, which came only two months after the Sun Zhigang Incident. The State Council amended the D&R system, however, it did not consider the former provisions to be in conflict with the Constitution. On 18 June 2003, the State Council held an executive meeting and approved the Administrative Provisions for the Salvation of Urban Helpless, Vagrants and Mendicants. Those provisions were implemented on 1 August 2003 and the original stipulations were abolished at the same time. The Bulletin of the State Council Executive Meeting claimed that population mobility had changed significantly over the last twenty years along with the rapid economic and social development in China, and in relation to this, the Provisions issued and executed by the State Council in May 1982 already could not meet the needs of the present times. Yet, despite abolishing the Provisions, the State Council did not admit that the Provisions were ultimately unconstitutional. The specific communication for this decision-­making process between the State Council and NPC Standing Committee was seldom known to the outside world. A commenter pointed out that the NPC Standing Committee did not make any response to the suggestions proposed by citizens for a constitutionality review against the Provisions according to Article 90 of the Legislation Law and that the NPC Standing Committee did not interact with the State Council in accordance with the procedures specified in the Constitution and Legislation Law; in fact, the State Council did not even make a statement on the results of a constitutionality review for the Provisions.33 In an article about the decision-­ making process, Teng Biao expressed that by avoiding a constitutionality review, in his opinion, it was actually a tacit agreement between the NPC Standing Committee and the State Council.34 However, to a certain extent, the abolition of the D&R system undermined the interests of normal mobile personnel and urban residents with officially registered residence. In May 2006, after the abolition of the D&R system, Zhong

Civic activism  195 Nanshan, an academician and medical expert, was robbed on the streets of Guangzhou. In an interview, he proposed that the vagabonds should be detained and the criminals severely punished, which caused widespread controversy.35 In summary, expert action was a suggestion with a strong sense of loss embeddedness for the NPC Standing Committee – the policy maker in charge of the constitutionality review on behalf of the citizens. This can be attributed to the fact that it was the State Council that was the stakeholder with potentially the greatest loss in this situation. For the State Council to abolish the D&R system, expert action is a suggestion with weak sense of loss embeddedness; this is because the ordinary urban residents and the normal flow of population would be the potential losers. Therefore, the quick response made by the State Council to abolish the D&R system was a natural outcome of the policy change.

Discussion on other competing interpretations The Sun Zhigang Incident was a landmark event in the politics and policy landscape of contemporary China. Perhaps, there were some other factors that could explain why the D&R system, which only generated problems for many years, could be abolished in such a short time after the Sun Zhigang Incident. Compared with other long-­standing problems in China under public appeal, which have not received any positive response, the government gave such an immediate response to the Sun Zhigang Incident. In addition to the radical manner of submitting a written statement, which was technically unfeasible, some other factors came into play as listed below. 1 2 3

4

The specific policy issues of the D&R system – as it was a special system, things would have turned out differently, if it were another policy issue. Political changes – the new government set up from 2002 to 2003 was committed to ensuring transparency and the correct implementation of the laws. The strategy taken by the experts to ‘define the problem’36 – jurists deemed the D&R system was unconstitutional. Proposing the constitutionality review was a strategy taken by experts rather than the strategy for civic activism, and that choice ultimately enabled them to achieve success. So much attention was drawn from the media, including the Internet.37

In order to determine the decisive part of policy change caused by the Sun Zhigang Incident, other potential factors or the strategy of civic activism taken by experts, we conduct a comparative analysis with other relevant cases. Case on the common criteria for physical examination during the recruitment of civil servants The first comparative case is from the test on the spillover effect. The Sun Zhigang Incident successfully set a precedent for practitioners engaged in promoting China’s policies. Theoretically, the spillover effect occurs when the

196  Civic activism reference to one case is transferred to others that are considered similar. Such an effect may occur in the same departments of different countries38 or different departments of the same country.39 Soon after the successful case related to the Sun Zhigang Incident, policy entrepreneurs successfully campaigned for the prohibition of discrimination against hepatitis B virus (HBV) carriers by referring to past experiences. Before such efforts were made, civil servants were not required to undertake a physical examination under the regulations of the central government. However, some local regulations stipulated that HBV carriers would not be allowed to participate in the national civil service examination nor would they be eligible for employment even if they passed the examination. Two legal cases that occurred in 2003 triggered widespread public attention. In April 2003, Zhou Yichao, a student from Zhejiang University, was deprived of the opportunity to be admitted as a civil servant in Zhejiang due to his positive HBV test result. He later killed a local official and caused serious injury upon another. Zhou was sentenced to death in September 2003 because of these crimes. On 10 November 2003, the first known lawsuit for discrimination against HBV carriers in China was registered and recorded. Zhang Xianzhu, a young man from Wuhu, garnered the highest score in the provincial civil service examination, but could not gain employment due to a positive HBV test result. He initiated the legal proceeding to challenge decisions made by the Municipal Government of Wuhu. These two high-­profile cases caused the public to question the existing standards for civil servant admission.40 Shortly after these two cases were made public, policy entrepreneurs also filed a petition to the NPC Standing Committee.41 On 20 November, ten days after Zhang Xianzhu had lodged the appeal, a BBS named ‘Gandan Xiangzhao’ with the administrator called ‘Jinge Tiema’, submitted a proposal for a constitutionality review signed by 1,611 Chinese citizens to the NPC Standing Committee. The proposal argued that prohibiting HBV carriers from being admitted was contrary to the Constitution; thus, it requested the NPC Standing Committee to conduct a constitutionality review for local regulations that discriminate against HBV carriers.42 Soon after the proposal was submitted, the Legislative Affairs Commission of the NPC Standing Committee forwarded the Proposal for a Review of the Constitutional Infringement to Chinese Foundation for Hepatitis Prevention and Control; it required the holding of an expert seminar to discuss the specific reply comments, when some officials of the Health Ministry articulated the fact that emphasis shall be placed on the matter concerning about 200 million people.43 On 18 July 2004, Gandan Xiangzhao jointly organised the five major powers of the network to draft another letter ‘To Premier Wen’. In August, Gandan Xiangzhao BBS together with other network organisations submitted a petition by express delivery to the prime minister and other leaders. That petition was signed by 4,852 people. At around that same time, the Standing Committee of the NPC just founded a new Review and Record Office for Laws and

Civic activism  197 Regulations with the responsibilities of assisting other Legal Work Committees to review the laws and regulations that may be in conflict with the Constitution and national laws (we present an analysis of the related contents in detail in the next section).44 Interestingly, this proposal did not require a constitutionality review but a legislation to protect HBV carriers. However, this petition was a suggestion to create a new law so it was confronted with technical challenges. Premier Wen Jiabao was in charge of the State Council at that time, but the legislative power was held by the NPC and not by the State Council. Only four days later, after the letter ‘To Premier Wen’ had been submitted, the Ministry of Personnel and Ministry of Health jointly issued the announcement titled ‘To HBV Carriers and Followers’.45 This announcement was issued to seek public opinions on HBV carriers. On 1 December 2004, the newly revised Communicable Disease Prevention Act was put into practice. The Act added a provision that any agency or individual must not discriminate against patients with infectious diseases, pathogen carriers and suspected patients of infectious diseases. On 17 January 2005, the Ministry of Personnel and Ministry of Health published the Notification on Common Criteria (Trail) for Physical Examination during the Recruitment of Civil Servants issued. That new policy stipulated that any government must not refuse to employ HBV carriers as well as those with colour blindness and of a certain body height.46 Institutionalisation of the constitutionality review Under the impetus of the Sun Zhigang Incident, the case on HBV carriers and other cases up for review, the NPC Standing Committee began to consider the establishment of a new system for constitutionality review. Based on the Review and Record Office for Laws and Regulations founded in May 2004, the NPC Standing Committee amended the Procedures on Review and Record for Administrative Statute, Local Laws and Regulations, Regulations on Autonomy, Specific Regulations, Laws and Regulations for Special Economic Zone and approved the new Procedures on Review and Record for Judicial Interpretation. These two documents formulated the procedures on conducting a constitutionality review against laws, administrative provisions and judicial interpretations to be followed by the NPC Standing Committee. If the State Council, the Central Military Committee, the Supreme People’s Court, the Supreme People’s Procuratorate or Provincial People’s Congress required a constitutionality review, the Legal Work Committee of the NPC shall initiate the review procedures. If other state organs, social groups, enterprises, SOEs or individuals required a constitutionality review, then the NPC Standing Committee shall initiate the review procedures if a request or a decision for a constitutionality review was deemed to be necessary by that committee. On 27 August 2006, the NPC Standing Committee approved the Law on Supervision for the Standing Committees of the People’s Congress at All Levels, which stipulated that people’s congresses at all levels have the right to revoke the unconstitutional provisions made by the government at the same level. Although we cannot claim that

198  Civic activism a complete system for constitutionality review had been established, at least the system for such a review was no longer a technical problem without a legal basis for the NPC. The technological feasibility of the system for constitutionality review has improved. Since the founding of the NPC Review and Record Office for Laws and Regulations, there has also been increase in the number of proposals for constitutionality review against relevant laws and regulations forwarded by scholars on behalf of the citizens. In November 2004, Hu Xingdou, a professor from Beijing Institute of Technology, submitted a proposal to the NPC for a constitutionality review against the PRC Household Registration Regulations approved in 1958.47 In November 2007, sixty-­nine scholars signed a joint letter to propose a constitutionality review of the System of Re-­Education through Labour. Those sixty-­ nine scholars not only included He Weifang (a jurist involved in the letter proposal for the Sun Zhigang Incident), but also the economists Mao Yushi, Hu Xingdou and Xia Yeliang and history professor Guo Shiyou; the group also included numerous media members and legal professionals.48 Unfortunately, the NPC Standing Committee never initiated any procedures for formal constitutionality review against the related laws and regulations as proposed by this group. Apparently, the successful experiences of civic appeal that were technically unfeasible in the past could not be replicated easily because such appeals became increasingly feasible. What was the underlying reason for this result? Certainly, many possibilities can be explored. One possibility was that cases similar to the Sun Zhigang Incident and HBV carriers were accidental ones that aroused public concern organically. Another possibility was that a day-­to-day system establishment with technical feasibilities aimed at civic appeals may weaken the impact of civic activism strategies, because it already set bounds on the concerns coming from the public, media and senior government officials. In other words, policy changes driven by the external community could only be promoted under the close attention and high value attached by the public and the government within the present policy system in China. Within this environment, at least in today’s China, a set of daily procedures for dealing with problems may delay the resolution of this policy issue. In the aforementioned cases, the constitutionality reviews indeed became more feasible than in the past, but new petitions now had to undergo a formal procedure, where the proposals may have weaker power to exert pressure from the outside; hence, policy entrepreneurs no longer pinned their hopes on the constitutionality review. In short, the effects of the strategy on constitutionality review taken up by citizens had weaker power in promoting policy changes due to the increased technical feasibility brought about by the new constitutionality review system. The above analysis, in fact, overturned a competitive hypothesis mentioned previously, that is, the strategy taken by experts to ‘define the problem’ played a decisive role in successfully promoting policy changes after the Sun Zhigang Incident. Theories in the past considered the ‘problem definition’ as the key technical strategy for the agenda-­setting of public policy. Based on the analysis

Civic activism  199 presented in this section, we can see that defining the current policy as a ‘constitutionality review’ was not the panacea to promote policy change in relevant cases in China. In fact, civic activism was relatively more aggressive and attracted the attention of experts on the basis of analysis in situations wherein the interest structure of the policy change, the features of knowledge complexity and lacunae within the current political and legal systems served as the key factors that prompted the nation’s highest decision-­makers to focus on relevant issues. Case comparison In this section, the substantial influence of the civic activism strategy taken by experts to promote policy changes can be determined by comparing several related cases. First, we illustrated the policy changes about the D&R system from a historical perspective. Before the Sun Zhigang Incident in 2003, there had been many cases on the abuse of the D&R system on the part of the authorities. In the presence of repeatedly exposed problems, scholars repeatedly proposed recommendations to the government. Some scholars enjoyed good relations with and great influence on the government, but their proposals had no significant effects. However, the Sun Zhigang Incident produced such an organic widespread public reaction, which prompted a group of scholars to submit requests for a constitutionality review against this system to the NPC Standing Committee on behalf of the citizens. Based on in-­depth investigation, we found that that the relatively radical proposal was substantially acceptable within the Chinese Constitution and the political framework, but it lacked feasibility in terms of the technical aspects of processing such requests. However, all those efforts were soon paid off. Although the proposal for a constitutionality review was not eventually fulfilled, the government ultimately abolished the D&R system and issued the new administrative provisions for salvation. Policy change was finally achieved through the efforts made by experts. Second, we tested the spillover effect of the Sun Zhigang Incident with a short case on the Common Criteria (Trail) for Physical Examination during the Recruitment of Civil Servants. This case study provided us with evidence that the civic activism strategy taken by the policy entrepreneur was effective in the policy change on the D&R system, and as such, policy entrepreneurs could follow the same approach for changing other policies. By integrating these cases, we find that a relatively radical civic activism initiated by experts based on lacunae among current systems is often very effective in promoting policy changes and often plays a key role in achieving success. More importantly, it is not only applicable for appeals on constitutionality review. First, the success of this strategy is not only limited to cases requiring such a review. In the second stage of the case on the Common Criteria (Trail) for Physical Examination during the Recruitment of Civil Servants (after July 2004), policy entrepreneurs initiated a legislative appeal that was different

200  Civic activism from constitutionality review, which was still infeasible, technically speaking. Second, the follow-­up development of the constitutionality review provided new evidence for this judgement. Since the institutionalisation of procedures for constitutionality review by the NPC Standing Committee in 2005, we no longer found any successful cases of policy changes through civic appeals for constitutionality reviews, which were initiated by experts who thoroughly abandoned this strategy. Thus, we can state that defining a policy issue as a case of constitutionality review was not a key strategy for promoting policy changes. Rather, the key factor was the operational infeasibility of the constitutionality review before 2005, which helped create positive impacts on the policymakers and on the formation of social opinions. Ironically, the gradual institutionalisation of the constitutionality review actually weakened the impact of this strategy and its ability to promote policy changes. Third, the important role played by the media was quite obvious in the Sun Zhigang Incident and other events that followed. Widespread media attention was very important as it enabled the experts to promote policy change through this channel. However, extensive reports by the media on the applications made by citizens for constitutionality review did not serve as the sufficient condition for successfully promoting the policy change. Rather, the media widely reported the application for constitutionality review of existing laws and regulations because it was proposed by experts. Ultimately, not every application could achieve this kind of success in the end. In conclusion, although so many interrelated factors can be used to interpret the changes of the D&R system to some extent, those factors worthy of our attention, which we summed up by comparing the above-­mentioned cases, were very important but not sufficient. The studies on those cases are summarised in Table 5.2.

Other cases on the model of civic activism As we have mentioned in the previous section, along with the increasingly institutionalised process for the constitutionality review, the strategy of submitting an application for such a review against a certain current system to the NPC Standing Committee gradually lost its original effectiveness. However, attempts made by experts to promote policy changes by initiating or participating in civic activism never ceased. Here, we will briefly introduce four cases. In those four cases, experts also adopted the strategy of ‘initiating or participating in civic activism’ and thus attracted the attention of policy makers. However, those four cases cannot be perfectly incorporated into the overall comparative case system of this book. At the beginning of this book, in which the design of the comparative case study is discussed, we have stressed that all the selected cases are national policies decided by the State Council, so that they will take on a sense of homogeneity. Among the four cases presented in this section, the Deng Yujiao and Qian Yunhui Incidents were not national macro-­policy issues but verdicts for the local

Before 2003

Frequently occur

Traditional expert advice

Expert

Time period

Social problem

Proposal

Proponent identity

Successful Successfully introduction of a new incorporated into the policy, abolishment of agenda the previous policy

Result of the efforts

No

Netizen

No

Failure

Household registration system, policy on re-education through labour

No more cases

Received a reply four days later, resulted in the successful introduction of a new policy

No

Netizen

Harder to succeed unlike past cases

More feasible than before

Expert on behalf of citizens

Constitutionality review

Institutionalisation of the constitutionality review

A letter to the Prime Minister in 2004

Constitutionality review Introduction of a protective legislation

Zhou Yichao Case; the first lawsuit alleging discrimination against HBV carriers (case related to Zhang Xianzhu)

Proposal submitted to the NPC in 2003

Common Criteria (Trail) for Physical Examination Other cases during the Recruitment of Civil Servants

Technical feasibility Yes of the proposal

Expert on behalf of citizens

Constitutionality review

Sun Zhigang Incident

2003

Policy on the Detention and Repatriation of Urban Vagrants and Mendicants

Case

Table 5.2  Comparison of the different cases and civic activism strategies employed by experts

202  Civic activism criminal cases. The third case is the campaign launched by experts on ‘Cracking down Kidnapping to Rescue Beggars with Microblogging’. Although the campaign attracted the attention of central senior leaders, a new national policy related to this has never been issued to date. Therefore, those four cases just serve as the reaffirmation of the new strategy of expert civic activism, which cannot be used for comparison with other cases on expert involvement models established in this book. The Deng Yujiao Incident Deng Yujiao came from Mulongya Village, Yesanguan Town, Badong County, Enshi City of Hubei Province. In 2009, she worked as a waitress in Dream City, a leisure centre located at Xiongfeng Hotel in Yesanguan Town, Badong County, Hubei Province.49 On 10 May 2009, at about 6 p.m., several officials of the Yesanguan Town Government, including Deng Guida, Huang Dezhi and Deng Zhongjia, came to Dream City for fun. Later on, three officials demanded that Deng Yujiao, an ordinary waitress, provide special services, which of course she refused. Those three officials then attempted to rape Deng Yujiao. In an act of self-­defence, Deng Yujiao grabbed a fruit knife, stabbed and wounded Deng Guida and Huang Dezhi, and then called the emergency police number 110. Deng Guida, the director of a business invitation office in the town government of Yesanguan, died despite emergency rescue efforts. Initially, the police of Badong County did not acknowledge that the officials involved had attempted to rape Deng Yujiao. They only presumed that the officials had just had a dispute with a waitress.50 Soon, the Badong County police said, during the third report on the details of the case, that Huang Dezhi went into a private room in the spa area and mistakenly thought that Deng Yujiao was a spa waitress, and thus demanded Deng Yujiao provide a heterosexual bathing service. Deng Yujiao refused to do so, explaining that she was not a spa waitress, which led to an altercation between the two parties. Deng Guida took out a stack of money to show off and slapped Deng Yujiao’s head and shoulder with the money, which triggered off Deng Yujiao’s sharp resistance.51 On 11 May 2009, Deng Yujiao was arrested on a criminal charge against voluntary manslaughter by the Public Security Bureau of Badong County. In the investigation, detectives found that there were some drugs for insomnia treatment in Deng Yujiao’s carry-­on bag and decided to send Deng to Hubei Enshi Special Care Hospital (a psychiatric hospital) for identification. The hospital adopted the binding protection measures, where her wrists, ankles, knees and other parts were fixed with cloth strips onto the bed, so that her mobility and range of activities were restricted.52 Public security authorities initially conducted an investigation on suspicion of intentional homicide against Deng Yujiao.53 Entrusted by Deng Yujiao’s family, Xialin and Xianan, lawyers from Beijing Huayi Law Firm, decided to speak for free in defence of Deng Yujiao. The lawyers argued that the Deng Yujiao case should be recognised as self-­ defence. Soon after, a major turning point took place for the case. On 23 May,

Civic activism  203 Badong county government announced that Deng Yujiao’s mother had lifted the entrusting relationship with the lawyer Xia Lin. At the beginning, Deng’s mother said that ‘nothing of the sort’ was agreed on. A few hours later, she suddenly withdrew what she said and confirmed the fact that the entrusting relationship with the lawyers had been lifted, and that the reason she was being held was that the lawyers had disclosed Deng’s privacy without authorisation.54 Afterwards, Deng’s mother hired two new lawyers as the attorneys for Deng Yujiao case in the investigation stage.55 Meanwhile, Deng’s mother washed some clothes of her daughter which might have been used as evidence.56 Many people thought that such a sharp shift in the attitude held by Deng’s mother was highly suspicious.57 The Deng Yujiao Incident immediately became the focus of public attention, with many netizens called Deng Yujiao as a ‘contemporary paragon of chastity’.58 Sina.com set a special column titled ‘A Waitress Stabbed Officials to Death’ to discuss the incident.59 Some experts also accepted interviews by the media to discuss the legal issues involved in this incident.60 On 22 May, the All-­ China Women’s Federation (ACWF  )) published an article titled ‘ACWF Attaches Great Importance to the Progress of the Deng Yujiao Incident’ and claimed that relevant departments will handle the case in a legal and fair manner.61 On 28 May, at about 11 a.m., Kong Pu, a female reporter of Beijing News, and Wei Yi, a reporter of the Southern People Weekly were intruded upon by some unidentified people while they were conducting an interview with Deng’s grandmother in Yesanguan Town, Badong County; they were forced to make a written statement indicating that: ‘no one is allowed to interview in the local area without local approval’.62 The way things were going, network places gathering public opinions, such as Kaidi BBS and Tianya BBS, initiated a heated debate on this event and showed their concern on whether Deng Yujiao could obtain a fair judicial decision. In the poll held by CCTV, as much as 92 per cent of participants believed that Deng should be acquitted based on the fact of justifiable defence.63 In contrast to other public events that had occurred in the past, the most dramatic part of the Deng Yujiao Incident was that some scholars, lawyers and personnel engaged in protecting women’s rights had organised several teams to undertake civic activism tasks. On 24 May, after the Deng Yujiao Incident, a number of scholars held two seminars, including the Seminar on Safeguarding Women’s Rights and Dignity and the Deng Yujiao Incident and the Seminar on Showing Concern to the Deng Yujiao Incident and Internet Public Opinion to discuss how they could help the victim, Deng Yujiao, obtain fair judicial treatment during the trial. Those two seminars also discussed the measures of public opinion and pragmatic approaches to supporting Deng Yujiao and decided to set up some voluntary civic organisations, including the Observer Mission for the Deng Yujiao Case in Judicial Justice, Support Group Relying on Lawyers for Deng Yujiao, Support Group Relying on Young Netizens for Deng Yujiao, Support Group Relying on Public Opinion for Deng Yujiao and so on.64 In addition, another group of netizens also set up the ‘Self-­financed Tourist Group to

204  Civic activism Badong’. These organizations visited the government office and complaints office of Badong County and conveyed petitions on four aspects. First, the tourist group planned to invest in the road construction from Badong to Yesanguan; second, the members of the tourist group would continually arrive in Badong and help Badong promote its tourism industry; third, the representatives of the tourist group would meet Deng Yujiao face to face according to the law and ask about her physical condition; fourth, the tourist group hoped to build a communication platform with the county government and maintain close contact.65 Strong public pressure prompted the Chinese Supreme People’s Court to elaborate its standpoint on the Deng Yujiao case. On 2 June, Sun Jungong, press spokesman of the Supreme People’s Court, said that the court shall adopt an even more rational manner in handling the case, which drew increasing media attention; the spokesman also said that they would firmly uphold the principle of handling the case fairly and justly, and would never try to replace the law with personal will and feelings, where the final adjudication shall be a unification with full consideration of the legal and social effects.66 On the morning of 16 June 2009, Hubei Badong People’s Court held the open hearing for the case as the first instance and made the first-­instance verdict. The court held that the counter-­attack executed by Deng Yujiao was an act of self-­ defensive but to an extent that was beyond the necessary limits, which belonged to over-­defence. Further, the Court was of the opinion that Deng Yujiao caused other people to die with intentional injury, and that her behaviour constituted the crime of intentional injury. After the verdict was handed out, Deng Yujiao took the initiative of giving herself up to the police and truthfully confessed to the crimes, which constituted a voluntary surrender. Based on accreditation by forensic medical examiners, Deng Yujiao suffered from mood disorders (bipolar) and therefore had diminished (limited) criminal capacity. Accordingly, Deng Yujiao was exempted from criminal punishment in conformity with the law.67 In addition, the Discipline Inspection Commission and the Supervision Bureau of Badong enforced party disciplinary measures against the two officials involved and decided to dismiss them from their posts. Huang Dezhi was expelled from the party and transferred to public security agencies for detention. Meanwhile, the Public Security Bureau, Supervision Bureau, Bureau of Culture and Sports and the Bureau of Commerce and Industry jointly issued a notice to launch special rectification towards recreation areas in Enshi.68 The adjudication upon the Deng Yujiao Incident led to consistent praise from official and unofficial parties and also gained positive comments from the mainstream media, which considered the adjudication as a typical sentence affected by public opinion.69 Throughout the course of the case, we cannot give a direct judgement on the extent of influence generated by the experts’ civic activism as being part of the public opinion. Nevertheless, the actions taken by experts were considered thoroughly; these experts believed that no desired effects could be gained by adopting the common manner of proposing expert advice to the government based on the comprehensive assessment of various factors involved in the Deng Yujiao Incident. Therefore, they decided to initiate voluntary social

Civic activism  205 collective actions, which were relatively radical and innovative. However, in the process of action, those organisations maintained reasonability and exercised restraint. They did not develop the civic activism into street politics but proposed their appeals to the local government in a ‘friendly’ manner. Finally, the social actors eventually attracted the attention of the Supreme People’s Court by virtue of the strong power of public opinion and successfully influenced the final judgement handed out. The Qian Yunhui Incident The successful experiences gained from the Deng Yujiao Incident were followed by experts who were also monitoring other cases, such as the Qian Yunhui Incident. On 25 December 2010, Qian Yunhui, a villager of Zhaiqiao Village, Puqi Town, Leqing City of Zhejiang Province, died in a traffic accident. Some netizens disclosed that Qian Yunhui was deliberately killed by someone. In the subsequent press conference, the Municipal Public Security Bureau of Leqing claimed that it was a traffic accident that had created subsequent disturbance. After having been elected as the village director in 2005, Qian Yunhui used to lead villagers in filing petitions related to land disputes. In the course of a petition lasting for five years, Qian was detained three times. Therefore, most netizens did not believe the statement given by the local public security authority. Based on the video evidence recorded by Qian’s watch with a recording function, which was later released by the court, Qian Yunhui had indeed died in a traffic accident.70 It is noteworthy that some experts organised three independent citizen fact-­ finding teams to conduct investigations in Leqing.71 One mission, the Leqing Observation Mission by Academic Citizens, consisted of scholars, including Professor Yu Jianrong (from the Rural Development Research Institute of CASS), Professor Yang Jiangong (from the Law School of Sun Yat-­Sen University), Associate Professor Ma Shen (from the Law School of Guangdong Business University), Professor Guo Weiqing (from the School of Government of Sun Yat-­Sen University) and Professor Fu Guoyong (a history scholar whose hometown was Leqing). Another mission, the Independent Observation Mission by Citizens, mainly consisted of media personnel, including Xiaoshu (a commentator of Southern Weekend), Chen Jieren (an observer for current events of the China National Radio), Piao Baoyi (a senior reporter of China European Business School Business Review and a lawyer) and Si Weijiang. The third mission, Onlooker Mission by Low-­end Netizens, consisted of Wang Xiaoshan (a well-­known columnist), Dou Hanzhang (a financial commentator) and other experts. Moreover, Xu Zhiyong, one of the drafters for the joint letter on the Sun Zhigang Incident, organised the Fact-­finding Mission by Open Constitution Initiative (Citizens) on the ‘Truth of Qian Yunhui’s Death’. That group consisted lawyers and legal scholars.72 In the month before the court ultimately released the video recording from Qian Yunhui’s watch, various missions conducted investigations independently

206  Civic activism but gained different conclusions. For example, the final result of the investigation conducted by the Fact-­Finding Mission by Open Constitution Initiative (Citizens) on the ‘Truth of Qian Yunhui’s Death’ showed that Qian Yunhui actually died from an ordinary traffic accident.73 Not recognising the rules of the observation mission, Yu Jianrong, a major scholar of the Leqing Observation Mission by Academic Citizens, retreated from the mission but stayed in Leqing to investigate land dispute issues in the local area, where other members continued to investigate the cause of Qian’s death. They ultimately found that no conclusions could be drawn on whether Qian died from a traffic accident or if he was murdered.74 Using microblogging to crack down on kidnapping to rescue young mendicants Salvation for child mendicants and vagrants has always followed the Administrative Provisions for the Salvation of Urban Helpless, Vagrants and Mendicants issued by the State Council in 2003. Salvation Centres for Teenage Vagrants were set up all over the country. On 16 July 2009, the Ministry of Civil Affairs, Ministry of Public Security, Ministry of Finance, Ministry of Housing and Urban–Rural Development and Ministry of Health jointly issued the Notification on Further Strengthening Salvation Administration for Urban Vagrants and Mendicants on the Streets, Rescue and Protection for Teenage Vagrants. The Notification stated that vagrants and mendicants increased in some cities and several problems arose from this increasing population. For example, minors were organised, forced, enticed and utilised to break the law and commit crimes, among others, which seriously infracted citizen’s rights, disturbed public order and compromised social stability. The Notification required that salvation and administration for urban vagrants and mendicants on the street should be further strengthened to maintain the legitimate rights and interests of minor vagrants and mendicants.75 In 2010, the Ministry of Civil Affairs drafted the Regulations on Rescuing and Protecting Minor Vagrants, which included provisions on principle and content related to salvation and protection, job distribution and coordination of functional departments, procedures for salvation and protection, safeguarding the rights and providing relief for the subjected children, protecting households and responsibility investigations.76 However, at that time, the Regulations were not yet included in the legislative programme of the State Council. In early 2011, Yu Jianrong, who was previously involved in the Qian Yunhui Incident, initiated another episode of civic activism after realising that no results were achieved for the case. At 14:22 on 17 January 2011, he sent out a message on Sina microblog (a Twitter-­like social media platform) stating the following: [They are] utterly devoid of conscience! This boy, Yang Weixin, six years old, and from Quanzhou, Fujian, was kidnapped in 2009. He was intentionally disabled so that he can become a street mendicant. At the beginning of 2010, some netizens found him on a street in Xiamen and took a photo of

Civic activism  207 him. Now, he is among the missing. I was furious after having received the appeal letter. Please pay close attention and protect your children. His family phone number is 189. … Public security departments must do something about this.77 Late at night on the same day, he posted two more updates on his microblog. I have such an idea. I’ll call the police on 110 once I meet the wounded and disabled children under the age of 10 who are begging on the streets. Then, I’ll publish the situation with regards the response made by the authorities regarding the policy. How does that sound? In addition, we choose a date when netizens of the country shall go to shoot videos of minor mendicants on the streets. Then, we collect the videos and compile them into a documentary film. On June 1st, we publish the recorded videos to major cities nationwide. What do you think of this idea?78 Yu Jianrong, a professor from the Rural Development Research Institute of CASS and a director of the Social Issues Research Centre, has dealt with the political issues in the rural areas of China for a long time. His studies focused on land dispossession, relocation, collective resistance, mass incidents and other issues in rural areas and have taken on an international influence. On October 2010, he opened his personal microblog. Up to April 2011, his microblog followers in Sina reached 600,000. He was usually up to date with what was going on in his microblog.79 His popularity was such that, in December 2010, he was named one of the ‘Top 50 Charming People in China’ by Southern People Weekly.80 After launching the proposal mentioned above, Yu Jianrong won the acceptance and support of many netizens and someone even started to discuss the specific measures with Yu Jianrong. The next morning, Yu Jianrong updated his microblog. Several chivalrous friends and I have reached agreements on the following details: (1) Shooting shall be conducted simultaneously, so that we can help enlighten others on the issue of street children begging on the streets. The first shooting date shall be done on January 29th or January 30th. (2) All information shall be transmitted to a unified mailbox. (3) An open microblog and blog shall be operated by special persons. (4) We will strive to submit the collected videos to delegates and members of the NPC and the CPPCC this year.81 Two hours later, Yu Jianrong posted another update. Some well-­known entrepreneur netizens in Shanghai have decided to donate 100,000 yuan as the start-­up cost for this campaign. As the initial decision, this campaign will only accept donations made by domestic entrepreneurs

208  Civic activism for documentary production and website operation. Donations will be managed by a team consisting of netizens who will publish all relevant information. As an initiator of this campaign, I will not handle and use any amount from the donations.82 Obviously, Professor Yu Jianrong had been discussing this issue with his friends that day. At that point, it was just a proposal for a small-­scale activity, which did not have much influence. However, under the circumstance Professor Yu Jianrong did not know anything, some netizens took the initiative to set up various organisations, released information about the child mendicants and set up live broadcasts over the next few days. By 20 January, this campaign had turned into one of the most influential events on the Internet and garnered the support of thousands of netizens in China. From 21 January, various media platforms in different regions including newspapers, magazines and television stations began to report this event, news of which had spread throughout the country. At around 19:06 on 25 January, Yu Jianrong registered a new microblog account named ‘Rescue Child Mendicants by Taking Photos Without Extra Troubles’ in the Sina platform,83 which was aimed at rescuing kidnapped children, who may have been victims of child trafficking, through the help of the netizens and the power of the police. This microblog called on all netizens to take photos or record videos when they see child beggars on the street, upload them on their personal microblogs, forward them to the microblog ‘Rescue Child Mendicants by Taking Photos Without Extra Troubles’ or send them by email to the special mailbox ([email protected]) set up for this campaign. As the crackdown formally started, microblogs on major websites across the country immediately set off a wave of ‘crackdowns on kidnapping’, and at that point, the police, social organisations and institutions, media and celebrity microblogs also participated in the rescue missions. Nearly every day, new pictures of child mendicants taken by netizens were being published on that microblog. The families of the scattered children also sent photos of their children to that microblog to find their missing loved ones. Several days later, during the Chinese New Year, there was a breakthrough: a boy named Peng Wenle (Lele), who had been abducted three years ago, was found by a netizen. After some efforts, the boy was reunited with his father, Peng Gaofeng, on 8 February. Lele was kidnapped in Shengzhen on 25 March 2008. In order to look for his son, Lele’s father opened the first ‘on seeking store’ in China which aroused extensive media reports as well. Without any doubt, it was exciting news that Lele’s father found his son through the microblog platform started by Professor Yu.84 This news was also reported by People’s Daily. Meanwhile, the Ministry of Public Security also responded that each clue provided by netizens would be reviewed.85 Police departments soon became involved after the crackdown via microblogging began. First, the clues about the first cases issued by Yu Jianrong were provided by netizens within two days, with which local police departments successfully rescued the child. On 19 January, Chen Shiqu, the director of the

Civic activism  209 Kidnapping Crackdown Office of the Public Security Ministry, sent out a personal response on the microblog. At the disposal against organising and forcing children to go begging, public security organs found that some people simply went begging with their own children. Those conducting such illegal activities were not qualified as parents and deserved the condemnation. Two days later, he issued the following official statement on the microblog: The Kidnapping Crackdown Office of Public Security Ministry has deployed measures in various regions against illegal criminal acts based on organising and forcing children to go begging and has set a goal to ban the child begging. All suspicious persons who use the children to go begging shall be investigated. Blood samples shall be collected and tested to store for those children with unknown origins and as suspicious kidnapping objects, based on which we’ll find and rescue the abducted children. We hope the broad masses could provide information and reveal such criminal activities.86 On 3 February, Chen Shiqu also posted the following statement on his microblog: Anti-­kidnapping is an arduous task in need of everyone’s support and help. I’d like to be with policemen for the kidnapping crackdown and all of you side by side, struggling for reduction and thorough elimination of the kidnapping crime. I’ll keep in touch with you by microblog. Welcome to provide clues on kidnapping crime. Each clue will be reviewed under the deployment by the kidnapping crackdown office of Public Security Ministry.87.84 On 11 February, the Ministry of Public Security offered a positive response to the enthusiastic netizens for kidnapping crackdown and stated that: ‘people shall dial 110 to call the police if having found someone suspicious to abuse, organise, force and utilise minors for begging. Public security organs will carefully check and severely attack according to laws.’88  Premier Wen Jiabao also noticed this activity through the social networking site. On 27 February, Wen Jiabao accepted the interview jointly conducted by the Chinese Government Network and Xinhua News Network. During an online dialogue with netizens at home and abroad, he made the following statement: I have already paid attention to this issue online for a long time. Some netizens revealed many problems on child mendicants by taking pictures and uploading them online. Recently, I’ve instructed the Ministry of Civil Affairs in conjunction with the Ministry of Public Security and other relevant departments to take comprehensive measures to strengthen salvation efforts for these child mendicants. I believe this is the first open and positive response from a top leader of the country towards the campaign of cracking down on kidnapping and child mendicants by microblogging.89

210  Civic activism The ‘Crackdown on Kidnapping to Rescue Child Mendicants Through Microblogging’ also drew the attention of many NPC deputies and CPPCC members. Representatives of the NPC and CPPCC undertook many related efforts beginning in February of that same year, hoping that the proposal could be taken into deliberation in the upcoming NPC and CPPCC conferences. On 13 March, Zhao Lin, deputy of the National People’s Congress and chairman of Zhejiang Furun, submitted the proposal at the NPC and CPPCC conference in 2011 and suggested that the Adoption Law of People’s Republic of China be revised, among others. His group also suggested that the penalties against kidnapping in the name of adoption should be intensified and that minors must be strictly forbidden from begging or performing on the streets to earn a living. He also proposed the establishment of a national information platform for missing persons and carrying out regular public service announcements based on national network interconnection for child mendicants.90 Han Hong, a famous singer and member of the CPPCC, made a proposal at the NPC and CPPCC conferences; he suggested setting up child protection agencies and establishing the ‘Three-­Level Guardianship and Intervention System’.91 In addition, Wang Mingwen and Huang Xihua, deputies of the National People’s Congress, Zhang Yin, a member of the CPPCC and others, submitted the proposal on kidnapping and forcing children to go begging during the same NPC and CPPCC conference. Hence, a civic activism effort initiated by scholars and participated in by netizens across the country helped to promote policy change. Recalling the whole process of the ‘Crackdown on Kidnapping to Rescue Child Mendicants Through Microblogging’, Yu Jianrong – an expert from CASS – played a key role. First, Professor Yu Jianrong was a well-­known scholar who had gained insights on collective protests in China. His expertise gave him a comprehensive understanding of how to mobilise the public and encourage them to participate in collective action. Second, Professor Yu was familiar with the operation of the social networking service platform and the Chinese Internet culture. He was a participant and a practitioner of the new media, having considerable influence on the Internet. Finally, he expressly knew that the related laws and regulations in the past could not really help to rescue the kidnapped children forced to go begging, and that positive results could only be achieved through the joint efforts of good-­hearted people in the whole community. Under consultation with his friends, they launched the microblog mentioned earlier and enjoined netizens to participate in civic activism. According to Professor Yu, a microblog can be considered as a window for social observation. For me, the greatest function of a microblog is that I can talk about my opinions, which I cannot do in the past in other communication platforms. Through the microblog, my words always imply that I was born from the bottom.92  In the campaign to crackdown on kidnapping to rescue child beggars, Professor Yu abandoned his own identity as an expert and initiated a civic activism

Civic activism  211 participated in by netizens as an ordinary citizen. In doing so, he finally drew the attention of top leaders towards a social problem and successfully promoted policy change. The ‘Free Lunch Plan’ for students in poor rural areas Another case of civic activism initiated by experts on behalf of netizens started in March 2011. At the beginning of February 2011, the China Development Research Foundation released a report about the nutritional status of the students of China’s rural areas, which was submitted to Premier Wen in January to elicit his commentary (pishi, 批示).93 The report revealed that children in the poor areas of middle and west China have a serious shortage in terms of daily nutritional intake. In March of the same year, Deng Fei, a young journalist of Phoenix Weekly Magazine, along with over 500 volunteers, included journalists and other public intellectuals, launched the ‘Free Lunch Plan’. In the beginning, Deng Fei used his Sina Weibo account to promote the ‘Free Lunch Plan’ to help pupils in poor rural areas. On 2 April 2011, together with his journalist colleagues, he successfully established the first ever free-­lunch dining room at Shaba Primary School in Qinxi County, Guizhou Province. On the day of the opening ceremony, Deng Fei further announced the establishment of the ‘Free Lunch Fund’ on his Weibo, calling on citizens to donate 3 RMB a day to provide free lunch for pupils in other poor rural areas. The ‘Free Lunch Fund’ was affiliated under the China Social Welfare Foundation. Soon after, Deng Fei and his team registered the official accounts in Sina Weibo (http://weibo.com/ freelunch) and Tmall.com (http://mianfeiwucan.tmall.com). The China Social Welfare Foundation also set up the official website of the ‘Free Lunch Fund’ (www.mianfeiwucan.org). The ‘Free Lunch Plan’ achieved great success through the efforts of Deng Fei, volunteers, donors and other members of the society, who actively participated. By June 2012, 1.4 million people had donated to the ‘Free Lunch Plan’ online, with overall donations reaching 35 million RMB. A total of 163 schools participated in the free lunch alliance.94 More importantly, the significant social influence of the ‘Free Lunch Plan’ eventually promoted national policy change. On 26 October 2011, Premier Wen Jiabao held an executive meeting with the State Council, and decided to implement the ‘Nutrition Improvement Programme for Rural Compulsory Education Students’. Through this initiative, the central finance appropriated 16 billion RMB annually to conduct pilot works in 680 counties in special difficult areas, benefiting 26 million pupils and students in these areas.95 Indeed, Deng Fei’s experiences and strategic choice of actions contributed to the success of the ‘Free Lunch Plan’ in achieving policy and social changes. In fact, Deng Fei was one of the key team members of Yu Jianrong’s netizen-­driven civic activism for rescuing begging street children,96 through which Deng Fei accumulated experiences in operating and organising netizen civic activism as well as in developing personal social networks among journalists, scholars, public

212  Civic activism intellectuals, officials in central and local government agencies and official charity foundations. In a television interview in January 2013, he talked about why he had chosen netizen activism instead of other strategies to help pupils in rural poor areas. He said that he knew his individual ability was insufficient in conducting such a huge public welfare enterprise. He could not just write news and articles in media every day to advocate for students in rural poor areas either because these children’s problems in poor areas were not considered newsworthy. Therefore, he decided to mobilise a high-­profile but low-­cost netizen public welfare enterprise.97 In June 2011, Deng Fei was awarded the ‘Decade Journalist’ of the ‘Cultural Award of the Decade News People’ by the Oriental Morning Post. In December 2012, Deng Fei was elected by voters as the ‘Good Citizen Around You’, a reward given by the CCTV programme called ‘Road to Happiness’.98 Case comparison We can compare the five cases on civic activism discussed in this chapter and identify the similarities and differences. In those five cases, experts abandoned their own identities as ‘experts’, initiated or participated in civic activism as citizens, created social opinion through media platforms and attempted to influence the policy makers. Those cases have some common characteristics. First, potential interest losers brought by official policy-­making and judgement had no close relationships with the central policy makers. In the case of the abolition of the D&R system, potential losers suffering from the greatest loss were the urban resident population. In the case of the Deng Yujiao Incident, potential losers suffering from the greatest loss were the low-­level officials involved in the case and the operators of the entertainment establishment. In the case of the ‘Crackdown on Kidnapping to Rescue Child Mendicants Through Microblogging’, the potential losers suffering from the greatest loss were the criminals who had kidnapped and organised the children to go begging. In the case of the ‘Free Lunch Plan’, there seemed to be no potential losers at all apart from the central fiscal reallocation. Second, policy-­making issues involved in those cases were not too complicated, where the expertise needed by officials to make decisions and verdicts were not at a high level. Furthermore, in the two cases (Deng Yujiao Incident and Qian Yunhui Incident), local governments and courts did not expect any expert involvement, nor did they invite experts to offer help during the policy-­making and judgement process. Clues and evidence of those cases virtually rested in the hands of the officials. To sum up, in those two factors mentioned above, experts initiated and participated in civic activism with proper strategies to attract media attention, and through these efforts, they managed to exert pressure onto the government. In those five cases, the strategies taken by experts and their results were also slightly different. First, although experts initiated civic activism all in the name of citizens or netizens, the specific strategies they used differed. After the Sun Zhigang Incident, experts submitted the proposal to the NPC Standing Committee on behalf of the citizens and requested a review on constitutional infringement against the former policy. After the Deng Yujiao Incident and the

Civic activism  213 Qian Yunhui Incident, experts organised voluntary groups of citizens who went to the specific areas to communicate with the local governments. In the crackdown against kidnapping and the ‘Free Lunch Plan’, experts founded a microblog platform as ordinary netizens. Second, experts did not realize the original vision only in the Qian Yunhui Incident, because there was conclusive evidence indicating that Qian Yunhui indeed died from a simple traffic accident. From the beginning, experts did not have any crucial evidence for case judgement. Upon initiating civic activism, the judgement made by experts on the truth of Qian Yunhui’s death had discrepancies with the actual facts. In those five cases, the common ground among different strategies taken by experts was that they found the flaws in the current system through their expertise and then adopted innovative action programmes to mobilise the power of the public and the media. In the process of initiating and participating in the civic activism, these experts not only had the courage to face political risks, but also made efforts to ensure that their action strategies were in line with the political and legal framework of the country. The experts did not intend to launch a mass event but to exchange views with policy makers in a rational manner. Moreover, their success in employing innovative strategies may lead to spillover effects. Similar strategies could be adopted by experts for other issues on government policy-­making, which could promote policy changes in many different fields in the country. The specific comparisons of the cases of expert civic activism are shown in Table 5.3. The experts discussed in this chapter, who initiated or participated in civic activism can be considered to be ‘public intellectuals’. However, their behaviour patterns are slightly different from those of traditional public intellectuals. Generally, issuing professional viewpoints through the media is the main behaviour pattern taken by public intellectuals. Historically, they have also advocated or participated in civic activism, or proposed a variety of political views to the country’s political leaders. In this chapter, the characteristics of the models taken by experts to initiate civic activism include the following: (1) each action taken by public intellectuals was consistent with the political environment and legal framework; (2) they were not trying to change the entire constitutional system but insisted on investigations for individual cases in aid of specific policy-­making; and (3) they made efforts to influence policy changes and government decision-­making through collective action. In those cases, public intellectuals were not trying to persuade policy makers as professionals but deliberately put aside their professional status, stripped themselves of their identities as experts and exercised their basic civil rights as citizens. Theoretically speaking, experts are neutral observers and advisers. Once they revert to their civil status as ordinary citizens to take part in civic activism, they have actually abandoned their neutral positions and placed themselves as ordinary citizens who are the most vulnerable ones among policy stakeholders. In deciding to take such course of action, the experts hoped to obtain more support and response from ordinary people, whereby the indirect influence produced by expert actions onto government policy makers could be multiplied.

Sun Zhigang Incident

2003

Sun Zhigang Incident

Request for a constitutionality review of the policy

Submitted proposals on behalf of the citizens

Case

Date

Cause: social problems

Expert attitude/ proposal

Expert strategy

Qian Yunhui Incident

End of 2010 to early 2011

Qian Yunhui Incident

Experts set up the ‘Observer Mission for Judicial Justice’ and other organisations that conducted investigations in the local areas

Experts set up the microblog platform as netizens and launched an online Free Lunch Fund

Experts set up the Experts set up the ‘Observation Mission microblog platform as by Academic Citizens’ netizens and other organisations that conducted investigations in the local areas

Students in poor areas were in a serious shortage of nutritional intake

March 2011

Provided free lunch for students in poor rural areas

Child mendicants

Beginning of 2011

Crackdown on kidnapping ‘Free Lunch Plan’ to rescue child mendicants through microblogging

Encouraged the public to provide clues for the website and the government

Deng Yujiao should be Suspected that Qian subjected to fair Yunhui died from judicial treatment murder, investigated the Qian Yunhui case objectively

Deng Yujiao Incident

2009

Deng Yujiao Incident

Table 5.3  Comparison among the cited cases of expert civic activism

Consonant

Consonant

Consonant

Policy Changes

Successfully promoted No policy issues policy changes involved, but successfully drew the attention of the Supreme People’s Court

No substantial effect; friendly reception by local government

Response from the State Council repealed The Supreme People’s None (evidence upper-level the former regulations Court gave a positive showed that Qian response Yunhui indeed died from a traffic accident)

Political and legal framework of our country

Representatives of the NPC and CPPCC submitted proposals; policy changes are ongoing

The Premier of the State Council paid close attention and instructed relevant departments to take comprehensive measures as a response

Consonant

The State Council implemented the ‘Nutrition Improvement Program for Rural Compulsory Education Students’

Premier Wen Jiabao held an executive meeting with the State Council

Consonant

216  Civic activism

Notes  1 Genxian Quan, Corpora on Civilian Operations in China, 3rd ed. (Beijing: China Radio & Television Press, 1999), 1936–1968.  2 Jiecheng Diao, A Brief History of People’s Petition (Beijing: Beijing Economic Institute Press, 1996), 236.   3 Ling Zhao, ‘Policymaking Process of Salvation Measures for Vagrants and Mendicants’, Southern Weekend, 26 June 2003.   4 Han Xiao, ‘Sketch on Current Ruling by Law of China,’ 20 January 2002, http:// article.chinalawinfo.com/Article_Detail.asp?ArticleId=3199。.   5 Wei Lin, Chunliang You and Shaohuan Huang, ‘Who Shall Be Accused of the Tragic Gang Rape’, China Youth Daily, 26 July 2000.   6 Wei Lin, ‘A Robust Young Man Mysteriously Died at the Detention Station, Guangzhou Detention Station has been Accused’, China Youth Daily, 27 August 2000.   7 Zhiqiang Zhang, Ying Dai and Lingshuang Jiang, ‘Bleeding Detention – People will be Beaten to Death in Lianyuan Repatriation Station if Ransom is not Paid’, Sanxiang City News, 24 September 2001.   8 Gang Cheng, ‘A Strong Man was Beaten to Death by the “Administration Assistant” in the Detention Station’, China Youth Daily, 24 September 2001.   9 Jianguang Tang, ‘Truth of Sun Zhigang’s Death’, China News Weekly, no. 21 (2003). 10 Dezhi Yang, ‘Survey on a Case of Fleeing from Detention Station’, China Youth Daily, 6 September 2000. 11 Quan, Corpora on Civilian Operations in China, 1965. 12 Beibei Shou, ‘Detention: How can a Relief System Become Deformed’, Southern Weekend, 13 September 2001. 13 Zhao Ling, ‘Never Expected to be so Soon’, Policy-­Making Process of Salvation Measures for Vagrants and Mendicants, Southern Weekend, 26 June 2003. 14 Renwen Liu, ‘Detention and Repatriation go against the Legislation Law’, China Youth Daily, 4 August 2000; Guangzhi Ling, ‘Jingshan Han: How Dark it is Behind the Detention’, China Comment 9 (2002). 15 Xuegang Liu, ‘Chenjia: Temporary Residence Permit: People are Boiling with Resentment Against no Efforts Spared in Advantage Taking’, Outlook 44 (2003); Xunmin Hu, et al., Sustainable Development and Reform on Urban Population Management System, refer to the Selected Papers on Social Security and Police Service (1995–2000), prepared by Shanghai Police Society (Shanghai: Donghua University Press, 2002). 16 Bo Meng, ‘Six Questions against the Detention System’, Southern Metropolis Daily, 27 May 2003. 17 Ning Ma, ‘Expert: Salvation Administration Filled with Humane Care’, China Youth Daily, 23 June 2003. 18 Ling Zhao, ‘ “Never Expected to be so Soon” – Policy-­Making Process of Salvation Measures for Vagrants and Mendicants’, Southern Weekend, 26 June 2003. 19 Feng Chen, ‘Recollection on the Sun Zhigang Case’, Website for the 60th Anniversary of Southern Daily Newspaper Office, 17 April 2009. 20 Feng Chen and Lei Wang, ‘Death of Sun Zhigang – A Detained Person’, Southern Metropolis Daily, 25 April 2003. 21 Chui Li, ‘Three Citizens Petitioned NPC to Conduct Review on Constitutional Infringement for Detention Measures’, China Youth Daily, 16 May 2003; Caolin, ‘Great Responsibility on Protecting the Constitutional Authority’, Guangming Daily, 6 June 2003. 22 Jintao Hu, ‘Address Made by President Hu Jintao in the Commemoration of Capital Circles for 20th Anniversary of Issuing and Executing the PRC Constitution’, Overseas Edition of People’s Daily, 5 December 2002.

Civic activism  217 23 Laura Paler, ‘China’s Legislation Law and the Making of a More Orderly and Representative Legislative System’, The China Quarterly 182 (2005): 301–18. 24 Zhiwei Tong, ‘Several Academic Issues Proposed by Sun Zhigang Case’, Science of Law 7 (2003): 3–6. 25 Kevin J. O’Brien, Reform without Liberalization: China’s National People’s Congress and the Politics of Institutional Change (New York: Cambridge University Press, 1990); Murray S. Tanner, The Politics of Lawmaking in China: Institutions, Processes, and Democratic Prospects (Oxford: Oxford University Press, 1999); Pitman B. Potter, The Chinese Legal System: Globalization and Local Legal Culture (New York: Routledge, 2001). 26 Tong, ‘Several Academic Issues Proposed by Sun Zhigang Case’. 27 Zhiyong Xu, ‘Suggestions Made by Citizens for Review on Constitutional Infringement’, Collected Works of Xu Zhiyong, 7 April 2011, http://xuzhiyong.fyfz.cn/ art/961135.htm. 28 Weifang He, ‘Development of Ruling by Law in China Seen from the Perspective of the Sun Zhigang Incident’, 10 June 2003, www.people.com.cn/GB/shehui/46/ 20030610/1013342.html. 29 Biao Teng, ‘Sun Zhigang Incident: Those Discussed and Evaded (Without Deletion)’, 20 July 2004, www.chinalawedu.com/news/20800/210/2004/7/hu2499104834102740 02168720_125062.htm. 30 Erik Eckholm, ‘Petitioners urge China to Enforce Legal Rights’, New York Times, 2 June 2003, A1. 31 Biao Teng, ‘Sun Zhigang Incident: Those Discussed and Evaded (Without Deletion)’, 20 July 2004, www.chinalawedu.com/news/20800/210/2004/7/hu2499104834102740 02168720_125062.htm. 32 Longyun Niu, ‘Sun Zhigang Incident & System for Review on Constitutional Infringement’, Outlook 22 (2003): 50–2. 33 Tong, ‘Several Academic Issues Proposed by Sun Zhigang Case’, 6. 34 Teng Biao, ‘Sun Zhigang Incident: Those Discussed and Evaded (Without Deletion)’, , 20 July 2000, www.chinalawedu.com/news/20800/210/2004/7/hu249910483410274 002168720_125062.htm. 35 Jinfang Lin, ‘No Turning Back for Abolishing the Detention and Repatriation System’, Xinhua News Agency, 26 June 2006, http://news.xinhuanet.com/comments/ 2006-06/26/content_4749499.htm. 36 David A. Rochefort, and Roger W. Cobb, eds, The Politics of Problem Definition: Shaping the Policy Agenda (Lawrence, KS: University Press of Kansas, 1994). 37 Yongnian Zheng and Guoguang Wu, ‘Information Technology, Public Space, and Collective Action in China’, Comparative Political Studies 38 (2005): 507–36. 38 John G. Ikenberry, ‘The International Spread of Privatization Policies: Inducements, Learning, and Policy Bandwagoning’, in The Political Economy of Public Reform and Privatization, ed. E.N. Suleiman and J. Waterbury (Boulder, CO: Westview Press, 1990): 88–110; Michael Mintrom and Sandra Vergari, ‘Advocacy Coalitions, Policy Entrepreneurs, and Policy Change’, Policy Studies Journal 24, (1996): 420–34. 39 Nikolaos Zahariadis, ‘To Sell or Not to Sell? Telecommunications Policy in Britain and France’, Journal of Public Policy 12, no. 12 (1992): 355–76. 40 Qiqiang Chen, ‘Murder by a Student in Zhejiang University Caused the Public to Question the Existing Standards for Civil Servant Admission’, Legal Daily, 27 October 2003; ‘Social Record: The First Case on Discrimination Against HBV Carriers’, 14 January 2004, www.cctv.com/tvguide/20040202/100607.shtml. 41 Yapeng Zhu and Joseph Y.S. Cheng, ‘The Emergence of Cyber Society and the Transformation of the Public Policy Agenda-­Building Process in China’, The China Review 11, no. 2 (2011): 153–82. 42 Gangdan Xiangzhao, BBS: To defeat Hepatitis B (Beijing: Oriental Press, 2005).

218  Civic activism 43 Officials of the Health Ministry, ‘Emphasis shall be Placed on the Matter Concerning about 200 Million People’, Chengdu Daily, 20 December 2003. 44 Li Cui, ‘Review and Record Office for Laws Set up, Illegal and Constitutionality Review into Start-­Up’, China Youth Daily, 20 June 2004. 45 ‘Public-­Opinion-Seeking by Ministry of Personnel and Ministry of Health on Employment of HBV Carriers’, 10 August 2004. 46 Wenjuan Du, ‘Law on Prevention and Control for Infectious Diseases: Zhang Xianzhu help 120 Million People Safeguard their Rights’, People’s Daily, 13 April 2005. 47 Shenbo Li, ‘A Professor Sent a Letter to NPC and Bluntly Said That the Existing Household Registration System is Contrary to Constitution’, Law Morning Paper, 18 November 2004. 48 Liang Shen, “Jurisprudential Circle Proposed the Constitutionality Review Against the Re-­Education Through Labour System’, Southern Weekly, 5 December 2007. 49 ‘Hubei Police Decided to Send the Waitress Having Stabbed an Officer to Death to Medical Institutions for Examination’, 18 May 2009, www.chinanews.com/sh/ news/2009/05-18/1697032.shtml.  50 ‘A Murder Occurred in an Entertainment Place in Yesanguan, the Woman to Commit Murder has been Controlled by the Police’, 12 May 2009, www.cjbd.com.cn/200905/12/cms184662article.shtml; Police said that Deng Yujiao Hadn’t Been Raped. 22 May 2009, http://society.people.com.cn/GB/42733/9352208.html. 51 ‘Predicament Faced by the Deng Yujiao case seen from Three Reports on Details of the Case’, Chinese Business View, 20 May 2009. 52 ‘Follow-­Up Report for the Case of a Waitress Stabbed an Official to Death: The Waitress was Bundled in the Hospital After having been Arrested’, Beijing Times, 19 May 2009. 53 Zhi Long, ‘Police said Deng Yujiao Case can be Only Defined as Heterosexual Bath, Which was Just an Ordinary Murder’, Southern Metropolis Daily, 22 May 2009. 54 Zhi Long, ‘Unpredictable Change of the Deng Yujiao Case: Deng’s Mother Lifted the Commission Relationship with the Lawyer’, Southern Metropolis Daily, 24 May 2009. 55 Police, ‘Deng Yujiao Wasn’t Raped, Deng’s Mother: Washed her Daughter’s Clothes and Dismissed the Lawyer’, Southern Weekend, 25 May 2009. 56 ‘Follow-­Up Report for the Case of a Waitress who Stabbed an Official to Death: Evidence Supporting the Rape Left on Deng’s Underwear’, Chongqing Evening News, 23 May 2009. 57 ‘Suspicion Aroused by the Statement Made by the Badong Government: Dramatic Change Occurred on the Attitude held by Deng’s Mother’, Guangzhou Daily, 24 May 2009. 58 ‘Deng Yujiao can be Called a Contemporary Paragon of Chastity!’, 20 May 2009, http://leaders.people.com.cn/GB/9336388.html. 59 The special column named ‘A Waitress Stabbed Officials to Death’. 60 Lihua Gan and Xueying Li, ‘Analysis on Deng Yujiao Case by Experts: Results can be Ignored if Female Defended for their Chastity’, China Youth Daily, 20 May 2009. 61 ‘Safeguard Women’s Rights by Law: ACWF Attaches Great Importance to the Progress of the Deng Yujiao Incident’, 22 May 2009, www.women.org.cn/allnews/29/81. html. 62 Chao Yang, ‘A Reporter was Sieged by Some Unidentified People during an Interview with Deng’s Grandmother in Yesanguan Town of Badong County and Forced to Write a Statement’, Xinhua News Agency, 29 May 2009, http://news.xinhuanet.com/ zgjx/2009-05/29/content_11451777.htm. 63 Xiuli Huang, ‘Bound up with the Deng Yujiao Case: 37 days in Badong’, Southern Weekend, 17 June 2009.

Civic activism  219 64 ‘Seminar on Concerns regarding the Deng Yujiao Incident and the Public Opinion Expressed on the Internet’, http://laws.sinoth.com/Doc/article/2009/5/28/server/1000 041024.htm, 28 May 2009. 65 Jieping Zhang and Zhongxiao Guo, ‘Civil Force Inside and Outside the Internet for the Deng Yujiao Case’, Asia Week, 20 June 2009. 66 ‘The Supreme People’s Court Responded to the Deng Yujiao Case: Court Handling the Case Shall Take Rational Manners’, Beijing News, 3 June 2009. 67 ‘The First-­Instance Verdict was made for Deng Yujiao, Which Stated that she was Exempted from Criminal Punishment’, Xinhua News Agency, 16 June 2009, http:// news.xinhuanet.com/legal/2009-06/16/content_11551254.htm. 68 ‘Several Departments Jointly Issued a Notice to Launch Special Rectification Towards Recreation Areas in Enshi’, Enshi Daily, 1 June 2009. 69 European Times, ‘Public Opinion Helped Justice to be Achieved for Deng Yujiao Case, Which Highlighted the Social Progress’, Xinhua News Agency, 19 June 2009, http://news.xinhuanet.com/overseas/2009-06/19/content_11567223.htm. 70 ‘A Simple Traffic Accident’, People’s Daily, 29 January 2011; ‘First-­Instance of Qian Yunhui Case’, Beijing Times, 2 February 2011, http://paper.people.com.cn/jhsb/ html/2011-02/02/content_739578.htm. 71 ‘Three Independent Citizen Fact-­Finding Missions Prepared to go to Leqing to Investigate the Qian Yunhui Incident’, Ifeng, 29 December 2010, http://news.ifeng.com/ society/special/leqingchehuoshigu/content-­2/detail_2010_12/29/3771146_0.shtml. 72 The list of team members mentioned above was prepared by the author of this book, based on numerous interviews by the media. 73 Zhiyong Xu, ‘Report on the “Truth of Qian Yunhui’s Death” Submitted by the Fact-­ finding Mission by Open Constitution Initiative’, 31 December 2010, www.china elections.org/NewsInfo.asp?NewsID=197869; Zhiyong Xu. ‘Report (2nd edition) on the “Truth of Qian Yunhui’s Death” Submitted by the Fact-­finding Mission of the Open Constitution Initiative’, www.chinaelections.org/NewsInfo.asp?NewsID=198 601, 26 January 2011. 74 ‘Accident Group on the Death of Qian Yunhui of the Leqing Observation Mission by Academic Citizens: Observation on Death of Qian Yunhui from Leqing’, 20 January 2011, www.chinaelections.org/newsinfo.asp?newsid=197867. 75 ‘Five ministries jointly issued the Notification on Further Strengthening the Salvation Administration for Urban Vagrants and Mendicants on the Street, Rescue and Protection for Teenage Vagrants’, 31 July 2009, www.mps.gov.cn/n16/n983040/n1928424/ n1928454/2000711.html. 76 Xiaoyu Guo. ‘Ministry of Civil Affairs Planned to Draft the Regulations on Rescuing and Protecting Minor Vagrants’, Legal Daily, 27 May 2010. 77 Jianrong Yu, http://weibo.com/yujianrong. 78 Ibid. 79 ‘A Day of Yu Jianrong’, 21st Century Business Herald, 6 January 2011. 80 ‘Top 50 Charming People in China’, Southern People Weekly, no. 44 (2010). 81 Jianrong Yu, http://weibo.com/yujianrong. 82 Ibid. 83 ‘Rescue Child Mendicants by Taking Photos Without Extra Troubles’, Sina microblog. 84 ‘A Boy Who was Kidnapped for Three Years was Found During the Campaign on Rescuing Child Beggars with Microblogging’, Information Times, 9 February 2011. 85 Mo Hu and Yun Jiang, ‘Ministry of Public Security responded that each clue provided by netizens will be reviewed’, People’s Daily, 10 February 2011. 86 Shiqu Chen, https://weibo.com/chenshiqu. 87 Mo Hu and Yun Jiang, ‘Ministry of Public Security Responded that Each Clue Provided by Netizens will be Reviewed’

220  Civic activism 88 Ministry of Public Security, ‘Please call 110 if you find Someone Utilising Minors for Begging’, Xinhua News Agency, 11 February 2011, http://news.xinhuanet.com/video/ 2011-02/11/c_121064081.htm. 89 Jiabao Wen, ‘I have Instructed Relevant Departments to take Comprehensive Measures to Rescue Child Mendicants’, Xinhua News Agency, 27 February 2011, http:// news.xinhuanet.com/2011-02/27/c_121126556.htm. 90 Delegate Linzhong Zhao, ‘Carry out the Public Announcement System Based on National Network Interconnection for CHILD MENDICANTS’, www.legaldaily. com.cn/zt/content/2011-03/13/content_2513853.htm?node=27689, 13 March 2011. 91 Hui Wang, ‘Han Hong Disclosed her Proposal for the First Time and Suggested Setting up Children Protection Agencies’, Beijing News, 11 March 2011. 92 ‘A Day of Yu Jianrong’, 21st Century Business Herald, 6 January 2011. 93 Mai Lu, ‘Gaishan nongcun xuesheng yingyang’ [‘Improving Nutrition of Rural Students’], China Development Research Foundation, 8 March 2012, www.cdrf.org.cn/ plus/view.php?aid=81 and www.cdrf.org.cn/plus/view.php?aid=676 (accessed 30 January 2013). 94 Fei Deng, ‘Mianfei wucan’ [‘Deng Fei: Free Lunch’], Sohu.com, 15 June 2012, http:// news.sohu.com/20120615/n345702813.shtml (accessed 30 January 2013). 95 The Programme’s official website: www.moe.edu.cn/publicfiles/business/htmlfiles/ moe/s6329/list.html (accessed 30 January 2013). 96 Lan Yang, ‘Yang Lan duihua meitiren Deng Fei: cong weibo daguai dao mianfei wucan’ [‘Yang Lan Dialogue with Media Worker Deng Fei: From “Microblogging Anti-­Trafficking” to the “Free Lunch” ’], people.com.cn, 16 September 2012, http:// culture.people.com.cn/n/2012/0926/c87423-19114756.html (accessed 30 January 2013). 97 Phoenix TV Station, ‘Gongyi zhongguo mianfei wucan gongyi xiangmu’ [‘Welfare China: Free Lunch Welfare Project’],”Phoenix TV Station, 14 January 2013, http:// v.ifeng.com/news/society/201301/14c0f2bf-2346-49a2-ac3e-249ba700e225.shtml (accessed 30 January 2013). 98 ‘Shenbian haoren, wennuan zhongguo’ [‘Good Citizen Around You, Warming China’], CCTV, 28 December 2012, http://roll.sohu.com/20121228/n361914222. shtml (accessed 30 January 2013).

6 Conclusion

Summary of the comparison of the policy-­change cases In this book, I have developed a new theoretical model to interpret the participation patterns displayed by experts in the process of influencing policy changes in China. In this model, special attention has been given to two key attributes of policy change: loss embeddedness and knowledge complexity. These two concepts are developed based on two theories, namely, policy network and principal–agent. On the one hand, the main criticism against researchers engaged in policy network is that scholars have never established a verifiable theoretical hypothesis to establish a connection between the structural attributes of the policy network and the states of the policy process. Therefore, as proposed in this book, the concept of loss embeddedness is an attempt to establish the theoretical connection between a special structural attribute of the policy network and the behavioural patterns manifested by experts whilst participating in the policy process. On the other hand, principal–agent theory generally discusses the informational advantage held by the agent over the principal. This book argues that policy makers (as the ‘principal’) may have the advantage of possessing key information on policy-­making and the incentive to keep the information undisclosed as they invite experts to provide expertise and relevant information during policy advisory activities. Therefore, the information asymmetry existing in the principal–agent relationship during policy advisory activities may be bidirectional. On the basis of the principal–agent model under the state of bidirectional information asymmetry, this book proposes the concept of ‘knowledge complexity’ to interpret the limits and advantages held by policy makers and experts in terms of knowledge and information in the process of policy advisory. Based on the key attributes of these two policy changes, we thus divide the policy changes into four types. As a distinctive feature, this book utilises the standardised procedures based on case study and carefully selected four cases of policy change to represent the four types of policy changes subscribed under the proposed theory. In order to verify a series of theoretical hypotheses, I have conducted comparative studies

222  Conclusion on four policy-­change cases. From the perspectives of loss embeddedness and knowledge complexity, an analysis of those four policy-­change cases indicates their typical differences (Table 6.1). First, establishing the new urban medical and healthcare system was a policy-­ change process with high levels of loss embeddedness and knowledge complexity. In this process, the Ministry of Health served as the maximal interest loser. The Ministry of Health was criticised from the beginning of the reform and experienced power abatement in the process of reform. In addition, other departments related to the new urban medical and healthcare system also have interest concerns in the reform direction. Meanwhile, similar to the promotion of the NCMS, establishing the new urban medical and healthcare system also involved a selection of policy instrument with high-­level knowledge complexity. Government policy makers had to rely on experts to understand the domestic situation and international experience and realize the design for technical and special issues on public health, administration and so forth. Table 6.1  Case comparison: attributes of policy change Case

Attributes of policy change Loss embeddedness

Knowledge complexity

Establish the new urban medical and healthcare system

Inter-ministerial coordination among 16 ministries and commissions; Major pharmaceutical companies, insurance companies and so on; Beneficiaries of the original medical system

High level of technique; Indefinite alternatives; Policy makers do not possess the critical information pertinent to the policy drafting

Pilot promotion of the new-type rural cooperative medical care system

The Ministry of Health is the beneficiary; Other departments and local governments have no loss of benefits

Highly technical and interdisciplinary issue; A large number of alternatives; Policy makers do not have critical information pertinent to the policy drafting

New affordable Local governments, developers Low level of technique; Definite policy instruments urban housing policy and commercial banks; Those rent-seekers enjoying ‘welfare-oriented public housing distribution’ are the maximal beneficiaries of the original policy; Meanwhile, mid- and low-income families never benefited from the policy on affordable housing Revocation of the detention and repatriation system

Low level of technique; Urban floating population; Urban residents with officially Easy policy instruments registered permanent addresses

Conclusion  223 Second, pilot promotion of the new-­ type rural cooperative medical care system was a process of policy change with weak loss embeddedness and high-­ level knowledge complexity. In this process, the Ministry of Health served as the maximal beneficiary, where relevant ministries and local governments experienced almost no loss of interest. In particular, the Ministry of Health also established the system of ‘Inter-­Ministerial Joint Conference for the NCMS’ to handle the daily affairs in the construction of the NCMS. Meanwhile, the promotion of the NCMS also involved a policy instrument selection process characterised by a high level of knowledge complexity. On the one hand, policy makers do not know the real state of rural health care. On the other hand, policy makers can only understand the effect and feasibility of the policy instrument through the field research and tests on policy instruments conducted by experts. Third, the new policy on affordable housing was a policy-­change process with high-­level loss embeddedness and low-­level knowledge complexity. The interest losers, who were involved in the experts’ proposal to abolish the affordable housing system and build affordable houses with financial funds from the central government, were all government departments embedded in the network of policy makers, local governments and staff members within the establishment. On the contrary, policy instruments about affordable houses mainly included financial investments, land supply and the distribution of purchase opportunities. These policy instruments only had a low-­level knowledge complexity and the government held the key information relating to these policy instruments. At this point, policy makers could make decisions without the help of experts. Rather, the most important consideration for policy makers at that time was how to strike a balance among the interests of different stakeholders during the reform of the affordable housing system. Fourth, abolishing the detention and repatriation system was a policy-­change process with low-­level loss embeddedness and low-­level knowledge complexity. Urban vagrants and mendicants were the maximal beneficiaries of the abolished detention and repatriation system, whilst the maximal interest losers were the permanent urban residents and normal mobile personnel, who were not stakeholders embedded in the network of policy makers. Meanwhile, the process of abolishing the detention and repatriation system had low-­level knowledge complexity, and as such, policy makers could also make decisions without the help of experts. Overall, the models taken by experts to induce their involvement in these four policy-­change processes vary. First, in the reform process of the new urban medical and health system, experts published their research findings to the media because internal, direct recommendations did not succeed. This resulted in better public awareness and pressure generated by public opinion, which led to the initiation of the policy. At the stage of alternative selection, policy makers invited many expert teams to provide advisory programmes, due to the high-­ level complexity of the reform. Moreover, the alternative designs made by experts showed significant differences, so there was also an outside-­in enlightenment relationship among the expert teams. Finally, after having integrated the

224  Conclusion suggestions of the experts, policy makers decided to adopt a composite reform programme, which gave proper attention to both suppliers and consumers. Second, in the pilot project for the new-­type rural cooperative medical care system, experts’ linear consultation also successfully promoted the agenda of policy change, when they did not immediately publish their research results. At the stage of alternative selection, the Ministry of Health organised the expert group of technical guidance and expert research centre to help the government make important decisions pertinent to the reform. Third, for the new policy on affordable urban housing, experts were divided into two camps: those who aimed to abolish the policy on affordable housing; and those who aimed strengthen the investment of the central government. However, expert suggestions did not play an effective role. Faced with these two perspectives, the central government neither abolished the policy on affordable urban housing nor increased the central financial investment. It was only moved into action when the 2008 Global Financial Crisis broke out and the construction of affordable urban housing was redefined as a means of expanding domestic demands. After this event, the central government eventually decided to invest huge amounts of capital for the construction of the affordable housing units. Fourth, in the policy change made by the State Council to abolish the detention and repatriation system, experts abandoned their own identities of being ‘experts’ and joined in civic activism as ordinary citizens. Table 6.2 compares the models and strategies taken by experts to induce their involvement in these four policy-­change cases. After the agenda initiated for abolishing the detention and repatriation system, the central government promptly developed the new policy. With the success of this attempt, this strategy taken by experts to increase their involvement in civic activism was replicated in many more instances thereafter. Several years after the Sun Zhigang Incident, many experts initiated or participated in many innovative civic activism efforts to influence policy changes and public decision-­making. Some efforts succeeded but others did not. Based on comparative studies of those four major cases, we outlined the paths followed by policy change in China from the perspectives of the different involvement models taken by experts. Apparently, the involvement models taken by experts have undergone dramatic changes due to differences in the levels of loss embeddedness and knowledge complexity among different policy changes. This empirical data strongly verified a series of theoretical hypotheses proposed in this book.

Conclusion and discussion With expert involvement as the master line, this book has outlined the models taken by experts in China to increase their involvement in different processes of policy changes. It is generally believed that expert involvement serves as the main driver of policy changes. Yet, this book proposed a counter-­intuitive theoretical issue as its greatest theoretical contribution: How do the policy changes, in

Conclusion  225 Table 6.2  Case comparison: models of expert involvement Policy-change cases

Models of expert involvement Basic position

Stage 1: Agenda-setting

Stage 2: Alternative selection

New urban medical Reform the existing and healthcare health care system; system effectively reduce the medical costs borne by the residents and mitigate the difficulties and costs in seeking adequate medical care

Failed in the direct channel and turned towards publishing their respective research results

Delivered lectures to the politburo leaders by invitation; 9 + 1 sets of expert advisory programmes

Pilot promotion of the NCMS

Increase financial investments made by the central government; expand the coverage of the rural cooperative medical insurance

Influenced the policymaking through direct channels and not by immediately publishing their research results

The Ministry of Health set up the NCMS technical guidance groups and the NCMS Research Centre

New affordable urban housing policy

Abolish or replace the policy on affordable housing; increase the financial investments allocated by the central government

Policy makers insisted on the policy on affordable housing; hence, expert suggestions had no impact

Initially, expert suggestions were of no effect. The central government did not increase the investments until the outbreak of the 2008 Global Financial Crisis

Submitted proposals to the Standing Committee of the National People’s Congress in the name of the citizens and requested for a constitutionality review

Policy makers quickly made the policy changes supporting the vulnerable groups

Revocation of the Provision of support for vulnerable groups detention and repatriation system and maintaining of social justice

turn, influence the modes of expert involvement? In addressing this theoretical question, we actually acknowledge the existence of an endogenous logic between policy change and expert involvement, that is, there is a relationship of reciprocal causation between policy change and expert involvement. The majority of past theories emphasised the role played by expert involvement in promoting policy changes but neglected the adverse effects realized by attributes of policy changes onto the involvement behaviours of experts. Taking this core theoretical problem as the starting point, this book proposed a question: Why are

226  Conclusion the Chinese experts prone to adopt different action strategies and involvement models in different cases of policy changes? In addition to the adverse effect generated by policy changes onto expert involvement as the theoretical expansion, this book also proposed two attributes of social policy change that could influence the involvement modes of experts: loss embeddedness and knowledge complexity. On the basis of these modes, the book has established the theoretical mode for interpreting the involvement modes of experts. Accordingly, the behavioural patterns of expert involvement in China can be divided into four types: (1) outside-­in enlightenment, (2) linear consultation, (3) locked-­out, and (4) civic activism. In particular, this book distinguished the two indirect action strategies, namely, outside-­in enlightenment and civic activism, which might be taken by experts who have failed to influence the policy-­making through direct channels. Both strategies adopted the expression mode of utilising the public opinion but were essentially different. These theoretical contributions are all cutting-­edge ideas in the field of policy processes and studies on expert involvement. The readers of this book can obtain a more in-­depth understanding of the current state of expert involvement in the policy process in China. Western scholars generally believe that experts in China only rely on official and internal channels to express their views to their leaders, whilst unofficial experts only have limited influence on major policy decisions in China. However, the plentiful evidence presented in this book suggests that the policy-­making system in China has already reached a fairly high degree of openness, and in this context, official and unofficial experts are not competitors but are actually entities who form a relationship of labour division and cooperation. In some policy processes, official experts indeed have more opportunities to influence a policy, whilst in others, unofficial experts have advantages over the former. Moreover, some policy processes require the full cooperation of official experts, unofficial experts and even overseas experts, especially when policy change could only be promoted by integrating the resource advantages of these different kinds of experts. How did expert involvement evolve in contemporary China from a historical perspective? This problem has been tackled in this study but has not been clarified systematically. Reviewing the entire book, we can conclude with the four factors that influence the changes in the models employed by China’s experts to become involved in the policy process. First, the government gradually relaxed its control over the intellectuals’ thoughts and ideologies. Experts in China gained greater independence and could thus reveal the diversity in their behavioural patterns. Unlike in past years, Chinese experts have already gained more freedom in carrying out debates on policy issues within the system and in the public domain. Second, faced with the increasingly complex policy issues, the policy makers’ need to include experts in the decision-­ making process has become stronger than ever. We expect that Chinese leadership of the new generation will have more initiative than before in initiating consultations with experts. Third, the progress made by the Chinese government in terms of

Conclusion  227 information disclosure has encouraged more researchers to get involved in the study and consultation on policies. This is a crucial step as they are the ones who can provide high-­quality suggestions on policy analysis to the policy makers. Fourth, due to the reforms in traditional media and the simultaneous rise of new media in China, the strategy of exerting external pressure and arousing public opinion to promote government decision-­ making has become increasingly effective. In the past, experts in China were completely excluded from the decision-­making circle if they were unable to influence the policy through internal channels. Certainly, this study also has its share of limitations, and these encourage us to develop more in-­depth studies in the future. First, in order to avoid the ‘reflexivity’ issue caused by interviewees, we decided to only employ publicly available information as the only evidence apart from interviews with inside experts. This approach may have limited our understanding of complicated cases. Second, we assumed in this study that experts have a neutral position, which has definitely simplified the study. For a more in-­depth understanding of the complex behaviours of experts, in the future, we can regard them as policy participants with personal interests and preferences. Third, due to constraints of space, we only provided four major cases of policy change. However, such a limitation does not reduce the external validity of the theoretical findings of this study. Considering the competing interpretations in multiple angles found in the case of abolishing the detention and repatriation system, we also compared the success or failure of the civic activism model in five smaller but relevant cases. In fact, we can carry out repeated tests on many cases for each involvement model. For future studies, we can enrich the case library on expert involvement to solidify the empirical bases of the theory proposed in this book.

Approach leading to scientific and democratic policy-­making Offering suggestions is not the purpose of this book. However, some findings of this study are worthy of further consideration as these can guide experts and decision makers to take appropriate action in similar policy processes. Therefore, it is necessary for us to propose these implications in the form of countermeasures and suggestions, so as to promote the further development of scientific and democratic policy-­making in China. Suggestions for experts In recent years, experts have been frequently involved in many policy changes in China. The initiative involvement of these experts does not mean, however, that they can have an actual impact on policy change. Relying on the findings of this study, experts engaged in relevant policy domains could devise the most effective way to utilise their limited resources and choose the appropriate involvement model to facilitate the translation of their expertise into real policy outcomes. In the cases of policy change wherein expertise played a significant

228  Conclusion role, experts duly adjusted their strategies according to the attributes of different policies and selected a reasonable mode of involvement to achieve their goal of influencing the policy. We must emphasise the fact that the reasonable selection of which involvement model to use depends on the resource advantages held by experts and their research organisations. In some policy changes where information report channels inside the government act as the optimised input mode for expert suggestions, research organisations with government background and experts with personal relations with key policy makers are more likely to stand out and play an essential role in corresponding policy changes. In comparison, in some other policy changes where experts can only exert their influence by virtue of the external power of the media, experts with a wide range of media resources are more likely to become successful advocates of public opinion. As a result, they have more opportunities to draw the attention of policy makers within the government. Thus, we suggest several strategies for experts. First, experts may intentionally make plans for their involvement actions in addition to enhancing the research capacity and extending their social network. Second, before taking action, experts must analyse the interest structure of the targeted policy change and obtain a clear understanding of the major stakeholders involved in the actions, especially the potential interest losers within the system. Third, to make the policy advice feasible, experts must analyse the fiscal restraint from the beginning. As the reform on tax distribution and the separation of affairs and authority has been implemented in China, special attention must be given to the fiscal restraints of the central and local governments. Fourth, different policy changes need corresponding experts with specific resource advantages; otherwise, the influence of the experts could not be successfully imposed onto an actual policy change. Therefore, experts must analyse their own resource advantages before being involving in the policy process. When necessary, experts could achieve resource complementarity through cooperating with other experts or think-­tanks. Based on the above summary, we can simply outline the paths followed by experts to select the appropriate behavioural patterns to increase their involvement in policy change (see Figure 6.1).  In Figure 6.1, conditions 1, 2 and 6 are the factors concerning the personal capacity of the experts, and conditions 3, 4 and 5 are factors regarding the specific attributes of a policy change. A1 Linear Consultation – Provide policy recommendations directly to policy makers A2 Linear Consultation – Seek to establish alliances with stakeholders B1 Publicly support existing policy-­making – This entails the risk of public criticism B2 Outside-­In Enlightenment – Create influence based on public opinion by publicising research results C1 Civic Activism – Initiate or engage in civic activism to attract media attention

Conclusion  229 X0 No involvement X1 With no substantial effect – Demonstrate viewpoints of the leaders through an internal report X2 Temporarily with no substantial effect – Establish media prestige by academic study X3 With no substantial effect – Public advocacy with no substantial effect on a policy X4 With no substantial effect – Lack of various network resources; hence, personal connections should first be strengthened Recommendations for policy makers Apart from the experts, policy makers could also be enlightened by the findings of this study, such that they can obtain a better understanding of the important roles played by experts in the policy process. First of all, policy makers should never consider experts as a subsidiary part of policy-­making. Rather, experts should be valued as the external ‘brain’. They allow the government to make sound decisions and they exert every possible effort to help the government arrive at the right judgements on complex policy-­making issues. Furthermore, the policy analysis conducted by experts serves as the unique instrument that

yes 5

no yes 1

yes

3

yes 4

2

no

yes

no

no

5

6 yes

no

X1

yes

yes

6

no

B2

no

X2 no C1 3 yes no X3

yes 6

X4

Conditions 1. Whether the experts have the research capacity in the corresponding field

B1 A2

no 5

X0

A1 yes

no

2. Whether the experts have a direct channel in the corresponding field

3. Whether there are interest losers within the system

4. Whether there are other beneficiaries who can accept the viewpoint within the system

5. Whether the policy has a high-level knowledge complexity

6. Whether the experts have developed good relations with the media

Figure 6.1 Routes followed by experts to select their behavioural patterns in a policy change process.

230  Conclusion enables current final policy makers to judge the objective quality of different policy opinions held by various stakeholders. Undoubtedly, the rational analysis of the experts may sometimes harm the stakeholders involved in certain policies. Those potential interest losers, however, should not refute the expert view by preaching down the experts’ moral quality.1 If there are no experts who are generally accepted to be objective and neutral in China, the rationality of public decision-­making will be universally questioned and this process shall only be embroiled in endless quarrels and a vicious cycle of inaction. At present, there exists a pervasive contempt against experts in Chinese society. This is essentially because the public are not convinced by the current Chinese experts who lack adequate research capacity and independence. More importantly, China has yet to establish a policy analysis market.2 Currently, many government policy makers invite experts to carry out consultation activities, but only with the goal of hiring them to legitimise the leadership’s decision-­making. With such a motivation, policy makers are more likely to choose and sponsor those experts who support the viewpoints of the leadership. In the consultation activities for policy-­making, the absence of objective criteria for measuring an expert’s research capacity has led to the practice of experts seeking research grants by catering to potential sponsors. As time passes, the research capacity of the experts is not improved and their independence gradually declines. Therefore, we propose institutional arrangements that take a faultless ‘policy analysis market’ as the core of the sound development of expert involvement. These proposals can be used as reference by the policy makers. Demand and supply mechanism of the policy analysis market In the policy analysis market, experts supply the products of policy thought, expertise, recommendations and even criticism, whilst the government, media and the public represent the ‘demand’ for these ‘products’. In terms of demand, government acceptance of the competency of the expert and the demand for policy analysis act as a prerequisite for expert involvement. In terms of supply, experts with different backgrounds within the same political environment are able to provide policy ideas representing a variety of values and interests. This condition serves as another prerequisite for a sound policy analysis market. Diversified input mechanism for research grants In a relatively developed policy analysis market, research grants not only come from the government, the final ‘consumer’ of expert studies on policies, but also from welfare research funds, individual donors or enterprises, who serve as the ‘indirect consumers’ of the policy ideas produced by the experts and researchers. With multiple and sufficient sources of research funds, experts no longer have to seek grants all around for their livelihood, and the possibility of an expert sacrificing his/her independence in favour of sponsors with ulterior motives is greatly reduced. Therefore, an effective system ensuring experts obtain diversified

Conclusion  231 sources of funding lies on the following factors: the establishment of government-­sponsored funds for policy studies in China; encouraging social welfare contributions by laws or policies; on the basis of government guidance, encouraging private capital as a useful complement for research funds under the legal system; and encouraging experts to conduct all kinds of welfare exploration, free applications for welfare funds granted to policy studies and so on. Multilevel output mechanism for the research outcomes The research outcomes produced by the experts will all be exported not only to government departments, but also to various interest groups dealing with different policy issues. In the policy process, experts deliver their ideas to the government through various channels via policy participants at different levels. Hence, in a sound market of policy analysis, the government – as the ultimate consumer of policy ideas coming from experts – must establish a far-­ranging mechanism for thought collection and filtration. Debates and a peer-­review mechanism for policy thought Given that one characteristic of the policy analysis market is information asymmetry, debates and the peer-­review mechanism for policy thought are essential in appraising the quality of policy ideas proposed by experts. It is often difficult for consumers of policy studies to make judgements on the quality of policy research. In the debate process, experts proposing or supporting a policy viewpoint superior to the other can enjoy higher reputation in the government and among the public. Therefore, a platform allowing multiple policy opinions under open debate can become an effective mechanism for the government and other policy actors in Chinese society to identify the advantages and disadvantages of different viewpoints in a more equitable manner. On such a platform, any policy issue can draw the attention of many experts who can, in turn, propose relevant policy viewpoints and suggestions. This way, the government is just like a consumer shopping in a supermarket filled with alternative policy schemes. Meanwhile, to allow more experts to have the opportunity to participate in market competition on policy proposal, the government must actively disclose key information on decision-­making to promote the achievement of policy analysis gained by experts in a more realistic and comprehensive manner. Regulatory mechanism for the policy analysis market In a policy analysis market with high-­level information asymmetry, the effective regulation of the government and the public is an important guarantee that ensures the healthy development of the market. The government can work with industry associations to establish the basic admittance criteria, professional standards, financial regulatory systems and other relevant systems, which will not only ensure higher levels of research capacity and professional ethics among

232  Conclusion the experts, but also the regulation of the interest interrelation between the viewpoint publication and the experts’ funding sources. Upon investigation, once the supervising system finds that an expert is involved in certain interests, this expert can then be eliminated or excluded from the policy analysis market.

Notes 1 In order to create hot topics, some media outlets cited or reported experts’ opinions in an improper and false manner, which contributed to the emergence of such a phenomenon. 2 Lan Xue and Xufeng Zhu, ‘Social Functions of Think-­Tanks in China – Road for Reform with Policy Process as the Core’, Management World 4 (2009).

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Index

Page numbers in bold denote tables, those in italic denote figures. achievement 136, 231 ACWF 203, 218n61 Additional Directives on Preventing Rural Population from Blindly Flowing into Cities 179 Additional Directives on Preventing the Rural Population from Blindly Flowing into the Cities 183 administrative linkage 4, 5, 16 Administrative Measures for Affordable Housing 125, 126, 138, 146 Administrative Measures for the Affordable Housing 128 Administrative Measures on the Price of Affordable Housing 128 administrative organ 6, 191 Administrative Provisions for the Salvation of Urban Helpless, Vagrants and Mendicants 181, 186, 194, 206 Administrative Provisions for the Salvation of Urban Vagrants and Mendicants 33 Administrative Sanctions for Illegal Activities on Price 125 Adoption Law of People’s Republic of China 210 adverse selection 12, 113 affordable housing 123, 124, 125, 126, 127, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 155, 156, 157, 158, 159, 160, 161, 162, 173, 223, 224 agenda setting 22, 80, 85, 105 alternative selection 22, 28, 30, 59, 80, 85, 223, 224 ambiguity 26, 28

arbitrary charge 106, 187 barometer 25 Beijing Normal University 59, 60, 64, 67, 73, 136, 170 Beijing Unirule Economics Institute 190 Beijing Unirule Institute of Economics 148 Beijing University of Political Science 190 Beijing University of Posts and Telecommunications 190 bid invitation 63, 68, 139, 141 Björn Wittrock 8, 35 blindly floating population 179 brigade 88 BUEI 5 Bulletin of the State Council Executive Meeting 194 cadre evaluation 110 Cai Jiangnan 65, 75 Cai Jiming 157, 166, 171 Carol H. Weiss 34n11, 35n31 CASS 4, 5, 148, 154, 163, 165, 188, 205, 207, 210 Central Military Committee 197 Chen Feng 189 Cheng Siwei 141, 164 Chen Guoqiang 149, 168 Chen Huai 157, 163 Chen Jieren 205 Chen Shiqu 208, 209 Chen Xiaohong 115 Chen Yingchun 118 Chen Yunfeng 149, 171 China Centre for Economic Research 58, 69, 72

Index  245 China City Construction Holding Group 157, 171 China Construction Bank 138 China Development Research Foundation 211, 220n93 China Insurance Regulatory Commission 111 China Land Surveying and Planning Institute 154, 156, 165 China Minsheng Bank 138 China National Petroleum Corporation 144 China National Radio 205 China Pharmaceutical Enterprise Management Association 71 China Poly Group Corporation 157, 172 China Real Estate and Housing Research Association 140, 157, 163 China Real Estate Association 148 China Real Estate Professional Managers League 149, 171 Chinese Academy of Sciences 1, 59, 62 Chinese Academy of Social Sciences 4, 34, 139, 163 Chinese Health Economics Training and Research Network 112, 113, 114 Chinese Medical Association 58 Chinese People’s Political Consultative Committee 17 Chongqing State-Owned Assets Supervision and Administration Commission 5 CITIC Bank 138 citizen participation 12, 13, 14 civic activism viii, 30, 38n67, 178, 189, 190, 193, 195, 198, 199, 200, 201, 203, 204, 206, 210, 211, 212, 213, 214, 224, 226, 227, 228 Civil Administration Departments 180 classical bureaucratic model 8 collective healthcare system 87, 88 commercial bank 102, 103, 137, 138, 140, 152, 222 commodity housing 124, 125, 127, 128, 140, 141, 142, 144, 146, 147, 148, 150, 153, 155, 156, 166 Common Criteria (Trail) for Physical Examination during the Recruitment of Civil Servants 199, 201 common property right 132, 134 community hospital 53, 57 compensate 11, 139 Constitution 40n107, 179, 190, 191, 193, 194, 196, 197, 199, 205, 206, 216n21, 218n27, 219n44

constitutionality review 178, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 201, 214, 225 constraint management 181 Coordination Group for Medical Reform 46, 52 Council on Health Research for Development 8 CPC viii, 1, 31, 33, 40n112, 42, 44, 47, 51, 59, 81, 86, 87, 88, 95, 96, 101, 105, 106, 110, 148, 166, 179, 183, 186 CPC Central Committee 31, 33, 40n112, 42, 44, 47, 51, 81, 87, 88, 95, 96, 101, 105, 106, 110, 179, 183, 186 CPC Central Party School 148, 166 CPPCC 17, 46, 59, 83, 135, 148, 149, 157, 159, 162, 165, 166, 171, 172, 176n72, 188, 207, 210, 215 CPPCC Committee 46 Cui Zhiyuan viii, 5 Cultural Revolution 88, 89 D&R 178, 180, 181, 182, 183, 187, 188, 189, 190, 191, 193, 194, 195, 199, 200 Dai Tao 77 David Lampton 15, 38n76 David Shambaugh ix, 15, 39n77 Decision made by CPC Central Committee on Several Major Issues of Building up Harmonious Socialist Society 59 Decision of the CPC Central Committee and the State Council on Further Strengthening Health Work of the Rural Area 90 Decision of the State Council on Establishment of Basic Medical Insurance System for Urban Working People 33 Decision of the State Council on the Establishment of a Basic Medical Insurance System for Urban Working People 51 Decision of the State Council on the Establishment of the Basic Medical Insurance System for Urban Working People 45 Decision on Further Strengthening Health Work in the Rural Areas 96, 116 Decision on Health Reform and Development 51, 95 Decision on the Reform and Development of Healthcare 44 demand pull model 8

246  Index Deng Fei 211, 220n94 Deng Guida 202 Deng Xiaoping 44 Deng Yujiao 200, 202, 203, 204, 205, 212, 214, 218n50, 218n51, 218n52, 218n53, 218n54, 218n55, 218n56, 218n60, 218n61, 218n62, 218n63, 219n64, 219n65, 219n66, 219n67, 219n69 Deng Zhongjia 202 Detailed Rules on Visit Reception 180, 185 Detailed Rules on Visit Reception by the Petition Office of the Supreme People’s Court 185 detention and repatriation viii, 178, 223, 224, 227 developer 141, 143, 152 Development and Reform Commission 128 Development Research Centre 4, 36n36, 45, 57, 59, 66, 80 Development Research Centre of the State Council 4, 45, 57, 59, 60, 66, 73, 80 Directives on Discouraging Farmers from Blindly Inflowing into Cities 179 Directives on Discouraging Farmers from Blindly Inflowing into the Cities 183 Directives on Further Implementing the Directives on Discouraging Farmers from Blindly Inflowing into the Cities 183 Directives on Preventing Rural Population from Blindly Flowing into Cities 179 Directives on Preventing Rural Population from Blind Outflow 179 Directives on Preventing the Rural Population from Blindly Flowing into the Cities 183 Directives on Preventing the Rural Population from Blind Outflow 183 Directives on Restraining Rural Population from Blind Outflow 179 Directives on Restraining the Rural Population from Blind Outflow 183 dissemination model 8 Dong Zhaohui 63, 79 Dou Hanzhang 205 Draft (2001–2010) on the Development of Rural Basic Healthcare in China 116 Draft for Advice Seeking the Opinion on Deepening the Reform of the Medical and Healthcare System 47 Dwight Waldo 13

Economic Restructuring Office of the State Council 115, 116 Electronics Ministry 16 Embedded beneficiaries 23 Embedded losers 23 Emery Roe 8, 36 endogenous logic vi, 225 engineering model 8 enlightenment model 8 equal provision 81 essential drug 68, 81 expert involvement vi, vii, viii, 1, 3, 6, 7, 8, 9, 10, 12, 14, 18, 21, 30, 31, 32, 80, 114, 123, 173, 189, 202, 212, 224, 226, 227, 230 Feng Zhanchun 63, 79 filing petition 205 financial allocation 66, 103, 110, 123, 127, 161 financial payment 109 fixed subsidy 43 fragmented authoritarianism model 15 Frank Goodnow 13 ‘Free Lunch Plan’ 211 Fudan University ix, 59, 60, 65, 71, 74, 112, 115, 117, 118 Fu Guoyong 205 Fu Jide 135, 171 Further Implementing the Directives on Discouraging Farmers from Blindly Inflowing into Cities 179 Fu Wei 117, 118 Gao Qiang 46, 58, 59, 80, 83n22, 83n26, 106 general office of the State Council 49 General Office of the State Council 39n88, 85, 91, 102, 127 Geographical Sciences and Natural Resources Research Institute 148 George W. Bush 10 Ge Yanfeng viii, 4, 45, 57, 66, 73, 80 Gong Xiangguang 108 government advisor 2 government-led 59, 63, 64, 65, 66, 68, 69, 81 Guangdong Business University 205 Guidance on Implementing the Pilot Run of the Basic Medical Insurance of the Urban Residents 46 Guidance on the Reform of Medical and Healthcare System in Urban Areas 45 Guo Qing 118

Index  247 Guo Shiyou 198 Guo Weiqing 205 Gu Xin viii, 64, 67, 68, 70, 73 Gu Yunchang 140, 157, 163 handling agency 102, 103 Han Hong 210, 220n91 Hao Mo 117, 118 Harold Lasswell 7 Harvard University 59, 62, 74, 112, 113, 114, 115 HBV 196, 197, 198, 201, 217n40, 218n45 Health Economics Institute of Ministry of Health 119 Health Statistics Information Centre 112 He Haibo 190 hepatitis B virus 196 He Ping 172 He Weifang 190, 193, 198 Housing Administration Bureau 133 Housing and Real Estate Research Department of the Policy Research Centre 136, 165, 173 Housing Construction Office and Housing Reform Office of Land and Housing Management Bureau 142 housing cooperative 143 Housing Security Law 173, 177n75 Hou Ximin 131, 150, 152, 159, 170 Huang Dezhi 202, 204 Huang Xinjing 142 Huazhong University of Science and Technology 79, 118, 190, 192 Hui Jianqiang 149, 168 Hu Jintao 1, 5, 58, 190, 216 Hu Shanlian 65, 71, 74, 115, 117 Hu Xianjun 152, 168 Hu Xingdou 198 idea broker 2 identification card 182, 187 ideology 8 Implementation Plan on Deepening the Reform of the Medical and Healthcare System 42 indemnificatory housing 126, 135, 143, 147, 148, 149, 150, 155, 156, 157, 158, 159, 162, 173, 177n76 information asymmetry vii, 12, 26, 27, 28, 54, 69, 221, 231 intentional homicide 202 interaction model 8 interest group 2, 11, 14, 18, 30, 41n121, 231

interest neutrality 18, 19 Interim Measures for Management of Urban Housing Cooperatives 143 Interim Measures for the Economic Management of Hospitals 48 Inter-Ministerial Coordination Working Group 46, 58 International Institute for Environment and Development 9, 36, 235 intrinsic motivation 6 James L. Sundquist 8, 35n30 Jiang Jialin 118 Jiang Zemin 115 Jin Zhengxin 157 joint conference 93, 102, 105, 108 Joint Notification on Addressing Household Registration, Provision and Other Issues of Persons in Resettlement Stations 180, 183 Joint Notification on Addressing Household Registration, Provision and Other Issues of Persons in Resettlement Stations Led by the Civil Administration Departments 183 Joseph Fewsmith ix, 15, 39n77 Kenneth Lieberthal 7, 15, 35n26, 38n76 KFPE 8, 36n38 Kidnapping Crackdown Office 209 knowledge complexity vii, 21, 22, 23, 25, 26, 27, 28, 29, 123, 161, 194, 199, 221, 222, 223, 224, 226 Kong Pu 203 land allocation 132, 136 Land and Resources Ministry 164 land king 141 land supply 123, 136, 155, 160, 223 land-transfer fee 136 Lang Xianping 149, 165 Leading Group for Strengthening the Reform of the Medical and Healthcare System 47 Legal Work Committees 197 Liang Jiyang 148 Li Changming 115 Li Daokui 154, 155, 165 Li Haiying 189 Li Keqiang 47, 82n7 Li Ling 58, 64, 66, 68, 69, 72 Li Ming 169 linear consultation viii, 224, 226 Li Shuiyuan 155

248  Index Liu Guoen 76 Liu Huiyong 155, 168 Liu Jun 58 Liu Renwen 188 Liu Shangxi 117 Liu Yonghua 117, 118 Liu Yuanli viii, 74, 114 locked-out viii, 123, 147, 173, 226 loss embeddedness vii, 21, 23, 24, 25, 29, 195, 221, 222, 223, 224, 226 lots 131, 132, 144, 146 low-rent housing 124, 126, 127, 133, 134, 135, 136, 137, 140, 142, 144, 145, 149, 150, 155, 157, 158, 159, 161, 162 Ma Hongman 166 Ma Huaide 188 Ma Kai 46 Mao Yushi 5, 148, 166, 198 Mao Zedong 88 Mao Zhengzhong 117, 118 market-led 59, 63, 64, 65, 68, 69, 81 Ma Shen 205 McKinsey & Company 59, 61 medical insurance 44, 45, 46, 52, 54, 56, 64, 65, 66, 67, 86, 107, 108, 110 medical insurance system 57 mendicant 206 Michel Oksenberg 7, 35n26 Ministry of Agriculture 86, 95, 98, 101, 106 Ministry of Civil Affairs 97, 98, 101, 173, 180, 181, 182, 183, 184, 185, 187, 206, 209, 219n76 Ministry of Commerce 180, 183 Ministry of Construction 125, 126, 128, 129, 131, 146, 173 Ministry of Finance 43, 44, 46, 48, 52, 53, 86, 94, 95, 96, 98, 101, 106, 109, 116, 117, 127, 129, 137, 173, 180, 183, 185, 187, 206 Ministry of Food 180 Ministry of Health 33, 43, 44, 46, 47, 48, 52, 58, 71, 84n41, 86, 87, 88, 89, 90, 91, 93, 95, 96, 98, 99, 101, 102, 105, 106, 108, 110, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121n22, 122n51, 197, 206, 218, 222, 223, 224, 225 Ministry of Housing and Urban-Rural Development 129 Ministry of Housing and Urban–Rural Development 131, 152, 156, 173 Ministry of Internal Affairs 179, 180, 183

Ministry of Labour 46, 52, 179, 180, 183 Ministry of Labour and Social Security 46, 52 Ministry of Land and Resources 125, 126, 128, 129, 131, 153, 154, 155, 156, 169, 176 Ministry of Personnel 44, 49, 96, 197, 218n45 Ministry of Posts and Telecommunication 17 Ministry of Public Security 179, 180, 181, 183, 184, 185, 186, 187, 206, 208, 209, 219, 220n88 Ministry of Supervision 126, 129 Minnowbrook Conference 13 MOHURD 131, 136, 140, 150, 151, 152, 153, 156, 157, 158, 163, 164, 170, 173n4, 174n19, 175n44, 175n46, 175n47, 176n55, 176n67, 176n69, 177n75, 177n76, 177n77, 177n78 monetisation-based 124, 142 mortgage loan 137, 138, 160 Nathan Caplan 8, 35n29, 36n44 National Congress 1, 59 National Development and Reform Commission 46, 58, 98, 125, 126, 127, 128, 137 National People’s Congress 17, 59, 106, 179, 210, 217n25, 225, 237 National Political Consultative Conference 135 National Regulations Concerning the Work of Hospitals 49 National School of Administration 190 National Thousand Talents Program 18 NCMS 85, 86, 89, 90, 91, 92, 93, 96, 98, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 120, 121, 122, 123, 222, 223, 225, 240, 241, 242, 243 NCMS Research Centre 120, 225 NCMS Technical Guidance Group 120 NDRC 46, 52, 114, 115, 116 Netherlands Development Assistance Research Council 9, 36n40 New Administrative Measures for the Affordable Housing 129 new affordable urban housing policy 32, 33, 222, 225 New Public Administration 13, 38, 234, 236 new rural cooperative medical care 32, 81, 93

Index  249 New-Type Cooperative Medical Scheme 85 New-Type Rural Cooperative Medical Scheme 85 new urban medical and healthcare system 32, 33, 225 Nie Chunlei 117, 118 Ni Hong 171 Non-embedded beneficiaries 23 Non-embedded losers 23 non-public hospital 64 non-stakeholders 23 Northeast People’s Government 87 Notice for Opinions on the Establishment of the NCMS 96 Notice for Several Opinions on the Subsidy Policy for Rural Public Health 95 Notice of the General Office of the Ministry of Health on Establishing the Research Centre for NCMS 119 Notice of the State Council on the Issuance of Implementation Plans 33 Notice of the State Council on the Issuance of the Implementation Plans (2009–2011) for Recent Priorities of Medical and Health System Reforms 101 Notice on Accelerating the Promotion of Pilot Projects Related to the NCMS 99 Notice on Further Deepening the Reform of the Urban Housing System and the Acceleration of Housing Construction 128 Notice on Organising the Technical Guidance Group of the Ministry of Health for the NCMS 117 Notice on Pilot Projects for the NCMS Issued by the General Office of the Ministry of Health 97 Notice on Several Opinions of the Ministry of Health and Other Ministries and Commissions on Development and the Optimisation of Rural Cooperative Medical System 90 Notice on Several Opinions of the Ministry of Health and Other Ministries and Commissions on the Development and Optimisation of the Rural Cooperative Medical System 95 Notice on Several Opinions on Further Strengthening Health Work in the Rural Areas 94

Notice on the Approval and Forwarding of the State Council for the Request Made by the Ministry of Health and Other Ministries for Instructions on the Reform and Strengthening of Rural Medical Care 94 Notice on the Guidance of the Ministry of Health and Other Ministries on Further Strengthening the Pilot Projects for the NCMS Forwarded by the General Office of the State Council 98 Notice on the Opinions of the Agriculture Ministry for Reducing the Burden on Farmers Forwarded and Decreed by General Office of the State Council 106 Notice on the Pilot Project in the 2nd Half of the Year for the NCMS Issued by the General Office of the Ministry of Health 98 Notice on Well-Performing Pilot Projects for the NCMS 98 Notice on Well-Performing Projects Related to the NCMS in 2007 99 Notice on Well-Performing Projects Related to the NCMS in 2008 100 Notification for Strengthening the Pilot Work on Economic Management of Hospitals 43 Notification for the Report on Several Policy Issues on Health Work Reforms 49 Notification of Civil Affairs Ministry on Seriously Implementing the Report on Survey and Solutions for Urban Beggars 180 Notification of General Office of the State Council on the Promotion of the Sustainable and Healthy Development of the Real Estate Market 129 Notification of the Civil Affairs Ministry on Seriously Implementing the Report on Survey and Solutions for Urban Beggars 184 Notification of the General Office of the State Council on the Promotion of the Sustainable and Healthy Development of the Real Estate Market 162 Notification of the State Council on Issuance of Implementation Plans (2009–2011) for Recent Priorities of Medical & Health System Reform 47 Notification of the State Council on Promotion of Sustainable and Healthy Development of the Real Estate Market 33

250  Index Notification of the State Council to Approve and Forward the Report of the Ministry of Health on the Meeting for the Directors of Health Bureaus 48 Notification on Actively Cooperating to Combat Criminal Activities that Seriously Endangered Public Security and Strengthening the Work on Detention and Repatriation 184 Notification on Common Criteria (Trail) for Physical Examination during the Recruitment of Civil Servants issued 197 Notification on Further Improving the Work of Detention and Repatriation 184 Notification on Further Improving Works Dissuading and Returning Outflow Victims 185 Notification on Issuing ID Cards for Employees Engaged in Detention and Repatriation and Badges for Detention and Repatriation 185 Notification on Issuing the Executive Regulation (Trail) of Provisions on the Detention and Repatriation of Urban Vagrants and Mendicants 184 Notification on Issuing the Notification on Payment for Expenditures Needed by Cross-province Repatriation in the Process of Detention and Repatriation 185 Notification on Practically Addressing Issues about the Reconstruction of Dangerous Building of Urban Social Welfare Institutions 184 Notification on Practically Addressing Issues on the Reconstruction of Dangerous Buildings of Urban Social Welfare Institutions 180 Notification on Promoting the Sustainable and Healthy Development of the Real Estate Market 128 Notification on Regularly Reporting the Situation of the Interned Personnel 184 Notification on Report on Progress of Levelling Protective Embankments to Facilitate Flood Discharge, Returning Farmlands to Lakes, and Building Towns for Resettlement in Hubei, Hunan, Jiangxi and Anhui 186 Notification on Revising the Grievance Procedures Followed by Prostitutes and Whoremasters if Refusing to Accept Interning Education 185

Notification on Strengthening Administration for Country-to-city Migrants Without Definite Prospects 185 Notification on Strengthening the Work of Detention and Repatriation 184 Notification on Strengthening the Works on Detention and Repatriation during the Spring Transportation Period 185 Notification on Strictly Forbidding Abandoning Dementia and Mental Disorder Patients 185 Notification on Temporary Provisions for the Budget Management of Resettlement Farms Affiliated to the Civil Administration Departments 183 Notification on the Issuance of Implementation Plans (2009–2011) for Recent Priorities on the Medical and Health System Reforms 51 Notification on the Release of Provisions on the Detention and Repatriation of Urban Vagrants and Mendicants 184 Notification on Well Doing Works Related to the Relief and Repatriation for Beggars 185 NPC 17, 46, 83n28, 120n1, 141, 148, 157, 159, 160, 162, 179, 188, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 207, 210, 212, 216n21, 218n47 NPC Committee 46 NPC Review and Record Office for Laws and Regulations 198 NPC Standing Committee 148, 160, 165, 179, 183, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 212 NRCMC 81 NRCMS 107 NTTCC 1 official expert 226 on seeking 208 Opinion on Deepening the Reform of the Medical and Healthcare System 42 Opinions of the Central Committee for the Comprehensive Management of Social Security on Strengthening Administration for the Floating Population 186 Opinions of the CPC Central Committee and the State Council on Further Strengthening Medical and Health System Reforms 51 Opinions on Deepening Reform of Medical and Healthcare System 47

Index  251 Opinions on Deepening the Reform of the Medical and Healthcare System 42 Opinions on Expanding Medical and Health Services Related Issues 49 Opinions on Further Strengthening Reform of Medical and Healthcare System 47 Opinions on Further Strengthening the Reform of the Medical and Healthcare System 51, 101 Opinions on Implementing Medical Aid in Rural Areas 97 Opinions on Issues Related to the Expansion of Medical Services 49 Opinions on Several Issues of Health Work in People’s Commune 88 Opinions on Shifting the Focus of Civil Administration Department 180, 183 Opinions on Strengthening Personnel Training and Team Building for Rural Health 116 Opinions on Strengthening Pilot Works for the Economic Management of Hospitals 48 Opinions on Supporting Rural Health Work by Urban Health 116 Opinions on the Consolidation and Development of the NCMS 101 Opinions on the Reform and Management of Rural Health Institutions 96, 116 Opinions on the Reform of Detention and Repatriation 185 ORCMCS 85, 86, 105, 106, 111 organisation and leadership 90, 95, 98 originality 26, 27, 28 outpatient 55, 92 outside-in enlightenment viii, 56, 173, 223, 226 peer-review 231 Peking Union Medical College Hospital 66 Peking University ix, 58, 59, 60, 63, 64, 66, 68, 69, 73, 76, 79, 80, 82n15, 84n39, 115, 168, 188, 190 Peng Gaofeng, 208 Peng Wenle 208 People’s Bank 128, 129 People’s Bank of China 126 People’s Republic of China 20, 190, 191, 192, 193 personal networks 11, 16 pharmaceutical companies 57 Piao Baoyi 205

pilot promotion of the new-type rural cooperative medical care system 32, 33, 222 Planning Bureau 148, 171 policy change vi, vii, viii, 2, 3, 7, 10, 12, 14, 15, 16, 18, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 104, 124, 190, 193, 195, 198, 199, 200, 210, 211, 213, 221, 223, 224, 226, 227, 228 policy consultation vi, 1, 19 policy entrepreneur 2, 196, 198, 199 policy implementation 6, 13, 22 policy instrument 26, 27, 123, 151, 160, 222, 223 policy process vii, viii, 2, 4, 7, 9, 10, 11, 12, 14, 15, 16, 17, 21, 22, 23, 28, 85, 221, 226, 227, 228, 229, 231 Policy Research Office of the CPC Central Committee 116 Policy Research Office of the State Council 89, 112, 113 policy window 23, 29, 194 Political Bureau of the CPC Central Committee 44 poverty-stricken 111, 114, 159 power delegation 105 Power Ministry 16 power rent-seeking 68, 107, 138, 147, 156 PRC 20, 42, 85, 87, 178, 179, 183, 198, 216n22 PRC Household Registration Regulations 183 price-capped housing project 139 Price Law of People’s Republic of China 125 pricing system 68, 161 principal–agent vii, 11, 21, 26, 109, 111, 221 problem definition 22, 198 Procedures on Review and Record for Administrative Statute, Local Laws and Regulations, Regulations on Autonomy, Specific Regulations, Laws and Regulations for Special Economic Zone 197 Procedures on Review and Record for Judicial Interpretation 197 profit surrender 105 profit-surrender 43 Provincial People’s Congress 197 Provisions for Detaining and Repatriating Urban Vagrants and Mendicants 33, 181 public advocate 2

252  Index public hearing 13, 14, 17, 192 public hospital 46, 47, 52, 54, 59, 63, 64, 65, 66, 67, 68, 69, 70, 71, 81 public hospitals 57 public intellectual 2, 5, 211, 212, 213 Public Security Bureau 202, 204, 205 Public Security Ministry 209 public welfare 20, 44, 59, 65, 70, 71, 87, 152, 212 Qian Xinzhong 43 Qian Yunhui 200, 205, 206, 212, 213, 219n70, 219n71, 219n73, 219n74 Qiao Yanqin 189 Qi Ji 170 Qiu Zeqi 76 Railway Ministry 16 Rao Keqin 115, 116 RAWOO 9, 36n40 RCMCS 85, 86, 87, 88, 89, 90, 91, 93, 95, 96, 105, 106, 110, 112, 114 Real Estate Institute of Peking University 149 Recent Priorities of Medical and Health System Reform 33 Reform of Healthcare System in China 45, 73, 82n5 reform pilot 81 Regulations (draft for trail implementation) on Rural Cooperative Medical Care 94 Regulations for the Administration of Medical Institutions 49 Regulations on Practice Management for Rural Doctors 116 regulatory 89, 151, 231 reimbursement 64, 81, 108, 110, 111 Renmin University of China ix, 59, 60, 74, 148, 165 rental dissipation 147 Reply to a Letter issued by the General Office of the Labour Ministry for Instruction on Whether Enterprise can Relieve the Labour Contract with Staff Members Interned by Public Security Organ 186 Reply to the Letter for Issues Relating to the Wages and Welfare of Prostitutes and Whoremasters during Interning for Education 186 Report for Instructions on Allowing Individuals to Practice Medicine 48 Report on Restraining People from Free Mobility 179, 183

Report on Several Policy Issues for the Reform of Health Work Undertaken by the Ministry of Health 43 Report on the Survey and Solutions for Urban Beggars 180, 184 representativeness 31 Request for Instructions on Allowing Individuals to Practice Medicine 43 retention 145, 147, 161, 173 Review and Record Office for Laws and Regulations 197 revocation of detention and repatriation system 32, 33 Robert K. Yin 31, 35n33, 41n124 Roger Pielke 9 rural cooperative medical system 85, 89, 90 Rural Development Research Institute 5, 205, 207 rural healthcare 116 salvation station 182 SASAC 5 science push model 8 self-defence 202 separate channels of revenue and expenditure 63 Several Opinions of the Health Ministry on Deepening the Reform of Health 44 Several Opinions of the State Council on Addressing the Housing Problem of Urban Low-income Households 128 Several Opinions of the State Council on Promoting Healthy Development of the Real Estate Market 127 Several Opinions on Promoting Healthy Development of the Real Estate Market 127 Several Opinions on Strengthening Health Reforms 48 Several Opinions on the Subsidy Policy for Rural Public Health 116 Several Provisions on Maintaining Order of Petition Work 180 Several Provisions on Maintaining the Order of Petition Work 184 shanty town 126, 127, 162 Shen Chang’an 149 Sheng Hong 190 Shen Kui 190 Si Weijiang 205 Social Insurance Law 86, 120 Social Issues Research Centre 5, 207 social stakeholder 16, 17, 56

Index  253 society-led 65 SOEs 17, 78, 139, 141, 142, 143, 144, 197 Song Daping 103 Song Ruilin 77 South Tour Speeches 44 specialised department 71 spillover effect 195, 199, 213 sponsor 111, 230 Standing Committees of the People’s Congress 197 State Administration of Commodity Prices 49 State Administration of Labour 48, 180, 184 State Administration of Taxation 44, 48, 126, 129 State Administration of Traditional Chinese Medicine 96, 98, 101, 117 State Council viii, 1, 5, 17, 31, 33, 39n88, 42, 43, 44, 45, 46, 47, 48, 51, 52, 57, 58, 59, 70, 75, 81, 82, 83, 86, 89, 93, 95, 96, 97, 101, 102, 105, 106, 108, 115, 117, 121, 123, 124, 125, 126, 127, 128, 129, 135, 136, 143, 146, 159, 162, 178, 179, 180, 181, 183, 185, 186, 188, 191, 192, 193, 194, 195, 197, 200, 206, 211, 215, 224, 242 State Council Leading Group for Housing System Reform 143 State Council policy on Real Estate Market 125 State Council’s Coordination Group 46 State Development and Reform Commission 63, 98, 173 State Economic and Trade Commission 71 State Food and Drug Administration 99 State Labour Bureau 43 State Planning Commission 95, 96, 125, 128, 131, 173, 180, 184, 186 State Price Bureau 49 state stakeholder 16 subsidise supplier 66 subsidy 52, 54, 66, 67, 81, 93, 106, 133, 134, 143, 158 Sun Pinghui 118 Sun Yat-Sen University 205 Sun Zhigang 178, 181, 187, 188, 189, 190, 192, 193, 194, 195, 196, 197, 198, 199, 200, 205, 212, 216n9, 216n19, 216n20, 217n24, 217n26, 217n28, 217n29, 217n31, 217n32, 217n33, 217n35, 224, 241, 242 Supplementary Notification on Pilot Works for the Economic Management of Hospitals 48

Supreme People’s Court 180, 184, 191, 197, 204, 205, 215, 219n66 Supreme People’s Procuratorate 197 Susan Shirk 15, 39n76, 39n86 Swiss Commission for Research Partnership with Developing Countries 8, 36 Syracuse University 13 technocratic model 8 Temporary Provisions for Budget Management of Resettlement Farms Affiliated to the Civil Administration Departments, 180 temporary residence permit 182, 188, 189 Teng Biao 190, 192, 193, 194, 217 The Beijing Unirule (Tianze) Economics Institute 5 The Legislation Law of the People’s Republic of China 190 third-party 64, 67, 152 Tong Dahuan 65 topic-based group 45, 57, 69, 113, 114 Trial Procedures on Post Allowance of Urban Social Welfare Institutions 180, 185 Tsinghua University i, ix, 5, 59, 62, 69, 74, 80, 84n38, 154, 165, 166, 176 UERMI 81 uncertainty 127 UNDP 112, 113 UNICEF 112, 113 United Nations Development Programme 112 unofficial expert 226 urban employees and residents’ basic medical insurance 81 urban medical and healthcare system viii, 42, 43, 45, 52, 53, 222 US Rand Corporation 113 veteran cadres 57 Wan Chonghua 118 Wang Chaobin 157, 166, 171 Wang Dongjing 148, 166 Wang Hongxin 136, 170 Wang Hufeng 75 Wang Lei 189 Wang Lusheng 117, 118 Wang Mingfeng 150 Wang Sibin 188 Wang Wei 150

254  Index Wang Xiaoshan 205 Wan Li 1 Wei Yi 203 welfare housing distribution 142, 143 Wen Jiabao 42, 46, 47, 59, 197, 209, 211 Wen Linfeng 156 WHO 60, 112, 113, 115 Woodrow Wilson 13 worker certificate 182 World Bank 61 Written Reply on Adding 11 New Detention and Repatriation Stations in Qiqihar and other Cities as National Counterpart Stations for Detention and Repatriation 185 Written Reply on Whether the Time for Detention and Repatriation can Offset the Period of Indoctrination through Labour 186 Wu Bangguo 190 Wuhan University of Science and Technology 189 Wu Yi 46, 59, 106 Xia Lin 203 Xiao Han 188, 190 Xiaoshu 205 Xia Yeliang 198 Xie Xuren 46 Xi Jinping 1 Xing Yuying 118 Xinhua News Agency 46, 58, 80, 83, 152, 174n10, 177n78, 219n67, 177n69, 220n88 Xiong Jinqiu 157 Xu Dianqing 148, 167 Xue Fulun 69 Xu Xianglin 15

Xu Zhiyong 190, 192, 193, 205, 217n27 Yang Chongguang 154 Yang Hongxu 147 Yang Jiangong 205 Yang Weixin 206 Yao Lan 118 Ye Yide 117 Yi Ju Real Estate Institute 147, 149, 168 Yin Dakui 44, 55 Ying Yazhen 117 Yi Xianrong 139, 165 Yu Jiang 190, 192 Yu Jianrong 5, 205, 206, 207, 208, 210, 211, 219n77, 219n79, 219n81, 220n92 Yu Lianming 157, 171 Yu Mingde 71 Yu Shenglong 117 Zhang Chaoyang 118 Zhang Li 157, 172, 177n74 Zhang Liming 117, 118 Zhang Mao 47 Zhang Shuguang 148, 166 Zhang Wenkang 106, 115 Zhang Xianzhu 196, 218n46 Zhang Zhenzhong 117 Zhao Luxing 136, 164, 173 Zhao Yanjing 148, 171 Zheng Bofan 148 Zheng Gongcheng 148, 165 Zhong Liaoguo 189 Zhong Nanshan 195 Zhou Wangsheng 188 Zhou Yichao 196 Zhou Zijun 78 Zhu Hongming 118 Zou Xiaoyun 154, 156, 164