The Transformation of Governance in Rural China: Market, Finance, and Political Authority 9781107081758, 1107081750

Table of contents :
1. Introduction; 2. The changing foundations of Communist rule in China's rural society; 3. The 1994 tax reform and rural fiscal crises; 4. The township in the era of reform; 5. The mechanisms of political power in villages; 6. Village finance: its deterioration and consequences; 7. The abolition of agricultural taxes and village governance; 8. Transformed peasant society and realignment in rural politics; 9. Entrepreneur cadres as new rural ruling elites; 10. Prospects for China's rural governance; Appendices; Bibliography; Index.

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The Transformation of Governance in Rural China

The outbreak of organized, violent peasant protests across the Chinese countryside from the late 1990s to the early 2000s has attracted much scholarly interest. In this new study, An Chen explores the impact of this violent peasant resistance on China’s rural governance in the context of market liberalization. Using extensive field research and data collected from surveys across rural China, the book provides an indepth exploration of how rural governance in China has transformed following two major tax reforms: the tax-for-fee reform of 2002–04, and the abolition of agricultural taxes (AAT) in 2005–06. In an innovative multidimensional analysis that combines approaches from political science, economics, finance, and sociology, Chen argues that private economic power has merged with political power in a way that has reshaped village governance in China, threatening to change its political structure fundamentally.       (Ph.D. Yale) is Associate Professor of Political Science at the National University of Singapore and a former senior research fellow at the Chinese Academy of Social Sciences. He is the author of Restructuring Political Power in China: Alliances and Opposition, 1978–1998 (1999). His recent publications have appeared in Politics & Society, Political Science Quarterly, Modern Asian Studies, China Quarterly, Modern China, Democratization, Journal of Democracy, and Journal of Communist Studies and Transition Politics.

The Transformation of Governance in Rural China Market, Finance, and Political Authority

AN CHEN National University of Singapore

University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781107081758

© An Chen 2015 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2015 Printed in the United Kingdom by Clays, St Ives plc A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Chen, An The transformation of governance in rural China: Market, finance, and political authority / An Chen. pages cm Includes bibliographical references and index. ISBN 978-1-107-08175-8 (hardback) 1. Rural development – Government policy – China. 2. China – Rural conditions. 3. Villages – China. 4. Local government – China. 5. China – Politics and government – 1976–2002. 6. China – Politics and government – 2002– I. Title. HN740.Z9C6124 2014 2014034062 307.1′ 4120951 – dc23 ISBN 978-1-107-08175-8 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

For Shuhong and Chen Wei

Contents

List of figures List of tables Preface List of abbreviations Key Chinese terms (pinyin) 1. Introduction

page viii ix xi xv xvi 1

2. The changing foundations of communist rule in China’s rural society

30

3. The 1994 tax reform and rural fiscal crises

58

4. The township in the era of reform

95

5. The mechanisms of political power in villages

128

6. Village finance: its deterioration and consequences

160

7. The abolition of agricultural taxes and village governance

189

8. Transformed peasant society and re-alignment in rural politics

232

9. Entrepreneur cadres as new rural ruling elites

261

10. Prospects for China’s rural governance Appendix A Fieldwork and research sites Appendix B Author’s surveys in China’s five provinces Appendix C The survey questionnaire Bibliography Index

285 303 321 324 335 374

vii

Figures

4.1 Institutional overlapping of county and township governments page 108 4.2 How did the TFR and the AAT change township government? 124 6.1 The purposes of borrowing in 676 villages of 105 counties in 2002 167 6.2 The average debts and revenue of 62 villages in Jia township 170 7.1 The change in annual salary for the village party secretary 197 7.2 Village cadres’ self-assessed AAT impact on their salary and welfare 198 7.3 Village cadres’ self-assessed AAT impact on their status and respect in the villages 199 7.4 Village cadres’ self-perceived change in the amount of their post-AAT work 210 7.5 Village cadres’ self-perceived change in the difficulty of their post-AAT work 211 8.1 The change in the frequency of contacts between village cadres and villagers 248 8.2 The change in the extent to which village cadres need fellow villagers’ help to perform their duties 248 8.3 The change in the extent to which villagers need the help of village cadres in everyday life 249

viii

Tables

2.1

Enterprise ownership in each administrative village on average page 55 2.2 The ownership structure of fixed production assets in villages nationwide 56 3.1 The composition of revenues of the central and local governments in 1996 63 3.2 The new pattern for sharing township taxes with different ratios 80 3.3 Fiscal balances of Wuli and Shenji townships, Jingmen, Hubei province, 1998–2000 86 3.4 Fiscal balances of Hong township, Anhui province, 1998–2001 86 3.5 Fiscal balances of TD township, Zhejiang province, 1993–96 87 3.6a The change in A township’s finance and its impact on D village 90 3.6b The change in B township’s finance and its impact on E village 91 3.6c The change in C township’s finance and its impact on F village 91 4.1 The change in the size of Jiangnan township government 101 4.2 The impact of the TFR on T township’s finance 111 5.1 The method for appointing village party secretaries (2002–2003) 135 5.2 Ordered logistic regression of VPB authority on selected variables 137 5.3 Correlation between village cadres’ authority and villagers’ affluence (respondents: ordinary villagers) 141 5.4 Correlation between village cadres’ authority and villagers’ affluence (respondents: village cadres) 141 5.5 Correlation between village cadres’ authority and the village’s collective economy 142 ix

x

List of tables

6.1

A comparison of three villages in terms of revenue structure 6.2 The post-TFR fiscal balance of Zhongtang village, Lucheng township (Lujiang, Anhui) (2004) 6.3 The structure of debt-spending on average in three villages of an agricultural township in northern Jiangsu 6.4 The provision of services for agricultural production (2005) 6.5 Average annual number of applications for party membership in 1998–2007 in 46 villages 6.6 Average annual number of recruited party members in 1998–2007 in 46 villages 7.1 The impact of the AAT on L village government’s total workload 8.1 The post-AAT change in the sources of L village government’s work 9.1 Ordered logistic regression of leading village cadres (VCs)’ eagerness to take on leadership posts on their own economic conditions 9.2 What quality or ability of the candidates did you emphasize most in recent village elections? 9.3 Ordered logistic regression of leading village cadres (VCs)’ self-perceived authority on selected variables A.1 The typology of China’s rural villages in economic terms A.2 The villages and townships where I did fieldwork between December 2002 and January 2013

162 165 169 182 184 184 212 249

267 277 279 304 305

Preface

This book started twelve years ago as a much smaller project, which was intended to explore China’s peasant burdens and grievances. At that time, I saw no clear signs suggesting that the Chinese countryside was on the eve of a great political and economic transformation. I did not anticipate that this project would take so many years to complete and eventually expand to such a scope. The two major rural reforms in the first decade of the twenty-first century, namely the tax-for-fee reform in 2002– 04 and the abolition of agricultural taxes in 2005–06, whose effects were reinforced by the ongoing marketization of the rural economy and the rapid deterioration of rural finances, have changed China’s rural politics almost beyond recognition. In terms of its economic, political, and social magnitude, this transformation by no means pales in comparison with agricultural decollectivization around the turn of the 1970s. As the situation in rural China was developing at a swift and dramatic pace, I found myself being dragged deeper and deeper into a “mire” that did not allow me to conclude this project quickly, but rather compelled me to keep updating my research and broadening its scope and to wait for the dust to settle. In the meantime, the more questions I had tried to answer, the more questions it begged. At the end of the day, I realized that the transformation of governance across rural China is virtually an “allor-nothing” topic that denies a partial or single disciplinary approach. Instead, it requires a comprehensive or multidimensional analysis that combines the perspectives of political science, economics, finance, and sociology. If one sentence can capture the core of this study, the main driving forces behind China’s rural political development over the past twenty years have not been political but economic, financial, and social factors. Needless to say, the completion of this project would have been impossible without the assistance of a large number of people. A large proportion of this book draws on the results of my field research in rural China that spanned eleven years. My gratitude goes first to He Xuefeng (Huazhong University of Science and Technology [HUST]), Lang xi

xii

Preface

Youxing (Zhejiang University), Zhao Shukai (Development Research Center of the State Council), Zhang Deyuan (Anhui University), Xie Yumei (Jiangnan University), Dong Leiming (Provincial Party School of Jiangsu), Wang Ximing (Southwest Jiaotong University), and Shi Congmei (Soochow University). These Chinese scholars are not only leading experts in China’s rural politics who know the reforms and changes in the Chinese countryside better than anyone else. More importantly, their empirical research sites were located in China’s different regions, which cover vast rural areas from the poorest hinterland to the richest coastal provinces. In addition to numerous discussions and exchanges of ideas, they arranged my fieldwork through their local networks; they either accompanied me to visit the villages and townships personally or requested their students and friends to do so; they helped me critically analyze the empirical findings and data collected from my field investigations; and they assisted me in organizing the surveys. This project benefited immensely from their expertise, which, for one thing, enabled me to recognize more keenly the diversity and complexity of the Chinese countryside and alerted me to the danger of being misled by regional biases. I owe gratitude to many other scholars, most notably Kathryn Bernhardt, Yongshun Cai, Richard Gunde, Maria Heimer, Shaohua Hu, John James Kennedy, Pierre Landry, Ethan Michelson, Kevin O’Brien, Yusheng Peng, Patricia Thornton, Mary-Ann Twist, Andrew Walder, Robert Woodberry, Dali L. Yang, and Feizhou Zhou. They read the early versions of some parts of this book. Their views, comments, and suggestions contributed greatly to the improvement of my analyses and arguments. Two anonymous reviewers for Cambridge University Press read the entire manuscript. For their constructive criticism and helpful comments, they deserve special credit for the strengths, if any, of this book. I gratefully acknowledge the excellent research assistance of Chen Chao, Chen Shaofeng, Guo Jiguang, Han Rongbin, Jiang Yang, Ma Shaohua, Qian Jiwei, Yu Juan, Yuan Jingyan, and Zeng Rui. Their help with collecting and processing useful Chinese research materials, among other things, lightened my burden and accelerated the progress of my research. I thank Lucy Rhymer at Cambridge University Press for her interest in this project and for guiding it through the publication process. Her encouragement, efficiency, and professionalism have made this experience of mine both gratifying and productive. The drafts of some chapters in this book were the papers presented at several international conferences, including the ninth annual Asian Studies conference (June 18–19, 2005, Sophia University, Tokyo); the

Preface

xiii

annual conference of the Association for Asian Studies (March 22–25, 2007, Boston); the conference on “China and India: Economic and Social Development” (March 17–18, 2008, Singapore); the conference on “Post-Olympic China: Globalisation and Sustainable Development after Three Decades of Reform” (November 19–21, 2008, University of Nottingham); and the tenth annual International Conference on Politics and International Affairs (June 18–21, 2012, Athens). Some hypotheses and findings of this book were presented and discussed at a number of seminars, including those held at the Center for Chinese Studies, UC Berkeley (March 2007) and at the Center for China’s Rural Governance, HUST (January 2008). I thank the participants of these conferences and seminars for their comments. I am particularly grateful to the National University of Singapore (NUS), where I have taught for nearly twenty years. NUS provided three research grants (R-108–000–010–112; R-108–000–018–112; R108–000–035–112) for my research on China’s rural politics. Without its generous financial support, I probably would not have dared to venture into or proceed with this formidable and time-consuming undertaking. The superb academic environment and facilities at NUS, particularly its rich collection of social science books, were so favorable to my research that it was one of the key factors explaining why I could complete this project. I thank my colleagues in the Department of Political Science. Discussion with them has always been rewarding. I am indebted to Terry Nardin, the department head, for his consistent support and encouragement. I have been teaching two courses on Chinese politics at NUS – at both the undergraduate and graduate levels. I appreciate many thoughtful comments of my students, which prompted me to think more deeply about the issues relating to the theme of this book. For me, writing this book is the best way to cherish the memories of my parents, Chen Yujia and Ren Peifen, who have been a tremendous source of intellectual inspiration and an overriding motivational power throughout my academic career. When I walked on muddy tracks against piercing wind in impoverished rural areas, I asked myself whether persisting with this project was worthwhile and why I could not turn to probably “easier” topics that are less excruciating. If I pursued this study only because of pure personal interest, I might have abandoned it years ago. When a project reaches a certain stage that causes a considerable amount of hardship, conviction may be needed to make the researcher’s efforts sustainable. I owe my conviction first and foremost to my father’s teachings and example. As a Chinese scientist trained in the United States, what drove his scientific exploration was not only personal enjoyment but more importantly his sense of responsibility. I wish to let him

xiv

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know from this book that I am not an academic sitting in ivory towers but one who cares about and tries to make his social scientific pursuits relevant to the practical concerns of ordinary people. This book is dedicated to my wife and son, Xu Shuhong and Chen Wei, who accompanied me through the highs and lows of this long process. For academic couples, how to divide household duties could be a problem. But for me this was not a problem at all as Shuhong volunteered to manage nearly all housework. Holding a Ph.D. in Chinese literature, she sacrificed much of her research time so that I could concentrate on my work. Wei was growing up as this project moved forward. When I relaxed, it was a great joy to listen to his Greek mythology and stories of scientific discoveries. Indeed, I learned a lot from him about secrets in galaxies. Over the past twelve years, because of my fieldwork in China, I was unable to join them in celebrating Christmas and New Year’s Day at our Singapore home except for two years. They missed me but never complained. Their love, understanding, and support have been more important than anything else to the completion of this book.

Abbreviations

AAT CCP HRS KMT NTR SOE TFR TVE VAT VOE VPB

abolition of agricultural taxes Chinese Communist Party household responsibility system Kuomintang non-tax revenue state-owned enterprise tax-for-fee reform township-and-village enterprise value-added tax village-owned enterprise village party branch

xv

Key Chinese terms (pinyin)

baogan cunmin xiaozu fei gai shui guanxi hukou kuai kuai liang wei hui santi wutong

tiao tiao tiaokuai guanxi wei quan wei wen wu bao hu xiangzhen or xiang xianji shi xingzheng cun yi jian tiao yishi yiyi zhai ji di zhaoshang yinzi zhen ziran cun

xvi

contractual fiscal balance villagers’ group tax-for-fee reform connections household registration horizontal jurisdiction two-committee meeting “three (village) deductions” and “five (township) charges” (various fees peasants were obligated to pay) vertical jurisdiction cross-hatching of horizontal and vertical lines of authority defending legitimate rights maintain (social-political) stability villagers who have lost their ability to earn a living township county-level city administrative village the village party secretary and elected village head are the same person one-issue-one-discussion the village’s land or the villager’s land for building private houses attracting investment town natural village

1

Introduction

Since the 1990s, the Chinese countryside has not been peaceful. Until about 2002, excessive peasant burdens, along with other problems such as deteriorating conditions for farming, the decrease in peasant income, and cadre corruption, gave rise to widespread collective violent protests in poverty-stricken agricultural provinces (Unger 2002; Bernstein and ¨ Lu¨ 2003: 120–37; Yep 2004; Li and O’Brien 2008; Gobel 2010: 28–32; 55–63).1 In relatively affluent coastal provinces, too, the compulsory requisitioning of farmland sparked fierce peasant resistance.2 In the wake of the tax-for-fee reform (TFR) (fei gai shui) in 2002–04 and the abolition of agricultural taxes (AAT) in 2005–06, where the situation of confrontation arising from the burden problem was defused, land seizures in the rural urbanization process emerged as a new source of tension, leading to a convergence in the type of peasant protests across rural China. In recent years, peasant protests ignited by forced land expropriation and inadequate compensation fees have multiplied and accounted for an estimated two-thirds of 187,000 “mass incidents” – from demonstrations to riots – reported for 2010. The number of these incidents had more than doubled in the previous five years (Garnaut 2012). Aside from the landrelated grievances, riots or defiance in rural areas were often triggered by apparently “minor” issues as well, suggesting a lowered threshold of tolerance on the part of resentful peasants.3 1 2

3

A State Statistics Bureau report concluded that peasant burdens nationwide rose quickly in the mid-1990s, reaching the historic peak in 1997 (GTNZ 2003). From the early 1990s to 2001, the relevant dispute cases the courts in Beijing heard jumped from several hundred to more than 15,000. Except for those that were satisfactorily solved, these disputes often caused a considerable amount of violence and loss of human lives (Lanfranco 2005; Nelson Chan 2006). In Huaxi village (Zhejiang), thousands of peasants rioted to protest against pollution from nearby factories. The protesters overturned police cars and beat and drove away government officials. Serious injuries were caused. A New York Times report (Yardley 2005) referred to this riot, along with many other cases of rural collective violence, as a symptom of widening unrest in China’s rural society. In 2006, some township governments in Sichuan, Shaanxi, Liaoning, and Guangdong were besieged and township

1

2

Introduction

However deep Chinese peasants’ grievances and despair may be, resorting to violent and organized protest as a form of defiance is unusual under China’s communist regime. The frequency and vehemence of rural riots seen over the past two decades is perhaps even rarer. In terms of its nature and impact, violent resistance is different from nonviolent complaining. The implications of this difference shed light on the extent to which China’s once all-powerful communist regime has lost its authority over the peasantry. Peaceful complainants belong to the category of “rightful resisters” who, according to Kevin O’Brien (1996), “assert their claims largely through approved channels and use a regime’s policies and legitimating myths to justify their defiance.” Thus, their acts may be construed as “rightful resistance” because their target is not the regime but its rural agents who are supposed to have distorted or violated the regime’s “pro-peasant” policies. The mild lodging of complaints does not symbolize the substantial decay of party hegemony, nor is it necessarily threatening to the regime. Believing in the legitimacy of their actions – as measured by the existing political rules – this type of “resister” expected that central decision makers in Beijing would eventually lend them support (O’Brien and Li 1995; Perry 2002; Bernstein and Lu¨ 2003: 139–40; Zheng and Wu 2005; Cai 2010). Based on the apparent sympathy of the central leadership for protesting peasants, some scholars saw the signs of an “alignment of peasants with Central authorities against local officials” (Bernstein 2000). By contrast, organized or collective violent resistance is an explicit, outright challenge to the political establishment. Considering the high risks involved, it probably signifies an eruption of longsimmering indignation and frustration that follows the exhaustion of possibilities and opportunities offered by the existing institutional or legal arrangements. Thanks to the tradition of mutuality in rural social relationships, Chinese peasants historically were not particularly liable to rebel.4 Also,

4

officials detained by force because peasants were outraged about the flaws in irrigation projects, road construction, collection of maintenance fees, and so forth (Chen and Qi 2008). In 2008, in a central province, hundreds of villagers surrounded the township government because the former village cadres had failed to repair the irrigation system and hence “a large size of paddy field (shuitian) degenerated to dry land (hantian)” (Tian and Yang 2009). In some agricultural regions, such as Jiangxi, even plans for improving village infrastructure could result in protests if they required resettlement and “contributions” from the villagers in the form of labor or money (Ahlers and Schubert 2012). It should be noted, however, that as the analysis in Chapter 8 shows, with respect to traditional intra-village power relations, north and south China differed. Clan influence in rural communities to a large extent determined the form and intensity of peasant rebellion or resistance against burdens in the late 1990s.

Introduction

3

given the heterogeneity of the peasantry and the difference in how much they benefited or suffered from the reforms, their reactions could vary vastly. However, where they were victimized by rural reforms or state policy to an extent that compelled them to react with collective violence, even though their targets were local governments rather than the regime or the political system, they posed a potential threat to the hegemonic order in rural China. Grievances by themselves are far from sufficient to explain rebellion. As Sidney Tarrow (1998: 71) indicates, those factors supposed to trigger outbreaks of contentious politics or rebellion, such as deprivation and social disorganization, are “far more enduring than the movements they support.” Expression of discontent is thereby “more closely related to opportunities for – and limited by constraints on – collective action than by the persistent social or economic factors that people experience.” This argument, when applied to peasant protests in China, would find support in the words of a rural party secretary who claimed that peasants under Mao suffered far greater hardships but dared not even complain. “Nowadays peasants are better-off in their material conditions but more defiant toward the government. And the government appears so flabby toward the peasants who refuse to pay taxes or even resort to violent resistance” (Yu Jianrong 2001: 474–75). Opportunities for collective violence are shaped by a variety of factors, the most important being the repressive capacity of the state. As Ted Robert Gurr (1970: 233, 237) put it, if a regime exercises “pervasive and consistent coercive control” over its citizens, the impetus to political violence “is likely to be directed into nonviolent activity.” A regime’s coercive control is determined by variables such as the proportion of the population directly subject to its security and judicial apparatus; the size and resources of military and security forces; and the severity and consistency of sanctions. In a similar vein, Neil Smelser (1963) argued that the effectiveness of agencies of social control has a high negative correlation with the occurrence of hostile outbursts or turmoil. Some China scholars (Bernstein and Lu¨ 2003: 137–46) also referred to the declining state capacity for repression as a major explanatory variable for the rise of rural collective violence. This decline was allegedly caused by the abandonment of traditional control mechanisms, such as political campaigns and class struggle, and by the ineffectiveness of public security and the judicial apparatus. Indeed, ubiquitous protests in the Chinese countryside seem to provide compelling evidence of the extent to which the reform regime’s repressive capacities have been undermined in the process of market reform. To reverse this decline, the regime has greatly increased public

4

Introduction

security expenditures in recent years in an effort to keep rising social unrest under control.5 Given its peculiar traits, however, what has happened in rural China does not fit squarely into the generalized pattern of rebellion or collective violence as described earlier. Unlike capitalistauthoritarian regimes and China’s pre-1949 political systems, the Chinese communist rule in the countryside was maintained less by police and security forces than by its omnipresent and omnipotent rural party organizations – in addition to its political and ideological weapons. The organizational control characteristic of the Maoist state was so thorough and formidable that even subsistence crises or the violation of a “subsistence ethic,” to borrow a term from James Scott (1976), failed to drive the peasants onto the streets – let alone spark a rebellion. This study is not intended to explore grievances among Chinese peasants – an issue that has been discussed at great length in academic circles. Instead, it attempts to analyze the structural causes and ramifications of the decline in the reform regime’s authority and governing capacity in the Chinese countryside – which was reflected in its failure to prevent widespread violent peasant protests from taking place – and the long-term impact of this decline on China’s rural governance. So far, this topic has not been adequately explored but is of immense importance to China’s rural development and political transition at large – considering the fact that rural residents still constitute the majority of the Chinese population. A series of inextricably intertwined questions are answered in this book. Why did the all-powerful party-state authority that worked so effectively under the Mao regime crumble in the rural context of market liberalization?6 Since the traditional structure of political power fell apart, what kinds of new authority, new ruling elites, and new patterns of village governance are emerging in the countryside? How significantly have the rural reforms – from the earliest household responsibility system (HRS) to the most recent AAT – transformed the functions and agenda of village government and recast the four-cornered relationships between the central party-state, local government, village authorities, and ordinary peasants? 5

6

On the other hand, as the recent well-publicized rebellion at Wukan shows, the Chinese government has tended to be more receptive to protesting peasants’ demands. The way in which the local leaders bowed to public pressure by accepting the protesters’ request was commended by the party propaganda machine “as a potential model for officials managing the tensions – and distrust – that plague villages across China” (Jacobs 2012). This phenomenon is especially striking in poorer agricultural provinces where, even the central government agreed, the [party] leadership of “as many as half of the villages” was paralyzed (Landry 2008: 225–26). One source even revealed that by as early as 1994, “party organizations had effectively ceased functioning in almost half of China’s villages” (Baum and Shevchenko 1999).

The argument

5

The argument At the base of China’s rural society, party-state power has been represented and exercised by the village cadres whose control over peasants was founded on a combination of redistributive and administrative powers.7 However, village cadres’ control was not equivalent to the regime’s control, unless they were operating merely as cogs in the party-state machine, without any independence or personal agenda. The thorough penetration of central party-state authority into rural communities depended on the two links on the “power transmission belt” or two sets of power relationships – one between the regime and village cadres; another between village cadres and ordinary peasants. After more than three decades of rural reforms, both links have been worn down to a significant degree if not entirely broken, particularly in agricultural provinces. In the reform process, decollectivization of agricultural production, the demise of the village’s collective economy, the deterioration of village finances, and the marketization of the rural economy reinforced one another to strip village cadres of the bulk of their redistributive power and income advantages. This scenario harmed village cadres’ profitmaximizing interests and dampened their political loyalty. But the straw that broke the camel’s back was the AAT. The AAT further worsened the fiscal crisis at the village level and drastically reduced village government’s responsibilities and thus administrative power. The steep decrease in village cadres’ redistributive and administrative powers has caused political authority to decline or crumble in vast areas of the countryside.8 It has altered not only the incentive structure of the (village) cadre elite but also the main functions and composition of village government. Although the AAT weakened the authority of village cadres and thereby eroded the organizational foundation of its rule in the countryside, the reform regime seems to have seen the AAT as an optimal strategy for maintaining the “stability” of rural society, which has been the highest priority on its current agenda for rural development. The regime had 7

8

The terms “village” and “village cadre” in this book denote China’s administrative village and its cadres. In most of China’s provinces, an administrative village (xingzheng cun) consists of a number of natural villages (ziran cun). In 2008, China had 680,000 administrative villages. In the discussion of village governance or the village economy, scholars and officials usually refer to the administrative rather than the natural village. “Political authority” in this study means the Chinese regime authority or the authority of the communist party-state. In the Chinese countryside, political authority is exclusively represented by the authority of village party branches or leading village party cadres, particularly village party secretaries. In urban areas, popular compliance is secured mostly by security forces, judicial apparatus, and other mechanisms of social control. By contrast, in rural areas, the capacity for allocating economic resources to a much larger extent determines the effectiveness of political authority.

6

Introduction

no perfect solution for achieving “stability” but two options. One was to strengthen its coercive and repressive capacity by empowering village cadres. Another was to appease peasants and win their support. In this trade-off, the regime had obviously taken the second option, as the AAT was expected to eliminate the prime source of state-peasant tensions and thus forestall tax-related riots. Even though the AAT had to be implemented at the cost of cadre power, it might not necessarily imperil “stability” as corrupt and abusive cadres themselves were often the catalyst for peasant protests or “instability.” It seems that the regime has recognized the underlying social contract in the post-AAT context of rural China, namely that the party-state is committed to protecting Chinese peasants’ legitimate rights and improving their well-being in exchange for their political support. Although the enormous diversity and complexity of rural society defy generalization, two developments stand out and probably represent the mainstream of rural governance. In many villages, driven by their own largely self-serving motives and the pressure from the township government whose finance, functions, and status were undermined by the AAT as well, the agenda of village cadres has departed from their traditional role as regime agents and is increasingly dominated by the search for new revenues through “attracting investment.” In a growing number of villages, the decline of political authority has not led to anarchy or created a power vacuum. Instead, it has given rise to a new type of authority wielded by a new ruling elite, called “entrepreneur cadres” in this study. This elite’s “public” or “political” authority is only marginally linked to political appointments but bolstered mostly by their personal wealth, market power, and capacity as private entrepreneurs. This blending of private economic power with political power makes “entrepreneur cadres” similar to but not exactly the same as the gentry class in imperial China. The financial and administrative restructuring at the township and village levels has brought about substantial de-alignment and re-alignment among the reform regime (township) government officials, village cadres, and the peasantry, possibly paving the way for the fundamental transformation of China’s rural politics. Market transition and socialist cadres – a debate revisited The redistributive system or the authoritative allocation of economic resources is one of the defining characteristics of state socialism. The transition toward a market economy, by definition, shifts allocative control over resources from the party-state bureaucracy to market institutions and thus undermines socialist redistributive power. However,

Market transition and socialist cadres – a debate revisited

7

whether and to what extent this conventional wisdom is practically true was debated among scholars who studied the market transition of socialist economies in China, Eastern Europe, and the former USSR. Market transition theory, a “society-centered” view, holds that marketization empowers private producers, entrepreneurs, and those with market expertise at the cost of redistributors or the administrative elite. From survey data collected in 1985 in rural China, Victor Nee (1989) found that the market economy brought cadre households relatively fewer returns in terms of net income advantages, after controlling for the cadres’ personal attributes, such as human capital and entrepreneurship. He thereby theorized that the growth of market institutions caused a decline in the significance of positional power in the ruling bureaucracy. The “shift to market coordination” diminishes the proportion of economic transactions “embedded in networks dominated by cadres,” transferring power to “market institutions” and “social networks.” Where current cadre status did have a significant effect on income, it was attributed to the cadres’ higher average education level and superior expertise. To the extent that cadres still enjoyed privileges in market transition, it demonstrated the partial character of the reform. Market transition theory acknowledges the “commodification of bureaucratic power,” namely that redistributive power or the control over scarce resources gives cadres some advantages, especially at the start of market reform. However, these advantages would diminish and eventually vanish with expanding markets and the changing structure of property rights (Szel´enyi and Manchin 1987; Nee 1991, 1996). Although Andrew Walder was hardly a staunch advocate of this theory, his study on career mobility in Tianjin did reinforce Nee’s argument, pointing to the ways in which the redistributive elite could be victimized by marketization (Walder 1995a).9 Challenging the market transition view, other scholars contend that marketization benefits rather than victimizes the old political elite. The proponents of this view have a somewhat different emphasis in their explanations of why and how party-state cadres could be winners in market transition. According to the “technocratic continuity” approach, party and entrepreneurial recruitments share a “meritocratictechnocratic” character, and “socialism developed a technocratic cadre ´ that can maintain its position through its acquired expertise” (Rona-Tas 9

In a later study, Walder (2003) actually did not think that the decline of power of old regime elites with the ongoing market reform, to whatever degree it is true, makes great sense. As he put it, incumbent elites “will already have seized available advantages” before the implementation of more complete reforms. “Subsequent reform does not turn back the clock: Property appropriated and income accumulated will remain in the hands of those who possess them.”

8

Introduction

1994). Although education is highly rewarded in social stratification under both socialist and market systems, it was usually an advantage, if not privilege, enjoyed by party members and cadres in Eastern Europe and the USSR. Over the years of reform, necessitated by the ongoing economic reorientation and modernization, education has also been given a high priority on the list of criteria for party recruits and cadre promotion in China. In addition, socialist cadres were able to develop other human capital, such as entrepreneurship and business or managerial experience acquired from overseeing the public economy. This arguably improved their ability to adapt to the emergent market economy (Connor 1979; Matras 1980; ´ Simkus 1981; Haller, Kolosi, and Robert 1990; Li and White 1990; Wasilewski 1990; Nee 1991; Bian and Logan 1996; Walder 2002). Still, other scholars have attributed cadres’ advantages in market transition to their political positions and control of state resources. According to this “power conversion” hypothesis or “state-centered” analysis, market reform allowed cadres to convert their political capital into economic capital through predatory behavior. Referring to it as “political capitalism” or the “linkage of power and capital,” Jadwiga Staniszkis (1991: 38–52) described how the cadre elite exploited their political power to turn state property or public assets into private wealth in the process leading to marketization in Poland, Hungary, and the USSR. Many managerial cadres of state-owned enterprises (SOEs), who concurrently owned or held positions in private companies, transferred their SOEs’ fixed capital and lucrative functions or leased out selected SOE departments to their private companies, and at the same time dumped their costs onto their SOEs. As Russia’s “insider privatization” proved, rent-seeking and predation on public assets by the old political elite were especially rampant in the initial phases of the country’s political-economic transformation, when the traditional hierarchical control broke down but the vacuum of authority had yet to be filled (MaFaul 1996). The concept of “political capitalism” is not foreign to Chinese reformers, even though the SOE reform in China was sponsored and regulated by the government. The “factory director responsibility system” of the early 1980s conferred considerable autonomy on SOEs, but SOE directors’ discretionary power failed to generate greater efficiency and productivity. Instead, it spawned massive managerial corruption and appropriation of state assets. For all the structural constraints imposed by the state, the shareholding transformation and privatization of SOEs at a later stage created even more opportunities for cadres to plunder and embezzle state assets (Steinfeld 1998: 46–47; Sun 1999; Lin 2001; Chen 2002a).

Market transition and socialist cadres – a debate revisited

9

According to the “power conversion” hypothesis, cadres’ advantages would persist with market transition even after their status switched from that of cadres to private entrepreneurs. Their enduring advantages are allegedly derived from their personal networks, which were important under state socialism but are even more so during both the transition to and development of post-socialist economies. This network of horizontal and vertical personal connections, obtained through party organizations and the state apparatus, was one of the invaluable resources cadres accumulated under state socialism, linking them to post-socialist economic and political elites. With the help of these new elites, they could gain preferential access to important information about the market, business, legislation, and regulations. Under the government’s “protective umbrella,” they received statecontrolled resources, such as bank loans and industrial projects, and enjoyed a variety of privileges, such as access to supplies of raw material, subsidies, and lower taxes (Grossman 1977; Nove 1983; Walder 1986; Oi 1989: 213; Hankiss 1990; Staniszkis 1991: 45; Major 1992; Solinger ´ ´ 1992; Rona-Tas 1994; Lily Tsai 2007). Rona-Tas’s data provide evidence for cadres’ “net advantage in corporate entrepreneurship.” Ex-cadres “more than doubled their reported personal incomes” after engaging in entrepreneurial activities, in contrast to the much smaller increase in income for cadres who did not do so (54 percent) and for non-cadre entrepreneurs (73 percent). Some studies of transitional economies have revealed mixed findings. Iv´an Szel´enyi and Eric Kostello (1996) made a “distinction between the old and new elite of communism – between the bureaucracy and the technocracy.” The old technocratic elites became the new corporate bourgeoisie and thus big winners in market transition, whereas the bureaucratic segment of the cadre elite ended up as big losers. The two scholars’ analysis of the “bureaucratic elite” – an equivalent of Nee’s (1996) “administrative elite” – is consonant with the market transition approach that places this segment of the old nomenklatura among the victims of marketization. The differences among the transitional economies should be noted as well. Walder and Nguyen (2008) conducted a comparative study of China and Vietnam that demonstrates how the scale of economic enterprise and the allocation of property rights influenced income distribution in the countryside. They argue that in China, the larger firms, which were initially established by rural governments, have resulted in rising cadre incomes, primarily through larger salaries. In rural Vietnam, however, the domination of small family enterprises accounts for the rapid decline of cadre income advantages.

10

Introduction

Based on the Chinese experience, Yanjie Bian and John R. Logan (1996) attempted to construct an alternative proposition – the “power persistence” hypothesis. Emphasizing the direct effect of variables reflecting authority relationships, they argue that redistributive power remains relevant as long as the public sector exists or to the extent that labor, capital, and other means of production continue to be regulated by the state. However, the advantage of party membership decreases and the importance of education increases as the market sector grows. By and large, this proposition fits Nee’s (1991) concept of “partial reform” and Walder’s (2002) findings in 1996 about the relative returns to cadres and entrepreneurs in China’s rural reform. Income advantages and village cadres Scholars basically agree that bureaucratic or redistributive power could generally be converted into income advantages for socialist cadres at the initial stages of market reform. The controversy, however, swirled around whether or not these income advantages could endure over time in the emergent market economy. The core issue of the debate, according to my argument in this book, is crucial to assessing both village cadres’ willingness and their ability to govern on behalf of the regime. The data in this book, obtained from fieldwork around three decades after the onset of China’s rural market reform, provides a clearer view of whether the initial effects of marketization are transient, enduring, or volatile. The data prove that all three views examined earlier have some explanatory power, as each of them finds more or less empirical support in this project. My findings also suggest, however, that these views grossly overlook some important contextual complexities and regional diversities. The impact of marketization on socialist cadres is far more sophisticated, condition-specific, and uncertain than any of the foregoing theories claims. More importantly, this impact has profound ramifications for political power – at least in the rural context of reform China. China’s rural villages can be divided into five types in economic terms (Appendix A, Table A.1). The first type is impoverished villages that lack resources of their own and also have very little or no collective economy. In these villages, village (government) revenue is limited to transfer payments or government subsidies, and villagers either have joined the floating population or live mainly on traditional farming. The second type is primarily agricultural villages whose small amount of industrial or commercial economy (collective and/or private) adds more or less to village revenue. Villagers there earn a living from both farming and non-farming businesses.

Market transition and socialist cadres – a debate revisited

11

Villages of the third type have their own resources. They possess a substantial non-agricultural sector, which is mostly a mixture of collective and private ownership, and thereby a considerable amount of collective assets and revenue. In these villages, farming contributes to only a small proportion of villagers’ income. Affluent villages with substantial private industry and commerce and abundant collective revenues belong to the fourth type, in which nearly all of the villagers’ income comes from enterprise employment and land compensation. The fifth type is the socialist or “new collectivist” villages whose number is very small but which often receive disproportionately heavy media coverage in China. The scope of the collective economy and the amount of collective wealth in these villages are so large as to bear on villagers’ livelihood to a significant degree. Village cadres, who have upheld China’s communist rule in the countryside, have undergone enormous changes in terms of their role, functions, positional authority, and income advantages. After more than three decades of market-oriented reform, this once largely undifferentiated aggregate has split into four categories that have a close association but not necessarily a cause-and-effect relationship with the typology of villages just discussed.10 Some village cadres have neither amassed personal wealth nor owned substantial private businesses. Most members of this group are from villages of type I, which have very few collective assets enabling them to gain “income advantages” and very few opportunities for profit seeking. The erosion of redistributive power and decreased returns have made these once coveted cadre positions unattractive and uncontested. It also partially explains why the village leadership in this type has changed little and functions largely to muddle along in a caretaking capacity. In some villages with a fairly robust collective economy (mostly types II and III), corrupt cadres used their authority to plunder collective assets. As was typical in transitional economies, after transferring ownership of enterprises from the collective to themselves, these cadres quit their political positions and became engaged full time in family businesses. The patron-client ties and other advantages former cadres were supposed to have did benefit them initially but became gradually attenuated in the changing context of marketization. These first two categories of village cadres do tend to confirm the predictions of market transition theory. Still, in some villages (mostly type III), cadres got rich through a variety of predatory and self-serving means that somewhat fit Staniszkis’s notion 10

Needless to say, given the complexities and diversities of villages and cadres in the Chinese countryside, the categorization of village cadres in this project does not precisely fit into the economic typology of villages.

12

Introduction

of power-capital linkage. However, this category of cadre does not follow the “power conversion” hypothesis completely, in that for various reasons, these cadres either did not enter into private entrepreneurship or failed to establish a substantial private business. Therefore, their political resources and human/social capital could not adequately translate into enduring advantages in marketized sectors11 – at least not in the way market transition theory suggests. Instead, the “power persistence” approach is more applicable here. In these villages, redistributive power was not rooted out but persisted in the market process. Village authorities still controlled a considerable amount of collective assets, which included elements of the collective economy that survived the decollectivization, self-raised funds, fiscal revenues, government subsidies, and transfer payments. Unlike the experiences of Eastern Europe, the marketization or privatization of the village economy in China – however radical or thorough – did not necessarily have a substantial impact on the village leadership. As long as they successfully managed their personal relations with the party-government, even the most corrupt cadres could keep a tight grip on political positions that gave them an income advantage. This advantage might not be directly related to the market but depended on the amount of economic resources available for them to redistribute. The idea of “power conversion” finds some support in the fourth category of cadres in a growing number of villages (types III and IV). Their primitive accumulation of private wealth accords with the statecentered analysis or the concept of “political capitalism.” Riding high on the wave of marketization and ownership reform, they took advantage of their control to turn collective enterprises into their own and thereafter established their family business firmly in the market sector. However, to perpetuate their income advantages in market transition, they did not quit their cadre positions but held double identities as party-state agents and private entrepreneurs – hence the title “entrepreneur cadres.” Their successes in the private sector did not merely stem from their “human capital,” such as entrepreneurship, managerial expertise, and market power, but owed a great deal to their links with the officialdom, which offered them exclusive access to a variety of commercial privileges. Their advantages as cadres did not slip away with the expansion of the market economy, nor did these advantages fade over time, compared to the growing relevance of other variables. Nonetheless, these enduring 11

Thus, based on a 1996 survey, they had “only marginally larger earning power than ordinary households, and they are at a substantial disadvantage compared to entrepreneur households” (Walder and Zhao 2006).

The effects of marketization on Chinese village cadres

13

advantages were derived, not from the cadres’ old personal ties, but from their continuous political appointments.12 Thus, “power conversion” is true – but not in the way that the “power conversion” hypothesis assumes. These findings about entrepreneur cadres’ income advantages are not new but were reported by Walder (2002) based on the 1996 data and Nee (1996). However, in the 1990s, the number of entrepreneur cadres was negligibly small. Their ranks have since swollen immensely and they now constitute a large proportion, if not the majority, of current village leaders – particularly in developed rural regions.13 Although all four categories of village cadres and different patterns of village governance are discussed in this book, greater emphasis is placed on “entrepreneur cadres” not only because they are special in China’s structure of political power but also because they probably represent the direction of China’s rural political development.

The effects of marketization on Chinese village cadres The rise of entrepreneur cadres as new ruling elites in rural China has been causally related to the change in economic returns to the position of village cadres that has been effected by market and fiscal reforms. The emergence of “entrepreneur cadres” is not a normal occurrence under state socialism and remains taboo in urban China.14 Their emergence in large numbers in rural China therefore perhaps should not be seen as spontaneous but as a state-endorsed outcome. The village cadres who have established themselves in the private sector must retain their political positions to secure some enduring income advantages and to realize the constant conversion of political power into (private) economic power. For the reform regime, as the analysis in Chapter 9 suggests, “power 12

13

14

This observation confirms the finding of Walder and Zhao (2006) that while “past political ties do not account for the high incomes of the entrepreneur households,” a cadre household with an enterprise “earned double the income of a non-cadre household with an enterprise.” It may be useful to compare the four categories of village cadres with the four types of the local state agents that represented different modes of local state economic involvement in the 1990s, namely entrepreneurial, clientelist, developmental, and predatory (Baum and Shevchenko 1999). The entrepreneurial and predatory officials resembled the second and third categories of village cadres. As examined in Chapter 7, the commercialization of village government in recent years has made it similar to the “developmental” pattern. The category of “entrepreneur cadres” in villages is unique, as village cadres are not state officials who are legally banned from developing their private enterprises in China. The “cadre” under state socialism denotes those who hold a position in the partygovernment and wield administrative, bureaucratic, or organizational power. The concept does not cover SOE managers, many of whom, according to Staniszkis (1991), owned private companies on the eve of marketization in Eastern Europe.

14

Introduction

conversion” is reversed in the sense that there is an expectation that private economic power in the hands of village cadres will be translated into public authority exercised on behalf of the regime. The status of village cadres in the party-state hierarchy Much discussion about market reform and socialist cadres places transitional economies in China, Eastern Europe, and the former USSR in one basket without adequate differentiation or comparative analysis. This approach does not seem to have posed any problem for sociologists, as the socioeconomic consequences of marketization under state socialism are similar. The impact of market transition on political power structure is a different issue however, and one on which reform China, Eastern Europe, and the former USSR are barely comparable. Once the floodgate of great transformation was thrown open, marketization proceeded apace, in tandem with democratization in Eastern Europe and the former USSR. Their experiences stand in sharp contrast with China’s pattern of marketization without democratization – namely that market reform has unfolded incrementally and consistently under a hardly reformed one-party system in China.15 The implications of this difference for political analysis are abundant and profound. In Eastern Europe and the former USSR, while enjoying “enduring advantages” in the market sector, most cadres-turnedentrepreneurs quit political institutions. Those who managed to join new political elites acquired and exercised public authority in Max Weber’s modern rational-legal system that had little or no overt linkage to their private wealth or business. This scenario might, as Nee (1996) ´ commented, have caused Rona-Tas (1994) to confuse the advantages of current and former cadres in Hungary’s market transition. Despite some similarities with SOE privatization in China, the nomenklatura has remained so firmly entrenched under the reform regime that it denies cadres-turned-entrepreneurs any chance to seize or hold on to political office. Political rule under China’s reform regime is stringent and abundantly clear: one can be either a party-state official or a private entrepreneur but cannot be both simultaneously. The concurrent double identities are both theoretically and practically impossible. Furthermore, 15

Indeed, as Grzegorz Ekiert (1991) argued, because of the “polymorphous nature of state-socialist regimes characterized by the lack of a clear distinction between political and economic institutions,” the transition from state socialism “requires the simultaneous and fundamental reconstitution of both political and economic systems.” So the transition that has taken place in reform China is significantly different from that of Eastern Europe and the former USSR at the start of the 1990s.

The effects of marketization on Chinese village cadres

15

it is extremely rare in reform China that political leaders and officials are chosen from among private entrepreneurs even if they agree to exit the private sector on appointment to party-government posts. This rule, however, does not apply to China’s village cadres, simply because they are not considered as true party-state officials. Village cadres in reform China were used as subjects in a number of studies on the impact of marketization (Oi 1989; Chen 2007; Landry 2008; Kung, Cai, and Sun 2009; Yao 2009). In fact, comparability between Chinese village cadres and the typical cadre elite in the transitional economies of Eastern Europe, the former USSR, and even urban China is restricted. China’s rural villages differ vastly from SOEs under state socialism or any of party-state apparatuses. Before 1958, the village was functionally the de facto – to some extent de jure – tip of the vertical administrative system that exercised state power. After the commune system was dismantled in the early 1980s, “village government” was reinstated and soon redefined as an “autonomous organization.” This symbolic “self-government” has made the status of village government awkward. It has been functionally part of the formal administrative structure but theoretically denied this status.16 Since village cadres are appointed and assigned administrative duties by the party-state, the formal withdrawal of state power, embodied by “villager autonomy,” has actually made no difference to the nature and status of the village. The party-state has kept peasants and village authorities under its control almost exclusively through rural party organizations, namely the village party branch (VPB) that has constituted the rural part of Vivienne Shue’s (1988: 130) “honeycomb pattern of the polity under Mao” and has been legally stipulated as the “core” of village government. Village leaders, by definition, are therefore grassroots party cadres but not government officials or civil servants on the regular state payroll. They are required to perform the duties of government officials but denied any right to their privileges. In addition, village cadres are selected from among fellow villagers and usually have extended kinship networks in the village. These characteristics illuminate their unique status in the cadre structure and their dual role in rural politics. On the one hand, village cadres are hired by the party-state as its agents and owe their offices, authority, and legitimacy solely to the regime; on 16

The AAT further exposed the village’s awkward status. Both township and village finances were devastated by the AAT. But the township is one level of government that is legally entitled to share an amount of state revenue adequate to ensure its public expenditure. Therefore, transfer payments for rural areas from the center were sent only to the township, which held discretionary power over how much each village under its jurisdiction could share.

16

Introduction

the other, they must protect the narrow village interests, and thus often use “soft opposition” strategies to resist directives from above while maintaining the “fac¸ade of compliance” (Oi 1989: 115–16). As Shue (1988: 112–13) observed, because rural affairs were usually handled informally and loosely, village cadres were able to play, without being punished, “some version of the local protectionist game enough of the time that it had the effect of pressing at least some local values, demands, and expectations upward into the bureaucracy.” Given the sacredness of kinship in the traditional Confucian ethos, as Richard Madsen (1984: 247–48) put it, the government was compelled to grant “considerable leeway” to village cadres who attempted to build up a power base through patronage or their network of kin, and even to those who committed corruption. Village cadres undoubtedly served as the party-state’s tool but were not exactly true representatives of the communist ruling elite, nor were they entirely attached to the regime in economic terms. Their low and marginal position in the pyramid of political power made them easy victims of the reform agendas of both the central and local states. Unless they were able to transform themselves into “entrepreneur cadres,” the amount of political capital village cadres could convert into private wealth or use to line their pockets in the new environment of marketization was much less than that available to the genuine cadre elite under state socialism. It is therefore unsurprising that their experiences as the losers of market reform were cited as lending credence to market transition theory. Nonetheless, as the commercialization of village government among others shows, the victimization of village cadres in the process of market reform and how they reacted to minimize their losses and turn the situation to their advantage is not a simple story. The loss of redistributive and administrative powers The abolition of collective agricultural production in the early 1980s chipped away the core of village cadres’ redistributive power and limited it merely to the management of contracts for land use, village-owned enterprises (VOEs), and properties (Oi 1989: 183–226). As land contracts came into legal effect in 1999, particularly with the adoption of the land contract law in 2002, cadre power over land allocation, for the most part, began to sink into irrelevance. The closure or privatization of VOEs in the late 1990s ended the drawn-out process of rural decollectivization, reducing economic resources for redistribution to a negligible amount in many villages in agricultural regions.17 17

Oi and Rozelle (2000) also discussed the economic power held by village cadres over the villagers. Their analysis aims to unravel the puzzles relating to villagers’ interest in village elections.

The effects of marketization on Chinese village cadres

17

Village cadres also possessed state-sanctioned authority to perform administrative functions, including the execution of state policies and laws; the maintenance of the hegemonic stability of rural society; the delivery of public goods and services; and the collection of taxes and fees. In imperial China, the exercise of administrative power in the countryside was so difficult that officials were impelled to “contract out” their administrative duties to the local gentry. The imperial state did not seek an active administrative role in rural society not only because it did not demand much from the peasants, but also because it lacked the institutional mechanism to control and monitor the atomized and dispersed peasantry (Fei 1953: 79–88; Watt 1972: 226–28; Duara 1988: 81). The effectiveness of village administration under the Mao regime should, for the most part, be ascribed to the highly collectivized economy that subjected Chinese peasants to the complete control of their livelihood by village cadres. With the unfolding of market reform, which was the antithesis of collectivism, the symbiotic and interlocking relationship of redistributive and administrative powers was exposed far more strikingly in rural than urban areas. The erosion of redistributive power in villages has weakened administrative power drastically and has thus jeopardized the very basis of political authority. Meanwhile, the purview of village administration has shrunk considerably along with the huge reduction in village cadres’ workloads, particularly after the AAT. The expanding role of market institutions in rural economic life has supplanted some of the administrative functions performed by village government, thereby reducing its responsibility over village affairs. But this diminishing administrative power has its deepest root in the changing trajectory of the party-state’s rural governance. It has become increasingly evident that the shift of the rural economy to markets has gone hand in hand with the execution of the reform regime’s hidden agenda for restructuring rural society and politics. As the AAT and concomitant policies prove unmistakably, the reform regime has totally abandoned the Stalinist model of capturing agricultural surplus for industrialization and instead has attempted to transform the chief function of rural governments from predatory extraction of economic resources from peasants, to providing peasants with goods and services through its programs of “building a new socialist countryside.” This historic and strategic change in the nature, goals, and mode of communist rule in rural China has made village cadres less useful or important.18 The decollectivization of agricultural production left village 18

Of course, it does not mean that the party-state will or can afford to abandon the countryside completely or to the same extent as in imperial China. Waldron, Brown, and Longworth (2006) argue that to pursue the two new goals of supporting peasants’ livelihood and agricultural modernization, the Chinese state has retained “strong capacity”

18

Introduction

cadres three major responsibilities: (1) to assist the state in purchasing grain, (2) to levy taxes and fees, and (3) birth control. The state decision in 1991 to liberalize grain markets and subsequent agricultural commercialization removed the first. Birth control has become peasants’ own preference in many rural areas, relieving local governments there of a grave headache. Although the TFR did away with most fee collection, the AAT freed village cadres of their last and the most painstaking duty, slashing their workload by at least half in many agricultural regions.19 As mentioned earlier, village cadres played a pivotal role in the rural structure of political power. Any pernicious effects of market reform that they suffered would also have an effect on the system of communist rule in rural China. The loss of redistributive and administrative powers has undermined village cadres’ authority and thus has given rise to a crisis of rural governance. Making the crisis even deeper and worse, as village cadres were losing their control over peasants, the reform regime was losing its control over village cadres.20 The breakdown of these two key links in the top-down transmission of political authority in the countryside can hardly be attributed solely to the effects of marketization. Needless to say, the more economic resources are allocated to peasants by markets, the less capable village cadres would be to organize and mobilize the peasants. In contrast to Eastern Europe and the former USSR, marketization and privatization were not so much a laissez-faire process in reform China but a deliberately crafted policy whose pace, scope, depth, and to a lesser degree effects were manipulated by the regime. In other words, to pursue its larger goals, the reform regime might be compelled to sacrifice village cadres on the altar of its policy agenda. Village cadres fell prey to market reform to the same extent as they did to the new financial and tax systems. If market transition was path-dependent, the outcome of a national tax reform should have been predetermined. The 1994 tax reform precipitated a catastrophic rural fiscal crisis that, aggravated by the ripple effect of market reform, irrevocably altered village cadres’ incentive structure and accounts for their ongoing reluctance to continue to work as regime agents.

19 20

in the countryside and is not likely to transfer its functions to the private sector. I would think that taking into account its new goals, the state’s “strong capacity” must be redefined and reconfigured. Whether or not the party-state will transfer its functions to the private sector will probably depend on its consideration of what would be the best way to ensure rural “political stability.” For how and to what extent the AAT reduced village cadres’ administrative responsibilities and workload, see Chapter 7. The party-state controls village cadres exclusively through the township government. As Chapter 4 argues, after abolishing one of its key functions, the AAT considerably weakened the township government and tended to make it even harder to hold a tight rein on village cadres.

The effects of marketization on Chinese village cadres

19

Complicating fiscal factors As redistributive and administrative powers were eroded with the spread of markets, finance emerged as more critical to rural governance. In the first place, village finance directly and deeply affected both redistributive and administrative powers. Abundant revenues at a village government’s disposal would strengthen its redistributive capabilities, such as dispensing welfare benefits among households, which could be crucial to the management of poor villages. The village government’s ability to provide public goods and services, a major source of its administrative authority, also depended on the state of village finance. Besides, village finance – more than anything else – determined the “income advantages” associated with cadre position, and these included a variety of legitimate, illegitimate, and “gray” benefits. For many years, village cadres’ salaries were paid out of the village’s collective funds, creating a strong correlation between the two. The crisis of village finance was inseparably entangled with the crisis of township finance, which in turn was essentially a function of the 1994 tax reform. To increase the revenue of the central government, the tax reform revised the old tax-sharing rules to the detriment of local finances and thereby intensified the scramble for financial resources among the various levels of local administration. Under pressure to achieve a balanced budget or fiscal surplus, each local government tried desperately to shift revenue losses and expenditure responsibilities down the administrative ladder. Located at the bottom of the ladder, the township was given the least tax resources but bore most of the spending burden. Without subordinate governments to top up its fiscal shortfall or contribute to its coffers, the township had no alternative but to squeeze village finance. The townships’ attempts to transfer their fiscal crises to the villages, which were manifested in decreasing subsidies (for the villages), increasing remittance (from the villages), and the re-division of spending responsibilities, accounted to a large extent for the exhaustion of village finance. Village revenues showed a trend of deterioration in the 1990s. Closure or changing ownership of VOEs left “village deductions” – self-raised funds, joint production fees, labor services, and fines, among others – as the bulk of village revenue until the TFR that scrapped these fees and confined village revenues to only two surtaxes in many traditional agricultural provinces. The AAT further deprived village governments of these two surtaxes and reduced their revenue to transfer payments alone if they failed to develop any non-agricultural business. However, as the data presented in Chapter 6 show, the amount of transfer payments that trickled down to the village level was usually too small to cover even its routine administrative expenses. This often led to the

20

Introduction

financial bankruptcy of a village government, which dealt its authority a blow more devastating than all negative effects of market transition combined. Meager finance undermined a village government’s redistributive capacity and cadres’ income advantages. A village’s financial crisis would also deepen its debt crisis. These factors rendered cadre positions even less profitable but much more stressful. Even though the advantages of cadre power did not entirely vanish, the disincentives tended to outweigh the incentives – driving village cadres into different career paths or prompting them to reset their agendas in pursuit of private gains. In China’s traditional rural society, the provision of public goods and services constituted the base of authority not only because it could be used as a lever to organize villagers and preserve the cohesiveness of the villages as a rural community, but also because it conveyed prestige, respect, and more authority. In imperial China, the gentry enjoyed privileged standing in the community, not only because of their wealth and education, but also due to their contribution to public projects and villager welfare. The causal link between authority and the provision of services applies perfectly to post-AAT villages. A quantitative analysis of my survey data suggests that the drying up of collective funds resulted in an undersupply of public goods and services and further weakened the presence of village authorities in village affairs. Data show as well that village cadres’ authority correlated significantly with village finance and the village government’s ability to serve villagers. Aside from weak village finance, the marketization of the rural economy has tended to atomize the peasantry and tear the fabric of traditional rural society apart, leaving any type of authority in a volatile, circumscribed, and fragile position. In many villages, the once monolithic political authority has virtually disintegrated into a pluralistic structure in which a multitude of individuals or groups compete for influence, authority, or dominance. All in all, market reform has transformed China’s rural society in a way that not only has destroyed the base of political authority, particularly in traditional agricultural regions, but probably makes a return to imperial-style village governance untenable. The private economic basis of public authority The empirical findings presented in this book leave no doubt that the decollectivization and marketization of the rural economy, VOE privatization, the 1994 tax reform, the TFR, the AAT, and other related rural reform policies were implemented at the cost of village cadres and political authority in the countryside, and that these policies have actually never spiraled out of the reform regime’s control. If the effects of family

The private economic basis of public authority

21

farming in eroding party leadership had to be accepted in exchange for the efficiency of agricultural production,21 why did the reform regime push through an array of other rural reforms that might unleash antiestablishment forces or destroy the base of its rule in the countryside? Were the possible outcomes of these reforms meticulously estimated in advance, mirroring the strategic thinking of the central reformers about long-term rural political and economic development? To solve this conundrum, the political consequences of market reform to China’s rural society should not be interpreted from the central decision makers’ thoughts and policy goals alone, but should be taken as the result of the complex interplay between the reform agendas of the central state and rural governments (at the county and township levels). As Linda Chelan Li (2007) indicated, the TFR and the AAT were, rather than the central government’s thoughtful plan, largely the “unintended consequences of strategic interactions between central and local state actors.” However, the fact that the center was compelled to respond to the reactions of rural officials as policy implementers does not mean that rural officials could “hijack” the center’s reform agenda. Although the central state did pursue its narrowly defined institutional interests, as was most evident in the 1994 tax reform, most of its rural reforms underscored its grand development strategy, whose ultimate goal was none other than to “uphold the leadership of the Communist Party” or “maintaining stability” in the countryside. In formulating their reform strategy, the post-Mao leadership proved themselves to be keen and adept at seizing windows of opportunity. To a large extent, however, the reform process was a process of path dependence – or as Deng Xiaoping described it, “crossing the river by feeling the stones” – which had a clear goal but not a “master plan.” To explain this process using a path-dependent approach, as the reform regime ventured down the path of decollectivization – a critical juncture of 21

Indeed, when the post-Mao leadership scrutinized the commune system, one of the lessons they learned was that in addition to cadres’ bad management and power abuse, excessive egalitarianism in income distribution associated with collective farming caused grave disincentive effects. So the chief goal of decollectivization was enhancing farm incentives (Riskin 1991: 284–86; Sun 1995). The growth rate of agricultural output in 1977–82 was six times faster than during the Cultural Revolution. A few studies proved that family farming contributed 30 to 50 percent of this growth (Putterman 1993). One study concluded that three quarters of the gains in agricultural productivity between 1978 and 1984 could be attributed to the increased incentives family farming offered to peasant families (Harding 1987: 105). From 1984 to 1995, agricultural production maintained a robust real annual growth rate of 5.8 percent (Peng 1999). But a few scholars had a different assessment of the effects of family farming on agricultural output (Yifu Lin 1991; Islam and Hehui 1994; Bramall 1995; Brandt, Huang, Li, and Rozelle 2002; Huang and Rozelle 1996).

22

Introduction

“formative moment” – it received “positive feedback” and “increasing returns” that triggered a self-reinforcing process – one that was increasingly hard to reverse (Stinchcombe 1968: 112; Mahoney 2000; Pierson 2000). When rural reform began to take an irreversible path, its adverse effects on rural regime agents’ morale and governing capacity (zhizheng nengli) caused much consternation among the party-state leaders (Zhongyang Wenjian 2004). Thus, they accentuated the necessity of consolidating the VPB as the “fighting fortress” (zhandou baolei) for maintaining party leadership in rural communities, and for that purpose augmented its transfer payments to township and village governments by a big margin in order to alleviate their financial predicament. However, in China’s cumbersome bureaucratic system, central state policies must be “filtered” by layers of local government before reaching down to the village level. In contrast to the central leadership’s agenda, those of local governments were driven by much narrower, parochial institutional interests that from time to time came into direct conflict with village interests. For example, as discussed in Chapter 6, the most convenient and relatively risk-free way for a township government to cover its own deficits was to squeeze village finances by misappropriating village funds, withholding transfer payments to villages, and/or sharing villages’ self-earned revenue as much as possible. To demoralize and disillusion village cadres still further, in recent years rural officials have been reluctant to support them in their clashes with peasants over policy implementation. In the hope of dispelling their “evil” image, many township officials have turned the once unshakable alliance upside down and preferred to offend village cadres rather than ordinary peasants, out of fear that the peasants might lodge complaints against township officials in Beijing or the provincial capital and hence ruin their political careers. As the neo-institutionalist theory outlines, rational actors do not have a “stable hierarchy of preferences”; institutional constraints often compel them to choose between competing preferences (North 1990). Under China’s cadre evaluation system (Landry 2008), the overriding criterion for measuring local officials’ performance is the speed of local socioeconomic development. Although rural governments were held responsible for village governance, their competing preferences required them to rank this “soft” target lower and, if necessary, to leave village cadres in the lurch altogether. The analysis of empirical evidence and real-world data points strongly toward the conclusion that a complex sequence of marketization, privatization, and worsening fiscal crises in the countryside over the past twenty years has destroyed the economic base of political power in many villages and also minimized privileges and income advantages for village

The private economic basis of public authority

23

cadres. The central state was unable and the local state was unwilling to lend them adequate financial support in order to retain their loyalty to the regime. While the central state was constrained by multiple bureaucratic barriers and thus could not reach directly to villages, local governments refused to “squander” their own resources to bolster village cadres’ capacity to govern. Against this background, “entrepreneur cadres” have emerged as new ruling elites in many villages. The mode of village governance under their stewardship has a much weakened connection to either party-state power or rational-legal authority. Instead, the “public authority” entrepreneur cadres wield depends in large part on their own private wealth, market expertise, and entrepreneurship, or more precisely on their personal ability to help fellow villagers. This authority is public or political only in the sense that entrepreneur cadres are political appointees who are authorized by the party-state to govern villages on its behalf. In reality, this is private authority in a public disguise, which is exercised in the interests of the regime only to the extent – and for as long as – the political appointment provides entrepreneur cadres with sufficient private gains and income advantages. Contributing to the debate between proponents and critics of market transition theory is that after three and a half decades of reform in rural China, marketization and all the structural changes it has brought about have converted private economic power into political power more significantly than the other way around. This reconfiguration of authority in China’s rural society will presumably endure, as it seems to be acceptable to the principal players involved. For the central policymakers, after the AAT reset the goal of Communist Party rule in the countryside to one of “harmonizing” rural society – a buzzword for the Chinese party-state – the political loyalty and administrative functions of village cadres were no longer as important as before. Local (mainly township) governments would benefit most if village cadres could use their private capacity to manage village affairs on behalf of the regime but share no state revenues and resources. Under this model, entrepreneur cadres would win as well. Located at the bottom of political hierarchy, village cadres’ lucrative social networks were limited and their political support meager, and the returns to their otherwise former cadre status would be negligible. Political appointments would boost their private businesses, increase their income advantages, and add legitimacy to their otherwise fragile private power. For ordinary peasants, entrepreneur cadres are better positioned and equipped than traditional village cadres to help them get rich. This entirely new and seemingly more palatable mode of village governance differs from any previous systems in Chinese history.

24

Introduction

Field research for the study China has twenty-eight provinces and six province-level municipalities (Beijing, Shanghai, Tianjin, Chongqing, Hong Kong, and Macau). The provinces are classified as either industrial or agricultural, according to three major criteria: (1) the proportion of rural population and workforce, (2) the proportion of agriculture in the province’s total economic output (value), and (3) the proportion of the province’s agricultural output in the national total. Zhejiang, southern Jiangsu, Guangdong, Fujian, and Shandong fall in the category of industrial provinces (or regions) where the rural economy as a whole is to a large extent industrialized and peasants earn their living mostly from non-farming businesses.22 Because all of China’s industrial provinces are located along the coastline, they are also often referred to as coastal provinces. Most of China’s provinces are agricultural ones, which can be roughly divided into developed and traditional agricultural provinces. Developed agricultural provinces (or regions), such as northern Jiangsu, Henan, Hubei, Hunan, and Jiangxi, have a small but growing amount of rural industry, but farming in general remains a major source of peasant incomes. In traditional agricultural provinces, most of which are located in western China or the hinterland, there is little rural industry, and agriculture heavily dominates in the rural economy and peasants’ income structure (Chen Wenke 2008). (As noted earlier, China’s rural villages are roughly divided into five types according to largely the same criteria.) The division of (poor) agricultural and (rich) industrial provinces and the typology of villages are critical to the analytic purposes of this study as they illustrate and explain huge diversities in terms of the village economy and finance, peasants’ income and affluence, and village cadre authority. Thanks in large part to the TFR and the AAT, the Chinese countryside has undergone a transformation whose social, economic, and political significance is matched perhaps only by agricultural decollectivization in the early 1980s. Much of this study is based on the data and empirical findings I collected from my surveys and fieldwork, which spanned eleven years (2002–13) and were conducted in eighty villages scattered in fifty-four townships across China’s eight provinces. Specifically, fieldwork and surveys for this project were conducted during December 2002–January 2003 (Hubei and Jiangsu), December 2004–January 2005 22

However, the rural areas of Shandong and Fujian are characterized by strikingly uneven development, with the interior townships and villages, which I visited, being far poorer than their counterparts along the coastline.

Field research for the study

25

(Jiangsu and Zhejiang), June–July 2005 (Jiangsu and Zhejiang), December 2005–January 2006 (Chongqing and Anhui), June 2006 (Shandong), November 2007–January 2008 (Jiangsu, Shandong, Sichuan, Hubei, and Zhejiang), December 2008–January 2009 (Fujian and Jiangsu), December 2009–January 2010 (Hubei and Zhejiang), December 2010–January 2011 (Jiangsu), December 2011–January 2012 (Jiangsu), and December 2012–January 2013 (Jiangsu).23 My field research during these periods proceeded in three major ways. The first was via extensive face-to-face interviews (see Appendix A). More than 400 people were interviewed, including township officials, village cadres, ordinary peasants, and scholars.24 In some villages, I lived among ordinary peasants and attended village leadership meetings in an attempt to observe the villagers’ everyday life from nearby and personally feel what “village governance” was all about in the real world. These on-the-spot investigations also offered me chances to witness how rural reform policies (mainly the TFR and the AAT) were being executed in villages; how township officials, village cadres, and ordinary peasants reacted and interacted in the process; and what specific impact the policies were having on village affairs. Given the large number of my interviewees and the villages I visited, interviews are cited in different ways in this book. Some observations and viewpoints were shared by many interviewees and were therefore less controversial. I refer to them as “interviews” or “au. int.” Where it is necessary to consider regional variations and policy changes over time or to compare perspectives, dates and venues of the interviews and the interviewees’ identities are given. To make some information verifiable, the real names, titles, and affiliations of some interviewees are provided with their consent, particularly if the information was somewhat special and was obtained from my one-on-one interviews. The second way empirical materials and data were collected was the distribution of a questionnaire, which had eighty-six questions to be answered by both ordinary peasants and village leaders (see Appendixes B and C). Surveys on these questions were conducted in fifty-two rural 23

24

In the economic categorization of China’s provinces, Jiangsu is usually treated as a unique case. It is referred to as either southern or northern Jiangsu in many places in this book. This province is divided in its middle by the Yangtze. Its southern part (both urban and rural areas) is one of China’s most industrialized regions. By sharp contrast, its northern part is a highly representative or average agricultural region. Northern Jiangsu may be further divided into developed and traditional agricultural regions (i.e., Suzhong and Subei). My fieldwork in Jiangsu, whose southern region (Nanjing) was my birthplace, was conducted across nearly the entire province. The number does not include the respondents who were interviewed by my assistants and me during the surveys conducted from November 2007 to January 2008.

26

Introduction

villages of five provinces from November 2007 to January 2008 – exclusively for this project. A total of 1,200 copies of this questionnaire were collected, and the data were statistically analyzed to form the quantitative parts of this study. Considering the constraints on surveys in China’s rural areas, personal interviews were conducted as well in the survey process in an effort to avoid any misunderstanding of the questions by the respondents. To base the discussion and analysis in this book exactly on what has happened across most of the Chinese countryside, I have tried to use the data collected from these surveys and the results of my interviews as a fact-check to verify each other. During my fieldwork, research material and statistics were collected from local Chinese publications not available in public or university libraries, especially from works on township and village finances – one of the key issues in this book. Any study on finance must let statistical data speak, but many fiscal data at township-village levels were hard to obtain from national and regional financial yearbooks. The bookkeeping of many townships and villages lacked strict norms. Methods for compiling statistics or defining categories of revenues also varied from region to region. To guarantee the accuracy of the fiscal data cited from local publications, the identity and affiliation of the author was important. Information provided by those working in local finance, tax, or accounting departments was given priority. These contributors might not be scholars, but their data should be more reliable, as they had access to the internal statistics that were otherwise not available to the public. To avoid a selective or biased presentation, some contrasts and comparisons are made, together with relevant background information. Organization of this book Aside from the introduction (Chapter 1) and the conclusion (Chapter 10), this book is divided into eight chapters. Chapter 2 takes a historical approach and discusses China’s rural politics from the imperial state through the late 1990s. It compares the systems of rural governance in the Maoist state and in imperial China to highlight the special structural features of communist rule in rural China. It emphasizes that, at the lowest level of rural society, the authoritative allocation of economic resources, or redistributive power, exercised by village cadres constituted the foundation of Maoist totalitarian rule. In the first two decades of rural reform, decollectivization, marketization, and privatization of the rural economy under the reform regime eroded the economic basis of (village) cadre power, leading to the decline or even collapse of political authority in villages.

Organization of this book

27

A village’s financial resources are critical to village cadres’ redistributive power and village governance. Financial shortfalls would render a village government dysfunctional or even paralyzed. Village finance in rural China, however, is not independent but bound tightly to township finance, which in turn is mostly shaped by county finance. Chapter 3 attempts to scrutinize the vertical financial relationships among county, township, and village under the 1994 tax system. It investigates the origins of deteriorating rural finances in the 1990s and provides ample evidence to demonstrate how the fiscal crisis at the township level was precipitated by the 1994 tax reform, which aimed to increase the central state’s revenues at the cost of local finances. Facing tighter financial constraints, township governments were compelled to transfer their fiscal crises downward – to the villages and peasants. The township is the key to China’s rural governance because it is the lowest level of government that directly and exclusively manages village cadres and rural communities on behalf of the party-state. Chapter 4 explores the changing roles and status of the township. Since its establishment in the early 1950s, township government has never developed into an independent and full-fledged administrative layer but has occupied a marginal place in China’s government hierarchy. In the implementation of rural reforms, the township and village have been bound together too tightly to be separated and thus have shared most of the transformation of their agendas. The TFR and the AAT drove a raft of township governments’ finances into the red and rescinded their most important traditional functions, leaving the township almost redundant in terms of rural administration. However, as the party-state’s organizational control in villages has ceased to work, legal-institutional control, which can be effectively exercised only at the township level, has proved crucial to containing rising rural riots and defending the hegemonic order in the countryside. Chapters 5, 6, and 7 are focused on the village level of rural governance. Chapter 5 analyzes political authority in China’s rural villages and explains why cadre power fell apart in many villages but is still in place in some others in the context of marketization. The discussion starts with an examination of the formal power structure in villages, especially the working relationships between the VPB and the villagers’ committee. Quantitative correlations between selected socioeconomic variables and the authority of the village party branch and cadres are tested. Empirical case studies illustrate with some specificity how cadre authority was hollowed out or defied in different types of villages and why cadres remained dominant in villages of new collectivism under the “boss-via-cadre” model.

28

Introduction

Chapter 6 probes into the ways the deterioration of village finance in the aftermath of the TFR impinged on both village cadres’ incentive structures and village government’s ability to provide public goods and services. While the attempt of the township to squeeze village finance had made it hard for village governments to balance their budgets, the TFR cost them more of their fiscal resources and considerably altered the structure of village revenues. Crushing village debt went from bad to worse because of the decrease in revenue and increase in spending. The financial bankruptcy of village governments, mostly in agricultural regions, undermined village cadres’ income advantages, reduced opportunities for corruption, and dampened their passion to serve as regime agents. The image of village cadres as losers in the market and tax reforms contributed to the decay of rural party organizations. The AAT was double-edged for village cadres because while it further reduced village revenues, it relieved village authorities of their most painstaking work. Based on the empirical findings and case studies, Chapter 7 grapples with how and to what extent the AAT, reinforced by the effects of marketization, transformed the function and agenda of village government. As cadres lost their longtime “core task,” village governance was left almost adrift in the wake of the AAT. Village cadres were not assigned much workload, nor did they receive much transfer payment. Before long, this scenario reshaped the priorities of village government’s agenda and, where the local conditions allowed, prompted cadres to search for new sources of revenue through “attracting investment.” Their efforts accorded fully with the demand of cash-strapped township government. The shared stake in increasing revenue has led to the convergence or “merging” of the functions of township and village governments in agricultural regions. Chapter 8 examines two critical developments in connection with the AAT and marketization, respectively, which have significantly reduced the importance of village cadres both to the reform regime and to the peasantry. Since the late 1990s, marketization has profoundly transformed rural social relationships and corroded the social foundation of political authority in the countryside. The atomization of peasant society in its various manifestations and the re-emergence of traditional nonpolitical elites, such as clan and church leaders, coupled with the recast nature, goal, and strategy of communist rural governance, have restructured the relationships among the four players in China’s rural politics, namely the party-state, township officials, village cadres, and ordinary peasants. Chapter 9 addresses the rise of entrepreneur cadres as new ruling elites in villages and the new pattern of village governance amid the

Organization of this book

29

decline or collapse of political authority. Unlike urban party-state officials, entrepreneur cadres in rural villages maintain double identities as party cadres and private entrepreneurs. These new village leaders have used their private entrepreneurial success to re-establish authority in villages. This authority is built more on entrepreneur cadres’ personal wealth and market power than on political appointments. By all accounts, it stands for a new model of village governance that blends private economic power with political power. Chapter 10 considers the theoretical implications of this study for the politics of market transition under a communist one-party system and assesses the prospects of China’s rural governance. Faced with the dilemma of post-AAT village governance, whether to maintain or abolish the township has to be taken as a priority on the agenda of the reform regime. The regime has several options, but the decision to choose any of them would most likely set off a profound, if not fundamental, transformation of China’s system of rural governance.

2

The changing foundations of communist rule in China’s rural society

Sun Yat-sen and Chiang Kai-shek both used a metaphor that likens the Chinese to a “heap of loose sand.” In China’s pre-1949, traditional rural society, monarchical authority was barely able to work in the countryside. Top-down organization or mobilization of the Chinese peasantry for any political purpose was extremely difficult, if not impossible. According to Hsiao-Tung Fei (1953: 75–88), two lines of defense “prevented an absolute monarchy from becoming intolerably tyrannical.” The first was Chinese political philosophy, which was against the interference of state power in everyday life. The second was the restricted sphere of the administrative system or the so-called do-nothing policy (for rural officials). John King Fairbank (1992: 104) added another line of defense, namely that local officials were able to perform their administrative functions “through the help of gentry community,” which was the “buffer between populace and officialdom.” All in all, ancient Chinese rural society did not provide favorable soil for totalitarianism. The thorough penetration of central power into the lowest reaches of rural society is therefore an anomaly, not a rule, in Chinese history. To understand why the Mao regime’s complete control over the peasantry fell apart in the transition toward a market economy, it is important to know how the structure of communist rule in the countryside was created and what it was founded on. This chapter argues that communist totalitarian rule in the Chinese countryside built on the organizational control over the peasantry, exercised by the village party branch (VPB) on behalf of the party-state. The key foundation of this control was not so much the communist regime’s military and security forces and judicial apparatus but first and foremost the VPB’s allpowerful capacity to impose economic sanctions. The economic power to be wielded by village cadres was causally and inextricably connected with the highly collectivized village economy. The decollectivization and marketization of the rural economy under the reform regime stripped village cadres of their politically based economic levers for controlling, mobilizing, and engaging peasants and thereby hollowed out their position of 30

The historical mode of rural governance in China

31

authority. The erosion or loss of village cadres’ redistributive power has contributed decisively to the decline of Communist Party rule in rural China. The historical mode of rural governance in China Village governance under China’s reform regime has evolved in recent years to increasingly resemble its historical version. The implications of this evolution can be better grasped through an examination of the imperial state’s functions in the countryside and the ways it performed them. Chinese peasants were traditionally atomized, dispersed, and disorganized and could rarely be directly and effectively controlled by the state. Without a doubt, under China’s imperial system, peasants could not escape “despotic” state power, which, according to the theory of Oriental society, derived from the necessity for large public works to provide irrigation and flood control (Wittfogel 1957). This necessity also bolstered the controlling position of Chinese officials (Chang 1955: xvi). However, the imperial state’s rule in the countryside was loose and indirect and largely limited to a few spheres of rural life. Representatives of the state could only be found at the level of the county (i.e., district, hsien or xian). They were unable to function without “contracting out many administrative duties to local individuals and groups.”1 This contractingout “hung up” – to use Fei’s (1953: 79–88) words – the centralized power so that it “did not reach to the ground.” Under the imperial system, the state’s administrative functions in rural areas theoretically included maintaining law and order, financing welfare and public works, tax collection, and conscripts (when needed). These functions were quite different and were not of equal importance to the state. The former two represented the state’s responsibility to the peasantry, but in reality were meshed with local community affairs and managed by the local elite or the gentry class. Of course, the gentry might still need the state’s authorization to legitimize their exercise of authority. For instance, they had to publicize the orders of the county government before collecting money for various projects (Duara 1988: 48). The county government might also set up a commission and appoint 1

As Prasenjit Duara (1988: 46) found in rural north China, a magistrate had to administer a jurisdiction of roughly 300,000 people, which was far beyond his personal competence or his office’s capacity. Although a district magistrate usually had a few ranking assistants, he could hardly do what was seen by the Yung-cheng emperor as the “really very complex and manifold” business. During the Qing’s Yung-cheng reign (1723–35), there was deliberation about whether to send officials to the township (hsiang or xiang) or rural subdistrict level to provide sound administration. This idea was eventually rejected (Watt 1972: 226–28).

32

The changing foundations of communist rule in China’s rural society

gentry members as directors to take charge of fund-raising and public services (Chu 1988: 182–83). By contrast, tax collection was the state’s main demand on the peasantry and therefore by far the most important work for officials, particularly in times of rebellion or wars, which depleted the national treasury (Kuhn 1979). However, a county magistrate had to seek the cooperation of the gentry to acquire tax-related information, distribute tax burdens, issue notices, and ensure tax payment. The gentry’s role in taxation, which became even more indispensable from the mid-Qing period on, partly accounted for its fiscal privileges, such as favorable land tax rates and exemption from the labor-service tax (Chu 1988: 185–90; Siu 1989: 6).2 Thus, in most of China’s imperial history, the state did not usually seek an active administrative role in rural society, let alone total control. This can also explain why the emperor did not attempt to extend the state’s reach beyond the county level. In fact, most county magistrates did not bother much about their duties. Instead, they spent “much of their time in leisurely expeditions or in developing their literary talents” (Fei 1953: 80). This “do-nothingism,” as Fei (1953: 10, 76) called it, was part of a history with “little theory or practice to encourage political power to interfere with the social life of the people.” Because local officials did “very little work,” they served as the “equivalent of a constitutional check on government.” While it is debatable whether or not this “donothingness” could constitute a “check” on tyrannical state power, this approach was highly consequential, as it bore heavily on China’s ancient rural administrative system. It perhaps provides a partial explanation as to why large-scale peasant rebellion in imperial China could fatally threaten a dynasty. On the other hand, even if it intended to, the imperial state lacked adequate means to keep a tight rein on peasants. In the study of China’s ancient rural governance, the working relationships between officials or agents of the emperor and the gentry class – the grassroots ruling elite – as well as those between the gentry and fellow villagers are most relevant in the analysis of political and structural change under China’s reform regime. Any ruler in imperial China who attempted to impose state power on peasants faced an apparently insurmountable obstacle, namely that he could not eliminate the rural gentry or transform this 2

Duara’s (1988: 55, 243) “brokerage model” shows that to avoid falling victim to the predatory activities of tax officers who were mostly unsalaried, many rural communities developed inter-village cooperative arrangements for tax collection. These “protective organizations” were mostly created and led by the gentry.

The historical mode of rural governance in China

33

class into state agents similar to communist party cadres. Nor could he get around the gentry or local strongmen to extend monarchical power directly to rural villages. Ideological control by Chinese empires was too weak to be applied effectively to the average peasant. For the gentry, the state ideology – unlike the all-embracing one of a totalitarian state – was largely cultural, and its “controlling” effects were little more than attempts to force “the members of the gentry into a constant preoccupation with the tenets of the authoritarian aspects of Confucian beliefs” (Chang 1955: xvi–xvii). The capacity of the state to penetrate rural society was thus handicapped by the necessity of wielding its authority via interaction and cooperation with local elites. Although the state could suppress challenges posed by elites who had their own independent power bases, the state usually managed to co-opt them and used them to achieve its policy goals. Therefore, state power in the countryside was exercised through intermediaries, namely the gentry. Local officials had to rely on the gentry to fulfill their administrative functions but could not control them by any institutional means because the gentry were not political appointees. For all their ties with local officials through their relatives in officialdom or through the examination system, the influence of the gentry stemmed from their wealth, social status, prestige, education, and the traditional respect they commanded from fellow villagers. The dependence of the government on the gentry for administration further strengthened and legitimized their informal power. The gentry are portrayed as “political brokers” who “conjured up legitimizing mechanisms to make themselves acceptable to officials and respectable to the local community” (Siu 1989: 85). Even so, because the gentry did not depend on state power for their status, they represented an autonomous social class that was beyond the state’s administrative control. The influence and autonomy of the gentry compelled magistrates to seek a cooperative relationship with them. In imperial China, the clan was the pillar of the largely kinship-based gentry rule in rural communities, particularly in southern China. Gentry rule was neither institutional nor organizational but was maintained through a combination of consultation, persuasion, and coercion. The gentry’s power was embedded in rural community connections that were founded mostly on family ties or membership of religious organizations. The “interlocking nature of [peasants’] social affiliations,” as Helen Siu (1989: 85–87) indicated, tied the peasants to “their social patrons in relationships of power and dependence, exploitation and shelter, compliance and commitment.” The emergence of entrepreneur cadres as the new rural ruling elite under the reform regime – a topic explored in

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The changing foundations of communist rule in China’s rural society

Chapter 9 – is hardly surprising, as they bear some similarity to their imperial counterparts. During the Republican period, the Kuomintang (KMT) regime attempted to strengthen its administration in the countryside, but its efforts did not pay off. In the 1930s, mostly to organize peasants to fight the Communists, the KMT took measures to tighten control over rural villages. One initiative was to revive the baojia system, in the name of self-government.3 This system required villagers to inform against each other about disloyalty, particularly sympathy or support for the Communists. However, the villagers refused to comply with the system, as it contradicted the moral code regarding traditional relationships between neighbors (Yang 1945: 9, 150). The KMT regime also attempted to extend the offices of government to the township level. In its initial years, the KMT’s government appointments stopped largely at the county level, too. In 1934, the KMT regime issued a decree that officially established two levels of government in the countryside, namely the county and township. Although the KMT in theory held the power to appoint township officials, most of the appointees were actually “local notables” who were well connected to local officialdom but derived their authority from family wealth, lineage, or social networks. Their status as state officials pressured them into closer cooperation with the KMT regime, particularly in its fight against the Chinese Communist Party (CCP) (Chen and Meng 2006); however, it did not impinge on their autonomy in managing rural communities. Very often, their political appointments provided them with greater opportunities to collude with local militia group leaders in pursuit of personal wealth through the levying of taxes, fees, and surcharges (Ruf 1998; Chen 2013). The township was therefore useful to the KMT merely to the extent that it made forced conscription easier. The evolving structure of rural party rule The consolidation of CCP authority in the countryside can, first of all, be ascribed to a sequence of post-1949 revolutionary changes. In the cultural sphere, the communist regime destroyed traditionally enshrined 3

During its earlier years, the Qing dynasty attempted to strengthen its capacity for controlling rural society by introducing decimal systems, such as lijia for fiscal purposes and baojia for self-surveillance, organized on the basis of households, with each jia made up of ten households and ten jia forming a bao. The Qing, though, did not invent the baojia system, which was first instituted in the Song dynasty. As some studies found, however, these bureaucratic devices were just “forms without function,” or they failed to function as desired (Duara 1988: 42–43).

The evolving structure of rural party rule

35

symbols, customs, and religious beliefs and replaced them with new belief systems and teachings imposed forcefully by brainwashing campaigns (Ruf 1998: 87–89). In the sweeping economic-political restructuring, members of the old gentry were either physically eliminated or turned into “pariahs in a hereditarily determined system of social stratification” (Unger 1989: 114–36). In the process of ideological and social structural transformation in rural areas, the CCP placed the peasantry under the control of double-level, parallel party and state apparatus. Over a period after the inception of China’s communist regime, the administrative structure beneath the county level was not unified across the country but divided into two types. In the CCP’s longtime base areas and the regions that it occupied earlier in the Civil War, such as the North and Northeast, rural governance was streamlined via the establishment of the “administrative village,” which was the basic rural administrative unit – an approximate equivalent, though smaller in population and geographical size, to the township in the rest of China, under the KMT regime. As territories changed hands at a stunning speed, the new CCP regime did not dismantle the township but inherited it – with some minor innovations – as a makeshift arrangement.4 These two parallel structures of rural administration dragged on until 1954 when the first state constitution unified the nationwide administrative system and stipulated the township as the lowest level of government. The township since then could be divided into two periods: 1954–58 and from 1984 to the present. Despite the variations in its functions, the township government has never been as strong, effective, or independent as higher levels of government. However, even though the township cannot even be regarded as a full-fledged form of authority, it does represent an extension of formal state power to a depth and breadth that could not be found at any other point in the history of China. The township government in its first period was not only short-lived but did not fully function. The agenda of the township or administrative village was initially dominated by land reform and political campaigns that aimed to consolidate the new political order in the countryside. Subsequently, its priority switched to agricultural collectivization. Although several functional committees were formed to facilitate the township’s responsibilities, the government itself had a small staff – hardly more than ten officials – who were assigned multiple duties on the matters ranging 4

One of the innovations was to diminish the scope of each township in an effort to tighten political control. Hengshan county (Hunan), for instance, had sixteen townships under the KMT regime. After the communist takeover, the county was divided into seven and later twelve “administrative districts,” each of which held jurisdiction over a number of townships (Yu Jianrong 2001: 220).

36

The changing foundations of communist rule in China’s rural society

from agricultural production, public order, finance, and grain purchase to culture, education, civil affairs, women’s work, militia, “poor peasant associations,” supply and marketing cooperative, credit cooperative, and so forth (Cao, Zhang, and Chen 2001: 582). Most of the administrative tasks imposed on the township were actually undertaken by its party committee, which to a large extent overlapped the government in its composition and relied on rural grassroots party organizations or VPBs to get its jobs done. The township’s significance as an intermediate level between the county and village thereby lay less in its government than in its party committee, which has consistently remained the core of party-state power at the township level (Zhang and He 1998: 103). The establishment of the township government should not be interpreted as an effort toward a bureaucratic form of administration but rather as part of the new regime’s attempt at symbolic state-building (Dittmer 1987; Zheng 1997). Aside from the symbolism, before the 1958 communization, rural governance below the county level was characterized by three tiers of administration, namely the district, the township, and the village, which shared all responsibilities for rural affairs. In fact, sandwiched between the two levels of strong authority, the township was the weakest in terms of its functions. In 1952, the district government in many regions changed its name to the “district bureau” (qu gong suo), and its status was redefined as a branch of the county authorities. Subsequently, collectivization escalated from mutual-aid teams to more advanced forms of cooperative. The need for policy coordination in wider areas encouraged two related administrative readjustments, namely merging townships to make each bigger, and creating more district bureaus to narrow the jurisdiction of each. As a result, townships nationwide diminished from nearly 220,000 to 95,843 between 1954 and 1957 (Hou Baojiang 2005). Each district bureau now managed fewer townships, and consequently some of the functions shifted from the township to the district. Following the promulgation of the 1954 constitution, the (large) administrative villages in the “old revolutionary” areas were restructured as townships. Thereafter, the “village” nationwide was defined as the township’s subordinate unit or the most basic “administrative” level. In most of the countryside, to facilitate land reform, the “peasant association” (nongmin xiehui) was formed in each village. A “mass organization” that consisted of “voluntary” peasants, the peasant association worked as the township government’s “administrative team” (xingzheng zu), as its name suggested. As an unprecedented but informal organ of “state power” in villages, the association was thoroughly controlled by the CCP

The evolving structure of rural party rule

37

through its appointment of association leaders and the VPB.5 When land reform was completed in 1953, the peasant association was disbanded and replaced by formal “village government.” Unlike the association, village government was not nominally integrated into the governmental system but legally and explicitly required to perform administrative functions. The consolidation of party authority in villages led to the downward transfer of more responsibilities for policy execution. Nonetheless, with the surge in the formation of cooperatives, village government as a nominal organ of power was soon sidelined. The leaders of mutual-aid teams, which mushroomed in 1953 and 1954, often avoided village authorities to deal directly with the township or district government, or its “working teams” sent to villages to provide instructions on collectivization. When the elementary agricultural producers’ cooperative succeeded the mutual-aid team to broaden the scope of collectivization, not only did its jurisdiction expand to match the village government’s; the cooperative also grew beyond the bounds of an economic organization and encroached on the village’s administrative domain. As the cooperative combined its economic and administrative powers to a larger extent, it pushed village government aside as the new center of authority in villages – a development that, in effect, paved the way for communization in 1958 (Riskin 1991: 85–95; Yu Jianrong 2001: 232–59). It should be emphasized, however, that because of the Mao regime’s sluggish state-building efforts, as well as a party tradition that harked back to the Jiangxi Soviet (1931–34), the government did not hold genuine authority or play a substantial role in all levels of the political-institutional hierarchy. This was especially the case in the countryside, where administrative authority over peasants who were atomized and dispersed could barely function. Thus, just like the power structure of the township, it was the village’s party branch and cadres that ensured the effective party-state rule at the very base of rural society. Central authority was transmitted down the party’s organizational ladder rather than through its government channels. The organ of power in villages was either represented or controlled by the VPB, which in turn accepted the direct and exclusive organizational leadership of the township party committee. In 1958, collectivization in the countryside advanced in full swing, culminating in the establishment of the people’s commune to replace 5

Because of the wide difference in the number of peasant party members, there were no party organizations in the villages of some regions in the early 1950s. In Hengshan (Hunan), for instance, not all villages (or brigades) had a party branch until 1961 (Yu Jianrong 2001: 273–74).

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The changing foundations of communist rule in China’s rural society

the township. A commune consisted of three organizational tiers that encapsulated nearly the entire rural population: the commune at the top, the production brigade as an intermediate level, and the production team at the bottom. These were the administrative equivalents of the township, village, and neighborhood, respectively. By merging administrative, organizational, and socioeconomic structures into one, the commune system was the Maoist state’s basic organizing mechanism in rural society, exercising political, economic, and social power over the peasants – powers even greater, tighter, and more comprehensive than the Soviet kolkhoz and sovkhoz (Cheng 1982: 101). Within the three-tiered commune system, the production team (a subvillage unit) was the body that immediately engaged and controlled all households. This extension of central power to even below the village (brigade) level underscores how tight a rein the party-state kept on rural communities.6 Given the division of labor between the three levels, neither the commune nor brigade leaders needed to manage the peasantry directly. In fact, as Carl Riskin (1991: 174) indicated, the commune and brigade were often portrayed as “empty shells” because “their administrative forms remained while most of their substantive functions were passed down to the teams.” With the inauguration of the HRS around the end of the 1970s, rural administrative structure in large measure returned to the pre-1958 pattern. The central government issued a directive in October 1983 that the township was to be resurrected to take over the functions of the abolished commune.7 The resurrected township, which is discussed at length in Chapter 4, was barely comparable to its pre-1958 predecessor whose administrative role, as noted earlier, was compressed by the district and village. Decommunization brought about a radical transformation of the Chinese countryside in which both the township and village were restructured and redefined in terms of their status, function, and responsibility. 6

7

Even so, rural officials below the commune level were not placed on the government payroll, nor did they receive fixed state salaries. In Xiangtan (Hunan), brigade heads were granted the status of government officials for a short period, but this was only one of a few exceptions between 1958 and 1961 (Yu Jianrong 2001: 264–65). The exclusion of brigade and production team leaders from state ranks was inherited in the era of reform. The abolition of the people’s commune and its replacement by the township did not proceed at the same pace in the countryside. It started in Guanghan county (Sichuan) in June 1980 and was completed nationwide in 1985. In most areas, the township represented the former commune, but in others, its jurisdiction was smaller than the commune’s. In 1985, there were 91,138 townships in China – 38,357 more than communes in 1978. Thereafter, the general trend was to merge townships, and their total number thereby dropped to 43,112 in 1996 and to 37,166 in 2004 (Zhang Xinguang 2005).

The evolving structure of rural party rule

39

With the resurrection of the township, the production brigade was reinstated as the “village,” with the production team renamed the “villagers’ group” (cunmin xiaozu). Thanks to the redefined status of the village, state power theoretically withdrew from the base of rural society. Before 1958, the legal status of “village government” was ambiguous, even though it functioned in reality as the tip of the state’s vertical administrative system. In the era of reform, the “village” – let alone sub-village units – acquired “autonomous” status, and the “villagers’ committee” was formed to represent villagers’ “self-government.” Thus, the village was not supposed to be commanded by the government as its subordinate or to perform any state functions. In fact, this “autonomy” or villagers’ “self-government” made no sense at all in terms of party-peasant relations. The villagers’ committee was either an empty shell or a mere formality. Authority remained firmly in the hands of the same party branch and cadres, namely the former production brigade and team leaders. However, as is illustrated later in this book, the change in the village’s legal and administrative status meant a great deal for rural governance. At the very least, it excluded all village cadres from the ranks of “civil servants” or government officials and thereby denied them the privilege of being on the state payroll. In the reform of party-government separation in the late 1980s, the old term “village government” was revived in public discourse to refer to village authorities. Unlike the 1950s, when a village was governed almost exclusively by the village party branch or group, the new village government theoretically consisted of the VPB and the villagers’ committee. This new terminology was largely intended to highlight the importance of “villager autonomy” and village elections that in theory could bring non-party citizens to village leadership positions. As argued in Chapter 5, however, village elections starting in the late 1980s rarely brought substantial change to the existing power structure in most villages. At best, village elections could impinge marginally on cadre power. Essentially, the VPB as the grassroots party organization in rural society has consistently exercised ultimate or absolute power over village affairs under the communist regime – no matter what administrative reforms have been implemented. Since the late 1990s, non-party forces have more or less filled the void of authority in villages where party cadres no longer hold sway; however, none of these forces has been in a position to challenge the normative VPB domination openly or to supplant the VPB and govern the village legitimately. This is the bottom line in analyzing the root causes of the decline of party-state authority over peasants. Until village elections acquire real political significance, the apparent rollback of state penetration into village affairs would not make any substantial

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The changing foundations of communist rule in China’s rural society

impact on the party’s controlling capacity in the countryside. Moreover, despite all the rhetoric about “villagers’ self-government,” township leadership still habitually treated village authorities as their subordinate or administrative arm and continued to assign them various government tasks to accomplish. The economic base of political authority Conventional wisdom posits that the effectiveness of Communist Party control over society hinges, for the most part, on the loyalty of its cadres as party tools. “It is this cadre structure,” Juan Linz (1975: 175–252) argues, “that allows totalitarian parties to pursue successfully their functions, and many of the achievements in transforming society have to be attributed to the cadres.” Some studies suggest that village cadres under the Mao regime played a similar role to that of the gentry in imperial times, because they sometimes resisted or deviated from party-state policy to defend local interests (Shue 1988). Despite some truth in this comparison, a basic difference is that village cadres, unlike the traditional gentry, were the representatives of the party-state. They obtained their legitimacy of authority and income advantages solely from the communist regime and were therefore subject to its complete organizational control and surveillance. Despite having a modicum of “autonomy” or leeway in policy implementation, the party-state maintained formidable administrative and financial sanctions over village cadres. As Jonathan Unger (1989) put it, “whenever they were not serving as agents of the state, they did not normally control sufficient power on their own account to dominate the villages below them.” Even Vivienne Shue (1988), whose cadre-gentry analogy was influential, agreed that rural cadres could resist central government control or the state’s exactions only “at the margins,” regarding “small benefits” for their villages.8 In addition to its hierarchically structured control, the Maoist state resorted to “class struggle” and political campaigns to deter county and township cadres from deviating from the party line; county and township cadres, in turn, used the same weapons to enforce village cadres’ compliance (Shue 1988: 138, 141; Unger 1989). Nonetheless, even if party organizational networks penetrate every corner of the countryside and rural cadres serve as loyal party-state agents, they are still not sufficient to explain the degree of control one finds in the 8

As Jean Oi (1989: 229) argued, despite its “selective” intervention and “periodic and sparing” application of its power, Mao’s state was “impressively effective and every bit as awesome as the totalitarian model would predict” once it chose to apply its controls.

The economic base of political authority

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totalitarian model. The communist regime’s direct organizational control over the peasantry could be exercised only by the village (party) cadres, who had access to adequate sources of power for this purpose. During most of the 1950s, the regime failed to establish absolute authority merely by using the VPB to control rural communities, because party power had yet to dominate the economic domain. The regime’s encroachment on peasants’ livelihoods and economic freedom began in 1953, when it monopolized the purchase and sale of grain. But total political control remained unachievable until total economic control was imposed under the commune system in 1958. The commune system maximized party authority over the peasantry, not so much by centralizing institutional power as by capitalizing on the nature of the commune as a collective economic organization. With most of their private property – including their own plots of land – confiscated, villagers were turned from landholding peasants into stateemployed agricultural laborers. Mostly through its monopoly over rural economic resources and the system of redistribution, the commune took its members prisoner by placing their economic well-being entirely at its mercy. To reinforce the party-state control, villagers were confined to their villages by the new household registration (hukou) system that tightly restricted their physical mobility. It was observed that the highly collective nature of the village economy reshaped power relations between the production brigade/team cadres and villagers. Although cadres used the “symbols, rhetoric, and sometimes the coercive force of party-state power,” as Gregory Ruf (1998: 157) found in Qiaolou village, their authority over fellow villagers was “based more on effective production management and judicious distribution of resources than on distant patrons of power.” In what was described by Jean Oi (1989: 131–54) as a “system of clientelist politics,” team leaders, who were clients of brigade and commune officials, were “allimportant patrons in their own villages.” They held “largely discretionary power to distribute state-monopolized resources and manipulate the villagers’ income opportunities [through the allocation of collective work points and private plots, etc.], welfare funds, and rationed commodities.” The economic base of rural political power in Mao’s era was revealed first by the decollectivization process and later by the marketization of the rural economy. The abandonment of collective agricultural production eliminated a large proportion of village cadres’ positional authority and unsurprisingly met with their desperate resistance in many villages (Zweig 1983; Latham 1985: 157–73; Kelliher 1992). However, decollectivization did not cause the complete disintegration of the collective economy. The HRS’s impingement on cadre power did not pose a serious

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The changing foundations of communist rule in China’s rural society

threat to party hegemony, either. In the first place, there were few peasant protests to test the reform regime’s governing capacity. During most of the 1980s, decollectivization improved peasant life and narrowed the urban-rural income gap.9 Although this trend began to stall in the late 1980s, the benefits peasants gained from rural reform and their indebtedness to the reform regime were not yet exhausted. Of course, peace in the countryside in the 1980s did not mean that peasants had no resentments. In fact, cadres’ abuse of power when dividing collective property or in allocating public resources inflamed tension in many villages. Aside from the lingering memory of political terror and the psychological inertia it induced, a major explanatory variable for why tensions did not burst into the open was that during the 1980s family farming or the household economy did not develop in a truly free-market context but under a largely unchanged state monopoly over a vast range of economic resources. Village cadres could no longer determine the villagers’ livelihood, but as former brigade or team leaders, they retained some of their old powers and acquired several new ones. They became “socialist landlords,” as Jean Oi calls them, who oversaw the allocation and management of contracts for land-use rights; dominated village-owned enterprises and properties; controlled access to nonagricultural jobs; and decided whether to issue certificates of identity for fellow villagers seeking urban jobs, and whether to intervene to protect villagers who got into trouble with local authorities (Oi 1989: 183–226; Rozelle and Boisvert 1994; Oi and Rozelle 2000). The underdeveloped market, under a heavily intervening state, gave village cadres a strong hand in the distribution of both rationed and inexpensive agricultural inputs, and in the provision of market information to the villagers, who feared market fluctuations and income uncertainty. As Carl Riskin (1991: 301–02) well put it, the new role of village government made manifest the “conflict between agricultural reforms and centrally administrated economy.” This new administrative role and the power attached to it created structural constraints on the autonomy peasants were supposed to have acquired as the household replaced the production team as an independent unit of production and accounting. The market process and shrinking redistributive power The structural crisis of party rule in the countryside since the 1990s stemmed first from the deteriorating material well-being of the peasants, 9

In the first four years of the 1980s, the average per capita income in the countryside increased annually by 17.1 percent, in contrast to only an 8.7 percent increase in urban areas; the urban-rural income gap ratio was narrowed from 3.32:1 in 1980 to 2.56:1 in 1984 (GFYZ 1996).

The market process and shrinking redistributive power

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who lost much of their gain from earlier reforms in the accelerated market transition and whose incomes stagnated or fell in some regions. In the early 1990s, the annual increase in income among peasants dropped to 15.6 percent, compared to 23.8 percent for urbanites. The urban-rural wealth gap re-widened to a ratio of 3.6:1, exceeding that of 1980 (GFYZ 1996).10 As spreading rural unrest put the regime’s ruling capability to the test, a greater market role in the rural economy required less state interference. Throughout the 1980s, the lack of an open labor market and the hukou system constrained peasant mobility and provided the foundation for village cadres’ lingering clout over villagers’ job opportunities. In the 1990s, the freer flow of production factors – labor in particular – made the hukou system less enforceable. As more local governments opened their cities to peasants as migrant workers, it became more difficult for village governments to use administrative measures to block rural-urban migration (Chan and Zhang 1999). For instance, villagers seeking urban employment still needed approval from the village government in the 1990s, but this was no longer the case in Hubei and Jiangsu in 2003–04, according to my interviews there. A non-farm job usually generates much higher income than does farmwork. In Mao’s era and the early phase of rural reform, nearly all lucrative non-farm jobs were offered by collective and state sectors and allocated through bureaucratic channels. As the study by Parish, Zhe, and Li (1995) proved, this power source for village cadres was greatly diminished by the liberalization of rural labor markets and expansion of nonfarm employment. The private economic sector and high labor-demand areas began to emerge as the largest employers for peasants. Except in villages where demand for private labor remained low, or for villagers seeking higher-status jobs, villagers began to rely more on informal or personal connections to look for non-farm jobs, free of administrative intervention. Meanwhile, the rural household as a family could “participate in migration provided they had both sufficient labor and enough money to meet the initial costs of moving.” Lowered barriers to migration spurred more rural households without local political connections to enter urban labor markets in coastal provinces and allowed them to “circumvent the political monopoly over off-farm opportunities” (Murphy 2002: 10

After reaching historic heights in the mid-1980s, rural purchasing power began to decline from 53 percent to 38 percent in 2001 (Li Changping 2002: 227). Early last decade, as a Western observer reported, rural incomes in China averaged less than one-third of urban incomes – one of the largest urban-rural wealth gaps in the world (International Herald Tribune, March 5–6, 2005: 4). Adding to the decline in peasant income were their soaring financial burdens that, fueled by cadre corruption, IOUs, and other malfeasances, triggered a massive upsurge in violent resistance.

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The changing foundations of communist rule in China’s rural society

52–72).11 Along with the waning influence of village cadres in the allocation of off-farm earning opportunities, their other redistributive privileges, such as the management of village-owned land and collective accounting in the payment of IOUs, lost most of their relevance as well. Reduced authority over land allocation The power of a village cadre as the manager or “trustee” of collectively owned land was important during the early phase of decollectivization, when he or she was authorized to allocate farmland among peasant households and to decide the terms for contracts dealing with land-use rights. In 1984, land-use rights were legally extended to fifteen years, which in theory should have undermined that power. In reality, however, legal guarantees for land-use rights were often circumvented by village cadres who desperately attempted to keep their power alive by emphasizing the “collective’s” – or more precisely the village government’s – ownership of land. A 1999 survey of 1,700 rural households in seventeen provinces found that arable land had been redistributed in 77.4 percent of villages and redistributed on a large scale in 50.8 percent (Qian Zhonghao 2003). According to a nationwide study, land reallocation or “adjustment” took place an average of three times between 1984 and 1999 (Li Xuechang 2003). In 1999, the 1984 land-right guarantees were extended for thirty years more – during which period any substantial change in the status quo of land allocation was banned. However, only 13.6 percent of new land contracts signed between village governments and villagers contained this legal article, and 25.6 percent simply ignored it, explicitly permitting land readjustment (Qian Zhonghao 2003). Large numbers of village governments continued to infringe on peasants’ land rights after 1999 in defiance of repeated warnings from higher authorities (Dang Guoying 2003). This widespread violation of state policy and the complaints it generated eventually led to the adoption of the “Law on Land Contract in Rural Areas” on August 29, 2002, which imposed more stringent legal restraints on village cadres’ discretionary powers regarding land. The law 11

Government sources show that China’s rural migrant workers, known as the “floating population,” emerged in the 1980s and reached 230 million by 2009. Rural migration to cities slowed down or stopped in some regions early last decade, due, not to enhanced barriers, but to salary stagnation for their urban employment. Since their general salary level began to increase around 2004, rural migration has continued (Chang Zizhong 2012; Liu Hongyan 2012). According to both my fieldwork and relevant information (Chapter 7), the AAT failed to significantly raise the value of land or make farming a lucrative business for peasants, so it did not seem to have had much impact on rural migration.

The market process and shrinking redistributive power

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stipulates that land contracts must be “subject to consent by not less than two-thirds” of the members of the villagers’ assembly or villagers’ representatives. Village cadres who “unilaterally revoke the [land] contract” or “compel the contractor to give up or modify” his or her right to land must bear civil responsibility.12 Land reallocation is often interpreted as the village cadres’ attempt to keep their grip on power. Rozelle and Li (1998) argued that periodic land redistribution was used by village cadres to extract compliance from villagers. But land redistribution was also seen as reasonable by many rural households whose needs for land changed as the family grew or contracted (Brandt, Huang, Li, and Rozelle 2002). In any case, the weight of cadre power over land reallocation hinged on how villagers assessed their land’s value. Conventional wisdom, based on historical patterns of peasant livelihood, suggests that cadre power over land would be especially formidable when and where villagers rely exclusively or primarily on farming for a living. Between the early 1990s and the introduction of the AAT in 2005–06, as income from farming stagnated in some regions and dropped in others, farmland became much less valuable to the peasants. In such areas, to the extent that arable land was still used or could only be used for agricultural production, villagers no longer viewed land as an asset that they had to desperately defend, or as a reason to curry favor with village cadres. The devaluing of farmland and farming for peasants is clearly apparent in the following data. The cost of farming rose by 34 percent in the early 1990s, followed by a fall in prices for agricultural products by 22.6 percent between 1996 and 2000. Annual peasant income per capita from farming plummeted from 1,092 yuan in 1997 to 600 yuan in 2000 (ZZY 1994; Hu Angang 2002). In 1995, the government raised agricultural taxes by a large margin, making farming even less lucrative. Unlike other fees that were charged at almost the same rate for all villagers – in accordance with the number of members in a household – agricultural taxes were levied on acreage. The more land a peasant household worked, the more taxes it paid. In Qipan (Hubei), earnings from the sale of crops per mu were 360 yuan in 1999. After deducting 170 yuan in production costs and paying 230 yuan for taxes and fees, net income was minus 40 yuan (Li Changping 2002: 34). As the TFR rescinded most fees in 2002–04, the rate of agricultural taxes was raised even further, to 7 percent (or 8.4 percent, including the surtax). The TFR abated the overall peasant burden, but the remaining 12

There is an exception, though. The village government is authorized to cancel a land contract if the land is expropriated by the government (Zhao Deyu 2009).

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The changing foundations of communist rule in China’s rural society

fees fell heaviest on households engaged in farming. Even in Hunan, an agricultural province without much rural industry or commerce, more than 60 percent of peasants’ real (after-tax) income came from nonagriculture pursuits or external jobs. Large farming-specialized households (zhongtian dahu) used to be symbols of rural affluence but sank into lower-income brackets after the late 1990s (Tian and Zhou 2003). Chinese peasants were historically attached to and bound by land. However, unprofitable farming reshaped peasant-land relationships and weakened village cadres’ authority as de facto landlords. Households whose members were well educated or who had special skills or urban connections simply deserted their land and migrated out of the village. Those who earned a living outside of agriculture but wanted to keep their land as a kind of insurance often subcontracted the land or lent it free to others. With heavier agricultural taxes, allocated land became such a burden that peasants even offered subsidies to attract subcontractors or renters (Meng 2000; Yu Jianrong 2001: 500–01). In Qipan, by 2000 five-sixths of able-bodied laborers had ventured out in hopes of finding a job, thus making many villages almost empty. As a result, 65 percent of farmland was deserted. Village cadres were unable to find a way to manage the deserted land because remaining village households refused to accept it (Li Changping 2002: 20, 44). Other factors, too, led peasants to abandon farming, including the availability of more non-farm job opportunities; the household “diversification” strategy; and a desire to “broaden one’s horizons” (Yaohui Zhao 1999; Keister and Nee 2001; Guang and Zheng 2005).13 One study estimated that peasant migrants made up 20 percent of the total rural population and 30 to 40 percent of the rural workforce in 2003 (Ni Ming 2003). A caveat is needed here, however. The importance of land to the peasants and the relevance of cadre power over it varied vastly across regions. Where land has a higher commercial value and can be converted to profitable industrial or business use, it has remained a powerful asset for the peasants. They may secure large requisition fees if their land is selected by the government or investors. This rural land, expropriated for non-agricultural purposes, is usually in strategic locations, where there is improved infrastructure and other conditions attractive to investors (Ho and Lin 2004). Even in the poorest areas, completely forsaking allocated land was an uncommon decision, as farming could, after all, provide jobs, security, 13

Although growth in off-farm jobs has prompted rural households to relinquish land rights, the supply of land has contributed to thriving land rental markets in rural Zhejiang (Zhang, Ma, and Xu 2004).

The market process and shrinking redistributive power

47

and a cheap source of food, especially for villagers who had difficulty finding or keeping non-farm jobs. These factors partially explain why land grabs have often met with fierce resistance (Xiaolin Guo 2001; Brandt, Huang, Li, and Rozelle 2002). The AAT has, in some ways, reframed allocated land from a liability to an asset, though hardly big, and retained more peasants on land, particularly in agricultural regions.14 Thanks to the land contract law, and its more stringent enforcement, this augmented value of land for the peasants has not boosted village cadres’ redistributive power accordingly. Abolished accounting power During the initial years of decollectivization, the villagers’ group as a sub-village unit retained some fiscal autonomy. When the government’s “station of grain purchase” bought grain from individual villagers who were obligated to fulfill their quota, it did not settle accounts with them directly on an individual basis but instead paid a lump sum to the villagers’ group. The villagers’ group would deduct all the taxes and fees each household owed and transferred these to the village government before distributing the remainder to the household. Starting from 1985, this accounting power was transferred from the villagers’ group to the village government, which paid each household according to the IOU that village cadres obtained from the “station,” minus all mandatory taxes and fees. At a time when the IOU problem was already harming peasant earnings from farming (Wedeman 1997), collective accounting made things even worse, as village cadres often abused this redistributive function to discriminate in favor of their cronies and against their adversaries. However, this accounting power did not endure long. Toward the end of the 1980s, peasant income, particularly in agricultural provinces, was leveling off or declining in both relative and absolute terms because of the rise in the cost of farming and the fall in the price of agricultural products. In some less developed regions, growing budget deficits led to more mandatory fees and thus increased peasant burdens further. As the deterioration of peasant livelihood placed issues with the IOU system under the spotlight, the village cadres’ enforced levy of taxes and fees via collective accounting sparked bitter resentment among peasants (Shen Duanfeng 2007). 14

Interviews with peasants at Chen’gao and Shuguang villages (northern Jiangsu) from December 29, 2008, to January 2, 2009; Yannei village (Fujian), December 14, 2008; Yangshao, Buqiao, Jiuchengli, and Xiezhuang villages (Shandong), June 12–18, 2006.

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The changing foundations of communist rule in China’s rural society

The cadre’s accounting power was weakened once the IOU problem was alleviated and, for the most part, vanished altogether with the agricultural commercialization that followed the central state’s 1991 decision to liberalize grain markets. This landmark policy change contributed decisively to the progressive maturity of rural free markets and in effect freed peasants from the obligation to sell grain to the state. Market competition for agricultural products among state commercial agencies, “non-designated” state enterprises, and private business owners allowed farm households to “sell their products through a variety of channels, to a variety of buyers and at a variety of prices” (Sicular 1995). The remarkable decrease in organized agricultural trade15 and the increase in market transactions – mainly through the expanded rural fair or periodic markets – also cost village cadres much of the leverage they had previously derived from their monopoly over scarce resources, such as chemical fertilizer, farm services, and outlets for the sale of products. In 1997, to encourage peasants to continue to sell to state grain purchasers, the central government explicitly demanded de-linking the sale of grain from the levy of taxes and fees. In addition, state agencies were required to pay cash in full and up front to the grain-selling peasants, leaving tax-fee collection to village government alone. It should be noted that although the new central directive banned the accounting power of village authorities and virtually withdrew the government’s “technical” support for them in fulfilling their assigned duties, in practice it did not alleviate either peasant burdens or grievances. On the contrary, this reform to some degree forced village governments to resort to greater coercion and violence to accomplish their collection of taxes and fees, which in turn gave rise to more violent and widespread peasant resistance.16 The rise and later privatization of village-owned enterprises Under the Mao regime, the collective economy in a village usually had two main components: collective agricultural production and village (i.e., production brigade) owned enterprises. The decollectivization, which ran from the end of the 1970s until 1984, was of a limited nature and 15

16

According to Terry Sicular (1995), the amount of agricultural procurement and retail sales at planned prices declined from 31.0 percent and 55.0 percent in 1990 to 17.3 percent and 16.4 percent in 1993, respectively. Interviews with cadres and villagers in the villages of Zhenggang, Chaigang, Shiniu, and Yingjie (Hubei) in December 2002; Yeshu and Shuguang villages (northern Jiangsu) in December 2004.

The rise and later privatization of village-owned enterprises

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abolished only collective agricultural production. Thanks to the new HRS, peasant households acquired the right to lease village land and also to use collectively owned means of production for family farming. In some provinces, where decollectivization was more radical, collective funds and fixed assets at the production-team or sub-village level were either divided among households (Yi Nanwen 1997) or sold to them (Qiu Zeqi 1999). Concentration of non-agricultural resources Even so, in most of the countryside, funds and assets at the brigade (village) level remained in the hands of village authorities. In the reform regime’s efforts to conceal the pro-capitalist nature of decollectivization (Chen 1995; Sun 1995), the collective ownership of village enterprises or “cooperatives” was flaunted as “keeping to the socialist road” and was written into China’s new constitution.17 Persisting rhetorical emphasis on socialism and collectivism in the early phases of rural reform justified the shift in village authorities’ priorities to that of consolidating the other leg of the collective economy, namely village-owned enterprises (VOEs). This ideological imperative was aligned with the interests of rural political elites to create a paradoxical scenario. As village-owned land was decollectivized and contracted to each household, non-agricultural resources were concentrated further for the sake of VOE expansion.18 The pre-reform non-agricultural collective economy was typically made up of small workshops producing low-tech consumer goods or processing foodstuffs. These workshops were actually owned and managed not by the brigade but by the production team. When the brigade was changed to the village, the common practice was that the village government took over formerly team-owned workshops, transferring their ownership to a “larger” collective (Wang Jie 2004). This counter-decollectivization was not transitory but continued for an entire decade. 17

18

The 1982 version of the constitution (Article 8) states: “Rural people’s communes, agricultural producers’ cooperatives [amended in the 1999 version as “Rural householdbased contract responsibility system with remuneration linked to output”], and other forms of cooperative economy such as producers’ supply and marketing, credit and consumers’ cooperatives, belong to the sector of socialist economy under collective ownership by the working people.” As indicated in Chapter 4, the same trend of industrial concentration took place at the township level as well. In much of the reform period, approximately 150 million peasants were employed in rural enterprises (TVEs and VOEs), in contrast to only around 20 million during the Mao period. At a time in the late 1980s when rural (collective) enterprises were thriving, they hired 300 million peasants.

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The changing foundations of communist rule in China’s rural society

The dynamics of TVEs and VOEs Most of the studies of China’s rural industry do not distinguish adequately between township-owned enterprises and VOEs but rather refer to them generally as township-and-village enterprises (TVEs). TVEs’ superiority over SOEs in performance was evidenced by the changing proportions of their gross industrial output. TVEs’ share of output grew from 14.6 percent in 1985 to 27.8 percent in 1996, contrasting with the drastic contraction of SOEs’ from 65 percent to 28.5 percent (Perkins 1996; Jefferson 1999; Jefferson and Rawski 1999: 27).19 At the village level, the collective economy did not disintegrate with family farming but instead grew rapidly in terms of collective assets – even in the hinterland where VOEs either were not well established or were started from scratch. In Zunyi, Guizhou, the collective assets of each village (brigade) were merely 8,800 yuan in 1978 but had multiplied to 58,800 yuan in 1994 (Xiang Jiquan 2002: 170). Given their collective (public) ownership and socialist nature, the resounding success of TVEs puzzled China watchers and engendered a plethora of explanations and theories. Some scholars defined TVEs as informal or disguised private companies or organizational hybrids with mixed or vague property rights (Nee and Su 1996; Nee 1992). Some contended that fiscal decentralization or pressure for revenue growth provided strong incentives for local authorities to bolster TVEs, leading to “local state corporatism” or “local market socialism” in the sense that local governments were turned into economic corporations. These scholars added that, thanks to imperfect market institutions, local officials enjoyed privileges in securing input and output markets, operating funds, commercial information, and technology that had been denied to private individuals during early years of reform (Byrd and Lin 1990; Putterman 1993; Lin 1995; Walder 1995b, 1998; Che and Qian 1998; Chen and Rozelle 1999; Oi 1999; Whiting 2001). Other scholars attributed the phenomenal thriving of TVEs to the “abundant profit-making opportunities” created by the then “exceptionally strong pent-up demand for a whole gamut of products (especially consumer goods).” The fact that TVEs operated outside central planning and on tight budgets also impelled them to exceed SOEs in efficiency and competitiveness (Naughton 1995; Peng 2001; Kung and 19

The development of TVEs was highly uneven within or among regions and depended largely on the local conditions. In the poverty-ridden areas of the hinterland and other traditional agricultural provinces, very few villages had profitable TVEs. Some did not even have TVEs.

The rise and later privatization of village-owned enterprises

51

Lin 2007). Whereas township enterprises had a largely economic purpose, the VOE was intimately linked to village governance and political control.20 Compared to township officials, village cadres usually had a far greater personal stake in VOEs. First of all, village cadres’ enthusiasm for collectivism was embedded in a symbiosis that took shape from the outset of agricultural collectivization in the mid-1950s. For more than two decades, managing the collective economy was what a cadre position in a village was almost totally about – a tradition that forged cadres’ mind-set, agenda, work habits, and understanding of their own duties. Second, village cadres did not draw their salaries from state finances and were therefore constantly haunted by the question of where their remuneration was coming from. The cadres saw profitable VOEs as being the optimal guarantors of their incomes and rewards, and this also minimized the tendency for cadres to be ridiculed by fellow villagers who perceived that levied fees ended up in the cadres’ own pockets (Xiang Jiquan 2002: 179). Deteriorating financial conditions for peasants and the upsurge of protests rendered VOEs all the more critical to village finance, explaining why village cadres responded enthusiastically to the government’s call describing VOEs as a shortcut to rural collective affluence. Third, as market forces made deeper inroads into the rural socialist redistributive system, village leaders obtained new incentives to develop VOEs, as they realized that VOEs could generate private gains for them as de jure or de facto VOE bosses. Managing VOEs offered multiple opportunities to earn “gray” income – from accepting kickbacks on the purchase of raw materials and sale of products, to offering contracts to family members or cronies, to outright embezzlement of VOE profits and assets. The collective economy was both the basis and prime source of the redistributive power that bolstered village leaders’ authority over fellow villagers. After the HRS stripped cadres of their direct control over agricultural production and peasant livelihoods, VOEs were left over as the only economic resources whose management could translate into personal prestige and authority. Village governments’ control of VOEs was typically so thorough and all-embracing that they were “often merged with enterprise management” (Peng 2001). In southern Jiangsu, managing VOEs was a top priority for the party secretary and village head (Qiu Zeqi 1999).21 20

21

Although Yusheng Peng (2001) proved that township enterprises and VOEs were similar in performance and some other aspects, their differences are crucial to the central theme of this study. This was so because in many villages of this region, which was well-known for its rural prosperity, VOEs were the main source of income for both village governments and

52

The changing foundations of communist rule in China’s rural society

Compared to township enterprises, VOEs were owned by a smaller collective or nominally by fellow villagers who cared about sharing VOEgenerated benefits. VOEs could provide coveted non-farming jobs and increase collective wealth. This not only countered the trend of atomization of rural communities following decollectivization but added considerably to the village government’s redistributive capacity. As Jean Oi (1999: 76) argued, VOEs constituted “a crucial part of [village cadres’] personal power base.” Cadre power was “strongest in those villages with successful collectively owned industry.”

The decay of VOEs and ownership reform The decade-long boom of both township enterprises and VOEs was no longer sustainable from the mid-1990s. According to the data released by China’s Ministry of Agriculture (NXQ 1998: 1), the growth rate of the value of TVE output nationwide skyrocketed from 22.4 percent in 1991 to 65.1 percent in 1993 before slumping abruptly to 35 percent in 1994 and 15.4 percent in 1997.22 The acceleration of market liberalization changed the institutional environment, and this was arguably accountable for the decline of TVEs. Aside from intensified competition in markets, local governments’ unique advantages in offering “external management services” diminished, whereas the inefficiencies of corporate governance in internal management were sharply exposed. Because of the expanded market allocation of resources and the falling cost of market transactions, the cost of informal or ambiguous property rights outweighed its benefits (Nee 1992; Peng Guangrong 1992; Chen and Rozelle 1999). The failure of TVEs proved that even under immature and imperfect market conditions, the advantages of public ownership over private ownership were still circumscribed and were unsustainable in the long run. In fact, defects inherent in the collective nature of TVEs had been noticed much earlier. Attempts at addressing these defects led to ownership reform or “informal privatization” in the late 1980s, when rights regarding TVEs began to be disentangled and were gradually transferred to private individuals (Rawski 1999; Walder and Oi 1999). The initial

22

villagers. In Jiangxiang village, 70 to 80 percent of the workforce was employed in its VOEs. VOEs also provided their managers – the village authorities – with a strong base of power. Interviews with two assistants to the Jiangxiang party secretary, on December 27, 2002. Indeed, the growth rate in 1997 was still high. Because this was a nationwide figure, the rising output value of TVEs in coastal provinces, many of which continued to boom in the late 1990s, should have more or less pushed up the general growth rate. Meanwhile, many TVEs did not really fail or shut down but underwent ownership changes.

The rise and later privatization of village-owned enterprises

53

attempt was managerial contracting, through which managers obtained autonomy in running TVEs and shared a right to residual income. However, the government’s intervention and its scramble with TVE managers for residual income impeded the improvement of efficiency and caused enterprise profits to fall (Chen and Rozelle 1999). From the early 1990s, efforts to align private incentives more closely with collective ownership turned many TVEs – 70 to 80 percent in Hangzhou, Shanghai, and Chongqing by 1997 – into shareholding cooperatives whose stocks were widely shared and property rights dispersed (Qiu Zeqi 1999). Even though this new system allowed the managers to share more of the rights to residual income and pushed TVEs a step closer to private ownership, the refusal of local governments – usually the largest shareholders of TVEs – to give up their assets (shares) meant that privatization was half-baked (Ito 2006). Some scholars have ascribed the ultimate completion of privatization to the 1994 tax system that shifted the main source of local government’s fiscal revenues from TVE profits to a sales (transaction) tax – a revenue that was expected to be maximized by private ownership. The new tax system also made collective assets liable to taxation by central and upper-level governments. Reluctance or inability to bail out failing TVEs; pressure for revenue generation and employment; and banking reforms also combined to prompt local governments to sell collective assets to private individuals (Whiting 2001; Ito 2006; Kung and Lin 2007). VOEs underwent similar stages of ownership reform – from managerial contracting to shareholding cooperatives and privatization.23 Meanwhile, multiple forms of ownership coexisted in many villages, including joint and foreign ventures. Except for a few villages whose VOEs were exceedingly competitive, VOEs proved much more vulnerable than township enterprises when exposed to wider and deeper market competition. The degree to which a VOE was actually a collective was even more blurry and suspicious than for township enterprises – some of them were actually disguised or “red-hat” private enterprises. Whatever their name suggests, most VOEs were “vaguely defined cooperatives” (Weitzman and Xu 1994), and the “control [over VOEs] is notoriously entwined with 23

Shareholding cooperatives in villages were different from those in townships in two respects. First, shareholding was usually limited to fellow villagers, who could purchase shares with their land, labor, capital, or expertise. Second, collective assets were quantified and divided among households in the form of shares in the cooperative. Some village governments simply privatized collective shares, distributing them equally among the villagers (Yan Shougen 1994; Chen Guoliang 1995). As discussed in Chapter 5, shareholding cooperatives in villages have recently thrived in the countryside thanks to the government’s encouragement.

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The changing foundations of communist rule in China’s rural society

family-kinship networks” (Peng 2001). In Shantou, Guangdong, collective shares in VOEs were merely land and factory buildings (Li Chuping 1992). The presumed advantages provided by VOEs’ more “informally private” ownership paled when compared to their inherent disadvantages. By the mid-1990s, over half of VOEs stagnated and 30 percent shrank (Li Maonan 1996: 74–75). VOEs usually had little or no access to “external management functions” arranged by local governments. A small scale, weak foundation, inadequately trained workers, lack of market networks, inappropriate investments, outdated technology and equipment, and poor management were among the problems that compelled VOEs to limit their market share to low-end, low-tech, and low-value-added products. Some of the problems facing VOEs were hard to address. Many VOE employees, for instance, were fellow villagers who saw themselves as enterprise owners and hence refused to abide by strict labor rules (Kung 1999). These inherent problems wiped out the weakest VOEs but made the privatization of others a smoother but more corrupt process – particularly in coastal provinces. Between 1995 and 1998, 70 to 80 percent of VOEs nationwide were sold, and most of the buyers were village cadres or their family members who had managed the VOEs.24 Within three years, approximately 600,000–800,000 village cadres transformed themselves into private entrepreneurs (Wang Jie 2004). The evolving ownership of village enterprises is presented in Table 2.1. Over the eight years from 1998 to 2006, the average number of enterprises in each village nationwide dropped from 8.93 to 7.2. Regional variations were consistent with the general assumption that the lack of market competitiveness drove large numbers of VOEs to bankruptcy, except in coastal provinces (East) where rural industries were robust and enterprises per village increased from 12.62 to 14.5. Even more significant was the change in the ownership structure of surviving 24

It does not mean, though, that village cadres themselves pushed for privatization. At Chen’gao village in 1995, the township government demanded that all VOEs be sold, allegedly against the wishes of the village authorities. However, the privatization did not go through public bidding; the VOEs were purchased by the incumbent VOE directors. Interview with Chen’gao’s party secretary on July 25, 2005. A cadre at Baimi village (southern Jiangsu) confirmed that VOE privatization was a government policy. His village used to have four to five VOEs, all of which changed ownership under government pressure in 1996. Interview on July 26, 2005. Village cadres did not necessarily benefit from or prefer VOE privatization even though they themselves would be the purchasers. Village cadres held almost all discretionary power over VOE profits. If VOEs lost money or shut down, cadres would lose out – but much less than if the VOEs were their family enterprises.

The rise and later privatization of village-owned enterprises

55

Table 2.1 Enterprise ownership in each administrative village on average (2006: N = 23; 1998: N = 292) 1998 Total East Number of enterprises per village Collective (managerial contracting) Shareholding Joint-capital∗ Private Foreign-overseas Others

2006

Center West N-East Total East Center West N-East

8.93 12.62 7.54

6.30 –

7.2

14.5 5.8

4.7

3.6

1.36

1.34 –

0.4

0.3 0.4

0.4

0.5

0.16 0.24 2.62 – 2.27

0.3 0.4 5.1 0.1 0.9

0.1 0.2 3.4 0.0 0.5

0.1 0.0 2.4 0.4 0.2

1.47 1.28

0.49 0.84 0.70 1.08 4.48 8.23 – – 1.93 0.77

0.41 0.70 2.39 – 2.76

– – – – –

0.6 0.8 10.0 0.4 2.5

0.3 0.7 4.2 0.0 0.1

Source: Formulated based on the data provided by the Ministry of Agriculture, PRC (Nongye bu 1999, 2007). ∗ Joint-capital enterprises usually denote cooperatives spontaneously created by fellow villagers to promote cooperation between them in production or business, without any government role or collective share.

village enterprises. Collective enterprises decreased from 1.36 to 0.4 per village – with a caveat that massive-scale VOE privatization had already been in process for some time by 1998 and its momentum, as the figures show, continued thereafter. Although the status of VOEs nationwide was downgraded to an almost negligible level as compared with thriving private enterprises, the contrast was especially striking in coastal provinces, where private village enterprises were overwhelmingly dominant and VOEs were on the brink of extinction. The phasing out of VOEs did not mean that collective assets had completely evaporated or that no collective economic and financial resources remained for village leaders to control. For one thing, village finance was not necessarily decimated by the disappearance of VOEs if village authorities were able to increase collective funds through other channels, such as leasing the village’s “mobile” (jidong) land to investors; by receiving land requisition fees;25 or through other collective economic undertakings. Although the “collective” in the Chinese countryside has not yet been dissolved, it has been disintegrating slowly – a trend that is partly illustrated by the change in the ownership structure of fixed production 25

For details, see “Land Requisition and County Finance,” a subsection of Chapter 3.

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The changing foundations of communist rule in China’s rural society

Table 2.2 The ownership structure of fixed production assets in villages nationwide (%)

Total fixed production assets Collectives Households Shareholding cooperatives Joint enterprises Private enterprises Others

1998

2002

100 28.98 33.79 12.01 04.04 8.47 1.90

100 20.39 40.95 10.10 1.81 14.17 12.61

Source: Calculated according to the data provided by the Ministry of Agriculture (Nongye bu 1999, 2002, 2007).

assets in villages (Table 2.2). The average proportion of collective assets managed by village authorities had already contracted to 28.98 percent in 1998 and, with the rapid increase of non-collective or private assets, this further dropped to 20.39 percent in 2002.

Conclusion In reform China, decollectivization, marketization, and privatization were not the outcome of democratization, as was the case in Eastern Europe and the former USSR, but a politically managed process. Since the very beginning of market reform, China’s central decision makers have been grappling to find an optimal balance between improving economic efficiency and consolidating political control. The decollectivization of agricultural production around the end of the 1970s was required to rescue Chinese peasants from the verge of starvation and to avert an imminent grain supply crisis. This revolutionary policy change was not only necessary in economic terms but also to regain “regime legitimacy” among peasants. Because of the reform regime’s political considerations and ideological straitjacket, however, the first “critical juncture” of rural economic structural transformation, which lasted through the 1980s and beyond, did not lead to the complete disintegration of the collective village economy. Instead, accompanying the new family farming system was the consolidation of VOEs, which, coupled with authoritative land allocation and collective accounting of state grain purchase, allowed some key collective economic resources to survive. As these resources dwindled in the wake of expanding markets and the implementation of more radical

Conclusion

57

pro-market reforms, village cadres’ redistributive power, which derived from their control over the allocation of collective resources, faded slowly but steadily into irrelevance. The failure to survive market competition resulted in either the bankruptcy or privatization of VOEs in the late 1990s, thus bringing the decollectivization – particularly in villages of agricultural regions – to its conclusion. Meanwhile, to restrain village cadres’ tendency to abuse power, and to calm escalating peasant resentment, the reform regime took measures to minimize or eliminate cadre power over land allocation and collective accounting. Considering the obstacles that prevent the party-state’s security and judicial apparatus from effectively reaching out to the vast countryside and the atomized peasantry, socialist redistributive power is far more critical for maintaining political authority in rural than in urban areas. Although the reform regime was compelled to abandon its rural agents’ redistributive privileges in exchange for the success of market reform in the move toward a market economy, the political cost was enormous. A redistributive economy is usually identified with socialism, which has remained a critical source of the reform regime’s ideological legitimacy. The change in the mode of resource allocation from the party-state to market institutions undermined the economic basis of the regime’s coercive power over the peasantry. Last but not least, market reform stripped village cadres of multiple privileges and benefits associated with a political position, and these had been their prime motive for serving the regime. The corrosion of this key link in the transmission of power from the top of the political hierarchy to the bottom of rural society created a potential structural crisis in rural governance. In the meantime, this crisis was deepened by deteriorating rural finances, which the next chapter discusses.

3

The 1994 tax reform and rural fiscal crises

Village finance is critical to village governance in China in numerous ways. First, finance is one of the major components of redistributive power. With fewer economic levers for political control, the governing capacity of a village government has become increasingly conditional on its fiscal capabilities, or more precisely on the amount of collective funds at its disposal. Abundant village government coffers, in the first place, mean that cadres are able to distribute welfare benefits large enough to impact the incomes of all households in the village. Second, a fiscal surplus or at least a balanced budget holds the key to the effectiveness of village administration. Insufficient expenditure debilitates or paralyzes village government. For instance, the ability of village government to provide public goods and services for villagers usually hinges on its finance. Since ancient times, this ability has underpinned village leaders’ authority and is used as a lever to mobilize peasants or to maintain the cohesion of villages as rural communities. Third, village finance is directly associated with village cadres’ personal income advantages and other office-related benefits. It is one of the explanatory variables in the study of their morale, passion, and performance as regime agents. Thus, the state of rural finance, particularly at the village level, has enormous political implications. Village finance depends almost entirely on township finance, however. Since decollectivization, village finance has never been independent but has mostly been handled as part of township finance. The fiscal condition of township government affects village governance directly and heavily. Thanks to their administrative superiority, townships often manage to run balanced budgets at the cost of village finance and often transfer their fiscal crises to the villages. On the other hand, township officials rely on village cadres for village administration and policy implementation. Because vertical intra-party organizational control and disciplinary This chapter contains material previously published in my article “The 1994 tax reform and its impact on China’s rural fiscal structure,” Modern China 34 (3) (July 2008), pp. 303–43.

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The 1994 tax reform and rural fiscal crises

59

mechanisms can no longer guarantee the obedience of village cadres, township leaders have been compelled to turn to material rewards to placate them. However, the rewards that can be offered are constrained by the financial capacity of the township. After the late 1990s, with village cadres no longer able to wield formidable sanctions against unruly villagers on their own, fast deteriorating township finances made it more difficult to manage the village cadres as well. This chapter argues that the 1994 tax reform was predominantly responsible for the downward spiral of the fiscal situation for rural (i.e., county and township) governments. This reform was intended to increase tax revenues for the central government, at the cost of local governments. It replaced the old rules of sharing taxes through negotiation with new ones that transformed the distribution of financial resources into thinly disguised power politics between different administrative levels. To achieve balanced budgets or fiscal surpluses, each level of local government vied to replicate the “self-serving” policy of the central government, leading to the upward flow of tax revenues and the top-down imposition of expenditure burdens. The township was located at the bottom of the administrative hierarchy and thus had the smallest share of tax resources but bore the greatest spending responsibility. It had no subordinate government to make up its fiscal deficit or to contribute to its coffers and thereby had no alternative but to squeeze village finance and peasants. Rural finances at the county, township, and village levels are entangled together in such a complex manner that they cannot be analyzed separately. Because township finances were established only in the mid-1980s, they could rarely escape the tight control of the more superior county government. Nationwide, county finance to varying degrees determines township finance. Therefore, to understand why township and village finances deteriorated after the 1994 tax reform, it is first of all necessary to examine how county finance fell victim to the reform that overhauled China’s vertical fiscal system.1 1

Thus far, some efforts have been made to explore rural government deficits. Much of the research concentrates on the increasing expenditure of rural governments as a result of the expanding rural bureaucracy; the performance evaluation system; and the provision of rural public goods and services (Bernstein and Lu¨ 2003: 84–115; Xiande Li 2003). Bernstein and Lu¨ (2003: 105–09) discussed some sources of township funds but did not elaborate on the structural causes of the shortage of township finance. Jean Oi (1999) and Christine Wong (1997a: 167–212) conducted detailed studies on rural finance prior to 1994. Their work provides an important reference for the examination of the changes effected by the 1994 reform. Oi also dealt with the sources, categories, and regulations of extra-budgetary revenues of rural governments. However, her analysis remained mainly at the county level and aimed to examine funds relating to rural industry.

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The 1994 tax reform and rural fiscal crises

The 1994 tax reform and county finance The primary goal of the reform that was implemented on January 1, 1994, was to enlarge the central government’s proportion of total state revenue by revising the rules for tax sharing. Under the previous fiscal contract system, local governments collected nearly all tax revenues (except tariffs, profits of center-owned enterprises, and a few others). These were then divided between the central and local governments according to a negotiated percentage. This system placed the financial solvency of the central government at the mercy of local governments, which often abused their discretionary power to enlarge the local share of revenue at the expense of the center’s coffers. By manipulating the way revenues were categorized, local governments often deliberately turned tax revenues into non-tax, extra-budgetary revenues that the center could not share.2 The new tax-sharing system divided taxes into three categories: national, local, and joint. Of a total of eighteen tax types – a reduction from the thirty-two pre-reform taxes – the consumption tax was exclusively earmarked for the central government. Of the joint taxes, the largest was the value added tax (VAT) – which was levied on all stages and spheres of the industrial process. This tax was to be shared between the center (75 percent) and the localities (25 percent). All the other tax types were categorized as local taxes, of which the biggest was the business tax, levied against tertiary industries (Wang and Hu 2001: 231–32).3 In 2002, both enterprise and personal income taxes were moved from the category of local to joint taxes, which were to be shared between the center and regions at a ratio of 50:50 (60:40 in 2003). During the first year of the new tax system (1994), the ratio of central to local fiscal receipts reversed from 22:78 to 55.7:44.3 (NBSC 2002: 271).4 2

3

4

Budgetary revenue and extra-budgetary revenue differ in two primary aspects. First, budgetary revenue includes all tax revenues and some non-tax revenues, whereas all extra-budgetary revenue and self-raised funds are non-tax revenues. Second, budgetary revenue is covered by the regular government budgetary management, but the other two are not. In China’s standard fiscal statistics, the terms “budgetary revenue” (yusuan shouru) and “fiscal revenue” (caizheng shouru) are usually used interchangeably. In the China Statistical Yearbook, caizheng shouru is invariably translated as “budgetary revenue.” To persuade each province to accept the new tax-sharing rules, the center made a major concession. It would compensate each province for the difference through a tax rebate if its tax revenue fell short of the 1993 baseline. Once the rebate was fixed, it was set to grow at a rate of 30 percent of the growth of each province’s total consumption tax and VAT. The central government’s budgetary revenue jumped from 95.8 to 290.7 billion yuan. (That year, 98.3 percent of total national budgetary revenue was tax.) By contrast, local government budgetary revenue dropped from 339.1 to 231.2 billion yuan. Between 1993 and 2001, tax revenues of both the central and local governments greatly increased.

The 1994 tax reform and county finance

61

In this largely zero-sum game, the increased flow of tax revenues to the central government had a massive impact on local finances. Under the old system, fiscal accumulation had actually increased at the local level. But this increase, as Stephen Herschler (1995) indicated, paralleled “an increasing need for local self-sufficiency in financing projects as the central government increasingly [shifted] fiscal responsibility from the national budget to subordinate levels of government.” The paradox of the 1994 reform was that it allowed the center to take more tax revenue from regions but did not reduce and, in some cases, even added to their expenditure. Agriculture was a case in point. The percentage of total central government expenditure on agriculture – most of which was devoted to cross-regional water conservancy and meteorological projects – dropped from 10.26 percent in 1991 to 7.12 in 2003. And the center’s share of total spending on agriculture (caizheng zhinong) was as low as 20 percent in 2003 (NBSC 2002: 269; Zhang Guifang 2005: 133–35). The tax reform immediately caused the explosive growth of local nontax revenue (NTR), thus altering the composition of local finances. NTR had long been used by local governments as a means to reduce the center’s share of local resources. The new system raised the importance of NTR to local governments, which, with reduced tax resources, now had to rely increasingly on NTR for a balanced budget. Local NTR flowed almost entirely into local government coffers, which were neither controlled nor monitored by the center. Local NTR in China, which is derived from a great many sources, is officially divided into three categories.5 The first is budgetary NTR, which consists mainly of SOE profits, administrative fees and fines (fa kuan), and subsidies from above. Central and local governments shared SOE profits, fees and fines equally. As SOE liabilities grew, earnings from administrative charges and fines increased. In any case, this category of NTR was relatively small. In 1994 and 2001, it made up merely 1.8 percent and 6.6 percent of total budgetary revenue, respectively (NBSC 2002: 266). The second category is extra-budgetary NTR (excluding self-raised funds) mostly from local government surtaxes, legitimate businesses, and paid services. This was a fast-growing category, increasing 2.7 times from 1993 to 2000. Although this category of NTR was also shared, the

5

However, the center saw a ninefold increase, contrasting with one of 2.3 times for local governments (NBSC 2002: 271). In China, NTR differs somewhat from the World Bank definition. The latter conceives of NTR as comprising all government revenue that is not a compulsory non-repayable payment for public purposes, largely limited to income from public enterprises and property (World Bank 1988: 300).

62

The 1994 tax reform and rural fiscal crises

center’s proportion was small and shrinking: it fell from 17.2 percent in 1993 to 6.5 percent in 2000 (NBSC 2002: 274). The third NTR category is “self-raised funds” (or “extra-system revenue”), all of which belong to local governments. This category consists of various fees and apportionments that are not legally based but arbitrarily imposed by local authorities, who monopolize administrative power and resources. Within this category, there are three types of fees. The first are previously free public services that local governments not only transformed into paid services but also made compulsory for selected groups of citizens and work units to purchase at rates set by local officials. Second are certain “duties” that local governments required private enterprises under their jurisdiction to perform. Enterprises were typically forced to participate in and pay for government-organized training, tests, consultation, and inspections or to submit mortgage and earnest money. The third type of “self-raised funds” are fines that local governments willfully imposed or raised, regardless of prevailing legal or administrative regulations.6 NTR in the forms of extra-budgetary revenue and self-raised funds (excluding the NTR portion of budgetary revenue) in 1996 constituted two-thirds of total local revenue (Table 3.1). Self-raised funds exceeded both budgetary and (other) extra-budgetary revenues as the biggest source (41.3 percent) of local revenue. In contrast, 89.9 percent of the central government’s revenue was budgetary revenue, mainly in the form of tax.7 The explosive growth of local NTR suggests that exorbitant 6

7

A clear-cut distinction between self-raised funds and extra-budgetary revenue is sometimes difficult to discern. Theoretically, all self-raised funds fall into the category of extra-budgetary revenue – the reason why “self-raised funds” rarely appears as a major or independent revenue category but instead as one of the items covered by “extrabudgetary revenue” in local governments’ official fiscal yearbooks. It should be noted, however, that in the fiscal yearbooks and documents of above-township governments, the term “self-raised funds” (zichou zijin) is often replaced by “extra-system revenue” (zhiduwai shouru), “other revenue” (qita shouru), or other equivocal terms – obviously an attempt by local governments to cover up their “self-raised funds,” which are usually associated with the illegal collection of money or predatory bureaucratic behavior. As the later discussion shows, to differentiate self-raised funds from (other) extra-budgetary revenues that are more legitimate or law-based is important to this study. NTR was not only the major source of the post-1994 increase in peasant burdens, but also one of the keys to understanding why the 1994 reform failed to yield sustainable pro-center effects. The center’s share of total state revenue (i.e., budgetary revenue, extra-budgetary revenue, and self-raised funds combined) in 1996 was much lower (27 percent) – even lower than the pre-1994 percentage – than its share in total budgetary revenue (49 percent). Scholars disagree about how to explain such a wide gap. Lee (2000) argued that the proportion of central revenue in the state’s total dropped from 28.99 percent in 1993 to 25.16 percent in 1998 mainly because of the center’s inter-governmental transfers, of which the tax rebate was by far the largest. Wang (1997) identified large central refunds, used to make up for the provinces’ losses under the new

The 1994 tax reform and county finance

63

Table 3.1 The composition of revenues of the central and local governments in 1996

Budgetary revenue Extra-budgetary revenue Self-raised funds or extra-system revenue TOTAL TOTAL (billion yuan)

Central government

Local governments

89.9% 10.1% 0.0% 100.0% 407.4

34.0% 24.6% 41.3% 99.9% 1101.6

Source: Calculated based on the data provided by the National Bureau of Statistics of China (Lu Hongyou 1998).

fees imposed after the 1994 reform did not just occur in the countryside but were an urban malfeasance as well. The problem, though, did not worsen to the same extent as it did in the countryside for a number of reasons, including the non-compulsory nature of most urban fees; the far bigger fee-income ratio for urbanites; and the fact that many urban fees were administrative charges levied, not on individuals but on enterprises or work units. More important, tax losses arising from the new system were unevenly borne among the various administrative levels. While suffering most from a tax drain, rural governments had few or no subordinate government levels to “exploit” fiscally. It is therefore unsurprising that they had to extract a greater amount of NTR, particularly in the third category of “self-raised funds.” The county’s fiscal loss and central subsidies The new tax system favored the central government, allowing it to collect all the consumption tax and three quarters of the VAT, the two biggest taxes. Before the reform, these two taxes had been of particular importance in local finance. In 1993, taxes on cigarettes and alcohol alone made up 10 percent of total budgetary revenues (Chung 1994). The consumption tax was even larger in some provinces, such as Guizhou system, as accountable for the gap. My findings offer a somewhat different interpretation. Although the subsidies the center was obliged to give to the provinces shrank its disposable revenue considerably, the primary cause was the change in the income structure, where NTR quickly expanded to replace tax revenue as the biggest source of national income. In 1996, total NTR exceeded tax revenues by over 100 billion yuan. In Henan province, 58 percent of total government revenue was NTR (Lu Hongyou 1998).

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where taxes on cigarettes and alcohol generated 45 percent of revenues in 1993 (Wong 1997b). The value of the VAT lies first and foremost in the abundant revenue it generates. Furthermore, VAT tax receipts are relatively stable, the tax is easy to levy, and it is not much affected by the profitability of enterprises. Of the various local taxes that help to finance county government, such as the business tax and the income tax, their relevance varies from county to county. Some are technically difficult to collect, and others involve a high levying price. For instance, many local governments used to encourage private investment and enterprise profitability by means of low tax rates or tax breaks (Bahl 1998). This strategy worked particularly well in counties whose infrastructure made it hard for them to compete with cities for investment. Thus, the standard 33 percent (income) tax rate levied on all enterprises after the 1994 reform could only serve to hurt county finance in the long run. To minimize the potential damage to the local economy, county officials, resorting to various excuses, often refunded previously paid taxes to enterprises (Zhao and Zhou 2000). Rural governments were hit hardest by the tax reform. Given the relatively poor tax resources in the countryside, revenues from the consumption tax and VAT had been much more critical to counties than to provinces and cities. After the 1994 reform, agricultural taxes immediately rose in importance. For counties with little or no industry, agricultural taxes plus other small taxes from farming became the bulk of tax revenues (Yu and Zhao 2003). According to an official survey conducted in 2000 in the counties of Xiangyang (Hubei), Yanling (Henan), and Taihe (Jiangxi), agricultural taxes were the largest source of revenue, providing 19.1 percent, 31.1 percent, and 19.2 percent of the total revenue, respectively.8 In Xiangyang, aside from agricultural taxes, the VAT (18.5 percent), and the business tax (10 percent), none of the other taxes levied provided more than 3 percent of total revenue (Zhu, Liu, and Yang 2003). The excessive reliance on agricultural taxes, which constituted merely 3.5 percent of national tax revenue and 4.2 percent of total local tax revenue (He Chengjun 2003), accounts for the fact that rural finances were in far worse shape than urban finances after the 1994 reform. In order to compensate for this fiscal drain and help local governments make up their budgetary deficit, the central government 8

By comparison, in coastal provinces, with rapid urbanization and a shrinking agricultural population, agricultural taxes constituted less than 1 percent of county revenue (Ma and Zeng 2008).

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augmented its subsidies to the localities. Central subsidies increased from 212 to 602 billion yuan between 1994 and 2001 (NBSC 1995; Wang 1997; Caizhengbu 2002: 16–17), but they failed to substantially help poor agricultural provinces, where rural deficits and peasant burdens were relatively more severe. The subsidies were instead mostly claimed by affluent regions. To understand why this occurred, the breakdown of central subsidies must be examined. In the past, tax rebates were the largest central subsidy, but they dropped from 75.5 percent (179.9 billion yuan) of subsidies in 1994 to 40.9 percent (301.4 billion yuan) in 2002 (Caizhengbu 2003: 26–27; Li, Du, and Jin 2004). Centrally provided tax rebates were not a real “subsidy” but were actually the due of the localities, as they had been distributed among the provinces largely in proportion to the contribution in tax revenues each made to the center. Thus, provinces with well developed industry and commerce received most of the rebates thanks to their strong tax base. Aside from tax rebates, all other central subsidies were defined as “transfer payments.” Earmarked grants, known as “special (zhuan xiang) transfer payments,” constituted by far the biggest category of such subsidies. The percentage of total central subsidies in this category increased from 18.29 (48.88 billion yuan) in 1996 to 30.84 (144 billion yuan) in 2000, and to 53.6 percent in 2002. These grants even exceeded tax rebates to become the largest central subsidy (Lee 2000; Caizhengbu 2001: 43; Lu¨ Wei 2003; Li, Du, and Jin 2004). The biggest grants (in 1999) were for capital construction (32 percent); policy subsidies (17 percent); and social security subsidies (16 percent) (World Bank 2002: 21). The first type of grant was usually offered for large local projects. Because most projects were undertaken by provincial or municipal governments, located in relatively industrialized regions, few of these grants were allocated to economically backward regions or reached the county level (Ma Jun 1998; Zheng Zixuan 2003). Moreover, the allocation of earmarked grants was largely a function of politics. In this regard, poor provinces were at a disadvantage because they were usually underrepresented in the central decision-making process. They were in most acute need of grants but possessed the least means to exert influence to get them (Wang 2002). Until the end of the 1990s, this uneven allocation was also related to the central government’s unbalanced development strategy, which favored the coastal provinces (Yang 1997: 81–97, 131–42). Transfer payments, by definition, move spending power from one administrative level to another. In many countries, most top-down

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transfer payments go to deficit-stricken regions in order to equalize local fiscal balances. In China, the only central transfer payment serving this purpose is the “general (yi ban xing) transfer payment.” It is given exclusively to revenue-starved underdeveloped areas and, if need be, can be used to alleviate peasant burdens. However, despite the central government’s pledge to redress regional economic inequalities, the general transfer payment remained very small. In 1996, it constituted merely 1.30 percent (3.47 billion yuan) of central subsidies (Lee 2000). In 2001, in absolute terms it grew substantially, to 13.8 billion yuan, but as a proportion of total central subsidies (601.5 billion yuan) it climbed to only 2.3 percent (Caizhengbu 2002: 16; Wang Rong 2004). Furthermore, the distribution of the general transfer payment seemed to be decided less by regional financial needs than by political considerations. In 1998, for instance, eighteen provinces qualified for the general transfer payment, but Xinjiang and Inner Mongolia obtained 597 and 576 million yuan, respectively, far more than double the average (Caizhengbu 1999: 465). Given this institutional bias, that central subsidies had “counterequalizing” effects should not be surprising (World Bank 2002: 131). In 1998, per capita central subsidies (unit: 1 yuan) were 554, 253, 116, 103, 100 in Shanghai, Tianjin, Zhejiang, Guangdong, and Jiangsu (all affluent, coastal provinces), respectively; 617, 224, 191, 171, 150 in Tibet, Qinghai, Ningxia, Xinjiang, and Inner Mongolia (all regions of ethnic minorities); and 55, 66, 55, 60, 86, 79, 82 in Sichuan, Hebei, Henan, Anhui, Hubei, Hunan, and Jiangxi (all agricultural provinces) (Lee 2000). Not only were subsidies to (non-minority) agricultural provinces relatively meager, even fewer funds filtered down to their counties. Central subsidies were usually transferred to the provincial level only. With a lack of clear-cut rules for sharing between sub-national administrative layers, many of the subsidies were actually seized by provincial governments to cover their own deficits (WNC 2002). This may also explain why central refunds to counties in agricultural regions did not increase in proportion to their greater fiscal contributions to the central government from the tax reform.9 9

In Henan, of the 30 percent of the growth of the VAT and consumption tax returned from the center, the county took a mere 10 percent (a third) while 20 percent was carved up between the province (15 percent) and the city (5 percent) (Zhu, Liu, and Yang 2003). The central tax rebate (50 percent) for the interest tax (part of the personal income tax) flowed entirely into the provincial coffers (Yuan and Yang 2002). The total tax revenues turned over by Xiangyang county (Hubei) between 1994 and 2000 increased 2.2 times, whereas the refunds from the center grew by only 34.2 percent (Zhu, Liu, and Yang 2003). In Q county (Anhui), 81 percent of its tax remittance to the center was returned in 1994. As of 2001, its remittance nearly doubled but the refunds increased by merely 11 percent (Wu Licai 2002).

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The “exploitation” of counties by the province/city It should come as no surprise that a province would withhold the central subsidies from counties. Although the new tax system reinforced the center’s fiscal self-protectionism, it also intensified the scramble for financial resources among local administrative levels. The 1994 reform was virtually a deal between the central and provincial governments, which authorized the latter to decide how to share local taxes among the province, cities, and counties. The provinces so dominate China’s local administrative hierarchy that they can manipulate the division of local taxes so that the subordinate governments end up absorbing the province’s tax losses (to the central government). After the reform, each provincial government attempted to imitate the center’s fiscal arrangement with the provinces in its own dealings with sub-province governments, which in turn followed suit by shifting revenue losses and expenditure burdens down the administrative ladder. The lower the administrative level of government, the less it retained in taxes and the greater its reliance on NTR. The link between the upward flow of local tax revenues and the deterioration of county finance can be identified from the following statistics: total local revenue in absolute terms increased 1.89 times from 1993 to 2000 (Sun Donghai 2002). In 2000, of China’s 2,074 counties (including county-level cities, i.e., xianji shi), 46 percent (950) – over 60 percent in some western provinces – ran into budget deficit and were therefore assigned to the “fiscal-subsidy” (caizheng buzhu) category (He Chengjun 2003; Li Tana 2003; JCKK 2004). County-level budget deficits rose to and hovered between 30 and 40 percent in the late 1990s (Su Min 2003). The deficits could also be attributed to more spending burdens imposed from above. A caveat is needed here, however. The tax reform should not be taken as the sole cause of the rural fiscal crisis. Rural finances also varied across regions. County finance was hardest hit in the hinterland, whereas the impact of the reform was much less devastating in coastal provinces. Yusheng Peng’s (1999) study of inter-county inequality shows that the uneven growth of the non-agricultural sector from 1985 to 1991 accounted to a large extent for the increase of the overall rural Gini coefficient. The rural Gini continued to rise in the 1990s. As is examined in Chapter 2, when the Chinese economy grew from shortage to surplus, TVEs in the hinterland lost out in the intensifying and increasingly zero-sum competition with their counterparts in coastal provinces, which continued to thrive thanks to a variety of advantages and successful developmental strategies. Many of the hinterland’s TVEs were forced

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out of business or moved to cities, thus depleting the counties’ tax base further. Even so, the extent that the financing capabilities of the county were undermined by the tax reform should not be underestimated. From 1993 to 1997, the percentage of total state revenue at the provincial level dropped from 12.8 to 10.3, whereas at the county level it plummeted from 18.5 to 11.1 (Chen and Li 2003). Between 1994 and 2000, in terms of total local fiscal revenues, the proportion of provincial government fiscal revenues skyrocketed from 16.8 percent to 28.8 percent, largely at the cost of rural finance (Han and Tang 2003).10 Fiscal surpluses at the provincial level grew to 13.4 billion yuan in 2000 (Jia and Bai 2002). After losing all the consumption tax and three quarters of the VAT (and 50 to 60 percent of enterprise and personal income taxes since 2002) to the center, the counties then had to share still more of their tax revenues, this time with the province and the city. All the taxes accruing from financial transactions, as well as the income tax of province-owned enterprises, belonged exclusively to the province (Wang Yong 2003). Although the rules and practices of local tax sharing differed from region to region, it seems that the exploitation of county finance was especially harsh in traditional agricultural provinces. An investigation conducted in 53 counties of a western province found that the provincial and municipal governments snatched tax revenues levied on high-tech and monopolistic enterprises, leaving counties the traditional sectors and agriculture, which generated much less tax revenue (Qu, Yuan, and Yang 2009). In Jiangxi, the revenues from eight taxes – namely resources, urban land use, stamp, land value added, personal income, real estate, inheritance, and stock exchange – were shared among the county, the province, and the city at the ratio 50:40:10 (Zhu, Liu, and Yang 2003). In Guangxi, until 2001 the provincial government took 30 percent of agricultural taxes and 40 percent of the taxes on resources, urban land use, and value-added land, and all the revenues from the paid use of state land collected at sub-province levels (Liu Mingda 2002).

Spending pressure on county finance In formulating fiscal policy, expenditure is considered more important than revenue (Bahl and Wallich 1995). The factors behind county budget 10

Take Sichuan as an example. Combined county-township fiscal revenues constituted 60.8 percent of the province’s total in 1994 and dropped to 45.8 percent in 2001 (He Chengjun 2003).

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imbalances in China after 1994 were not limited to the reduction in revenues alone. As the central government left local public goods provision to local governments, the result was a downward transfer of expenditure burdens. Inter-governmental expenditure assignments before the 1994 reform had already showed a top-down tendency. As West and Wong (2001: 339) found, from 1978 to the early 1990s, the central government’s share of total budgetary expenditure fell from 54 percent to less than 40 percent. From the late 1990s onward, provincial and municipal authorities made tackling the problems associated with SOE bankruptcy, rising unemployment, and urban security networks their fiscal priorities, which rendered them even more reluctant to bear the cost of rural affairs.11 As the World Bank (2002: ii, 1) reported, together, rural governments provided roughly half of total sub-national budgetary expenditure, including the bulk of vital public services; “70% of [sub-national] budgetary expenditures for education; and 55–60% of that for health.” The biggest county finance expenditure after 1994 was salaries. From 1994 to 1999, the government payroll for the entire country increased by 4.5 percent annually. The wages of local civil servants were raised five times after 1996. Over the years, the central government provided additional funds for these raises, but these were far from enough. Counties and townships received 40 percent of total local fiscal revenues but were responsible for 70 percent of the local payroll (Han and Tang 2003; Yu and Zhao 2003). According to a survey in nine counties (or county-level cities) across seven provinces (Zhejiang, Fujian, Anhui, Henan, Hubei, Yunnan, and Ningxia), the per capita salaries of county officials dramatically increased between three and twelve times from 1990 to 2003–06. Needless to say, the less revenue a county received, the greater proportion of it would be spent on salaries. In only two of the counties just listed did salary outlay make up less than half of total expenditure. The percentage of salaries was even higher in township-level expenditures. In the townships of Xianfeng county (Hubei), 82 percent of expenditure was solely for “feeding” the bureaucracy. In most of these counties, deficits increased to a dangerous degree, and spending exceeded revenues by two to four times in the early 2000s (Luo and Chen 2009). Data from China’s Ministry of Finance showed that from 1994 through 1999, total fiscal revenues at the county level increased by 51.5 percent (8.6 percent annually), but total expenditure increased 101.4 percent 11

Interviews with the Labor Bureau officials from Wuxi’s municipal government on December 28–29, 1999, and with the scholars of the Wuhan Institute of Economic Research on December 18, 2002.

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(15 percent annually) (CY 1994–99). Financial self-sufficiency at the county level, demonstrated by the ratio between revenues and expenditures, dropped from 78 percent to 50 percent between 1993 and 1997 (Chen and Li 2003). According to the World Bank (2002: iii), transfer payments in 1999 (before the TFR) already “financed fully one-third of aggregated expenditures at the county level, ranging upward to 61% for the nationally designated ‘poor’ counties.” Nonetheless, given that transfer payments were generally insufficient and that mechanisms of distribution were politically skewed, many county governments still could not balance their budgets and thus – on top of stepping up efforts to generate extra-budgetary revenue and self-raised funds – attempted to extract more from township finance.12 Land requisition and local government finance In addition to its share of the joint taxes, a county’s budgetary revenue derives mostly from the taxes on business, real estate, urban maintenance and construction, vehicle-and-ship use, stamp duty, value-added land, inheritance and donations, education, contracts, and some other areas (Ma and Zeng 2008). This list does not include a distinct “land requisition tax.” Since the late 1990s, the expansion of urban areas and the efforts of local governments to set up “development zones” (kaifa qu) have generated a huge demand for rural land. By March 2004, there were reportedly 500 to 600 development zones across China that covered 3.55 million hectares, and 90 percent of this was expropriated rural land. Official statistics reveal that, for urbanization and development purposes, China lost 6.7 million hectares of arable land between 1996 and 2003.13 12

13

This accounts for the situation the World Bank (2002: iii, 134) found in Hunan in 1999, which was also common in other agricultural provinces: despite all the subsidies from above, “township finances are basically bankrupt, and county finances are near bankruptcy.” Lynette Ong (2006) noticed in her investigation that many county governments were burdened with heavy debts, and the causes included “bloated government payrolls, losses incurred by the state grain marketing companies, arrears of social welfare payments and debts of state-owned enterprises.” Regarding land requisition, urbanization is different from “attracting investment” at the township and village levels, which is discussed in Chapter 7. The size of farmland required by urbanization is usually much larger than that for “attracting investment” and thus involves many more villages and peasants. A study shows that in some agricultural regions, to “optimize” the use of land resources, the county government merged a number of villages into a super one that functioned like a small town (Jia Xiaomin 2012). Land requisition for “attracting investment” allowed landless peasants to be hired in the private enterprises that built on their land. By contrast, the peasants who lost land in urbanization could hardly find jobs. A survey conducted in Liaoning found that only 20 percent of them could find a job soon after land requisition, whereas 80 percent could not but had to rely on land compensation fees (DQD 2012).

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In tandem, the revenue land requisition generated for local governments soared from 8.39 billion yuan in 1993 to 27.97 billion yuan in 2003 (NBSC 1997, 2000, and 2004; Chan 2006). In recent years, local governments have relied more and more on land sales to finance expenditure (Sargeson 2013; Smith 2013). It was difficult, however, to find a trace of land revenues in local tax or budgetary revenues, nor could they be found in official financial statistics. Local government revenue from land requisition is divided into two categories. The first category is tax revenues, which are split into various taxes directly or indirectly related to land, such as the use of urban land; value-added land; use of cultivated land; contracts; and the business tax on land transfer, construction, and real estate. The second category is the income from leasing land (tudi churang jin) – mostly to developers. Having grown at astonishing speed, this income usually makes up 80 percent of local governments’ total land revenues. According to an approximate estimate based on diverse sources, local government revenue from leasing (rural) land between 1999 and 2005 multiplied tenfold – from 51.4 billion to 589 billion yuan (Li Tao 2006; Tian and Ji 2006; Zhao Deyu 2009). In the Chinese countryside, there are two types of land requisition. One type is the land requisitioned by the government supposedly for public projects. Another is the land requisitioned by village and township authorities for attracting investment to serve their own interests. The second type, which is examined in Chapter 7, did not emerge as an outstanding issue until the AAT. Given its weight in local government finance and its adverse effects on the peasantry or rural “stability,” three questions concerning the first type of land requisition need to be answered: How did the government expropriate land from the peasantry? Which level of local government benefits most from it? Why did land requisition cause tensions between state and peasant? In fact, the central government has been highly alert to the dangers posed by local governments’ desperate attempts to find new sources of revenue by expropriating cultivated land. These attempts could not only imperil food security but more often than not spark peasant protests. The Land Administration Law (2004 revision) stipulates that the approving authority for land requisition is the provincial, municipal, or county government, depending on the nature of the expropriated land and the specific purpose for expropriation.14 Under all circumstances, neither the 14

In the law (Article 45), the expropriation of “basic farmland” and “land exceeding 35 hectares outside the basic farmland” must be approved by the State Council. To reduce the fiscal temptation land expropriation offers to local governments, the law

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village nor township government is allowed to scrap peasants’ land-use contracts or transform farmland for non-agricultural use. In most cases, the county’s Land Management Bureau acquired the rights to the land from peasants and then sold or converted it to commercial land for new businesses and industries (Hillman 2010; Hsing 2010; Sargeson and Yu 2010).15 County authorities often rely on the assistance of township officials and village cadres to negotiate with the peasants whose land is being targeted for expropriation (Huang Xianjin 2004; Dang Guoying 2006). As far as the clues from reports and case studies inform, provincial finance does not seem to have benefited much from (rural) land expropriation – presumably for two reasons. The provincial government is too high up in the administrative hierarchy to have a substantial stake in rural land revenue. As noted earlier, given its dominance in the subnational party-state hierarchy, it decides the allocation of local financial resources and thus does not have to compete for land revenues with its subordinate governments. Therefore, land revenues should be most relevant to municipal and county finances (Li Junde 2003; Zou and Zhang 2004). But how much revenue land requisition can add to municipal and county finances is hard to pinpoint because most land-related revenue belongs to extra-budgetary revenues whose definition, calculation, and statistics are notoriously opaque, messy, and largely arbitrary and lack effective supervision. The lower the government authority is, the more this is so. Besides, as empirical studies suggest, most of the cities and counties where land requisition has generated large amounts of government income are located in coastal provinces whose rural land, compared to the hinterland, is in far greater demand thanks to its higher commercial value (Zhao Deyu 2009). Zhou Feizhou (2007) investigated this issue in a few cities and counties in an “eastern” province and came up with some useful data that were “filtered” from official statistics and therefore could only be seen as an “approximate” estimate. His data expose the staggeringly huge importance of land revenue to local finances. In J city, the revenue from land was 500 million, 1.4 billion, and 2.1 billion yuan in 2001, 2002, and 2003, respectively. Deducting the cost of land requisitioning, the net land revenue for the city was 350 million yuan in 2003. For the three years, the municipal government’s average

15

(Article 55) requires that 30 percent of the land compensation fees “for new construction land” must be transferred to central finance. An in-depth analysis of the multiple factors affecting land conversion may be found in Yew (2011).

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annual budget revenue was 1.0 to 1.1 billion yuan. In other words, the city’s land revenue in 2003 was one-third of its total budgetary revenue. In S county, net land revenue was 595 million yuan in 2003, which amounted to roughly 43 percent of its total revenue. And again in Y county, net land revenue was 400 million yuan in 2003. As Zhou found, local governments distributed land revenue in different ways. In J city, all the land-generated revenues flowed into the municipal coffers, whereas the S county government took 70 percent, and the rest was divided among its townships and villages. Although the importance of land requisition in rural finance deserves further inquiry, existing research suggests that land requisition has made rural governments in developed regions richer but does not seem to have contributed in any significant degree to rural finances in underdeveloped regions. Even in developed regions, land revenue can hardly be expected to become a stable source of government finance and not only because land resources are limited. The amount of “land compensation fees,” which are exclusively paid by the municipal or county government, has often aroused fierce protests among peasants. According to the Land Administration Law (Article 47), these fees include land compensation fees, resettlement fees, and compensation for buildings (or “attachments”) on the land or unharvested crops (qingmiao). The land compensation fees are to be six to ten times the average output value of the three years preceding the expropriation of the cultivated land. The resettlement fees for each agricultural person to be resettled are to be four to six times the average annual output value of the three years preceding the expropriation. The standards for compensating for structures and unharvested crops on the land expropriated are to be determined by local government. The problem is that the law has not always been so strictly adhered to. The standards for land compensation diverged considerably in different regions. In some townships, fees paid were 30 times the annual income from farming the plot of land taken, plus the estimated market value of the unharvested crop. For farmland expropriated for constructing highways and railways, the standard compensation should be 50,000 yuan per mu. The confrontation between local governments and peasants stems from the former’s attempt to minimize their payments and the latter’s efforts to obtain the fees they deserve. For instance, to obtain more compensation for “attachments and unharvested crops,” many peasants rushed planting and simple building on land soon to be expropriated. Some local governments also deliberately underestimated the output value of the expropriated cultivated land. Without question, in this fiscal zero-sum game, peasants are usually outmaneuvered by the

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government (Chan 2006; Zhou Feizhou 2007).16 On the other hand, raising land compensation fees would certainly reduce the contribution of land requisition to local government finance and probably weaken the government’s incentive for it. Changing county-township fiscal relations Township finance has been inextricably linked to county finance and in some areas was indistinguishable from it. The township’s tax department is nominally a subordinate unit of township government but actually is controlled by the county’s tax bureau, which arranges its personnel and payroll and decides how much tax it should levy and share with the county. As at every sub-national administrative level, the revenues of the county and township consist of budgetary revenues, extra-budgetary revenues, and self-raised funds. County governments, themselves facing severe fiscal strain, took advantage of their control over township finance by adopting a “county-first” (bao xian jin xiang) strategy (au. int.; Liu Peiying 2002). In 2002, the Ministry of Finance, with the approval of the State Council, issued a document requiring further constraints on the fiscal independence of the township. In some provinces, such as Anhui, a reform called “the county’s management of township finance” (xiang cai xian guan), implemented in 2003, bound county-township finances even more tightly together (AC 2004).17 This new central government–endorsed policy, 16

17

Also interviews with cadres and peasants in villages of Silong (Chongqing), Luxi and Qiugang (Anhui), Xiezhuang (Shandong), Shuguang (northern Jiangsu), Yannei (Fujian), and Yinbei (southern Jiangsu) between 2005 and 2008. Village authorities could not often share government revenue from land expropriation but did take a share of land compensation fees. How to share varied from village to village. In some villages where cadres held sway, 40 percent of the compensation fees went into the village coffers. But the other 60 percent were not taken by the households concerned alone but equally shared by all the households in the village or in the “villagers’ group” – to be followed by the reallocation of the remaining collective land (au. int.). Meanwhile, the party-state policy changed in favor of peasants. In 2004, the new central decision allowed the peasants involved to take the lion’s share of the fees. It also demanded that local governments set up “social security funds” for the peasants whose land was expropriated (Zhao Deyu 2009). In some townships of Fujian, the village government, the villagers’ group, and the household whose land was requisitioned shared the compensation fees according to a 15:15:70 ratio. Interviews at Yannei on December 14, 2008. This reform contained three measures: (1) the county formulated a joint budget for itself and the townships; (2) common accounts were set up for the county and townships; and (3) all the township-level budgetary and extra-budgetary revenues were managed by the county (Ma and Zeng, 2008). As the township lost much of its utility following the AAT, the county tightened its control over township finance. In early 2009, the central leadership issued a document, demanding that xiang cai xian guan be executed nationwide (ZZG 2009).

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combined with the administrative authority of the county over the township, allowed the county to change its fiscal relations with the township in an attempt to shift its own fiscal crisis to the township. The old baogan system From an institutional perspective, county-township fiscal relations have long been more volatile and less stringent compared to those between higher levels of government. With some regional variations, until the mid-1990s, under a system called baogan (contractual fiscal balance), the county set both a baseline for tax collection each year and a ceiling for expenditure for each township under its jurisdiction. Both the baseline and the ceiling were determined on the basis of the township’s previous year’s tax revenues and expenditures. (In Hubei, the baseline was established on an average of the previous three years and revised every three years.18 ) Township tax departments were not allowed to retain any collected tax revenue but had to transfer it to the county for redistribution. After returning revenue needed to meet its pre-determined ceiling for expenditure to the township, the county usually kept the balance. To encourage each township to collect as much revenue as possible, if tax revenues exceeded the baseline, the excess would be shared between the county and the township, the ratio hinging on the level of each township’s affluence – with a higher ratio given to poorer townships.19 Once the baogan terms were settled, the township had to take full responsibility for balancing its own budget. If the township’s expenditures exceeded the ceiling, the county, in principle, would not make up the shortfall. In some regions, contingent on its own fiscal condition, the county might offer subsidies, such as funds for special projects, on an ad hoc basis. But the amount was arbitrary or negotiable or based on the TVE profits the county shared. The county might also apply for an appropriation from higher-level authorities on behalf of the township. Many agricultural townships whose tax revenues could never meet their minimum spending needs could qualify for “institutionalized subsidies” (tizhi buzhu) from the county (au. int.). Because all of a township’s tax revenues, minus its calculated expenditures, were taken by the county under the baogan system, the township usually lacked the incentive to rigorously collect taxes unless the excess 18 19

Interviews with cadres in the villages of Zhenggang, Chaigang, Shiniu, and Yingjie (Hubei) in December 2002. The discussion of how baogan came into being as a result of the 1980s fiscal reforms and why it turned the township government into a predatory institution may be found in Chapter 4.

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tax above the baseline could be retained by the township alone, or if the collection of taxes was linked to its expenditure ceiling. In fact, sharing the excess was not tempting at all to the township, simply because it would expose the township’s “tax potential” and thereby raise the baseline for the next year (or round). This “whipping-the-quicker-ox” policy acted as a disincentive for the township to increase its tax revenues. For the county, an evident flaw in this system was that the baseline for tax collection could be manipulated by townships that knew how to turn the tax game to their own advantage. To reduce the county’s share of its fiscal resources, the township would try to spend as much as possible to win a higher expenditure ceiling. It would also tend to under-collect tax revenues by turning them into extra-budgetary revenues or self-raised funds – exactly the same trick local governments played against the central government.20 The issue of undue burdens on the peasant population arose as the baogan system took shape, but it was not as severe as it was to become after the 1994 tax reform. First, the benefits that accrued to the peasants from family farming had not yet been exhausted. Although the increase in peasant incomes began to level off in the late 1980s, their livelihood had not yet deteriorated substantially. Second, before 1994, some fees did not constitute an additional burden for peasants but were rather a substitute for the tax they otherwise would have paid. Third, as long as the county enjoyed a surplus or had other stable sources of revenue (such as enterprise profits), it was not overly concerned about its share of township fiscal resources (au. int.). The change in the tax-sharing pattern In a new and different institutional context, the old baogan system quickly lost its appeal for county officials, who increasingly felt the pain caused by the 1994 reform and were forced to come to grips with the widening budgetary gap. It did not take long before they realized that the county, too, could take greater advantage of its administrative authority over the township in order to enhance the upward flow of revenue. By the end of 1995, the rural version of the tax reform had been implemented in 21,517 (46.8 percent) of China’s 45,967 townships (Zhao Yunqi 2000). It was not until later that more townships (in Anhui in 1996, in Shandong and Henan in 1998) – most of which were located in traditional agricultural regions and had long been plagued by a scarcity of tax resources and fiscal 20

Interviews with village cadres and township officials in Hubei, Jiangsu, Anhui, and Shandong in December 2002–January 2003, April 2005, July 2005, and January 2006.

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deficits – gradually adopted the same reform (Zhao and Zhou 2000; Ren Baoyu 2002; Wu and Li 2003). From the outset, county officials took liberties with the spirit and principle of the 1994 system, leading to a mixture of the old baogan and the new tax-sharing system in many areas. Under this mixed system, the key baogan principle remained unchanged: each year the taxes collected by the township had to reach the baseline set by the county, and all tax revenues had to be transferred to the county for redistribution (au. int.). Another baogan element, namely the township’s fiscal self-reliance, was not only retained but further emphasized, in the sense that fewer subsidies from the county were available. However, the new system differed from the old one in three major aspects: (1) how township-level taxes were collected, (2) how the baseline was determined, and (3) how the township’s tax revenues were shared by the county. According to my fieldwork, the methods used in different regions, while differing in their particulars, followed some general rules. Under the old baogan system, the county annually stipulated – without itemization – the total amount of tax revenue to be remitted by each township. The lack of an itemized breakdown made it hard for the county to monitor the township’s tax-levying efforts. If the township failed to accomplish its assigned task, the county just had to accept it, probably making the baseline for the next year (or round) more “reasonable” or “realistic.” The new system reduced the ability of the township to maneuver by dividing taxes into three types, each to be levied by a different agency. After the 1994 tax reform, the central tax bureau established branches at the township level, which directly collected the national and joint taxes (mainly the consumption tax and VAT). One central branch was responsible for taxation in several townships. For local taxes, there were two arrangements that did not seem to correspond to the region’s economic structures. In some counties – such as agriculture-dominated Shayang, affluent Dongbao (Jingmen, Hubei), industrialized Binhu (Wuxi, Jiangsu), and Henan, a traditional agricultural province – local taxes at the township level were collected by the township’s tax department (au. int.; Ren Baoyu 2002; Wang and He 2002). In Yutai county (Shandong), Taicang (a county-level city in Jiangsu), and in Anhui province, the township only levied agricultural taxes, leaving all other local taxes to be collected by the county tax bureau (au. int.; AC 2004). The township in some poor agricultural regions did not even have its own tax department, and here all taxes were levied and collected by the county (Yang Minghua 2003). The coexistence of three tax-collecting agencies greatly reduced the township’s capacity to extract taxes and its ability to manipulate the system for its own benefit.

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On the other hand, the county no longer determined the baseline solely on each township’s previous year’s record, but on a complex combination of factors. The county now stipulated both the amount of revenue from each tax (and each component of the agricultural tax) and a final total, for each township. The total was calculated according to the weighted average of levied taxes in a preceding number of years (usually three to five years) combined with the growth rate (ranging from 5 percent to 20 percent), which was estimated by taking into account several factors. The key factor in agricultural Hubei and Anhui, for example, was the projected growth rate of tax revenue at the national, provincial, and county levels; in industrial Wuxi (Jiangsu), it was the estimated rate of economic (mainly industrial and commercial) growth (au. int.; Wang and He 2002; Wu and Li 2003). Agricultural product, land, and contract taxes, however, remained relatively stable. In Jingmen (Hubei), the baseline for some taxes – such as the special product, business, and enterprise income taxes – was not decided by the county but by the level of government immediately higher – Jingmen city, which had jurisdiction over four counties and seventy-one townships (in 1997). Presumably, attempts to make a wider comparison could have been motivated by a desire to increase the accuracy of the estimate for each township, or by a desire of municipal authorities to get around county officials (au. int.; He Xuefeng 2001: 36). In any case, nearly all interviewees agreed that, in setting the baseline, informal personal interactions and bargaining were as important as formal rules, if not more so. The most significant change in the baogan system was in how townshiplevel tax revenues were shared. In the move toward the new tax-sharing system, all townships were divided into three types based on their historical fiscal record, the scale of their non-agricultural sectors, and an assessment of their economic prospects. The first type was those with surpluses that could be contributed to higher authorities. To this type belonged the townships with a large number of industrial enterprises and abundant non-agricultural revenue. The second type consisted of those whose revenue came mostly from agriculture and could barely maintain fiscal autarky. Of the third type were the poor agricultural townships that needed subsidies from higher levels of government to achieve fiscal balance. This categorization of townships was of little relevance to the first two changes – how township taxes were collected, and how the baseline was set – but was decisive in tax sharing. For the third type of township, those needing subsidies, the question was not the sharing of its taxes, but how much it could gain from the subsidies. A comparison of two townships in Yutai county (Shandong)

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is informative. Wangmiao, a township of the third type, could not only count nearly all its tax revenues as its own, but could obtain some of the transfer payments that had been given to the county for distribution among its townships. Zhanghuang, which was a township of the first type, benefited from a coal mine it owned. It did not qualify for any subsidies or transfer payments, but instead was required to turn over 20 percent of its business tax and 40 to 50 percent of its land tax to higher authorities.21 The new tax-sharing ratios between counties and townships varied by regions. According to the rules for standardizing tax revenues at the township level issued by the Ministry of Finance in 1995 (Caizhengbu 1995), the budgetary revenue of the township was to include revenues – to be distributed by the higher authorities – from the taxes on TVE income, butchering, town maintenance and construction, fair trade, livestock trade, the use of vehicles and ships, contracts, and others. But the rules did not specify how much of each tax was to be allocated to the township. Because of regional differences in tax resources, some local taxes might be critical to some townships but irrelevant to others. However, in practice, two new patterns for tax sharing emerged. The first pattern, as adopted by Shenji (Shayang, Hubei) and Taicang (Suzhou, Jiangsu), for instance, was to divide the total amount of tax revenue – without breaking it down – between the county and the township according to a ratio of either 3:7 or 4:6. For the county, the advantage of this method was that it placed county and township finances in the same boat, discouraging – if not preventing – the township from maneuvering. The second, more complicated pattern was for each of the different tax revenues to be assigned different ratios (Table 3.2). In both patterns, the township taxes taken by the county might not entirely have gone into county coffers but might have been shared with higher authorities. The difference between the tax-sharing patterns deserves an explanation. The two patterns became apparent in my fieldwork in townships in Hubei and Jiangsu. Townships there, particularly in Hubei, shared the problem that the formula for tax-sharing was somewhat subject to change. The changes were often the result of unpredictable factors, such as policy discontinuity at higher levels, the county’s fiscal balance, or changing local tax resources, and therefore it was difficult to ascertain whether the patterns were relatively stable. Based on my interviews and other data, the first pattern of tax-sharing seemed to occur where three 21

Interviews with four finance officials of Wangmiao and Zhanghuang (two from each township) on April 23–24, 2005.

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Table 3.2 The new pattern for sharing township taxes with different ratios

County (district)∗

Township taxes belonging entirely to the township

Township taxes shared (% for the township)

The local proportion of the VAT, business, enterprise/personal income, vehicleand-ship use, butchering, special product, contracts, resources, use of urban land, stamp, land (60%), and urban educational surtax (UES) (90%)∗∗ Agricultural products, The local proportion of the VAT special products, (6.25%),∗∗∗ town maintenance and land, and contracts construction, use of urban land (0%), (all were abolished enterprise/personal income, vehiclein 2004) and-ship use, stamp, UES, and resources (50%)

Dongbao Town maintenance (Jingmen, Hubei) and construction, and agricultural products

Binhu (Wuxi, Jiangsu)

Sources: According to the data provided by my interviewees: Deng Shikun, Liu Xiaohua, Zheng Houguo, and Gao Guodao in Zhanghe and Shenji townships (Jingmen, Hubei); Du Jianliang, finance director of Hudai township (Binhu, Wuxi, Jiangsu), and his colleagues. Also based on He Xuefeng (2001: 36–38), Wang and He (2002), and ZWBWX (2003). ∗ Both Dongbao and Binhu were rural “districts,” an administrative equivalent of the county. They were called “districts” because they were located in the suburbs. ∗∗ For taxes on resources, the use of urban land, stamp, and land, the remaining 40 percent was divided between the county and the city. For the UES, 10 percent was taken by the province. ∗∗∗ Of the 25 percent of VAT reserved for regional areas, the township, district, city, and province each took an equal share (each amounting to 6.25 percent of the total VAT).

features stood out: (1) there was more personal interaction, if not more trust or harmony, between county and township officials; (2) the county lacked sufficient personnel to monitor the township; and (3) no single tax was predominant. The second pattern of tax-sharing, aside from lacking these features, presumably had a causal connection with the budget surplus of a county and its townships. Both Dongbao and Binhu districts and their townships were located in the suburbs. Proximity to the city provided them with multiple advantages for economic development and thus a strong tax base. Dongbao was ranked first among the counties of Jingmen in terms of tax revenues and villagers’ income. Binhu’s fiscal revenues reached 2 billion yuan in 2001, placing it sixth among the counties of Jiangsu (ZWBWX 2003).

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The consequences for township finances All townships have expenditure demands. If budgetary revenue does not cover expenditure, the shortfall must be covered by extra-budgetary revenues and self-raised funds. To see how the mixed taxation system took its toll on township finance and added to the burden on peasants, it is necessary to examine its impact on the township’s budgetary revenue. This revenue consisted of local taxes (including the local portion of the VAT) and subsidies, most of which used to come from the county’s resources. Subsidies were indispensable in achieving fiscal balance in the third type of township. Data from agricultural provinces show that a direct consequence of counties’ growing budget deficits was the reduction of county subsidies to the townships. This in turn compelled townships to turn to transfer payments from the central government and the province. Because townships lacked the administrative channels to deal directly with authorities above the county level, transfer payments to the township – as with the proportion of its tax revenues transferred to higher authorities – were handled by the county, acting as a kind of broker. How the county allocated transfer payments among its townships was far from regulated or transparent. For instance, funds for compulsory education spending were part of the general transfer payment granted to the county to be shared with the township. The amount to be shared, however, was decided by the county government – and only three of its members had a say in this decision: the county party secretary, the county head, and the county’s finance director (Kennedy 2007). Because the amount of transfer payment the county could obtain for itself was small, it was not uncommon for the county to withhold it all for tackling its own deficit (au. int.; Hu Tuoping 2001; Li Changping 2005). If peasant burdens worsened only in the townships of the third type, this might be understandable. After all, these townships, with a narrow tax base and small subsidies, had no choice but to transfer the cost of administration and development to the peasants. However, the peasant burden problem worsened in townships of the first and second type as well. While its expenditure ceiling was decided by the county, the township’s minimum expenditure ought to be guaranteed. Under the new system, however, the county no longer linked its share of each township’s tax revenue closely with the township’s expenditure. As with slashed county subsidies to the townships of the third type, this de-linking meant that the county no longer played the tax-sharing game with adequate consideration for the township’s fiscal balance. Among other things, this caused the budgets of a large number of townships to switch from a surplus to a constant deficit. In 1995, of China’s 45,964 townships with

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their own budgets, only 28 percent (13,000) were of the third type. However, this category swelled to 52 percent by 1999 (Zhao Yunqi 2000; He Chengjun 2003).22 The deterioration of finance in these townships was basically a function of two changes. Aside from their loss of tax revenues, they were saddled with heavier spending. Counties tended to re-divide the sphere of responsibility so that townships ended up paying more for rural development projects and policy execution. Usually, most township revenues came to be spent on education and (officials’) salaries. The Compulsory Education Law passed in 1986 stipulates that governments should be responsible for providing compulsory education for grades 1 to 9, but does not define which level of government should bear the costs in the countryside, including salaries for teachers and expenses for maintenance of educational facilities. In reality, teachers in rural state-run (gong ban) schools had been paid by the county throughout most of the 1980s. Toward the end of that decade, counties began to shift this expense to the township, at the same time appropriating the funds intended to supplement the township’s educational budget. In the late 1990s, the county’s responsibility for financing rural schools gradually decreased, making education the largest expense for the township. A government-sponsored survey showed that by 2001–02, townships and villages paid for 78 percent of compulsory education costs, whereas the county, provincial, and the central governments paid merely 9, 11, and 2 percent, respectively. Growing fiscal pressure on township and village authorities, which directly resulted in increased peasant burdens, prompted the central government to modify the Compulsory Education Law in 2006 and to transfer greater responsibility for rural education, and thus greater spending on education, to the county. (In many agricultural regions, the county reassumed funding rural education fully or partially in 2002.) Thereafter, full-time primary school teachers were paid by the county government, but the costs for subsidizing village 22

The county could also impinge on township finance in other ways, such as redefining a township’s type, revising tax-sharing rates, and changing tax categories in its favor. In this regard, Henan set some of the worst examples. One of its counties, without authorization or consultation, re-categorized all of its nineteen townships as the first type, and thus they were obligated to contribute to county finance (Jin and Feng 2000). In most townships of this province, the bulk of budgetary revenues came from agricultural taxes. In Yanling, agricultural taxes were arbitrarily declared exclusive county taxes. As a consequence, for ten of this county’s twelve townships, annual tax revenue (mostly from the business tax, enterprise income tax, and VAT) was barely enough to pay one or two months’ salaries. One county even demanded a regular share (17 percent in 1998) of its townships’ selfraised funds (Ren Baoyu 2002). An official survey found that such impingement was not limited to Henan but was also common in other agricultural provinces, such as Hubei and Jiangxi (Jin and Feng 2000; Zhu, Liu, and Yang 2003).

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teachers and repairing school buildings were still borne by townships and villages (Kennedy 2007). Increasingly, however, spending on rural education paled in comparison with another administrative cost borne by the township, namely the maintenance of its bloated bureaucracy. Whether financed by the county or the township, educational costs have actually tended to decrease over time. To the extent that the one-child policy has been successful, the pool of applicants to schools has decreased, leading to the shutdown or merger of many rural schools and some reduction in the number of schoolteachers.23 By contrast, the ballooning number of government personnel has posed an even more grave and more enduring problem for township finance. The reasons for this, and its magnitude, are considered in Chapter 4. One study found that along with the increasing prevalence of “eating finance” (chifan caizheng), total budgetary expenditure at the township level in 1997 was 8.24 times that of 1986. This represents an average annual increase of 22.4 percent, far outpacing that of the central government (13.9 percent) and total local (15.5 percent) budgetary expenditure, as well as the increase of township budgetary revenue (18.2 percent) (Zhang Jun 2000). In some counties with large and growing budget deficits, township finance suffered from more than tax sharing and greater spending. Since county officials exercised considerable discretion in setting the tax baseline, they often stipulated an annual growth rate – in Hudai (Binhu, Wuxi) since the late 1990s it has been as high as 20 percent – without considering whether it was in fact achievable. If the township could collect more, the county would, of course, share more in absolute terms. But the county acted out of a hidden motive as well. County officials always suspected that the tax potential at the township level might not have been fully tapped, or that township officials might be playing their usual tax minimization games with the county.24 Although some townships might prevail by using their personal connections or bargaining skills, this baseline-setting game – just like the setting of tax-sharing rates – largely played into the hands of county officials, who not only controlled the township’s tax department but, more 23

24

Regional variations should be noted, however. John James Kennedy (2007) found in Shaanxi that between 2001 and 2003, rural elementary school attendance and the number of schools dropped 24 percent and 16 percent, respectively, but full-time rural elementary school teachers increased in number by 6 percent. The result was a “lower teacher-to-student ratio in rural elementary schools.” A township head in Xiangshui (Jiangsu) complained that the county leadership was open about the fact that the tax exaction task it assigned was beyond anyone’s capacity. “I have no alternative but to try every means to accomplish it. I will not stay in this place all my life anyway” (Yu Lichun 2002).

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importantly, were responsible for appointing township officials and evaluating their performance. The standard most commonly applied by the county to assess the performance of township officials consisted of three “one-vote vetoes.” A township official had to step down only if he or she failed in any of these three: birth control, social stability, and the economy. Tax collection was a major part of the third task (au. int.; Rong Jingben 1998: 152–54; Yu Lichun 2002). If the baseline was unreasonably high, it would place at least three additional burdens on the peasants. Township leaders – particularly those who were not native but transferred to a rural area from elsewhere – had to demonstrate their competence to their superiors. They did not have to curry favor with the local villagers or look to them for longterm cooperation, as they had no plan to stay if promoted. Driven by this mind-set and the “one-vote-veto” rule, township officials managed to extract as much as they could from peasants and included it in tax revenues to be shared by the county – a reversal of the earlier practice or the typical practice of homegrow officials who had various connections with the villagers.25 In townships with few non-agricultural taxes, the increased baseline had to be met by raising agricultural and butchering taxes. However, agricultural taxes were hardly a stable form of revenue “because of the wide fluctuation in agricultural production due to the [weather] and variations in peasant income due to the market” (Xiande Li 2003). Whereas the agricultural product tax was largely fixed, the special product tax was variable. In the Jingmen area, agricultural and butchering taxes made up 80 percent of each township’s revenue, on average. In Shayang county, its financial yearbook showed that in the 1990s its special product tax spiked up 18.5-fold (SCBW 1988–2001). The special product and butchering taxes constituted a peasant burden second only to santi wutong.26 The problem did not lie just in their quantitative increase each year but more seriously in their indiscriminate,

25

26

Also, for township officials, allowing the county to share more of township revenue is better than leaving any fiscal surplus for their successors. Ouyang Jing’s (2009) investigation in a township in central China exposed that incumbent officials were reluctant to leave any funds they raised behind them if they left. In the prevalent local “officialdom culture” (guanchang wenhua), so doing would be seen as a stupid act or would make them a laughing stock. In 2005, when the new leadership took office, only 76 yuan was symbolically left in the township’s coffers. Santi wutong means “three (village) deductions “and “five (township) charges,” which were the fees Chinese peasants were obligated to pay after the decollectivization and constituted the bulk of their financial burden. Santi wutong was alleviated with the TFR and eliminated with the AAT.

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equalized distribution across all households (dubbed liang shui ping tan).27

A comparison of township finances To illustrate the nationwide trend of deteriorating township finances after the 1994 reform, four townships are compared here. The townships have been selected from three provinces with considerable differences in rural economic structure and affluence. Representing the national average, or slightly above the average, Hubei is an agricultural province with a modicum of rural industry and commerce. Township revenue here came mostly from agricultural taxes. Zhejiang is an industrial province that has China’s most competitive and profitable TVEs, and industrial and commercial taxes have long generated more revenues for its townships than agricultural taxes. Anhui is China’s largest agricultural province (measured by its total revenue from agricultural taxes), with rural affluence at or below the national average. Arising from the change in the county-township tax-sharing pattern, from 1998 to 2000, the gap between disposable funds and actual expenditure in Wuli (Hubei) widened from 3.56 to 5.49 million yuan (Table 3.3). The excess of actual over-budgetary expenditure expanded from 2.94 to 4.40 million yuan. In Shenji, the same gap and excess between 1998 and 1999 rose from 2.80 and 2.33 to 4.07 and 3.08 million yuan, respectively. The negligible increase of budgetary revenue (from 2.72 to 2.79 million yuan) in Wuli stood in sharp contrast to its extra-budgetary revenues and self-raised funds, which jumped from 2.46 million yuan in 1995 to 4.88 million in 1998, and to 6.82 million in 2000 (not included in the table).28 In Hong township (Anhui), budgetary expenditure nearly doubled from 1998 to 2001, whereas budgetary revenue declined (Table 3.4). According to Christine Wong (1997a), for township finance nationwide 27

28

According to the central government’s regulations, the two taxes were to be levied only on peasants who actually earned income from slaughtering livestock or from “special product” lines, such as fruit, fishery, and tobacco, whose tax rates were 35, 32, and 150 yuan per mu, respectively, much higher than that (15 yuan) of ordinary agricultural products. Peasants who produced “special products” were usually wealthier and could afford to pay more. But the imposition of the special product tax on those who lived mainly on ordinary agricultural products was not only unfair but drove them into an impasse (Li Feng et al. 2002). The tax rate for butchering one pig was 8 to 12 yuan. In Shayang, Jingmen, some households butchered no pigs at all, but each household was nonetheless still forced to pay 39 yuan on average in 1999 (au. int.; He Xuefeng 2001: 65). Data provided by the fiscal department of Wuli township.

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Table 3.3 Fiscal balances of Wuli and Shenji townships, Jingmen, Hubei province, 1998–2000 (unit: million yuan) Wuli

Shenji

Year

1998

1999

2000

1998

1999

2000

A. Budgetary revenue B. Budgetary expenditure C. Disposable funds D. Actual expenditure Budget deficit (D–C) Actual over budgetary expenditure (D–B)

2.72 3.29 2.67 6.23 3.56 2.94

2.92 3.94 2.87 7.47 4.60 3.53

2.79 4.01 2.92 8.41 5.49 4.40

2.79 2.98 2.51 5.31 2.80 2.33

3.04 3.91 2.92 6.99 4.07 3.08

– – – –

Source: Based on data provided by the two townships’ fiscal departments.

Table 3.4 Fiscal balances of Hong township, Anhui province, 1998–2001 (unit: million yuan)

Total budgetary revenue Total budgetary expenditure Itemized expenditures: Agriculture Culture and sports Education Health Public administration Taxation Pension Others

1998

1999

2000

2001

– 1.156

– 1.325

1.413 1.994

1.210 2.237

0.008 0.028 0.550 0.019 0.136 0.065 0.255 0.095

0.008 0.044 0.680 0.023 0.146 0.076 0.348 –

0.011 0.104 1.152 0.008 0.168 0.11 0.341 0.100

0.013 0.119 1.135 0.037 0.132 0.078 0.441 0.282

Source: Calculated based on the data provided in Wu and Li (2003).

in 1993, budgetary revenue made up 73.8 percent of total revenue while the rest was extra-budgetary revenue and self-raised funds. The ratio was reversed to a significant degree thereafter. In the representative township of Jiangsu, the proportion of extra-budgetary revenue and self-raised funds in its total revenue increased from 33.71 percent (8.6 million yuan) in 1993 to 61.67 percent (12.7 million yuan) in 1999. During the same period, budgetary revenue dropped from 16.91 to 7.89 million yuan (Song Hongyuan 2004: 6–8). Wuli’s combined extrabudgetary revenue and self-raised funds were 1.79 times its budgetary revenue in 1998, and the difference widened to 2.44 times in 2000 – a convincing indication of heavier peasant burdens.

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Table 3.5 Fiscal balances of TD township, Zhejiang province, 1993–96

Subsidies from higher authorities Tax receipts TVE profits∗ Extra-budgetary revenue Self-raised funds TOTAL Total revenues (million yuan) Total expenditures (million yuan)

1993

1994

1995

1996

10.4% 43.4% 29.7% 12.6% 3.9% 100.0% 2.918 2.802

18.5% 30.5% 27.6% 10.5% 12.9% 100.0% 4.194 4.133

10.4% 17.2% 33.1% 11.3% 28.0% 100.0% 7.697 7.788

14.6% 21.4% 29.1% 14.8% 20.1% 100.0% 6.144 6.067

Source: Financial Statistics of TD Township (August 1997) (Zhang Jing 2000: 257). ∗ In the statistics compiled by most township governments, TVE profits (not the TVE tax) are included in self-raised funds (Tan Qiucheng 2002).

TVE profitability was of great relevance to township finance (Ong 2006). In the two townships in Hubei, with the decline in TVEs, the percentage of agricultural taxes rose from 67.43 and 46.8 in 1993 to 78 and 69.9 in 1999, respectively (He Xuefeng 2001: 36–37). The contribution of TVEs to the coffers of the higher authorities was one of the major factors affecting the amount of subsidies from above. For example, TVE profits in TD township (Zhejiang) more than doubled from 1993 (0.87 million yuan) to 1996 (1.79 million yuan) (Table 3.5). Accordingly, the subsidies tripled (from 0.30 million yuan to 0.90 million yuan), contrary to the trend in agricultural provinces. On the other hand, if TVE profits could be a major source of township revenue, the township would most likely be able to balance its budget without having to extract more funds from peasants. Nonetheless, even in the case of TD township, increased TVE profits did not reduce peasant burdens in absolute terms, although wealthier peasants might have found the burden relatively bearable. Between 1993 and 1996, the township’s expenditure increased 2.2 times, but tax receipts grew by only 4 percent. By contrast, extra-budgetary and self-raised funds, the sole supplements to the township finance except for TVE profits, increased 2.5 and 10.8 times, respectively. The revenue losses transferred to villages The financial dependence of the village on the township is rooted in their working relationship. The township government bears the brunt of responsibility for policy implementation and other state functions, whereas the legal status of the village under the reform regime is as

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a self-governing unit that should thereby function as an autonomous organization. Village leaders, by definition, do not belong to the category of government officials who are paid from state finances. In reality, partly as a legacy of the totalitarian past and partly because of the vaguely worded legal clause and practical needs of rural officials,29 the township has invariably treated the village as its subordinate unit and tasked village government with various administrative functions. As noted in Chapter 2, the authority of the township is transmitted to the village typically through party organizational, rather than through state-administrative, channels. The township is the immediate “boss” of the village in the rigid party-state hierarchy and maintains exclusive supervision of village affairs. The top-down party organizational channel has become especially critical to village governance since the late 1980s, as village elections have gained greater credibility and produced more village leaders who are non-party people and have their own power base and mandate. However, the township party committee’s control over village (party) cadres has never worked effectively without recourse to financial mechanisms. Since the implementation of rural reform, this organizational control has been on the decline, and financial control has thereby become even more important. Until the TFR, “village deduction,” self-raised funds, joint production fees,30 labor services, and fines constituted the bulk of normal village revenue. Although village leaders levied these fees directly, they had no real authority to decide the amount of each fee, but had to follow a quota formulated by the township. Even worse for village finance, collected fees had to be transferred in their entirety to the township for redistribution – which was similar to county-township fiscal relations. Village deductions should have been kept exclusively by the village, with other fees shared by the township; in reality, however, the proportion of all fees, including the village deduction, to be retained by the village was at the discretion of township officials, whose decisions were based on their own fiscal needs or on what they perceived as the village’s needs, rather than on how much tax the village government levied and remitted. In some townships in Anhui, an agricultural province, one-third of the village deduction was 29

30

The 1998 “Organic Law of the Villagers Committees” (Article 4) stipulated: “The villagers committees, on their part, shall assist the said people’s government in its work.” This clause was often construed by rural officials as an obligation for village cadres to fulfill state assignments. “Village deduction” was usually used for the village’s public projects and welfare and administrative expenses. Both self-raised funds and joint production fees were spent more specifically on capital construction on farmland and roads, fighting droughts and floods, development of new crops, prevention of epidemics, and on domestic animals and poultry pestilence, and so on.

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taken by the township – not to mention the other fees it was entitled to take (Sun Ziduo 2001). Because the township was held responsible for balancing the finance of the village, the village did not enjoy discretionary power over its own funds. To eradicate brazen corruption among village cadres, village finance was entrusted to the township government in the late 1990s – a system that was labeled as cun zhang xiang guan (Liao Jinying 1993; Zhang Yuanhong 1997). Any spending of village funds without township approval was forbidden. Before this, a village would request appropriation if it exhausted its administrative budget. In a bid to control village deficits, however, township officials were keen to tighten the use of village funds. Some expenditure, such as efforts to attract investment, was seen as reasonable or justifiable in the eyes of village leaders but lacked a legitimate basis for reimbursement. At the end of the 1990s, the cun-zhang-xiang-guan system was changed to cun zhang xiang shen (the village decides the use of village funds but the township checks up). This change was prompted by the widely reported misappropriation of village funds by the township, as well as by the outcry from village cadres, who blasted the system for violating the principle of “villagers’ autonomy” (Cheng Tongshun 2000: 212–14). Although cun zhang xiang shen returned partial power to village leaders, it still imposed constraints on their otherwise arbitrary allocation of village funds (He Xuefeng 2001: 20–33). As a rule, if township finance fared well, the village could share more of its own financial resources. If not, the village would be its immediate victim.31 The aggravated fiscal squeezing of villages by townships before the TFR was apparent in three aspects: the decrease of subsidies; the increase in remittance; and top-down shifting of spending responsibilities. Table 3.6 presents a comparison of three townships and villages: D village at A township (type I) (Xiangcheng, Suzhou, Jiangsu), E village at 31

The discussion is also based on my interviews with the treasurer of Chaigang village and a cadre at Yingjie village (Hubei), and two leading cadres of Yinbei (Jiangsu) – all in December 2002. Both cun-zhang-xiang-guan and cun zhang xiang shen mean that village cadres should provide receipts of expenses to the township government for scrutiny and reimbursement. A study reveals that, in some regions where the government relied heavily on village cadres, and for whatever reason did not want to offend them, this system was largely a formality. In the same manner as it turned a blind eye to village cadres’ extortion of peasants, the government either allowed cadres to take all the village’s collective funds or approved their reimbursements without checking. It was common for village cadres to use fake receipts to apply for reimbursement (Guo Junxia 2010). Some townships coveted village funds by making the procedure of reimbursement cumbersome or approving only small expenses. Other townships turned this system into an instrument to control village authorities. Each case discouraged village cadres from spending for any purpose (Ding Jianjun 2008).

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Table 3.6a The change in A township’s finance and its impact on D village 1992 1993

1994 1995 1996 1997 1998 1999 2000

2001

Budgetary revenue 669 1691 905 730 815 885 819 789 1073 1517 (10,000 yuan) 57 59 67 61 62 61 69 67 77 Budgetary spending/ 22 budgetary revenue %∗ D village Subsidies/revenue % 0 0 0.7 1.5 0.6 0 0 0.3 2.7 2.3 3.6 2.1 2.4 2.5 8.5 7.5 14.4 17.4 11.8 17.8 Remittance/ spending %∗∗ Source: Formulated and calculated according to the data provided in Liao Hongle (2004); Zhang Zhaoxin (2004: 127); Ma Yongliang (2004: 157–61); and Cao Liqun (2004). ∗ Its extra-budgetary expenditure was 37.39 percent and 40.25 percent of the total expenditure in 1995 and 2001, respectively. ∗∗ The “remittance” was counted as one of the village’s expenditures.

B township (type II) (Linzhang county, Hebei), and F village at C township (type III) (Bin county, Heilongjiang). These townships and villages were selected because their fiscal statistics had been kept relatively well. They were also fairly representative of the different categories in terms of township-village finances. D village, located in prosperous southern Jiangsu, was a rich village with a considerable amount of commerce and industry. Villagers’ income here was much higher than the average nationwide, and only 6.79 percent was earned from farming in 2000. In comparison, the level of income at E and F villages approximated to the average. Located in traditional agricultural regions, the two villages had few industrial enterprises or collective assets, and 52 percent and 72 percent of villagers’ income was agriculture-related, respectively. This comparison does not offer a clear-cut picture but – with an analysis of some complicating variables and additional information – suggests the extent of the harm the 1994 tax system did to township finance, which immediately affected village finance. First, budgetary revenue collected at the township level fluctuated drastically – an indication of the instability and vulnerability of its financial sources in the aftermath of the change in tax-sharing rules. Supporting the findings presented earlier, budgetary revenue in absolute terms fell below the 1993 level at both A and B townships during all or most of the years examined. The fiscal condition of a township is most precisely illustrated by the ratio of budgetary spending to budgetary revenue. At A township, its spending took 22 percent of its budgetary revenue in 1992 and the percentage rose to 77 in 2001 (Table 3.6a).

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Table 3.6b The change in B township’s finance and its impact on E village 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Budgetary revenue (10,000 yuan) Budgetary spending/ budgetary revenue %∗ E village Subsidies/revenue % Remittance/ spending % ∗

52

65

18

24

24

149

223

55

78

38

99

116

100

89

102

97

103

100

99

96

– –

0.6 – 36.9 –

2.6 – 40.5 –

– –

0 – 46.3 –

0 0 47.3 –

Its extra-budgetary expenditure was 91.35 percent and 90.21 percent of the total expenditure in 1995 and 2001, respectively.

Table 3.6c The change in C township’s finance and its impact on F village∗ 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Budgetary revenue (10,000 yuan) Budgetary spending/ budgetary revenue%∗∗ F village Subsidies/ revenue % ∗∗∗ Remittance/spending %

112

103

162

253

286

348

456

500

533

–

151

104

263

185

217

208

185

189

256

–

0

0

0

0

14

0

–

57.3

61.2

37.3

37.3

– –

0

–

33.1 –

37.0

37.9 –

∗

C township was merged with B.Z. township in 2001. Its extra-budgetary expenditure was 21.70 percent and 13.01 percent of the total expenditure in 1995 and 2001, respectively. ∗∗∗ The conjecture on the unusual figure for 1999 was that its percentage of borrowing in terms of total expenditure usually remained under 20 but suddenly rose to 28.1 in 1998 and 38.9 in 1999, far exceeding 20 percent, which was generally regarded as the bottom-line of fiscal security (Zhang and Song 2004: 92). ∗∗

Although the ratio remained steady on paper at B township (Table 3.6b), its extra-budgetary expenditure was staggeringly large in terms of total spending, which stood in striking contrast with A township and C township (Table 3.6c) whose extra-budgetary expenditure was below or far below half its budgetary spending. The percentage suggests that budgetary revenue at B township was barely enough for even 10 percent of its total expenditure. Thanks to transfer payments and subsidies, C township’s budgetary revenue increased by a large margin. However,

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its finance did not improve but worsened because of heavier spending burdens. C township’s budgetary revenue had never met its budgetary spending, and the gap widened from 1.04 times in 1993 to 2.56 times in 2000. The deterioration of township finance resulted not only in the suspension of subsidies to villages but also in township officials’ stepped-up efforts to collect extra-budgetary revenue by demanding more remittance from villages. Remittance is a more accurate indicator of township-village fiscal relations than are subsidies. Some subsidies originated from government authorities at levels above the township, whereas remittance flowed mostly, if not exclusively, into township coffers. Because of C township’s constant deficits, F village did not receive any subsidies except for the apparently unusual year of 1999. Meanwhile, the percentage of remittance as part of F village’s entire spending rose from 33.1 (1993) to 37.9 percent (2000). The subsidies E village obtained from B township made up 2.6 percent of its total revenue before 1994 and dropped to zero thereafter. In 1992, 40.5 percent of its expenditures was as remittance to the township, and the percentage climbed to 47.3 by 2000. A township certainly increased subsidies to D village, but the amount paled beside D village’s remittance, which soared from 2.1 percent of its spending to 17.8 percent. According to the scholar conducting the survey, for the villages without enterprise profits or non-agricultural revenues, the only feasible way to balance the budget was to extract money from the peasants. In E village, for instance, the fees levied on the villagers or the “self-raised funds” constituted 72.3 percent of total village revenue in 2000, compared to 40.6 percent in 1992 (Liao Hongle 2004: 39). Conclusion The rural fiscal crisis and related peasant burdens, for the most part, were a function of the 1994 tax reform in which the central government revised tax-sharing rules to boost its own revenue. On the one hand, the efforts of local governments to thwart the central government’s goal resulted in the explosive growth of NTR. On the other, a fierce scramble for financial resources prompted local governments to shift fiscal losses and expenditure responsibilities down the administrative ladder. As a matter of course, the rural fiscal crisis does not seem to have been intentionally designed, anticipated, or desired by the central decision makers but resulted from some of the paradoxical effects of the 1994 tax system. The blame for this crisis should not be placed solely on the central government. The leadership in Beijing expected that raised tax

Conclusion

93

revenue would augment their fiscal capacity to assist poor regions mainly through transfer payments. Nonetheless, their well-intentioned policies produced unintended consequences. The center certainly substantially increased its transfer payments to localities. But as a function of the institutionalized bias against less developed regions and lower administrative levels embedded in the 1994 system, most transfer payments flowed into developed regions, and the rest were mostly taken by the provincial government. Only a small proportion trickled down to traditional agricultural provinces that most needed the central government’s funds to alleviate their fiscal shortage. The ways in which officials at each governmental level exploited the 1994 institutional arrangement to their own advantage must also be taken into account. In the era of reform, China’s policy-making structure has swung back and forth between decentralization and recentralization. At the end of the 1980s, the central leadership found that China’s tax system, which had been structured in favor of the regions during decentralizing reform, was causing a huge deficit for the central government and undermining its fiscal capacity to a dangerous degree. Thus, the pendulum swung back to recentralization in the early 1990s, with the revamped tax system intended as a major step in that direction. However, the authority of the central leadership over the regions, and its policy-making autonomy, had already been weakened by decentralization. Although its nomenklatura power remained effective, the central leadership had to be responsive to provincial leaders, its most important “constituents.” The changing central-provincial relationship could be seen in the visits Vice Premier Zhu Rongji, representing the Politburo, paid to most provinces in an attempt to win their consent for the tax reform – a phenomenon unimaginable under Mao. As evidence shows, the 1994 tax reform was actually a deal between the central and provincial governments. The central government’s concessions and its perceived “weakness” in the tax-sharing bargaining sent a message to provincial officials that it would be legitimate, if not implicitly encouraged, if they gave top priority to ensuring a fiscal surplus at the provincial level. And in due course, provincial officials changed the rules for sharing local taxes in their favor. However, the assumption of no punishment is not sufficient to explain why provincial officials – as well as municipal and county ones – would transfer a potential fiscal crisis to their subordinates. Would not regional leaders be held responsible for the socioeconomic development of the whole region under their jurisdiction? If townships and villages were bogged down in fiscal crises, surely it would be the relevant county head, mayor, or governor who would be punished.

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The government agenda is invariably influenced by competing preferences. In China today, no local official can afford to entirely ignore the voices of local citizens. However, China’s nomenklatura puts pressure on officials to be more responsive to their superiors, who control their political careers. Local officials must perform well to move up in the party-state hierarchy, and the speed of local socioeconomic development usually ranks as the best indicator of an official’s performance. A good performance, however, must be guaranteed by the abundance of funds. The 1994 system cut the flow of tax revenues to the region, but left these performance criteria unrevised. The pressure to perform under tighter fiscal constraints drove desperate local officials to balance their budgets at the cost of their subordinates – not only in sharing financial resources and the center’s transfer payments but also in dividing expenditure responsibilities. Although rural fiscal crises in their areas might drag down the overall performance evaluation of local officials, these were seen as less important than other factors. This same rationale applies to township officials as well, particularly those in agricultural provinces, leading to “selective policy implementation” (O’Brien and Li 1999). Knowing how to distinguish between “hard” and “soft” targets, these officials “invariably place popular policies in the soft, nonbinding category and regard birth control and revenue collection as hard targets that must be met.” Given its relatively low risk, extracting money from villages and peasants, whose interests were least represented in the governmental process, conferred maximum benefits on township officials. As indicated in later chapters, the further deterioration of township finance in the aftermath of the TFR and the AAT drove the township government to be even more predatory, leading to the worsening of fiscal and debt crisis at the village level and the shattering of village cadres’ incentive structure.

4

The township in the era of reform

In the structure of political authority in China’s rural society, the township is the pivotal layer that serves as a bridge connecting rural communities and the communist regime.1 The marketization of the rural economy and the two landmark reforms of the past decade, namely the TFR and the AAT, have generated both positive and negative effects for the township and have somehow neutralized each other to place this administrative level in a structural dilemma. Communist Party rule in the Chinese countryside used to be maintained first and foremost through vertical party organizational channels. As is indicated in later chapters, the decline of the authority and capacity to govern of village party branches (or committees) and rural party organizations at large has tended to demolish the foundation of this organizational control, compelling the reform regime to turn increasingly to institutional means or the “rational-legal” system for rural governance. As a result, the functions of rural party organizations either have vanished or have been taken over by state apparatus and “rule by law.” The transition from party (organizational) control to state (institutional) control in rural society during the marketization process has thrust the status of the township into the limelight. 1

The administrative layer below the county is usually referred to as the “township” (xiangzhen), which is used without differentiation in most of China’s publications and Western literature. Actually, xiangzhen is an administrative level but is made up of two different types, namely xiang (township) and zhen (town). They differ in four aspects: (1) zhen has a larger population; (2) zhen is more prosperous and usually the hub of the regional economy, industries, and commerce; (3) zhen is also the political and cultural center of the region where important party-state apparatuses, schools, hospitals, and cultural facilities are located; and (4) the proportion of non-agricultural population in zhen is larger than agricultural population, whereas it is the reverse in xiang (Zhang and He 1998: 70–73; Zhong 2003: 47–93; Kennedy 2007). Since the 1950s, with socioeconomic development, the general trend has been the increase of zhen and decrease of xiang in numbers. On the eve of communization in 1958, China had 95,843 xiang and 3,672 zhen (Wang Kan 2008). In 1985 when the “township” was resurrected, zhen constituted 11 percent of xiangzhen and its percentage rose to 37 in 1995. By 2003, the total number of xiangzhen dropped to 38,028 and zhen swelled to 52 percent (NBSC 2004; Zhao Shukai 2008). As explored in Chapter 10, the differences between xiang and zhen are expected to be one of the key factors in future township reform.

95

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The township in the era of reform

In theory, rural villages are not considered part of China’s administrative structure, but in practice, they are treated as the township government’s immediate subordinate units. Villages are usually not allowed to bypass the township to appeal directly to higher-level authorities, nor are higher-level authorities encouraged to interfere directly in village affairs. It is therefore the exclusive responsibility of the township to manage village cadres, oversee village affairs, and take care of peasant life on behalf of the regime (au. int.).2 As such, the greater state role in managing rural communities means, by definition, the greater importance of the township. On the other hand, in a rapidly growing number of villages, entrepreneur cadres have emerged as new ruling elites whose authority over fellow villagers stems more from their private economic capacity than from political appointments. This changed base of authority has considerably boosted these ruling elites’ independence, thus making the township government’s political control more difficult and, for that matter, more necessary. However, an array of “pro-peasant” reforms over the past decade, which culminated in the AAT, has given rise to a counter-trend as well. This chapter examines the evolving nature, status, functions, and roles of the township as a formal governmental layer under the communist regime and explores the extent to which recent rural reforms, particularly the TFR and the AAT, have reshaped the township’s administrative functions and financial capacity. It argues that marketization and privatization, coupled with sweeping social transformation, have rendered obsolete the basic functions for which the township was initially installed 2

Because the party-state relies on township officials to manage village cadres, its control over those officials is critical. In the scholarly discussion on central-local relations under the reform regime, the extent to which the central state could control local officials is controversial (Baum and Shevchenko 1999). Although scholars mostly agreed that fiscal and administrative decentralization in the 1980s undermined the central authority over regions, some thought otherwise. Dorothy Solinger (1996) indicated that decentralization should not be understood as a set of uniform policies. While different territorial units benefited – or suffered – from decentralization to different degrees, the center remained dominant and played a decisive role in redistribution and regulation. Pierre Landry (2008) argues that the party’s control over the appointment and promotion of local officials has ¨ made the center’s authority and control effective. Christian Gobel (2010: 91–92) thinks that in the past decade, as the management or supervision of rural finances moved up in the bureaucratic hierarchy, local-level discretion in policy making and implementation was more tightly constrained by the center. However, Linda Chelan Li’s (2007) investigation of the TFR process and its consequences revealed that the central supervision and control of township officials was not an easy task at all. I agree with Li in that township officials have always had and pursued their own interests in rural reforms. They, as policy implementers, know well how to turn reforms to their own advantage. In recent years, despite the increased transfer payments and programs of “building a new socialist countryside,” the AAT-effected reduction of their responsibilities has allowed township officials to acquire greater autonomy.

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97

and later resurrected. The conflicting trends with respect to the role and status of the township have resulted in a paradox. While the importance of the township has grown in theoretical terms, the AAT, among others, has taken away substantive tasks from its routine agenda, leaving it with almost nothing to do. As another crushing blow to its survival, the TFR and the AAT deprived the township of most of its fiscal revenues, pushing township finances to bankruptcy in many traditional agricultural provinces. From the commune to the township How the commune reverted to the status of a township in the early 1980s caused long-lasting effects not only on the role of the township but on China’s rural politics in the reform era at large. The HRS returned most of a village’s agriculture to family farming but transferred the ownership of (collective) agricultural land from the township to the village. Thus, the initial rural reform took one of the commune’s chief functions off the agenda of township government and considerably narrowed its purview. While the township was relieved of its responsibilities for peasant production activities and the micromanagement of agricultural land, other administrative functions of the commune not only were handed down to the township but grew onerous and more specialized. These included local socioeconomic development, education, public security, public health, birth control, and civil affairs – to list a few of the most important. These tasks were previously carried out by three levels of administration but were now concentrated at the township level. Even if the township government could force village cadres to share its workload, they proved far weaker – compared to brigade and production team leaders – in performing state functions than in managing village affairs. Meanwhile, with the disappearance of some of their major responsibilities after decollectivization – such as organizing collective production, calculating work points, and mobilizing peasants for political campaigns – large numbers of cadre posts in villages lost their worth or relevance and were scrapped. Most of the victims were arguably brigade cadres who had had the privilege of not doing physical agricultural work under the commune system and thus vehemently opposed decollectivization. Many production team leaders also chose to quit because they found greater income advantages in “resuming full-time farming activities” under the HRS (Latham 1985: 165–67). The combination of decommunization and decollectivization invalidated some old functions but also created some new ones for both township and village authorities. When leasing land from the collective (village

98

The township in the era of reform

government), individual peasant families were obligated to pay agricultural taxes and various fees (or santi wutong) as well as to sell grain to the state according to mandatory production quotas. It did not take long before these new issues grew to dominate the agenda of township authorities. At the same time, the township government took on the main responsibility for the management of collective enterprises. Contrasting sharply with the decollectivization of agricultural production was a “growing emphasis on building up more cooperative or collectivized organizational forms, whether in specialized production, small-scale manufacturing, commercial activities, or in agricultural infrastructure investments” (Hartford 1985: 53). Rather than being dissolved, collective-owned rural industries were centralized to an even higher degree. The industrial collectivization that proceeded somehow paradoxically in tandem with agricultural decollectivization in the 1980s could be accounted for by the incentives of the two principal actors in rural reforms, namely the central reformers and rural officials. Deng Xiaoping and his reform-minded colleagues found themselves in a constant ideological dilemma (Chen 1995). It impelled them to try to balance the alleged “innocuous” political influence of family farming – a reform that was frowned on by conservative leaders as an attempt to lead China back to private ownership or capitalism – with an attempt to strengthen and centralize collective ownership to compensate for the adverse fiscal flow (in favor of the village but at the cost of the township) arising from decollectivization. Doing this allowed rural governments to take advantage of newly granted rights over revenues (for township government) (Oi 1999). Thus, in the wake of decommunization, all formerly commune- and brigade-owned enterprises, commerce, and technical services were reorganized into an all-township integrated corporation that comprised both vertically integrated companies that “coordinate within one enterprise all aspects of production, processing, and marketing of a single product” and horizontally integrated companies that coordinated a township’s agricultural, industrial, and commercial activities (Shue 1984). As Vivienne Shue found in Guanghan, Sichuan, the operations of all the specialized companies in the township corporation were “coordinated by a corporate management committee at the township level.” The administrative restructuring that went hand in hand with economic reorganization resulted in multiplied administrative units. Reversion from the commune to the township was not merely a change in name, signboard, or stamp. Nor were commune officials simply reappointed as township officials. Commune authorities nominally consisted of the commune party committee and the commune management committee.

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Under the “unified party leadership,” all political, economic, social, and administrative functions merged to be concentrated in the hands of the party committee, which almost totally “swallowed up” the management committee. On the eve of disbanding the commune, structural reform was already underway to improve the efficiency of economic management. Thanks to the new policy that intended to separate economic authority from political authority (zheng she fen kai), the management committee was more or less disentangled from the party committee to perform distinct economic functions. The separation of the management committee from the party committee, and the subsequent decommunization, coincided with the nationwide party-government separation – a deliberate effort to restore pre1966 institutional arrangements. The separation was implemented from the county level and thereafter proceeded swiftly up the administrative ladder. At each level, with the abolition of the revolutionary committee, the government and the people’s congress were not only resurrected but also assumed a more substantial role than they did before the Cultural Revolution. Against this background, the commune party committee and the commune management committee were changed to the township party committee and the township government, respectively. As a “normal” or formal governmental layer, the township was constitutionally required to install three parallel organs of political power; thus the township people’s congress was also created. In theory, the township congress was the successor to the “commune members’ congress,” which was designated as the commune’s “highest organ of power” and authorized to elect commune leaders. Just like the congress at each administrative level (Chen 1999; Xia 2007), the commune members’ congress never worked, not even as a rubber-stamp body. In any case, the conversion from the commune to the township actually broke one institution into three. Restructured and expanded township government One of the distinct features of the township under the reform regime was that its bureaucracy ballooned out of proportion – but not entirely because of its growing importance. Indeed, nearly every administrative reform that aimed to curtail township institutions and personnel became a drawn-out tug-of-war between the central reformers and rural bureaucrats. This swollen bureaucracy was accountable, in one way or another, for nearly all the major maladies at the township and village levels, ranging from peasant burdens to the financial crisis. To unravel the puzzle of how the expansion of township bureaucracy spiraled out of control and

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why all the central reformers’ harsh measures to control it failed, it is not adequate to examine the responsibilities and functions the reform regime assigned to the township. One must also take into account the dynamic of China’s post-Mao institutional expansion at large. In general, compared to the commune, the township’s burden of administration increased. Decollectivization in essence meant a change in the unit of accounting, or more precisely a transfer of rights from the collective to the individual producer with regard to the income from agricultural production. Throughout the 1980s, however, marketization of the rural economy and privatization of agricultural production did not keep pace. Both township and village authorities tried desperately to capitalize on the redistributive power they still retained to allocate economic resources. Equally important, peasants, as de jure independent producers, expected the government to ease their fear of unfamiliar market mechanisms and income uncertainty. In a period of swift and radical structural transformation in the countryside, the implementation of rural reforms fell ultimately on the shoulders of the lowest level of government. Understandably, to fulfill its multiple roles and responsibilities, the township government was compelled to install more specialized administrative units and recruit more personnel. Table 4.1 illustrates the massive expansion of the township (commune) bureaucracy at Jiangnan following the launch of Deng’s reform at the end of the 1970s. During most of the Cultural Revolution, the highest organ of power at the Jiangnan commune consisted of only four units and approximately fifteen personnel whose domain of responsibility had broad and vague boundaries and seemed pretty empty. This institutional arrangement corroborates the earlier cited observation, namely that under the three-level administration, authority at the commune level was somewhat constrained and substantial power was mostly delegated to the brigade and production team. Before being disbanded, the commune’s number of units jumped to seventeen, but the number of personnel increased only slightly – presumably due to many joint, crossdepartmental appointments. Two mutually contradicting trends determined a commune’s size in terms of personnel in the early years of rural reform. As authority at the levels of the brigade and production team weakened with the disbanding of collective production, some of their remaining workload moved upward. In addition, the commune’s previously generalized functions had to be specialized to cope with a variety of new issues and tasks arising from decollectivization. However, the central reformers obviously did not regard the commune’s new functions as important enough to deserve personnel recruitment. Instead, rural cadres fell prey to the government

Table 4.1 The change in the size of Jiangnan township government (Fengman district, Jilin city, Jilin province)∗ People’s commune (1968–77) personnel: 15∗∗ Four teams (zu) General affairs Political work Production Politics and law (zhengfa)

People’s commune (1978–83) personnel 20–25∗∗

Township government (from 1983 to 1993) personnel: 168

Township government (after 1994) personnel: 45∗∗∗

17 offices or teams General affairs Finance Public security Agriculture

16 offices General affairs Civil affairs Finance Judicial affairs

16 bureaus Horticulture Land Environmental protection Public health

10 offices or bureaus General affairs Civil affairs, letters, and visits Birth control Finance and auditing

Civil affairs Grain and oil purchase

Agriculture Industry

Infrastructure Statistics

Livestock Culture, education, and public health Transportation Forestry Science and technology Water and electricity Agricultural machinery Broadcast station School graduates (zhiqing) Vegetables Production

Water conservation Electricity

Auditing Collective enterprises

Land Infrastructure, public health, and environment Judicial affairs Education

Agricultural machinery Veterinary clinic Grain and oil purchase Broadcast station Culture Education Adult education Vegetables

Economic diversification Comprehensive harnessing Housing affairs Labor and services Letters and visits Birth control Forestry Transportation

Agriculture Enterprise management

Source: Formulated according to data and information provided by Zhao Chenxin (1998: 83–92). ∗ Because the township government and party committee were fused or largely overlapped, these agencies, offices, bureaus, and personnel belonged to either or both of the two institutions and thus represented the entire township bureaucracy. ∗∗ Because the original data were missing, the number here was estimated with reference to other communes or townships of a similar size (Fu Guangming 2001; Wu Licai 2001; Sun and Wen 2007). ∗∗∗ In 1994, a major administrative reform was launched to streamline the township bureaucracy.

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The township in the era of reform

endeavor to cut administrative costs. As Richard Latham (1985) noted, the Third Plenum reformers wanted more leading rural cadres to return to agricultural production under the HRS, thereby making it “increasingly difficult for leading groups to justify the maintenance of large staff of non-production personnel.”3 Nonetheless, the situation switched abruptly soon after. In its first decade, the administrative units of the Jiangnan government almost doubled and personnel numbers grew by a factor of ten. The origin of this apparently unconstrained inflation of township bureaucracy can be traced back to administrative restructuring in the wake of the conclusion of the Cultural Revolution. The sweeping “restore-things-to-order” (boluan fanzheng) campaign, which followed Deng’s rehabilitation, was characterized by an explosive growth of party-state apparatus. Not only were the political institutions that had been dissolved in the Cultural Revolution resurrected; many more departments were created to oversee the unfolding economic reforms. Local bureaucracies taken as a whole reached their largest post1949 size in 1981, by which time the numbers of party-state apparatuses at the provincial, municipal, county, and township levels on average increased to 80–90, 60–70, 50–60, and 20, respectively. Many of the new institutions, agencies, and offices were often redundant with overlapping or frivolous functions. Once in place, they acquired a dynamic of self-expansion to survive and prove their worth. In 1982 and 1987, the central leadership tried and failed twice to turn back the tide of local bureaucratic growth (Xie Qingkui 1998: 13). Overstaffing in the bureaucracy under China’s reform regime was, of course, one of the most intractable and enduring maladies that plagued every level of government – from the center to the township. The transition toward a market economy should have scaled back the party-state’s role in the economy and society, but the size of government did not diminish accordingly; instead, it grew a great deal. As an official source disclosed, by early 2006 the entire bureaucracy in China consisted of 6 million “civil servants” on the regular state payroll and 63 million bianzhiwai (“outside formal quotas”) administrative and subsidiary staff who were paid with extra-budgetary funds. The ratio of salaried officials to common people having no rank was 1:18, which is 3.7 times that of the mid-1980s and 40 times that of the KMT regime in the late 1940s. Needless to say, bureaucratic overstaffing did not result from the state’s administrative needs but was associated with the corruption, 3

In Shifang commune (Wenxian, Gansu), 178 commune and brigade positions were eliminated and cadre subsidies dropped by nearly 85 percent.

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103

cronyism, and nepotism that notoriously went hand in hand with market reform.4 Additional circumstances fueled the expansion of the township government both as the lowest administrative body and as part of rural government. Indeed, compared to the commune, the township was justified in hiring more personnel for its new initiatives. The reorganization of the brigade and production team into “autonomous” units pushed the township into a position to deal with the peasants face-to-face on behalf of the party-state. This new obligation alone actually more than canceled out the relief the township found from decollectivization (Wu Licai 2001). In most provinces, the “commission of discipline inspection” and the “department of people’s armed forces” (renmin wuzhuang bu) were also formed at the township level in parallel with its three major organs of power. In some regions, a township branch of the Chinese People’s Political Consultative Conference was even set up. As noted earlier, the centralized management of industrial and commercial enterprises gave birth to an institution called the “Corporation of Agriculture, Industry, and Commerce” (nong gong shang lianhe gongsi), which was headed by the township leaders and performed the government’s economic functions. Besides this, the township also experienced two waves of bureaucratic expansion in the 1980s, first because of the failed reform of local party-government separation, and next due to the delegation of more power from the county to township (Yang 1996: 186– 88). The 1994 tax reform caused the imposition of more administrative responsibilities from higher levels of government, which called for a still bigger township bureaucracy. In 1994, the township, for instance, was ordered to speed up tax collection; for that, it had to hire more personnel.5 It was not surprising if a township’s finance had to pay a staff of 200 to 300 people (Wu Licai 2001). Given the township’s allocated roles in rural governance and the ubiquitous presence of county authorities, the number of township agencies and personnel obviously exceeded reasonable needs. One investigation (Zhang and He 1998: 104–11) brought to light some hidden factors behind the uncontrollable rural bureaucratic expansion. Party-state laws and regulations did not stipulate an exact number 4

5

Zhang Quanjing, the former head of the CCP Organization Department, weighed in on this thorny issue. Reflecting on his failure to cut the bureaucracy stacked with redundant personnel, he referred to the unbridled bureaucratic growth as the most serious and perhaps incurable problem facing China (Pan Xiaoshou 2006). Because of the pressure to meet the constantly increasing baseline for tax/fee collection, the average number of tax-related salaried personnel in the townships of Shayang, Jingmen, increased to seventeen, in contrast with the national average of six. In some townships, money spent on hiring people to collect taxes took up 10 percent of total budgetary expenditure (CYD 2001; Wang and He 2002).

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of township agencies but only a general principle that virtually granted the township government the discretion to decide for itself how many agencies and employees were needed to accomplish its tasks. This legal “loophole,” which was taken advantage of by rural officials, accounted for both the proliferation of township agencies and their bizarre diversity. A prevalent practice was yin ren she shi, which means setting up offices merely to accommodate (anzhi) people with “special” backgrounds, particularly retired but still influential officials. Falling into this category were offices usually called “investigation and research” (diaoyan), “inspection” (xunshi), “supervision” (jiandu), “poverty alleviation” (fupin), “joint defense” (lianfang), and “maintaining public order” (jiucha). Satisfying a network of patronage was a primary explanatory variable for this bloating of bureaucracy at all levels, especially for the township. The state payroll was usually far more tempting to rural residents than the meager living they would otherwise have earned from farming. Jobs in the township bureaucracy could also provide them with the benefits of nearly unfettered corruption (Bernstein and Lu¨ 2003: 100–05). Among the plethora of administrative units, no real division of labor or functional specialization existed. During each year’s critical or busiest season, the entire bureaucracy – whatever their usual responsibility was – often turned out in full force to carry out the township’s “core task” – mainly tax-fee collection and birth control. When harsher measures were adopted in 1994 to scrap sinecures, central policymakers claimed that township agencies were excessively redundant and detrimental to the smooth functioning of government. A bloated and unwieldy bureaucracy was found to be the “culprit” for rampant red tape and for interdepartmental bickering that stymied administrative efficiency. As a researcher observed at Jiangnan, after a new round of streamlining in 1994 trimmed both township agencies and personnel by more than two-thirds, the government became more capable and efficient (Zhao Chenxin 1998: 86– 93).6 6

However, for most townships, efforts to slim down the bureaucracy proved extremely troublesome and did not have long-lasting effects. The “Heilongjiang experience” was once cited as exemplary. In this province, three options were arranged to accommodate laid-off township personnel. The first was government-sponsored, profit-making companies or “economic organizations” whose employees continued to receive state salaries for three years. If thereafter these companies failed to make money or shut down, the employees would lose their income and very likely, according to the responsible official, would return to township payrolls. The second option was to appoint township officials to village leadership posts for three years, during which period their salaries and welfare benefits remained intact. The third was earlier retirement; these officials no longer had to work but were still paid a full salary until they reached the legal retirement age. To the disappointment of the reformers, despite all these rewards and incentives, very few township officials took the initiative to quit the government (Shi Lei 2005).

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Overstaffing, of course, not only caused inefficiency or “bureaucratism” but more consequentially placed an unbearable strain on government finance. Limited budgets, which had hardly increased in proportion to the unwarranted growth of the bureaucracy, would either make overstaffing financially unsustainable over time or force the priority of the government agenda to shift and address this issue. It was this widening fiscal shortfall and its adverse effect on officials’ income that drove the township government to become a profit-making institution and to turn predatory.7 According to the laws and regulations promulgated in the early 1980s, the township government and party committee were, respectively, assigned seven and six functions, most of which were hardly distinguishable from each other in terms of substance. In contrast to the county, the township’s responsibilities were generally fewer and more circumscribed (Zheng Fa 2000; Zhan Chengfu 2004). As the Jiangnan case reveals, the apparent attempt to secure as large a budget as possible from higher levels of government prompted the township to magnify each of its functions through excessive specialization and overly subtle differentiation of responsibilities. The commune, for instance, installed merely one office to handle all the affairs of “culture, education, and public health.” The succeeding township government split this office into three to specialize in each of the three domains. After the 1994 retrenchment, the “culture” office was dismantled and “public health” annexed to the “infrastructure and environment” bureau. To add more credence to the idea that township officials had “heavy” administrative burdens, township officials also tended to overstep their line of authority to interfere in peasants’ farming and livelihood. Before long, the township’s motivation of striving for a larger portion of state budget by multiplying and maximizing its functions was weakened by the fiscal reforms of the 1980s, which triggered a sequence of structural adjustments in central-local fiscal relations and culminated in the 1994 tax system. These fiscal reforms essentially changed the distribution of financial resources among administrative layers from “eating from one kitchen” to “eating in separate kitchens.” As Jean Oi (1999: 7

The finance of township administration as part of the state is normatively covered by the hierarchical budgetary process through a variety of forms of taxation. In other words, the township government is supposed to be allocated a budget by the state for its spending. William Niskanen (1994: 15–23) defined the bureaucracy or a set of bureaus as “nonprofit organizations which are financed, at least in part, by a periodic appropriation or grant.” Their owners and employees “do not appropriate any part of the difference between revenues and costs as personal income.” Bureaucrats, though, are disposed to oversupply bureau goods and services in an attempt to maximize their allocated budgets.

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27–28) nicely put it, the reforms, in effect, brought an end to the “upperlevel budget allocation to meet local expenditures” and replaced it with a new system in which local governments had to rely on themselves for revenues. To facilitate this profound policy change, the central state granted local authorities the right to the economic surplus generated from local development. This new pattern of budget allocation restructured county-township fiscal relations as well. As discussed in the last chapter, the baogan system, which took shape in the aftermath of the 1980s fiscal reforms, allowed the township in most regions to establish finance of its own – more or less separate from or independent of county finance. As the price paid for its fiscal autonomy, however, the township was obliged to balance its own budget. Unlike the higher levels of government whose hierarchical division of revenue was built on a relatively rational-legal or impersonal foundation, the county and township probably still ate from one kitchen in practical terms, but out of separate bowls. Even though the separation was not thorough at all, it was of gigantic import to the township, which was granted a distinct form of financial self-interest to pursue. To the extent that township finance was independent, it turned the incentive structure of township officials upside down and recast the nature and behavior of the township government. From the 1980s to the early 1990s, the township benefited a great deal indeed from its fiscal autonomy, which provided its officials with a strong motive for developing township-owned industries. Nonetheless, in the late 1990s, the failure of many township enterprises to survive intensified market competition, and stronger market norms, eliminated a critical source of government revenue. The even more miserable fate of VOEs drastically contracted profits that could be taken by the township. Amid the township government’s growing financial hardships, the 1994 tax reform dealt it another devastating, if not fatal, blow that profoundly altered its agenda. To ensure it had enough revenues to pay its officials in the first place, the township government in reality had no alternative but to try by every possible means to “feed” itself. Its desperate need to discover new sources of funds drove the cash-strapped township government to extract more resources from villages, initially by squeezing the peasants harder8 and in recent years by pressuring village authorities to “attract investment.”9 In fact, since the mid-1990s, township finance has never truly recovered 8 9

As a popular saying goes, “tens of ‘peaked caps’ [officials] extort money from one ‘tattered straw hat’ [peasant]” (jishiding dagaimao suoqu yiding po caomao) (Chen and Shi 2006). For how the village’s “attracting investment” could contribute to township coffers, see Chapter 7.

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from its fiscal crisis – it has only gotten worse. The sheer necessity of survival has spurred the township government to deviate from its due role as part of the state and degenerate into a “trouble-maker” (for the populace) or more precisely an “interest group” whose prime goal was to serve neither the party-state nor rural communities but to turn itself into a “self-serving broker” (Yang and Su 2002). Even more strikingly than his own findings from rural north China in the early twentieth century, the degeneration of the township government fits into Prasenjit Duara’s (1988: 217–43) “involutionary mode of state expansion” in which the township succeeded in achieving certain state goals and strengthening formal state agencies but pitted the state against rural communities and thus “delegitimated the state more rapidly.” Interlocked county and township institutions Because the township, unlike the village, was part of the state and shared government responsibility for rural governance, why did the higher levels of authorities – or more precisely the county – not come to salvage it but instead seem to look on with folded arms? The answer to this question – along with the root causes of many of township governments’ alleged negative qualities, such as inefficiency, personnel redundancy, excessive bureaucratism, and inter-departmental entanglements – should be sought in China’s unique bureaucratic system. One of this system’s defining features is the duplication of parallel party and government institutions at each administrative level. Making the governmental process even more intricate and cumbersome is what Kenneth Lieberthal (2004: 186–88) calls the “matrix muddle,” which denotes the “cross-hatching of horizontal [kuai] and vertical [tiao] lines of authority,” or tiaokuai guanxi, as is known in China’s bureaucratic jargon. To simplify the matrix complexity, some of the key administrative units of each local government are only nominally attached to that government but are actually run by the next-higher government as its institutional branches or subordinate units. However it is construed in theory or regulated in practice, tiaokuai guanxi represents the most remarkable form of upper-level government interference in the administrative functions of lower-level government. For a couple of reasons, this vertical interference, which is often motivated by a desire to share in the lower-level governments’ lucrative initiatives, revenues, and economic resources, is especially intensive in county-township relations.10 Outside of the communization period, the 10

After decommunization, the “district office” existed as a semi-level of rural administration between the county and township. Following the lead of Anhui in 1992, this office, or layer, was gradually phased out in most of the countryside.

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County Government

Category A

Figure 4.1 Institutional governments

Category B

overlapping

Township Government

of

county

and

township

township has a short history. The neglect it suffered in state allocation of tax revenues, as well as plenty of rhetoric and comments that question the necessity of its existence, is a reminder of the township’s weak and vulnerable status. Until perhaps the late 1990s, most township officials were promoted from among village cadres who were poorly educated and devoid of government experience. The central and regional governments apparently lacked confidence in township officialdom’s ability to implement policies whose spirit and content often required a good education, expertise, and professional training to comprehend. Apart from township officialdom’s limited competence, some administrative matters of legal magnitude had to be dealt with in wider rural areas and implemented with identical norms that did not allow for local distortion or deviation. Last but not least, driven by its own narrowly defined institutional interests, county government did not want the township to monopolize the rural resources that could be translated into revenues to be shared by county officials (Ma, Liu, and Qiu 2000: 270). Figure 4.1 illustrates how county government undercuts the independence of township administration. The number of administrative units at the township level varies and has changed back and forth over time. In the 1990s, most townships each had more than 25 to 30 departments (bumen) – whether they were called offices (shi), bureaus (ju), stations (zhan), agencies (chu), divisions (si), sections (ke), posts (suo), and so on. Aside from the general office in charge of routine affairs, those departments responsible for agriculture, industries (mainly township-owned enterprises), finance, land management, birth control, civil affairs, public order, agricultural machinery, culture, public health, local infrastructure, forestry, broadcasting, water supply, grain distribution, and the veterinary clinic usually fell under the township’s (horizontal) jurisdiction (kuai kuai), and their personnel were counted as township government employees (Zhang and He 1998: 94–100).

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Andrew Mertha (2005) distinguishes between two types of administrative relationships, namely “leadership relations” (lingdao guanxi), which are characterized by binding orders, and “professional relations” (yewu guanxi) based on non-binding instructions. The departments just listed have “leadership relations” with the township government and “professional relations” with the corresponding professional or functional departments at the county level. All other departments are the county government’s branches, which may be assigned to either of two categories in terms of jurisdiction, management, and allocation of personnel and budgets. Although there is considerable regional diversity in its composition, Category A in Figure 4.1 usually includes the bureaus that manage the township’s post service, banking, weather forecasts, national tax, electricity supply, industrialcommercial regulations, tobacco sales (yancao zhuanmai), and (company) insurance. These bureaus, which are overseen and financed exclusively by the county government, have few interactions with and tend to override the township government. Although their employees join township party (member) activities, their remunerations and career opportunities are all decided by the county authorities. Because these bureaus function on behalf of the county and have “leadership relations” with it (tiao tiao), they are often jokingly called the county’s “embassies” to the township (Xie Qingkui 1998: 18; Smith 2010). Category B (tiao kuai) refers to the bureaus that the county and township governments manage jointly. Their tasks and services cover local tax, judicial affairs, supply and marketing (of agricultural products), grain-oil purchase, the credit cooperative, transportation, education, hospitals and clinics, procuratorial work, and courts. The bureaus are responsible to both levels of government in that their personnel are typically nominated and paid by the county but appointed by the township. Unlike Category A, bureaus in Category B in theory work for the township and have “leadership relations” with the township government and “professional relations” with their county superiors. In reality, the employees of these bureaus see their “professional superiors” as their real bosses. They tend to perceive themselves as hierarchically superior and thus condescend to township officials. How does this complex bureaucratic web work at the township level? How are the township’s own bureaus and both categories of county branches coordinated in the policy process? If the fact that an official of any given office has “a number of bosses in different places” stands for the transition of the Chinese polity toward “fragmented authoritarianism” (Lieberthal 2004: 187), then political authority at the township level is not only fragmented but from time to time crippled. The control of county branches over the key resources, departments, and manpower

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of the township explains why the township government often behaves like a lame duck. It often cannot take any initiative on its own without cooperation from the county branches.11 Not only bureaus in Category A, but even those in Category B often refuse to cooperate. In some townships, the frequent absence of the heads of county branches made it difficult either to hold township leadership meetings or make any policy decisions (Ma, Liu, and Qiu 2000: 270). The township government is accountable for socioeconomic development in its own locality but is not granted full authority or sources of power to fulfill its duties. In township officials’ own words, those who take responsibility (themselves) have no power, whereas those (county branches) who have power take no responsibility. As some officials alleged, because it was short of administrative autonomy, financial capacity, and institutional integrity, the township government was virtually reduced to the status of a county branch long ago (Xie Qingkui 1998: 18; Chen 2013). This scenario was especially striking in impoverished rural regions.12 The impact of the TFR and the AAT on township finance Escalating rural turmoil set off by worsening peasant burdens prompted the central government to adopt tax-for-fee measures in pilot areas in 2000. After being extended to twenty provinces in 2002, the TFR finally became state policy, to be implemented nationwide in 2003.13 The reform increased the rate of agricultural taxes to 7 percent (or 8.4 percent, including the surtax), while rescinding santi wutong. The remaining fees had to be collected according to democratic principles and with the villagers’ consent. The TFR resulted in a remarkable reduction of peasant burdens across the country.14 It was reportedly most effective in coastal and western provinces. As of December 2002, peasant burdens had decreased by 11

12

13 14

The township’s administrative dependency on the county or vertical authority overriding horizontal ties between the levels of rural government, as David Zweig (1992) indicated, “demonstrates the continuing role of bureaucratic authority as a determinant of resource allocations.” As Kennedy (2007) found in northwest China, because of the inability of township governments to raise funds after the TFR, many of them “function more as county administrative units than local governments.” ¨ For a detailed discussion on the TFR, see Gobel (2010). For instance, in Baoheti (Changde, Hunan), a pilot township for the reform, pre-reform agricultural taxes, the butchering tax, and santi wutong were merged into a single tax, and the total amount collected dropped from 3.26 to 2.24 million yuan (2001). The combined total of all (other) fees also decreased from 3.24 to 1.18 million yuan. As a result of the TFR, nearly half (47.4 percent) of peasant burdens were removed (Li Qi 2003).

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Table 4.2 The impact of the TFR on T township’s finance (unit: 1 million yuan)

Budgetary revenue Extra-budgetary revenue Subsidies Township charges (fees) Other fees levied on peasants Total revenue Total expenditure Balance

2001 (pre-reform)

2002 (post-reform)

11.38 1.10 6.69 2.81 2.83 24.81 24.55 0.26

13.08 0.15 4.57 0 0 17.80 21.63 –3.83

Source: Based on data provided in Yang and Wu (2004).

approximately 72 percent in Guangdong, 62 percent in the Shanghai area, 52 percent in Jiangsu, 44 percent in Zhejiang, and on average 60 percent in Yunnan, Guangxi, Inner Mongolia, and Qinghai. In agricultural provinces such as Henan, Hebei, Jiangxi, Hunan, and Hubei, the average reduction was 30 percent (Zhao Yang 2002).15 A study concluded that the TFR trimmed the proportion of peasant income paid for taxes/fees from over 10 percent to an average of 7 percent (Liu, Zhang, and Li 2003). A survey conducted in 2002 among 249 villages in 94 counties in Shandong province suggested that burden reduction was real. Among the 502 villagers surveyed, 72.31 percent supported the TFR and 80.52 percent said that the reform had lightened their burden (Ji, Zhao, and Yuan 2003). While achieving the desired effects of reducing peasant burdens, the TFR did not address the institutional cause of the problem headon. Townships in many agricultural regions, which had long failed to balance their budgets, suffered further from the TFR. T township was representative in that its revenue was mostly farming related, but it also had a moderate amount of non-agricultural business. Table 4.2 shows that the TFR cost the township all of the fees it previously levied on peasants and 86 percent of its extra-budgetary revenue, which had come from the peasants as well. As compensation, the township was allowed to keep a larger share of its agricultural taxes. But the gain (1.70 million yuan) was small compared to its loss (8.71 million yuan), which turned its fiscal balance from a surplus of 260,000 yuan to a deficit as high as 3.83 million yuan. 15

¨ These figures probably partly explain Gobel’s (2011) finding that the poorer a village was, the more the villagers suffered from the TFR.

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Measures were taken to alleviate the pressure on township finance. Besides the efforts to slash administrative expenditure by merging townships and retrenching township agencies, the shift of some of the expense for basic rural education back to the county helped to ease township fiscal plight but strained the county budget (Li Qi 2003). The central government made a special appropriation for the TFR, which surged to 15.6 billion yuan for 2004 (Caizhengbu 2005: 3). Rural finance in general, particularly in the central regions, was not improved with the appropriation, however. Aside from the shortfall and unfair allocation of appropriated funds, the structure of subsidies may in part offer some explanation. As noted earlier, central subsidies consist of tax rebates, earmarked grants, and general transfer payment. In 2003, tax rebates per capita in the counties and townships of eastern (coastal) regions were 100 yuan in contrast to 40 yuan in western and central regions. Earmarked grants per capita were 100 yuan, 80 yuan, and 75 yuan in western, eastern, and central regions, respectively. General transfer payment per capita was 250 yuan for western regions and 200 yuan for both eastern and central regions. On average, eastern regions obtained most of the rural government tax rebates, and western regions were given most earmarked grants and general transfer payment. By contrast, central regions received the fewest central subsidies, and it is therefore unsurprising that they had the gravest problem in terms of increased peasant burdens; however, their rural finances suffered most from the TFR and the AAT (Zhou Feizhou 2006). As most townships were struggling with the growing budget gap, Premier Wen Jiabao in March 2004 announced that agricultural taxes would be phased out within five years. Following Zhejiang’s lead, agricultural taxes had been abolished in twenty-two provinces by mid-2005. By the end of 2005, agricultural taxes ceased to be levied in twentyeight provinces and 210 counties (including county-level cities) of Hebei, Shandong, and Yunnan. Starting from January 1, 2006, agricultural taxes were officially abolished nationwide – three years ahead of schedule. Although agricultural taxes accounted for a tiny 2.3 percent of China’s total fiscal revenue (in 2003), they were critical to rural finances, particularly in the central and western regions where agricultural taxes contributed more than 30 percent to rural governments.16 The TFR and the AAT virtually eliminated the two largest sources of revenue for rural 16

There were wide variations in the dependence of provincial fiscal revenues on agricultural taxes. The largest proportion (%) of agricultural taxes of total provincial revenues (2001) was found in Anhui (16.7), Yunnan (11.3), Hainan (10.1), Jiangxi (9.9), and Guizhou (9.4); the smallest proportion in Tibet (0.04), Tianjin (2.58), Beijing (3.1), Shanghai (3.6), and Shanxi (3.6) (Wang and Lan 2008).

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governments. The total amount of agricultural tax revenue nationwide was 60 billion yuan, but the loss for rural governments was much greater than this. Along with the AAT came the abolition of fees attached to agricultural taxes that were collected from peasants and earmarked for the provision of public goods. These fees doubled the amount of agricultural taxes. In other words, the total loss of revenue for rural governments as a result of the AAT was as high as 180 billion yuan. The central transfer payment, designed to compensate for the AAT, was able to make up only one-third of the loss (Ma and Zeng 2008). Whereas affluent townships usually received revenues from local and joint taxes, such as the business, enterprise, and personal income taxes, impoverished agricultural townships were left with transfer payments alone. The AAT thus created a most serious rural fiscal crisis that, as China’s minister of finance warned, “imperils the stability of governance at the rural grass-roots level” (Nanfang Dushi Bao Jizhe 2005). The center did indeed augment its transfer payments on a massive scale to compensate for the loss of rural finances. According to Wen Jiabao, the total central transfer payments between 2003 and 2007 rose precipitously to 4.25 trillion yuan, and 87 percent was allocated to central and western regions (Zhang Guang 2009). Up until early 2006, subsidies from the central and provincial governments made up 60 to 90 percent of the expenditure in most counties in the western provinces and 50 percent in central provinces (Zhou Feizhou 2006). To relieve the strain on county finance, which was to a large extent accountable for township finance, a few provinces, such as Zhejiang, Guangdong, Henan, Liaoning, and Hubei, have or will experiment with transferring the authority over county finance from the municipal to the ¨ provincial government (sheng guan xian) (Gobel 2010: 91).17 The gist of this transfer is to bundle provincial and county finances together or, to put it bluntly, to allow the county to share more of the province’s revenue. This measure, as some results showed, only marginally alleviated the county’s fiscal plight as the increase in its revenue lagged behind the increase in its assigned expenditure (Qu, Yuan, and Yang 2009). Despite its less than satisfactory effects, the central leadership still recommended this option to other provinces in the hope that the provincial government would take greater responsibility for balancing rural government budgets (ZZG 2009). 17

In the regions whose economy was dominated by agriculture, county finance suffered from the AAT no less than did township finance. In Sichuan, the revenue of agricultural taxes constituted 47.5 percent of a county’s budgetary revenue in 2003. This revenue vanished after the AAT (Feng Xingyuan 2010).

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In the areas where township governments relied mostly on fees and agricultural taxes, transfer payments plus other subsidies amounted to only a small proportion of their pre-TFR revenue – much too small for them to perform their due functions. In 2005–06, local fiscal revenues made up half of the entire national fiscal revenue. Provinces and cities shared 36 percent and 24 percent of total local revenues, respectively. Although counties and townships together took 40 percent, they paid salaries to 70 percent of local civil servants – including schoolteachers – in addition to their other spending responsibilities (Wang Hongru 2007). Township officials, of course, were not entirely passive or idle all the time, merely waiting for subsidies and transfer payments, or resigning themselves to their lot in the allocation of revenues. The evidence Lynette Ong (2006) collected from Sichuan shows how township governments attempted to mobilize resources “through loans to collective enterprises whose de facto owners were township authorities.” Financial resources could also be obtained by township authorities who established “local informal financial organizations that were subject to less strict regulations.” Township officials in central and western provinces often raised funds or obtained more subsidies through cultivating private relationships (siren ganqing) with their superiors or mobilizing their guanxi or connections among the local officials and in the name of providing public goods (Yang and Song 2008). A poor agricultural township in Shanxi had no other sources of revenue but imposed heavy fine on illegal private mining companies (Rao and Ye 2007). These measures might not help a great deal. The deeper fiscal crisis at the township level in the aftermath of the AAT was obviously not a regional phenomenon but had spread across most of the country. The State Statistical Bureau predicted in 2005 that all township governments in China would need a total budget of 370 billion yuan to survive (i.e., to perform their most basic functions). Even if their expenditure is slashed by 30 percent, they still need a budget of 259 billion yuan. But total postAAT revenues for townships were estimated to be only 75 billion yuan with their deficits rocketing to 184 billion yuan (Dang Guoying 2005). Even in townships whose revenue did not rely heavily on agricultural taxes, transfer payments might not make up for the loss. A township of this type (Jining, Shandong) had a revenue of agricultural taxes of 3.84 million yuan. After the AAT, the township received a transfer payment of 2.95 million yuan as compensation (Sun and Wen 2007). At Dancheng county (Henan), each township was allocated only 200,000 yuan for handling official business – an amount barely enough to pay for the Internet, electricity, photocopying, and stationery. By contrast,

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pre-TFR santi wutong alone amounted to 15 million yuan in some townships (Nanfang Dushi Bao Jizhe 2005). As long as the balance sheets remained in the red, three agonizing choices were left for the township leaders: to squeeze village finances, to borrow money, and to provide fewer public goods. Without question, if it could, a township government would do all of three. My fieldwork conducted in recent years, which is discussed in Chapter 7, found that in many if not most regions, the township has compelled its villages to search for new revenues to be shared by it through “attracting investment.” The debt problem was the gravest in townships that had little non-agricultural revenue but were hard pressed to accomplish unattainable socioeconomic goals.18 In Hunan, the evaluation of township officials’ work performance covered twenty-nine items. Township leaders signed a “responsibility contract” (zeren zhuang) issued by the county government. As a result of borrowing money to meet the pressure to perform, as outlined in their contracts, over 95 percent of townships in this province were afflicted with deficits and debts (Chen Wensheng 2006). This widening hole in township budgets, in turn, encumbered county finance, partly explaining county-level deficits in some western provinces that climbed beyond 60 percent (Su Min 2003). Combined countytownship debts exceeded 1 trillion yuan in 2004 (Reporter 2005). A “poem” that spread among rural officials after the AAT vividly contrasts the fiscal conditions of different levels of government: national finance is thriving (zheng zheng ri shang), provincial finance is robust and stable (wen wen dang dang), municipal finance is shaky (yao yao huang huang), county finance is crying for help (ku die han niang), and township finance has nothing left (jing jing guang guang) (Wang Hongru 2007). Restructuring county-township finances To provide an urgent but long-term solution to the townships’ postAAT financial crisis, the center decided to revamp the structure of rural finances. In 2006, the Ministry of Finance announced a new policy demanding that the system of the “county’s management of township finance” (xiang cai xian guan), which was innovated by Anhui in 2003, 18

Townships resorted more and more to borrowing after the 1994 tax reform. In 2002, despite cutting back public goods supply to a minimum, township debts skyrocketed to 200–220 billion yuan – an average of 4 million yuan per township. And 84 percent of townships nationwide were plagued by debt (Niu Zhumei 2002). In Hunan, over 95 percent of townships ran into deficit. In Jianli (Hubei), 70 percent of townships had a fiscal surplus in 1995. Seven years later, 90 percent had a deficit (XCCZYB 2003). The townships’ greater efforts to squeeze village funds led to the rise of debt at the village level.

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be established nationwide, except the “rich” townships whose industry was competitive enough to generate abundant non-agricultural revenues. The adoption of this new system virtually spelled the death of baogan that had governed county-township fiscal relations for nearly twenty years. Depending on the sources of pre-AAT township revenues and the amount of non-agricultural taxes, post-AAT township finance may be divided into three types (Chen 2013). The first (referred to as type A for the sake of clarity) includes the townships whose governments have deep pockets and can obtain plentiful tax revenues from private enterprises and other sources. In these townships, most of which are located in coastal provinces, such as Zhejiang and southern Jiangsu, the AAT has not changed the baogan rule they had followed to share revenues with the county.19 The townships whose finance did not convert to the “county’s management” system represent a tiny minority, though. By the end of 2010, this system was adopted in 83 percent (28,600) of all townships. Given the huge diversity of these townships, the functioning of the system differs considerably in terms of rules and methods. In the poorest townships (type B), which had relied almost entirely on agricultural taxes, transfer payments became the sole source of revenue after the AAT. The “county’s management” system combines the county-township budgets and bank accounts, or more precisely township finance simply merges into county finance. All the transfer payments for the township and whatever revenue the township acquires are remitted into the county’s coffer, which is responsible for all the public expenditures at the township level, including officials’ salaries. For these townships, the system actually pushed their finance back to the pre-baogan period in which the township had no finance of its own (Rao and Ye 2007; Wang Xuezhen 2009).20 For other townships (type C) that are neither the richest nor the poorest, the “county’s management” system works in a different way. These townships typically have a moderate amount of industry and nonagricultural taxes. Because their revenues dropped a great deal after the AAT, most of them are not supposed to have enough revenue to share with the county, nor are they obligated to.21 But the “county’s management” system requires them to submit all of their revenues to the county 19 20 21

Qiangtou, which I investigated in December 2009, was exemplary for this type. See also Feng Xingyuan (2010). Also interviews with a few township officials at Pengxing on December 25–26, 2009. Two other factors have also weakened the impetus of the county to share township revenue. First, the central transfer payments for counties continue to increase. Second, some county governments have found new and big sources of funds, that is, land requisitions (au. int.).

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for “management” in the sense that the county would check the purposes of spending. Indeed, the system means that township officials have no discretionary power to spend their government revenue, whether it is the money they themselves earned or transfer payment. Any item of expenditure must be scrutinized and approved by the county authorities. Obviously, the “county’s management” system aims to prevent any misuse of the revenue by township officials, whose corruption is frequently exposed in the media. As surveys in Hunan and Henan found, this system has also curbed the increase of township debts, as it makes borrowing meaningless for township officials (Kong and Li 2011). A positive aspect of this system for the township, though, is that the county in principle should not embezzle or “share” township revenue – unless the township’s revenue far exceeds its expenditure needs (Meng Hongzhen 2010).22 If township finance suffers a shortfall, the county is obligated to come to its rescue with transfer payments or subsidies. In Zhangdian, whenever the township encountered a budget deficit, the county would allocate more transfer payments to help it.23 The type of finance has to deeply affect the performance and behavior of township officials. For types A and C, township officials usually have strong incentives to make money on their own. Type A townships typically enjoy large and stable sources of revenue and therefore do not care much about the sharing by the county, whose coffers are most likely full as well. The “county’s management” system works like a double-edged sword for type C. Although the revenue township officials obtain would probably not be taken by the county, they have no autonomy for its spending and thereby cannot translate township revenue into personal income advantage. Nonetheless, regional variations are enormous regarding how strictly the county controls the township’s expenditure. A survey on the effects of the “county’s management” system in Hunan exposed both its flaws and loopholes. In practice, the system functions as a double-checking system that makes the approval procedure discouragingly cumbersome. Any expenditure below 1,000 yuan must be approved first by the township head and, if exceeding 2,000 yuan, by both the township head and party secretary before the application was submitted 22

23

Indeed, the report on the county’s embezzlement of township revenue under its management is rare. But as some of my interviewees said, even if the county does embezzle, it is hard to know. Interviews with the deputy party secretary of Zhangdian and her colleagues on January 2, 2011. Of course, the township’s budget deficit should be rare, as the “county’s management” system can prevent it from occurring. Zhangdian is a typical type C township. It is defined as an agricultural township, but abundant enterprise taxes make it rich. I was under the impression that the township leadership was proactive in managing public projects that could occasionally put its finances in the red.

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to the county for approval. Because of the geographical distance and oldfashioned communication between the township and county, the process of application and approval was time consuming and complicated, causing much trouble or distress for both sides. Township officials often used excuses, such as the urgency of the spending, to bypass the new system or request “exceptional” treatment (Kong and Li 2011). Given the informal and personal nature of the interactions between county and township officials, one perhaps should not expect that the “county’s management” system would tightly constrain the misuse of township revenue (Ouyang Jing 2009; Wang Xuezhen 2009).24 Thus, for the type C townships that constitute the vast majority in China, despite its “downside,” the “county’s management” system is not necessarily a disincentive. Instead, officials in many of these townships have explored all the possibilities in search of revenue. “Developing the economy” by wooing investment proved the best way, not only because private enterprises at both the township and village levels would generate a large amount of tax revenue for the township government, but also because, even more important, the business deals with private entrepreneurs have immense potential to bring township officials private gains. Post-AAT township administration: case studies In traditional agricultural regions where the TFR and the AAT confined township finance to transfer payments alone, many township governments ceased to do any substantial work both because the core of their workload was eradicated, and because their weak fiscal capacity left them little leeway in performing other functions, such as public goods provision. For the party-state and the peasantry alike, it seems that in these regions the positive side of the township in rural governance has been increasingly outweighed by its negative side. Throughout the 1980s, both the township and village governments still performed important functions on behalf of the reform regime, such as purchasing grain and oil for the state, executing the one-child policy, and levying taxes and fees. The first was scrapped with the 1991 liberalization of grain markets. Mostly as a social by-product of marketization, birth 24

It is not surprising that township officials complain bitterly about this system. They argued that the system was actually illegal as it violated China’s Budget Law (1995), which stipulated that each level of government must have its (independent) finance (Feng Xingyuan 2010). Interviews with two township officials at Xiayuan on January 1– 2, 2009; a cadre at Juegang township on December 30, 2008; also interviews at Pengxing and Zhangdian.

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control in much of the countryside was easier to enforce. The AAT took the last and also the most demanding job off the township government’s agenda. From the criteria for evaluating township officials’ performance, one may catch a glimpse of the extent to which tax collection dominated the workload of township officials and was pivotal to their career prospects. In agricultural provinces where rural industries were weak and agricultural taxes constituted the bulk of township revenue, township officials’ performance was quantified as 1,000 marks in the evaluation system. The collection of taxes took the most marks (450–500), far exceeding “social stability” (i.e., no peasant riots) (200), and birth control (100). It goes without saying that the AAT alone – including the elimination of its subsidiary work, such as the levying of surcharges and surtax – cut township officials’ workload nearly by half (Zhou Liangcai 2007). In central and western provinces, more of the township government’s critical and lucrative functions were transferred to county branches following the AAT (Yang and Song 2008). A survey concluded that the TFR and the AAT combined cut down the workload of township officials in some traditional agricultural provinces by 80 percent – even more than village cadres’ (Chen and Shi 2006). Wu Licai (2008) investigated how the AAT changed the nature of township officials’ work. Before the AAT, 66.70 percent of rural officials rated “developing the economy” as the township government’s work of overriding importance; the percentage declined to 29.29 after the AAT (in 2007) – followed by “public security” (12.37 percent), “improving services for agricultural production” (12.12 percent), “providing social services” (10.61 percent), and so on. The astonishing finding in his survey was that after the AAT, the township officials who chose “doing the jobs assigned from above” as their major task dropped by 20.39 percent. Only 1.26 percent ranked it as the township government’s toppriority job. To find out what township officials did after the AAT and how important their new responsibilities were to the party-state, I did fieldwork in Qiangtou (Zhejiang), Pengxing (Hubei), and Zhangdian (northern Jiangsu) in 2009–11. The three townships fell in different categories in terms of economic development and affluence, sources of government revenue, and the structure of peasant income. Therefore, the results of my investigations perhaps demonstrate post-AAT township administration across rural China. Zhejiang is a province well known for its advanced rural industries. Qiangtou is located along the coastline and was ranked as one of Zhejiang’s “industrially strong” townships (gongye qiangzhen). Compared to traditional agricultural regions, the effect of the AAT on

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the nature and amount of township officials’ work was insignificant, if not negligible. The collection of agricultural taxes only made up 10 percent of their total workload, allegedly because “80 percent” of the peasants did not see the taxes as heavy burdens and thus paid “conscientiously.” Ten years before, birth control took 20–30 percent of township officials’ working hours. In recent years, birth control (ji sheng) has been replaced by “birth of healthier babies” (you sheng). As you sheng is consonant with many rural residents’ new fertility preferences and the trend of market-driven social change, enforcing the policy is much easier and the time spent on it dropped to 10 percent. The township government’s agenda revolved around three undertakings, and the top one was to enforce the veneer of “social stability.” Since the AAT brought an end to the confrontation arising from excessive peasant burdens, land expropriation emerged as a major factor that imperiled “stability.” To alleviate the potential tension, local legislation stipulated that the government could expropriate a village’s land only if 70 percent of the villagers consented. This measure, however, was no guarantee of “stability,” as the dissenting minority often protested or complained to higher authorities. Next to “stability” was the development of the (local) economy. However, the government’s capacity for the job was limited to little more than offering services and “preferential” treatments for private enterprises, which included cheap land, tax breaks, assistance in hiring workers, and sharing market information. The government was also keen to “protect” the interests of the peasants who were employed in these enterprises and took care of production safety, capital-labor relations, and medical insurance for enterprise employees, among others. The third task for the township government was the provision of public goods and services, which covered infrastructure; job training for peasant migrants; social security; employment; pensions; organizing festivals of technology, culture, and artistic performances; and teaching “old-man dance.” The township and the county (Xiangshan) shared 70–80 percent of the taxes paid by private enterprises. Thanks to the abundance in the township coffers, the government had built the roads connecting each household in the villages. However, nearly all the officials I interviewed agreed that the township authorities had weakened in recent years to such an extent that they could at most play a “coordinator” role in rural administration.25 Pengxing, located in the agricultural province Hubei, had a moderate amount of (private) industry. Although this township’s economic structure was dominated by agriculture, the peasants earned most of their 25

Interviews with officials at Qiangtou (Zhejiang) on December 27–31, 2009.

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income from non-farming jobs. The rural workforce was mostly engaged in urban employment, leaving only women, children, and elderly people (the so-called “38–61–99 army”26 ) farming in villages. The administrative functions of Pengxing and Qiangtou governments were similar on paper or in principle, but their routine and practical work differed. In both townships, peasant protests were mostly sparked by conflicts over land requisition. In Pengxing, however, officials complained about other allegedly “unreasonable” demands or “trivial” matters that caused riots as well, such as the government’s refusal to buy medical insurance for temporary workers. In the contracts the Pengxing government signed, it was “obligated” to assist private enterprises in looking for skilled workers and often used its political connections to apply for bank loans on their behalf. These services, however, should not consume much time, as the township only had thirteen enterprises – far smaller in both number and scale compared to Qiangtou. In sharp contrast to Qiangtou, the AAT cut back massively on the Pengxing government’s administrative burden, prompting an immediate and drastic change in the priority of its agenda. Its “heaviest” responsibility shifted from tax collection to the “public services” that used to and are in fact supposed to be managed by village authorities, such as land circulation among peasants, distribution of farming subsidies, fighting drought, and taking care of children and elderly people whose family members had left home for urban employment.27 To carve out a niche for themselves in the post-AAT rural governance, township officials took over so much of village affairs that each of them was required to take care of the children of three families and a few “difficult households” (kunnan hu) who could not earn a living on their own. The government extended its services for villagers from “organizing medical checks for childbearing women” to “assisting old women who were left at home to farm.” In this township where both township officials and village cadres were habitually busy with the levy of taxes and fees, the AAT cost village cadres their hard-target work and turned their priority to what was previously handled as soft-target work. For good or bad, the AAT liberated township officials from their heaviest traditional responsibility, spurring them to interfere in or manage more village affairs – in an effort to prove that they remained busy and useful.28

26 27 28

The “38” (March 8 – Women’s Day) stands for women; “61” (June 1 – Children’s Day) for children, and “99” (9 × 9 = 81) for elders. In his fieldwork in Anhui, Graeme Smith (2010) also found that township officials were doing what was formerly shouldered by village cadres. Interviews with officials at Pengxing on December 23–26, 2009.

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Resembling Pengxing, Zhangdian (Taizhou, Jiangsu) was a big agricultural township in which the AAT was highly consequential to peasants and officials alike. Wooing investment supplanted tax collection to top the post-AAT agenda of the township government. Located by the Yangtse, the township had 386 private enterprises, many more than did Pengxing. The officials’ enthusiasm for “developing the economy” derived first and foremost from the tax revenue paid by these enterprises, which filled in 95 percent of the government coffers. A plentiful inflow of revenues allowed the township government not only to grant all the transfer payments handed down from the county to the villages but to contribute more funds to improving local infrastructure, providing public goods and services for villagers, and developing social welfare projects.29 The township government, too, introduced lucrative agricultural products for peasants and brought several villages together in an effort to achieve economies of scale. The officials I interviewed believed that the township was indispensable to post-AAT rural governance and development in several aspects. In the first place, the township played a leadership role and functioned as a cohesive and unifying force in boosting inter-village cooperation, which is pivotal to the efficiency of the “new agriculture.” The large-scale public goods, such as irrigation projects, usually benefited a number of villages but required their cooperation, which would have been unlikely without the township’s organization or coordination. In this region, the township government was allegedly especially critical to “social stability” because tensions arose not only from the grievances of villagers against the government but also from intervillage fighting over water. All the villages agreed to accept the township government as the arbiter.30 Confirming the results of the surveys cited earlier, among the post-AAT undertakings of all the three township governments, none was imposed by the county or higher authorities as hard-target work.31 Whereas the 29

30 31

I visited the three townships when media reports on the countryside were filled with the buzzword of “building a new socialist countryside,” one of whose main programs was rural governments’ provision of public goods. In my interviews with the officials of all the three townships, however, I did not hear any of them mention it. Interviews with officials at Zhangdian (Jiangsu) from December 30, 2010, to January 3, 2011. However, it does not mean that there are no assessment criteria for township officials. As Graeme Smith (2010) points out, provincial and sub-provincial authorities face similar revenue incentives and assessment criteria. Township leaders are often pressured by county government to treat attracting investment as their top priority and the “surest way” to earn promotion. However, my fieldwork found that for two reasons, it was hard for the county to stipulate any hard “quota” for the township to accomplish in attracting investment. First, the conditions for attracting investment vary vastly among townships. Second, depending on the fiscal type of the township, county finance may or may not benefit from the township’s attraction of investment.

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criteria for performance on tax collection were pronounced and quantitative, township officials’ post-AAT responsibilities were not only ill defined but mostly self-assigned and motivated by the opportunities they offered for private gains. Indeed, the central state designated developing the economy and providing services for peasants as the two priorities of township authorities nationwide, but these are largely abstract principles without substance or credible indicators. Because the AAT left almost nothing for the township to do, the county was less dependent on township officials for rural administration and policy implementation.32 As the earlier discussion shows, agricultural townships had long struggled to balance their budgets, and the AAT almost emptied their coffers, particularly in central and western regions. Many township governments depended on borrowing to operate. Because township officials were transferred frequently, they did not have to bother about how to repay the loans. Some debt-laden township governments received court orders each year to force them to repay their debts. It was reportedly commonplace for township government buildings to be forcibly auctioned, their bank accounts frozen by the courts, and township funds for routine administration taken by the courts as a form of mortgage. To avoid being entangled in lawsuits about debts, township officials worked on shifts in turn and came to their offices only for ad hoc purposes. When peasants came to the township, most of the time they could not find any officials, just locked government offices (Chen Wensheng 2006b; Wu Tanlong 2006). Where township finances deteriorated from “eating finance” (chifan caizheng) to “begging (for) finance” (taofan zaizheng), township governments were paralyzed. A post-AAT survey of 129 townships found that because of budgetary restraints, 74 percent offered little or no poverty relief; 68 percent invested very little in infrastructure or public goods, such as roads and irrigation projects, and 9 percent not at all. In 68 percent of these townships, widened gaps in their budgets cost the officials their regular pay. In 31 of 34 townships of Hengyang (city), salaries fell in arrears for at least one year. In Hunan, the average annual salary for township officials was so meager (10,000 yuan) that it was lower than that of most peasant migrants (Chen Wensheng 2006a, 2006b).33 32 33

The discussion of Qiangtou, Pengxing, and Zhangdian draws on my analysis in Chen (2013). This post-AAT income for township officials should be somewhat representative. In a survey of twenty townships in ten provinces, an official’s annual salary was around 5,400 yuan in three townships, 7,200 yuan in eleven, and more than 10,000 yuan in six (Zhou Liangcai 2007).

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The township in the era of reform

The TFR and the AAT

Reduced workload for officials

Pressure to abolish townships

Reduced government revenues and growing deficits

Shortage of funds for public goods and services

Reduced salaries or remunerations for officials

Demoralized officials

Figure 4.2 How did the TFR and the AAT change township government?

The apparent inability to make ends meet over time dampened township officials’ incentives. Seeing no light at the end of the tunnel, they described themselves as “three lacks” (san qiong): one, lacking in career potential (lu qiong); two, lacking in family wealth (jia xiong); and three, lacking in a good reputation (ming qiong) (Chen Wensheng 2006b). Growing frustration and disillusionment was vividly embodied in aphorisms that circulated widely among township officials: “Salary is merely a pay slip; no hope to be promoted (to the county); no (private) house in the city” (gongzi shi tiaozi, xianli mei weizi, chengli mei fangzi); “no future in politics, no goal in life, and no zeal in working” (zhengzhi shang mei qiantu, shenghuo shang mei bentou, gongzuo shang mei gantou); “no law in the past, so cadres had discretion; law rules nowadays, so cadres have no ¨ ganbu you[ban]fa; xianzai youfa, ganbu wufa) discretion” (guoqu wufa[lu], (Shen Duanfeng 2006). The way in which the TFR and the AAT affected the township was strikingly exposed in the chain reaction they triggered (Figure 4.2). On the one hand, the invalidation of one of the township’s key functions threw doubt on its necessity as an administrative layer. The unfolding administrative reform that aimed to retrench the township bureaucracy threatened to cost its officials their positions and political career.34 On the other hand, in agricultural regions, the two reforms caused fiscal crises 34

I interviewed a few township officials at Wangmiao on June14–15, 2006 – six months after the AAT. They seemed to be demoralized, if not panicked, more than village cadres, and not simply because the AAT dealt an even greater devastating blow to township finance. At the time of my visit, the “rumor” was spreading that most of township-level personnel as civil servants would be either laid off or transferred to lower-salary posts.

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at the township level to deteriorate faster, which not only diminished the township’s capacity for public goods provision – unless they could obtain the “new-socialist-countryside” funding (Ahlers and Schubert 2012) – but demoralized township officials. All these consequences have compelled the central and provincial governments to place the township at the top of the agenda for rural administrative reform. To cope with rural government deficits and to improve administrative efficiency, merging townships has been a nationwide trend since 1986, and during that time this momentum has been renewed again and again.35 From 2000 to 2005, 20.7 percent of townships and 13.1 per¨ cent of villages were reduced (Gobel 2010: 125). Up to early 2009, the total number of townships (xiang and zhen) in China had decreased from 91,590 in 1985 to 34,600 (Zhao Shukai 2008; Sheng Ruowei 2009). The general practice in agricultural provinces was to merge poor and underdeveloped townships (xiang) with more affluent towns (zhen). In Shaanxi, in the two years (2001–03) of the TFR, the number of xiang dropped from 1,065 to 679, whereas zhen increased from 850 to 861 (Kennedy 2007). The merging of townships, however, contributed little to the reduction in bureaucratic personnel. My investigations, whose results were consonant with Lily Tsai’s (2007: 58) observation, found that most of the new township governments arising from township mergers absorbed nearly all of the personnel from the “annexed” townships. In a number of cases, what occurred was not really a merger, but rather, little more than a change in the township government’s name and signboard, which was intended merely to meet the numerical demands imposed from above. Merging township agencies produced the same effects.36 The AAT obviously added a great deal to the urgency for more substantial township reforms (see Chapter 10). In early 2009, the central state unveiled a new round of administrative reforms to streamline township institutions. This reform – which was scheduled for completion by 2012 – set two priorities, namely to downsize township staff forcibly and to assign new roles for 35

36

For instance, Anhui province retrenched 40.6 percent of the personnel on township payrolls in 2001 (ANB 2003: 129). In 2003, townships surrounding Beijing were reduced from 257 to 193 and the number of rural salaried officials was cut by 20–22 percent (Chai Mi 2004). In Henan, after two rounds of reforms to streamline township institutions in 1998 and 2001, the total number of township personnel in 2004 still nearly doubled the stipulated quota (Zhang Xinguang 2007b). An investigation was conducted in twenty townships of ten provinces that went through similar institutional reforms. The leadership in fifteen townships reported that these reforms had little or no effect as they did not reduce government personnel or expenditure, nor did they improve administrative efficiency (Zhao Shukai 2005).

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the township government, which would be confined to providing public services, increasing peasant income, and developing the local economy (Sheng Ruowei 2009). Conclusion Although the township was formally created by the KMT regime in the 1930s, it did not have a functioning government until the communist takeover in 1949. During most of the 1950s, however, township government played no substantial role in rural affairs, in large part because it came into being more as part of the largely symbolic state-building process than out of practical governmental need. After the township was resurrected in the early 1980s, a vicious circle could be identified from its evolution as an administrative layer. Under the three-level commune system, commune authorities delegated its administrative power and functions to the brigade and production teams. As the brigade and team were turned into the “autonomous” village and villagers’ group, many of the responsibilities previously shared by the three levels fell on the township alone. Indeed, to the extent that decollectivization liberated the peasantry from party-state constraints on their production and livelihood, it relieved township government of much of its responsibility. However, the implementation of rural reforms and the necessity of managing village cadres on behalf of the reform regime added a number of new functions and responsibilities to the township government’s agenda, compelling it to install many more administrative units and to recruit more personnel. The ceaselessly expanding township bureaucracy was not only a problem with administrative efficiency; it had more profound political ramifications. It changed the character and role of township government. The unchecked rise in the outlay for salaries and administrative expenditure caused township deficits to grow out of control. After the 1994 tax reform, the cash crunch forced the township government to tighten its belt drastically. The AAT eliminated the last major source of its tax revenue in poor agricultural regions, driving the finance of many townships into bankruptcy. The deteriorating fiscal crisis not only wreaked havoc on the township’s administrative capacity but made it increasingly difficult to “feed” its huge bureaucracy. To reinforce their vulnerability or weak status, the AAT slashed most of the township governments’ workload in agricultural regions, leaving them few substantive functions to perform. In many revenue-starved townships, administration was paralyzed and officials demoralized. In others, the struggle for survival spurred township

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officials to search desperately for new sources of revenue on the one hand, and to impose on themselves new tasks in an attempt to prove their continued worth on the other. The impact of the AAT on township governments varied a great deal, depending on how heavy their taxcollecting burden had been. However, it was quite evident from the empirical cases that the AAT had considerably reduced the importance of the township in rural governance – a consequence that to a large extent accounted for the change in the agenda and functions of township government as part of the Chinese state.

5

The mechanisms of political power in villages

Under the Chinese communist regime, the role of village party branches (VPBs) and village cadres is the key to understanding why central state power could penetrate rural society to an extent unparalleled in Chinese history. In the transition from the commune system to family farming in the early 1980s and in the shift to a rural market economy since the 1990s, this once awesome role has dwindled significantly in most of the Chinese countryside. The positional authority and income advantages of traditional village cadres were gradually but steadily eroded in the wake of expanding markets that replaced the state institutions in allocation of economic resources and thus nibbled away at their redistributive power. While the market and fiscal reforms cost VPBs and cadres much of their power to wield sanctions against unruly villagers, the amount of their authority varies so vastly across the country that patterns of village governance are widely different. This chapter attempts to explore the mechanisms of political power in villages and unravel the puzzle of why and how cadre power has been more effective in some villages than others. It argues that however much political authority in rural villages declines or crumbles, this has not resulted from anti-system challenges as some may have presumed, nor is it much related to any particular administrative reform, such as the change in definition of the village from an “administrative unit” to “self-government.” The discussion first of all sheds light on the existing structure of political authority in villages, particularly the impact village elections have produced on power relations between the VPB and the villagers’ committee. After establishing that VPBs remain undoubtedly dominant over villagers’ committees and exercise the highest power over village affairs, a quantitative analysis is conducted to test the correlations between a number of selected socioeconomic variables and the VPB authority. However, for all the theoretical implications and predictive power of the results of the analysis, the effectiveness of cadre power and village governance in 128

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the real world is affected by a complex set of hardly quantifiable factors as well. The empirical findings presented demonstrate how the erosion or failure of political authority could happen in villages of different types or under different circumstances. By contrast, in the villages that persisted in or switched to collectivism in the reform process, formidable power remained or was reconcentrated in the VPB hands. The VPB and the villagers’ committee While decollectivization, marketization, and financial crises have eroded the foundations of party-state authority in rural society, their impact on village politics is more often than not compounded by village elections that are alleged by some observers to have broken party cadres’ power monopoly.1 A growing body of evidence demonstrates that competition from the villagers’ committee indeed impinged on VPB authority – but to varying degrees. To control for the village-election variable, one needs to examine the normative structure of power in villages, particularly power relations between the VPB, which has little or no popular basis, and the villagers’ committee that is supposed to have an electoral mandate. The dominant pattern of power relations After communist rule was consolidated in the countryside in the early 1950s, the party branch (or party team, depending on the number of party members) was the exclusive organ of authority in most rural villages. On November 24, 1987, the Sixth National People’s Congress passed the “Organic Regulations for Villagers’ Committees (draft),” which legalized the system of the villagers’ committee and thereby marked the formal return of the village to “self-government.”2 Because 1

2

Because of China’s vast territory and diversity of local conditions, the importance of village elections and the extent to which they are democratic varies widely. However, it cannot be taken for granted that village elections have been progressively more democratic everywhere. One scholar, who kept close watch on village elections for nearly two decades, observed that local governments want to control local resources such as land, and for that purpose, must control village elections (Bristow 2010). Stig Thøgersen’s (2008) interviews in Sichuan showed that many township officials there were unhappy with village elections. They thought that village elections “might be a solution in more advanced areas;” but in “backward” regions, the “quality” of peasants was too poor to elect the right people. Also see Appendix A: my interviews at Taoyuan and Shuguang villages in northern Jiangsu. Like the HRS, villagers’ committees were initially formed by the peasants spontaneously at the end of the 1970s when the commune system was tending to fall apart. The committees were discovered and considered by reform-minded leaders to be a good form

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both the Constitution and party-state decrees demanded that the chairperson of the villagers’ committee be directly elected by the villagers, village elections came into the limelight, and the “village government” thereafter replaced the VPB in public discourse. Logically, the more democratic the village election, the less able township officials should be to command the elected “village head” (i.e., the villagers’ committee’s chairperson) and thus to control village affairs. In fact, peasants are clearly aware that the elected head plays only second fiddle in the village’s power structure – both in theory and in practice.3 As Guo and Bernstein (2004) found and my fieldwork proved, the party secretary, namely the VPB chief, remains dominant in nearly all villages – even in those where elections are largely fair and free. Two basic types of VPB domination can be identified. The first is the so-called yi jian tiao, namely that the party secretary and elected village head are the same person. The township leadership often encourages the village party secretary to run for the position of village head in an attempt either to resolve potential conflicts between the two posts (Guo and Bernstein 2004) or to gauge the popularity of the party secretary among villagers and make it one of the criteria for reappointment (au. int.). In the case that the incumbent party secretary failed the test, some township party committees would appoint the elected village head as the new party secretary if he/she was a party member (ZHSZSZ 2005).4 Yi jian tiao used to be more prevalent in industrially developed regions, such as Guangdong (56 percent), than in agricultural ones, such as Jingmen,

3

4

for peasants’ “self-management, self-education, and self-service” (LZJ 1987). The Constitution adopted on December 4, 1982, stipulated for the first time that the villagers’ committee be established among rural residents on the basis of their place of residence, and each of their chairpersons, vice-chairpersons, and members be elected by the residents. In 1982 and 1983, the CCP Central Committee issued two documents (no. 36 and no. 35) concerning the election and functions of villagers’ committees. By the end of 1985, 940,900 villagers’ committees were formed in place of the 700,000 production brigades across the country. On average, one villagers’ committee exercised jurisdiction over 250 households and 1,000 peasants (Minzhengbu 1988: 47). Two caveats are needed here. First, as Kennedy (2009) found from his fieldwork in rural Shaanxi, village elections might not produce good leaders. The overwhelming majority of the peasants surveyed did not trust village leaders whether they were elected or appointed. Even so, the peasants still preferred village leaders to be elected rather than to be appointed. Second, peasants’ enthusiasm for village elections may not necessarily contain anti-government sentiments. In a survey among peasants in northern Jiangsu, 71 percent of respondents thought that the elected villagers’ committee should receive the leadership of the township government (Yu and Zhang 2011). However, as village elections become increasingly open, competitive, and unpredictable, village party secretaries are less likely to be selected from among elected village heads, as the regime or township authorities are suspicious of their obedience and loyalty (Landry 2008: 221–56).

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Hubei (30 percent) and Bazhong, Sichuan (32 percent) (YCWB, May 6, 1999; Feng Shujun 2003).5 Because party cadres in affluent villages possessed considerable economic leverage or redistributive power, they were often elected village heads. In recent years, thanks to the favorable feedback from the central government, and to township authorities’ deliberate efforts, yi jian tiao has spread to more agriculture-dominated regions. Reduced village revenue and rising village debts entailed massive cutbacks in administrative expenditure – a task that could be accomplished most conveniently by cutting salaried positions. In addition, as village coffers ran low, opportunities to embezzle collective funds were wiped out, and some potential candidates’ enthusiasm for running for leadership posts was thereby dampened. Among 4,176 villages in Zhangjiakou (Hebei), the pattern of yi jian tiao was adopted in 2,006 villages (48 percent) in 2005. Seventytwo percent of the cadre elite had posts in both VPBs and villagers’ committees.6 Even if the two positions are held by different individuals, the party secretary typically commands through the VPB. In general – I found no exception whatsoever to this pattern among all the villages I visited – a village’s highest decision-making body is the joint meeting of the VPB (or the village party committee if the village has many party members) and the villagers’ committee. It is usually labeled as the “two-committee meeting” or “liang wei hui” – a synonym for “village government” in village politics. Most leading members of the villagers’ committee are concurrently VPB members.7 Thus, the “joint meeting” is not much different from the VPB meeting. If villagers’ committee members are not VPB members, they must defer to VPB members to show respect 5 6

7

The figure for Jingmen was obtained from my interviews in December 2002 to January 2003. As a result, the number of cadres dwindled to 3 or 4 in small villages (fewer than 1,000 villagers) and 4 or 5 in large villages. The total number of village cadres under municipal jurisdiction decreased from 26,726 to 17,586, saving salary expenses of 25 million yuan per year. Meanwhile, the average annual salary for the village party secretary was raised from 1,000 to 1,800 yuan (ZHSZSZ 2005). In some Jiangxi villages, all elected villagers’ committee members with party membership would be appointed as VPB members. Non-party members would be admitted into the party (Hu and Huang 2004). Regional variations should be noted, though, in the extent to which the members of the villagers’ committee and the VPB overlapped. In Fengjia village, which Huang and Odend’hal (1998) investigated, about half of villagers’ committee members were VPB members. Tianjian Shi’s (1999) data suggested that village elections threw a large proportion of incumbent cadres out of office – 30 percent in Shandong (1995), 40 percent in Jilin, and 70 percent in an eastern province – thereby resulting in greater differentiation between the villagers’ committee and the VPB.

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for the higher principle of party leadership. The party secretary in some villages would hold a VPB meeting first to discuss and decide on village affairs and then demand procedural approval by the “joint meeting.”8 Paradoxically, village elections could reinforce the centrality of the VPB in power structure. Because elected village heads have a different base of power and mandate, and hence tend to be less docile, village elections have prompted the township leadership to interfere in village affairs more via vertical intra-party organizational channels (au. int.). Yi jian tiao is the most ideal power arrangement for township officials. If it cannot be achieved, to highlight the VPB’s authority overriding the villagers’ committee’s, township officials often conspicuously and symbolically meet and give instructions only to village party cadres during their trips to villages (Guo and Bernstein 2004; Zhou and Cao 2012).9 As a party journal points out unequivocally, the CCP constitution allows the township party committee to “lead” the VPB, whereas the township government is merely authorized to “guide” and “assist” the villagers’ committee. Only by ensuring that the VPB is the “core of leadership” in the village can the township leadership control the village government (Chang Chengcheng 2007). Conflicts with the VPB Despite the VPB’s hegemonic status in the power structure, potential or open conflict with the villagers’ committee does exist. Under the system of village elections, the VPB’s monopoly of political power could no longer be seen as unquestionable. Competition for authority between the two bodies arises first and foremost from the mutually contradicting constitutional rules dictating party-government relations at the village level. The “Organic Law for Villagers’ Committees” (1998) defines the functions of the villagers’ committee as being responsible for managing the village’s public/welfare projects, land, and other collective assets. The law, however, shares the stipulation of the CCP’s “Regulations for the 8

9

In a few villages I visited, however, important issues must be discussed and approved by the villagers’ assembly, which usually had forty to fifty members. Interviews at Wujiadun village (Zhejiang) (July 28, 2005); Jiuchengli village (Shandong) (June 15, 2006); and Yingjie village (Hubei) (December 16, 2002). A township party secretary put it bluntly to his interviewer: “If a village party secretary does not listen to us, we directly dismiss him right away. If the village head does not listen to us, we cannot dismiss him but can hollow out his power base. For instance, when the township holds meetings, we notify the party secretary but not the village head. We simply ignore him if the village head asks us to help or makes any suggestions” (Ding Jianjun 2008).

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Work of Rural Grass-roots [CCP] Organizations” (1999) that the VPB is the “core of leadership” in villages. Based on a survey of 500 villages in Hunan, an average agricultural province, in 1999, power relations between the VPB and the villagers’ committee fell into five types: (1) yi jian tiao (10.8 percent), (2) the VPB monopoly of power (39.8 percent), (3) cooperation and power sharing (40.1 percent), (4) disharmony or friction (5.8 percent), and (5) confrontation (3.5 percent). The VPB dominated in 90 percent of the surveyed villages but did so in somewhat different ways. Village heads were elected with an implicit mandate to check and balance, if not challenge, the VPBs. Once elected, however, they often found themselves in no position to match the VPBs, nor were they able to obtain the endorsement of the township government to assert their legitimate authority. To the reform regime, the third type – cooperation and power sharing – stands for an ideal model of village governance. However, the investigators found that village heads could work “in harmony” and share more or less “power” with party secretaries only because they “unconditionally” accepted the VPB leadership (Mao and Chen 2001). If my fieldwork could offer any complementary observations, whether or not the village head respects the party secretary as his superior and cooperates as a minor partner with the party secretary depends mostly on three factors: the personal relations between the two individuals; the popularity of the party secretary; and the base of support for the village head. In the surveys above, responses to the question of how to interpret the self-contradicting “Organic Law” reveal that even the most apparently obedient elected village heads are reluctant to subject themselves to the VPB hegemony. Of the village party secretaries, 65.6 percent saw their assigned role and status as the “core of leadership,” that is, exercising ultimate power over all village affairs. By contrast, 95 percent of the village heads perceived the management of village-owned assets – the most coveted and lucrative power for village leaders – as the villagers’ committee’s exclusive authority, which should not be usurped or shared by party cadres. Although 85 percent of the elected village heads were party members, most of them thought that the VPB’s role should be confined strictly to party affairs, such as recruiting party members and organizing political study. Alluding to VPB authority’s lack of legitimacy, 96.7 percent of the village heads demanded that chief party posts go through open, villagewide contests as well in order to ensure that popular and competent cadres were appointed as party secretaries (Mao and Chen 2001). Some investigations exposed that behind the regime-endorsed domination of party branches/cadres in villages, grievances among elected village heads

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were deep and widespread (Zeng Qingmei 2003; Han and Ma 2005). Confrontation seems to be particularly intense in villages where elections have brought about a radical redistribution of power.10 Improving the VPB’s “legitimacy” The powerlessness of elected village heads vis-`a-vis village party secretaries has tainted the image of the village elections that have been touted as the landmark of China’s democratic progress.11 To balance the VPB authority, as well as to prevent potential power abuse, some local governments innovated power-sharing mechanisms that gave the VPB the final say in village affairs but granted the villagers’ committee veto power over financial matters and the use of village government stamp (Chang Chengcheng 2007). Early last decade, one more measure, namely the “two recommendations and one election” (liangtui yixuan), was taken to cover the deficit of legitimacy in VPB authority. This measure was first introduced as the “two-vote system” in Hequ county (Shanxi) and soon commended by the CCP’s Department of Organization as a model to be learned from nationwide. It was intended to augment villagers’ input in the appointment of party secretaries and VPB members. A village party secretary is usually appointed in one of three ways. The first is by direct appointment from the township party committee. The second is the township’s appointment of four to six VPB members who in turn elect the party secretary. The third is direct election by all party members in the village. The “two-vote system” offers the fourth option. Candidates for the chief party post must be endorsed by most villagers before their names enter the final list. Despite local procedural differences, the system divides the process of appointment into three phases. 10

11

Yusheng Yao (2009) has found that even though villagers cannot decide on the appointment of party secretaries, they are able to use secret ballots in village elections to prevent party secretaries or their allies, who are corrupt, incompetent, and unpopular, from taking over villagers’ committees. In cases of this kind, villagers’ electoral victory would logically make no sense if elected village heads are then obedient to party secretaries. The “empowering effects” of village elections, as Lianjiang Li (2003) well put it, spurred villagers not only to participate in elections more actively but to cast their votes for candidates with a clear mandate – that is, to use the village headship to challenge non-elected party cadres. Using village elections to show off China’s “socialist democracy” has been a sustained official effort. To lend credence to the claim that China is moving toward greater democracy, the government has been keen to invite foreigners as observers of village elections. A recent case was reported by BBC. On a summer’s day in 2010, the “central government took a bus-load of journalists” to Xiwangping, a village that lies in the mountains to the west of Beijing, to watch how the villagers went to the polls to elect their head (Bristow 2010).

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Table 5.1 The method for appointing village party secretaries (2002–03) (%)

Regions∗

Appointment

The township nominates and VPB members elect

C county, Jiangxi T county, Jiangxi X city, Shanxi Nationwide

70.6 68.4 – 11.2

11.8 21.1 – 19.9

Direct election by all party members

Two-vote system

Others

11.8 5.3 – 66∗∗

0 0 66.7 31.5

5.9 5.3 – 2.9

Source: Compiled from Xiao Tangbiao (2006) and the data obtained from author’s communication with him. ∗ C county (Jiangxi): N = 20; T county (Jiangxi): N = 20; X city (Shanxi): N = 16; nationwide: N = 241. ∗∗ “Direct election” was one of the two-vote system’s components and thus partially overlapped the system in calculation.

First, a party-member meeting proposes a tentative list of candidates for “democratic assessment” – followed by a vote of confidence among fellow villagers. Only those who win at least 50 percent of the vote can be listed as official candidates to be elected by party members. All villagers are eligible to participate in the “vote of confidence”; and households are allowed to send their representatives.12 To guarantee the popular basis of the candidates, ordinary villagers who participate in the voting must not be fewer in number than the party members (Zhang Shaonong 2004; ZSSZYD 2005; Chang Chengcheng 2007). Nonetheless, because the “two-vote system” was recommended but not enforced, it was adopted in only a few regions. The sample surveys in Jiangxi and Shanxi (Table 5.1) showed that most of village party secretaries in X city (Shanxi) were produced through the “two-vote system,” in contrast with Jiangxi’s two counties where the system was not installed. Nationwide, nearly onethird of village party secretaries owed their positions to this system by 2002–03. The socioeconomic factors affecting cadre power The foregoing analysis of the formal structure of authority in villages suggests that the nominal reinstatement of the village as an “autonomous” 12

In Zhejiang, from 2006 onward, participation in the “vote of confidence” was limited to the heads of all households in the village who voted on behalf of all family members (Hu Xuhang 2007).

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organization or the formal withdrawal of state power from the bottom of rural society need not destroy Communist Party rule, nor does it necessarily undermine the reform regime’s capacity for political control and policy implementation in the countryside. Under China’s exceedingly powerful party hegemony, village elections or other forms of villagers’ “self-government” may install a weak check on the VPB but can never break its enduring iron grip on authority under any but exceptional circumstances. The predominant pattern of cross-holding posts in the two committees and the unchallengeable “party leadership” principle makes it structurally unlikely for the elected villagers’ committee to function as a “backup” in the case that the VPB ceases to work. In the public discourse of China’s rural politics, the term “village cadres” in its strict sense – namely the cadres who are in control of villages – almost exclusively denotes VPB members. And “village government” is none other than the VPB’s fac¸ade. To the extent that political authority crumbles in villages, it is not because of the absence of formal leadership, or that formal leadership is overtly disavowed by extra- or anti-system forces – an extremely rare occurrence in the context of rural China. Rather, the collapse of political authority in villages means that the politically appointed village leaders have lost their control over fellow villagers and are therefore powerless (Chen 2007). Despite the changing nature and goal of village governance and the decline of political authority in the countryside, village cadres remain formal leaders who are authorized by the party-state to manage village affairs. Unlike the era of the people’s commune, however, it is no longer possible to find a stereotyped or regular pattern regarding whether and how cadre power works in villages. Instead, rural reforms over the past three decades – especially the recent TFR and the AAT – have given rise to a variety of different ways in which cadres govern their villages. Political authority has mostly, if not entirely, evaporated in some villages and has turned into a source of tension and protest in some others. Still, in quite a few villages, cadres have retained or regained enough authority for them to govern effectively. Variations in the amount of cadre power and in the way cadre power works cannot be adequately explained by the central state’s reform policies, which were typically executed across the countryside without notable region-specific considerations. Instead, political authority or more precisely VPB authority proves to be correlated with a number of variables that should be powerful predictors of the effectiveness of village governance. The correlational analyses that follow suggest how cadre power or VPB authority may be strengthened or weakened. The results of analysis reported in Table 5.2 are based on the data collected from my surveys conducted between November 2007 and

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Table 5.2 Ordered logistic regression of VPB authority on selected variables

Coefficients

Sig.

Odds (Exp)

Medium Intercept Village (government) finance VPB’s power in allocating collective resources VPB’s role in offering services for villagers VPB’s image or prestige among villagers VPB’s ability to help villagers VPB’s care about villagers’ interests VPB’s work performance

9.123 (0.884) –0.280 (0.085) –0.158 (0.098) –0.170 (0.107) –0.409 (0.139) –0.144 (0.114) –0.224 (0.131) –1.099 (0.145)

0.000 0.001 0.106∗ 0.112∗ 0.003 0.208∗ 0.088 0.000

0.756 0.854 0.844 0.664 0.866 0.799 0.333

Weak

12.485 (1.235) –0.381 (0.146) –0.618 (0.155) –0.467 (0.159) –0.553 (0.212) –0.521 (0.194) –0.690 (0.222) –1.479 (0.224)

0.000 0.009 0.000 0.003 0.009 0.007 0.002 0.000

0.683 0.539 0.627 0.575 0.594 0.502 0.228

VPB authority Selected variables Strong

Reference group

Intercept Village (government) finance VPB’s power in allocating collective resources VPB’s role in offering services for villagers VPB’s image or prestige among villagers VPB’s ability to help villagers VPB’s care about villagers’ interests VPB’s work performance

Source: Author’s surveys in 52 villages (10 each in Jiangsu, Hubei, Sichuan, and Shandong; 12 in Zhejiang) between November 2007 and January 2008. Notes: N = 1,022, valid = 1,010, missing = 12; overall percentage predicted correctly: 72.3%; p ⬍ 0.1. Dependent variable is VPB authority as assessed by ordinary villagers. Standard errors in parentheses. ∗ The correlation is not robust, as the p-value is greater than 0.1.

January 2008 among 1,022 ordinary villagers in 52 villages evenly scattered over five provinces (Jiangsu, Shandong, Sichuan, Hubei, and Zhejiang) (for the sampling frame and survey questionnaire, see Appendixes B and C, respectively). They demonstrate statistically significant relationships between VPB authority among villagers – the dependent variable – and seven independent variables. The comments on or answers to each question by the respondents provide part of an explanation for each relationship. Although the surveys were conducted after the AAT, the findings with respect to the extent to which these factors affect the authority of village leaders may apply to village politics in all times. In the surveys, the respondents’ evaluation of VPB authority was measured by the question: “What do you think of the VPB’s leadership position (lingdao diwei) or authority (quanwei) after the AAT?”13 Each 13

Chinese peasants, who had been immersed in communist jargon for decades, were not supposed to misunderstand what lingdao diwei or quanwei meant. If some were indeed confused, two more questions would follow in the surveys: “To what extent do you and

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respondent was given three categories to choose from: strong, medium, and weak. (In the questionnaire, the “weak” category covers paralyzed VPBs.) To examine their effects on the dependent variable, a number of questions were asked. The answers to all the questions fall somewhere on a 5-point scale from 1 (very bad or weak) to 5 (very good or strong). The interpretation of the coefficients finds seven variables to be significant. Each of them has an effect or predictive power on the dependent variable, after controlling for other independent variables. The first variable is village finance – namely the balance of revenue and expenditure of the village government. With a one-point increase from 1 to 5, the odds of VPB authority falling into the “medium” category decrease by 24.4 percent, and the odds in the “weak” category decrease by 31.7 percent. This result suggests that the better a village’s finances, the stronger VPB authority would be. The relationship is not abnormal, as it fits in with my field observations. Village finance was measured by the amount of disposable collective funds available, which was not only among the most important power resources at village cadres’ discretion but to a large extent determined the benefits and privileges associated with cadre position. Cadre power in allocating collective resources has no significant effect between the “strong” and “medium” categories (p-value = .106, greater than .1), but its rise by one point would reduce the likelihood of “weak” VPB authority by 46.1 percent. Collective resources include villageowned assets, enterprises, land, fishponds, mines, forestry, and so on. Although the allocation of these resources was the VPB’s exclusive privilege, the respondents obviously did not simply equate VPB authority with the amount of collective resources a village owned. In any case, however, the coefficient denotes unmistakably that without a considerable amount of collective resources, village cadres would have great difficulty establishing their authority. Plenty of collective resources and control over their distribution do not necessarily translate into strong authority. This finding deviates remarkably from the prevailing model that attributes much of cadres’ positional authority to the scale of collective economy and redistributive power.

fellow villagers obey when the village party secretary speaks or asks you to do what you do not like to do, such as paying taxes and fees (in the past), complying with the township’s ‘instruction’ for growing specified crops, donating to collective projects, and not exposing the village leadership’s problems to higher authorities?” “If you do obey, is it because of his/her political appointment, namely that he/she is the party secretary representing the party-state, or for other reasons, such as your employment in his/her private company, that you often borrow money from him/her, or he/she has special relations with you, and so forth?”

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However, it does confirm my observations about AAT-related changes and that in the post-AAT institutional environment, to the extent that redistributive power continues to work, village cadres must use it more cautiously. The government stipulated strict rules in a bid to stamp out power abuse by village cadres and any potential tensions arising from this. If village cadres do not abide by the rules or laws, fellow villagers would sue them or appeal to the government. In other words, the relationship between the “redistributive power” and the “positional authority” remains positive but not linear. Variables with similar effects are the VPB’s role in offering services for villagers and its ability to help villagers. Although their correlations with VPB authority are not robust between the “strong” and “medium” categories (p-value = .112 and .208), the two variables make a significant difference between “strong” and “weak” authority. With a one-point move up the scale for both, VPB authority is, respectively, 37.3 percent and 40.6 percent less likely to be weak. In the survey, the “services” the VPB offered denote mostly public goods, such as constructing roads and bridges, running schools, and providing running water and electricity. In comparison, the “help” refers to more trivial and personal affairs, such as mediating quarrels among villagers, assisting those who need to deal with the township government, alleviating villagers’ temporary financial hardships (for instance, lending out of collective funds), and presiding over villagers’ private affairs such as marriages and funerals. The analysis concludes that as long as the VPB did a poor job with regard to services and/or help, its “leadership position” suffered a great deal. Higher scores on either or both of the two variables would incline fellow villagers toward appreciating the VPB’s performance, but this appreciation does not necessarily add or add proportionately to VPB authority. This result apparently contradicts my earlier observation in some villages – particularly during the most painful tax-collecting years – that village cadres’ “authority” or competence in collecting taxes was to a large extent built on “human affections” (renqing) that accumulated through their services and/or help for villagers. Considering the timing of my surveys, the new finding may have reflected changed relations between village cadres and villagers in the aftermath of the AAT. Since the AAT, offering services or help for villagers has been designated as the major work the well-paid village cadres do. It is therefore no longer seen by fellow villagers as a personal favor that deserves much appreciation. Controlling for the effects of services and help, a significant relationship between the VPB’s authority and its image or prestige among fellow villagers is identified. One could rather safely predict that a VPB or village cadres who lack a good image among villagers have little authority.

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Merely a one-point improvement in the VPB’s image would decrease the possibility of “medium” and “weak” VPB authority by 33.6 percent and 42.5 percent, respectively. The effect of the VPB’s perceived care about villagers’ interests is similar, presenting an intriguing contrast with the effects of services and help. The possibility of VPB authority being “medium” is reduced 20.1 percent and that of it being “weak” plummets by 49.8 percent for a one-point increase in the VPB’s perceived care. To the extent that villagers’ gratitude translated into cadre authority, villagers placed greater emphasis on whether and to what degree the VPB “cared” about their interests than on what the VPB really did for them. More research needs to be done to explain these differences. However, one may reasonably hypothesize that village cadres who display deep care for villagers but for whatever reasons do not have adequate capacity to serve them tend to enjoy greater authority than those who provide more services and help but whose work is taken for granted, or is perceived to be not good enough or to have been done out of selfish motivation.14 This result may partly explain why village leaders tend to have strong authority in more cohesive and harmonious villages where fellow villagers trust village leaders for their devotion to collective well-being. As one may expect, the evaluation of VPB performance is the most accurate predictor of its authority. If the VPB’s performance is evaluated as poor by villagers, its authority is normally certain to be low. A one-point improvement in the VPB’s performance would decrease the likelihood of its “medium” and “weak” authority by 66.7 percent and 77.2 percent, respectively. In contrast with the preceding variables, some variables whose relevance to VPB authority has been, if not taken for granted, accepted as largely unquestionable are shown to be statistically insignificant. In its image-building efforts, the regime’s propaganda machine has been keen to publicize exemplary villages in which cadres have allegedly led the villagers toward “common affluence” (Dai, Luo, and Tong 2003; Ding and Jiang 2003; Zhang Song et al. 2003). Although some reports appear credible, the concept of cadres’ pivotal role in achieving collective prosperity has created an impression that wherever villagers are wealthy, the leadership or authority of village cadres is working. To assess the effect of fellow villagers’ affluence on cadre authority,15 a survey asking the same question was conducted separately among 14 15

This, to some extent, fits the “tainted altruism” phenomenon, namely that a good act counts for nothing if the actor benefits as well (Kluger 2014). The affluence of villagers is usually related to factors such as the village’s natural resources (e.g., soil, climate, and mineral resources), geographical location, infrastructure, traditional advantages or disadvantages for economic development, and the percentage of villagers engaged in profitable businesses (Jiang Zhenchang 2002).

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Table 5.3 Correlation between village cadres’ authority and villagers’ affluence (respondents: ordinary villagers) Pearson correlation Sig. (2-tailed) N

0.055 0.085 1022

Table 5.4 Correlation between village cadres’ authority and villagers’ affluence (respondents: village cadres) Pearson correlation Sig. (2-tailed) N

0.144 0.134 115

Source: Author’s surveys in 52 villages (10 each in Jiangsu, Hubei, Sichuan, and Shandong; 12 in Zhejiang) between November 2007 and January 2008.

ordinary villagers and village cadres. The results for both groups are similar. The relationship between cadre authority and villagers’ affluence, as evaluated by ordinary villagers, is positive (p ⬍ 0.1) but negligibly weak (Table 5.3). The relationship as evaluated by village cadres is not robust due to the p-value (Sig. [2-tailed]) = .134) (Table 5.4). That affluence actually does not predict authority might suggest two scenarios. Indeed, in some villages, to the extent that villagers give cadres credit for their enhanced standard of life, the cadres gain authority. But as the analysis implies, this scenario does not prevail. Where villagers get rich on their own, they tend to defy, rather than yield to, cadre authority, presumably because their market power makes them less dependent on the cadres. The most surprising finding in the statistical analysis regards the correlation between cadre authority and the village’s collective economy. Under the Mao regime, party leadership or village cadres’ authority and the concentration of all economic resources in their hands reinforced each other to a degree that made totalitarian control possible. In the post-Mao era, the relationship between the two was confirmed by numerous positive and negative examples. Nearly everywhere, political authority faded with the disintegration of the village’s collective economy (Wang Chaojie 2006). Conversely, as discussed later, even in the context of marketization, continued or revived collectivism in a few “socialist” villages allowed the VPB to cling to its position of authority.

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Table 5.5 Correlation between village cadres’ authority and the village’s collective economy Pearson correlation Sig. (2-tailed) N

0.15 0.635 1012

Source: The same as Tables 5.3 and 5.4.

Although for most of the reform era, a positive correlation between the scale of a collective economy and cadre power seems to be beyond dispute,16 Table 5.5 shows that the relationship no longer exists (Sig. = 0.635). The results of my interviews and the survey respondents’ comments point to a new conception of the collective economy as an explanatory variable. The “collective economy” discussed here is not the same as the VOEs, most of which either shut down or were privatized in the late 1990s. Rather, much of the new collective economy is actually a by-product of land seizure that, as analyzed in Chapter 3 (the section “Land requisition and local government finance”), has increased markedly over the past decade as a result of accelerated urbanization and local industrial development. The village government’s share of “land compensation fees” is required by state policy to be deposited into the village’s “public project/welfare fund” and to compensate landless peasants not only financially but with employment. Thus, the new collective economy, unlike the old one, has often failed to boost cadre authority because the peasants tend to take for granted whatever benefits they enjoy from the collective economy and are therefore ungrateful. In quite a few villages, cadres’ cronyism and nepotism in managing the collective economy has undermined rather than strengthened their authority. Village cadres’ dominance slips if they wield no redistributive power, but an increase in redistributive power does not proportionately enhance their authority. In recent years, the emergence of the shareholding collective economy has further compounded the effects of the collective economy on cadre power. In 2003, the party-state leadership encouraged peasants to develop multiple forms of specialized cooperatives according to the “voluntary” and “democratic” principle (ZZGW 2003). At a central party conference in 2008, the development of the village collective economy and peasant co-operativization was stressed – not out of political 16

Maoists claimed that taking the collectivist road is the key to maintaining party leadership in villages (Shao Chunbao 1996). A party journal trumpeted the “collective economy” as a panacea without which rural party organizations would have “neither cohesive force nor appeal or fighting capacity” (Zhang Jiandong 1997).

How could village governance fail?

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motivation but to achieve economies of scale for grain production and thus “agricultural modernization” (ZZGT 2008). In response to the new central “policy spirit,” regional authorities, particularly in coastal provinces where the village economy was more advanced and collective assets were more abundant, called for the shareholding reform (gufen hua) of the collective economy. For the central and local states, the shareholding reform, which has been implemented in a growing number of villages, holds out the promise of altering the ownership form of “collective property rights” to make villagers the genuine, rather than nominal, owners of collective assets. Probably to the dismay of village cadres, however, this reform would not boost their position of power but rather would marginalize them still further. Usually, the reform starts with an estimate of the total value of the village’s collective assets and then quantifies it as stocks to be shared by all the villagers. The stocks, of which only a few or none would be allocated to the “collective,” generate dividends in proportion to the profits of the collective economy. Major decisions on the management of the collective economy ought to be made by its shareholders through voting. The shareholding practice as a fresh trend reportedly has a number of local variants, most of which not only allow landless or jobless villagers to obtain a relatively stable income but have indeed shifted the control over the collective economy from cadres to ordinary villagers (Deng, Huang, Xu, and Rozelle 2010; Kong and Liu 2010; Chen, Wu, Lin, and Zhang 2011; Minhang 2011; Li and Xia 2012; Miao and Meng 2012; Wang Rui 2012; Zheng Huibin 2012). How could village governance fail?17 Contrasting with the moderate methods Chinese peasants usually used to lodge complaints, their protests in the past two decades escalated rapidly from initially peaceful petitioning, demonstrations, and sit-ins to widespread acts of violence. Even more disturbing, riots in some rural areas were not spontaneous as they had been, but were well organized and coordinated. Much of the literature cited in this book, including surveys sponsored by the Chinese government, agrees that party-state authority in the countryside has been mired in a structural crisis since the 1990s. Some observers described village governments, whose core was the VPB, as either “dead” or “half-dead” (Ni Ming 2003). Data collected from a number of surveys shed light on the scope and depth of the crisis. In 48 villages investigated in Henan province, the VPB remained strong 17

This section contains material previously published in my article “The failure of organizational control: Changing party power in the Chinese countryside,” Politics & Society 35 (1) (March 2007), pp. 145–79.

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and effective in only 20 percent of villages and was paralyzed in another 20 percent. For the other 60 percent, the VPB was so “disabled” that its functions were limited to levying taxes and fees. Even for this task, village cadres were blamed by township officials for their incompetence. They could do little more than provide officials with the addresses of resisting villagers or accompany the officials to catch them (Henansheng shehui 1998; Zhao Shukai 2003). An investigation among 100 villages in Jianshi county (Hubei) discovered that 48.5 percent of village governments had no offices, and 84.4 percent of VPBs and party groups had no place for organizational activities. Village cadres had to meet instead at their own homes – and this occurred less than once a year (Zhang Zhenyi 2001). A survey of 413 villages in 17 provinces conducted by the Ministry of Civil Administration concluded that 20 percent of village governments were “close to paralysis” (huan san); the percentage soared to 30–50 or greater in “economically backward” areas (Mai Wenlan 2002). As township officials habitually treated village government as one of their administrative units, they found that it was too feeble to perform any assigned functions. The correlational analyses in the preceding tables suggest that weak governing capacity is most likely to be found where village cadres neither have adequate economic (redistributive) power nor are perceived as having done their best to help villagers. Nonetheless, even in the villages in which political authority has utterly vanished, the formal leadership, namely the party branch, is still there. Theoretically, VPB authority requires no prerequisites such as the socioeconomic variables examined earlier. The VPB represents the constitutionally endorsed “leadership of the Communist Party” in its governance of villages and is thereby vested with coercive power. By implication, if VPB authority or coercive power completely fails to work, factors must be operating that are probably village specific and more complex than the statistical analysis concludes. In my empirical studies of weak party authority in villages, two patterns stood out. In the first pattern, “party leadership” no longer existed, or the VPB was “paralyzed” – indeed, this term was often used by respondents in surveys. In the second pattern, “party leadership” was perversely exercised by the cadre elite to pursue selfish interests. As a consequence, cadres lost the moral authority to lead. Political authority hollowed out This pattern is commonly found in destitute villages whose collective economy has collapsed and whose collective assets are exhausted. Where no other cohesive elements or alternative forces filled the power void, the village tended to disintegrate as a social or administrative unit. Some

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villages simply emptied as most of the villagers had migrated (ren qu cun kong), leaving only elderly people at home to care for grandchildren (Zhang Zhimin 2003). In twenty-nine villages of Wuli (Shayang, Hubei), within one year of village elections, seven village heads – all serving concurrently as deputy VPB secretaries – resigned. In some villages, the head changed several times a year (He Xuefeng 2001: 25). Thwarted by the difficulty of finding qualified candidates to serve as village cadres, townships often had to send their own staff to run villages as an emergency measure (Ni Ming 2003).18 Other village cadres chose to stay for reasons not necessarily related to opportunities for corruption. These cadres were typically elderly, poorly educated, and had a long political career behind them; they remained loyal to communist values and ideology. As self-proclaimed “vanguards” or “role models,” they might enjoy a sense of superiority over the “masses,” or they might retain affection for the party to which they owed a debt of gratitude for past “glory.” Such individuals would be responsive if the township leadership threatened to expel them from the party if they resigned as village cadres. At Wuli, for example, township officials threatened to audit village cadres’ financial accounts if any resigned during tax-collecting season (He Xuefeng 2001: 25). On top of this, after working for the party for decades, these cadres found that they had very few career opportunities in a drastically changed environment, as they lacked required expertise for any other job. Derided as “muddling-along caretakers” (weichi huizhang), village cadres feared the villagers more than the other way around, particularly during tax/fee-levying seasons when they relied on fellow villagers’ personal favors to fulfill their collection tasks. Most of the time, cadres were indistinguishable from ordinary villagers in terms of their manners and routine agenda. They also had few dealings with fellow villagers in their capacity as village cadres. The villages of Zhenggang, Chaigang, and Shiniu (Jingmen, Hubei), which I visited in December 2002 and kept track of thereafter through personal communications, provided some examples of “leadership paralysis.” Approximately 20–30 percent of able-bodied laborers earned their living away from each village, while the remaining villagers concentrated on growing crops, such as rice, wheat, and rape, on their farmland during the two-month nongmang (busy farming) season. For the rest of the year, villagers grew trees, fruit, and tea, or were engaged in animal husbandry and fishing. Some managed groceries or barbershops and others drove taxis or trucks for transportation. 18

Findings from Hubei and Jilin showed that some township governments were tired of handling resignations and appointments of village cadres and simply let villagers choose via free elections (Jing Yuejin 1999; He Xuefeng 2001: 25).

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Political authority was almost entirely irrelevant to the villagers’ everyday life. Cadres did not interfere in what the villagers were doing, provided that they paid their taxes and fees. Villagers had little respect for the cadres because they were unable to offer any substantial help. Neither did they hate the cadres, who were not known for power abuse – presumably because these villages simply offered no such opportunities. Before the TFR, villagers did complain about financial burdens but knew they were imposed from above. In these villages, villagers were not really aware of the existence of the VPB or party authority – a silence that became even more audible after the TFR and the AAT. This pattern of village governance – that is, of village cadres “muddling along” or performing no more than a minimum of duties – was probably applicable to many if not most villages in traditional agricultural provinces. An investigation found that over 55 percent of villages in Jiangxi could be assigned to this category (Tang Xiaoteng 2005). Where village cadres had no tangible sources of power, the power void could be filled by “soft power” – the power of persuasion and admonition. Guo, party secretary of Taoyuan village in northern Jiangsu, complained that his VPB possessed no control mechanisms at all over the villagers. But he was still able to prevent his village from falling apart because fellow villagers respected and “listened to” him, thanks to his “clean image, integrity, and philanthropic character.” In December 2004, when I interviewed him, Guo had served as the village party secretary for two decades and had apparently amassed a considerable amount of “social capital” or “capital of human affection.” With some medical training, he opened a clinic in the village to earn a living. He often saw patients free of charge, or charged them a discounted fee. Although their gratitude gave him a kind of “prestige” that helped him in levying taxes and fees, it did not provide a solid foundation for power. “If you are a nice man,” he said, “your fellow villagers will respect you and buy your face. But it does not mean that you have real authority over them.” Guo was, of course, not alone. The pages of party newspapers and journals were replete with reports of cadres who won fellow villagers’ hearts and minds by helping them get rich. Like Max Weber’s “charismatic domination,” this soft power does not amount to positional authority, nor can it be institutionalized: to the extent it works, its source is not the cadres’ political appointments but their personal character. Political authority abused and defied Village cadres need authority to perform their assigned duties; though weak, this authority can be used for self-serving ends by corrupt cadres – especially in villages that typically are neither very rich nor very

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poor in terms of collective wealth. In poorer villages, cadres have little power or privilege to abuse, and villagers are highly atomized without much sense of community or concern over the development of their villages. In richer villages, cadres enjoy more legitimate income advantages and care more about their offices. Thus, they are less willing to run the risks associated with graft; villagers, too, care less about graft unless it goes to extremes. By contrast, some villages in between are characterized by both cohesiveness and divisiveness. Villages of this type are made cohesive by the existence of collective assets and resources that are large enough for every villager to have a personal stake in them, but are much less significant than the kind of collective assets that formerly gave village cadres the leverage to control villagers’ life. However, collective wealth could be divisive as well. Some village cadres, referred to as “private gain seekers” (sungong feisi) by fellow villagers, often take their offices as tools for maximizing personal benefits. By doing so, they fail to translate the management of collective assets into higher governing capacity. On the contrary, their greed and graft often create simmering tension with fellow villagers, which they lack moral authority to handle. Dongye (Putou, Yangzhou, Jiangsu) could be considered as such a case.19 This village had three private enterprises that employed roughly 15 percent of its workforce. Most villagers were engaged in agriculture, but the bulk of their income came from other businesses, such as retail trade, vehicle repair, and grain processing. The average annual income per capita was 4,000 yuan – much higher than in Zhenggang and Chaigang villages in Hubei (which both had 1,600 yuan per capita). A handful of owners of combines and tractors helped with farming in other villages during nongmang seasons, but few villagers had joined the “floating population.” The concentration of the villagers’ businesses in the village and nearby areas was one of the factors that strengthened the village’s cohesiveness as a community. The village sold its two VOEs in the late 1990s, but how the cadres maneuvered the deals with the buyers remained a puzzle to fellow villagers – except that they were aware that VOE assets were grossly underestimated. Rumors swirled that one VOE’s net market value (its capital and assets) should have been about 1.5 to 1.7 million yuan, but it was apparently sold to a private entrepreneur for only 605,000 yuan – of which the buyer actually paid (to the village government) only 325,000 yuan. Another VOE, too, was sold at a price far lower than the villagers’ estimate of its worth. Meanwhile, except for repairs on the village’s 19

Dongye and Sangyuan were merged into Yinjiangxin village in 2002. Information was gathered from my interviews in December 2005.

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irrigation project and roads, there was no big public spending. One day, the villagers were appalled to learn from village cadres that only 120,000 yuan was left in collective funds. The cadres had promised 1 million yuan in compensation to villagers whose farmland was expropriated for a canal, but the money was never distributed. In the eyes of the villagers, their cadres rarely handled any proper business but merely whiled away their days gambling and pleasureseeking. The villagers alleged that if their village’s financial accounts were audited, the cadres would perhaps get a death penalty. However, the villagers had little understanding of village finance and had no channels through which to collect hard evidence of cadre corruption. They were apathetic about village elections not simply because the elections could not shake the dominance of the party secretary who was backed by the township, but because they believed that any elected village head would soon be “co-opted” into the secretary’s inner circle and share its privileges.20 Stinging criticism of cadres and defiance of cadre authority failed to burst into open, intense confrontation. Unlike the rather humble and “do-nothing” attitude of cadres evident in villages where political authority was weak or absent, cadres in this village desperately attempted to hold back villager discontent, fearing that their inability to guarantee “stability” would result in dismissal from their posts. With neither “hard” nor “soft” power, they resorted to buying off potential rebel leaders and activists – a tactic that often paid off. At Dongye, some 30 percent of the villagers, including nearly all the “elites,” thought of themselves as members of a “privileged” group. A number of potential activists were also drawn into the villagers’ committee or the VPB.21 As a few studies show, what happened at Dongye was widespread. Much of cadre corruption has taken place with regard to the management, contracting, and privatization of VOEs. Whereas many VOEs lost 20

21

This scenario matches findings in a northern village. The villagers there were disillusioned with village elections. Although they helped to break the power monopoly of party cadres, no capable leaders emerged from the elections. Rather, the elected village leaders were as selfish and incompetent as the old ones (Yao 2009). The passive attitudes of peasants toward village elections were reported in another survey among 200 rural households in Jilin. Only six of them had family members who sought nomination as candidates (Cui and Zhang 2006). In his discussion about Chen village, Richard Madsen (1984: 24–26) explained how the disintegration of both political structural arrangements and the traditional moral framework led to a breakdown in village leaders’ moral character during the Cultural Revolution. Since the 1990s, a similar process has unfolded, but in a somewhat different way and with a greater magnitude. As party discipline and legal constraints have failed to restrain political immorality, the dominant moral paradigm has shifted from a willingness to “serve the people” to a determination to make a fortune by hook or by crook.

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money and were shut down, others were still profitable and were sold, not only because of the state-endorsed ownership reform, but because cadres could take bribes from the deals (Xu Sijian 2001). It is notoriously commonplace, particularly in agricultural regions, that village cadres misappropriated the compensation fees paid by the government for expropriated land and attempted to turn collective funds into their private wealth (Jiang Zhenchang 2002). How do corrupt village cadres govern? The following data may offer a glimpse into the endemic corruption in villages. According to a survey conducted among twenty villages in Jiangxi in 2002–03, peasant burdens and cadre corruption were identified as serious problems in rural society by 77.7 percent and 76.2 percent of the respondents, respectively – followed by gambling (75.9 percent), fake and worthless products (69.0 percent), poverty (65.4 percent), redistributive injustice (49.2 percent), moral degeneration (46.8 percent), and the deterioration of public security (40.2 percent). Also, 60.9 percent reported a substantial change in the moral conduct of village cadres. Of these respondents, only 16.7 percent held a favorable view of the change, whereas 52.3 percent perceived village cadres as having changed for the worse (Tang Xiaoteng 2005). This finding tallied exactly with the results of another survey conducted around 1999. Of 818 peasant migrants surveyed, 63.7 percent thought of village cadre corruption as becoming more serious. When asked to give reasons why they were unhappy with village authorities, corruption (35.2 percent) ranked first, followed by heavy peasant burdens (33.5 percent) and cadres’ unwillingness to help villagers (20.4 percent) (Zhao Shukai 2000). How, then, do corrupt and unpopular village cadres govern or manage village affairs? Although protests were not peculiar to the villages under these cadres, they seemed more likely to happen where villagers suffered from the coupling of financial burdens and cadre corruption. The two factors were not invariably linked, however.22 The case of Dongye shows that in order to smooth over potentially explosive relations with fellow villagers, cadres could adopt a co-optive strategy, diffusing corruption by increasing the number of villagers who participated in the distribution of “rewards.” However, the success of such a strategy, which hinges 22

At a few poor villages I visited in Hubei (2002) and northern Jiangsu (2004–05), peasants refused to pay taxes/fees because they had no money to pay. They protested against the policy but did not necessarily hate the cadres who executed this policy. In fact, I did not hear much complaint about their “corruption” but got the impression that the poorer a village was, the more difficult it would be for a cadre to be corrupt.

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on a fragile and volatile balance among corrupt cadres and privileged and unprivileged villagers, can hardly improve village governance; at best, it merely prevents resentments from bursting out into collective violence. In fact, the co-optive strategy in corruption-plagued villages faces barriers to success in one or more of three ways: one, vital personal benefits are at stake; two, intense conflicts of interests are involved; and three, ill-gotten gains are not “fairly” shared. At Sha village (Hunan), much of the collective land was leased to coal mines that contractually employed a quota of fellow villagers. However, these coveted jobs were allocated at the cadres’ discretion. The cadres’ family members and relatives took precedence over the lowest-income households in the village to obtain the jobs. The rest of the quota was sold, and the money earned flowed into the cadres’ private pockets. These unsavory deals were not laid bare until the party secretary and the village head fell out over other deals and attacked each other. The “losers” were subsequently organized in a rebellion that led to the downfall of the entire village leadership (Chen and Liu 2004). The two patterns just discussed are hardly exhaustive but can probably be applied to varying degrees to the villages where political authority has ceased to function. Causality implied in these case studies is not universal, however. As the preceding quantitative analysis shows, the good reputation cadres in poor villages enjoy for taking care of fellow villagers may increase their authority, but this authority works only in some circumstances. In villages that possess a moderate amount of collective assets, cadres’ integrity and fairness in exercising redistributive power may have the same effect. My observations from the fieldwork suggested that the crisis of governance or the decay of party-state authority could be gravest, not in the poorest villages, but in those that were fairly rich in the sense that they were characterized by the abundance of collective funds and cadres’ strong but often abused redistributive power. In poverty-ridden villages, the VPB might not have adequate sources of power to underpin its dominance; therefore, it was less likely to generate many grievances and clashes. In wealthier villages, however, rather than keeping peace and order, the exercise of authority itself could become a catalyst for peasant rebellion. Moreover, the patterns of village governance are not immutable but are quite changeable. As analyzed in Chapter 9, however corrupt village cadres might be during their initial acquisition and amassing of personal gains, their entrepreneurial success may allow them to rebuild their authority by giving them the ability to offer fellow villagers substantial help.

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Continued cadre domination with new collectivism As the earlier analysis suggests, the correlations between the village’s collective economy and cadre power have become more complex since the end of the 1990s. While the amount of disposable funds or financial balance of a village government does make a difference to its authority, the collective economy that is related to land compensation somehow adds very little to such authority. Where village government still manages sizeable collective assets, its authority could be undermined by corruption. The shareholding form of the collective economy empowers ordinary villagers and strips cadres of their economic leverage. However, the collective economy could still make cadre power formidable – even in a context of marketization – as long as two requirements are met: one, the collective economy is large enough in quantity; and two, it is under village cadres’ total control. Without question, such a scenario has been uncommon throughout the reform era but could still be discovered in a few villages whose economy is often referred to as “new collectivism” in China’s academic discourse. Although “new collectivism” is reminiscent of Mao’s collectivism, the two are substantially different. In the first place, no evidence suggests that new collectivism has ever been imposed from higher authorities or enforced by administrative means. Instead, the return to collectivism usually had the consent of fellow villagers. In most of the reform years, the collective economy was often rhetorically complimented; but if it ballooned to a scale that dominated the life of the village population, its implicit challenge to the reform leadership would invite political trouble. Village cadres could even face criminal charges if they coerced peasants into it. On the other hand, new collectivism has no uniform model. Its patterns are diverse and may be differentiated primarily by the extent to which the village’s economic resources, of which the most valuable is land, are recentralized in the hands of village government. Nonetheless, even in the villages with the largest and strongest collective economy, the freedom or option of villagers to quit, coupled with multiple income opportunities in a market economy, would make total cadre control impossible. The villages of “new collectivism” share a few prominent features. First, the village government scrapped villagers’ land-use contracts and recentralized land for collective use. However, the land and other economic resources are used, not for developing agriculture, but for non-agriculture sectors. A number of these villages have thereby been transformed from traditional agricultural producers into modern-style conglomerates, consisting of a number of subsidiary industrial and

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commercial companies in which village cadres are bosses and villagers are employees. Second, these villages usually have stable leadership. Huaxi (Jiangsu) and Nanjie (Henan) are among the best-known icons of new collectivism. At Huaxi, Wu Renbao served as the party secretary for forty-eight consecutive years before his son succeeded him in 2003. Wang Hongbin has headed Nanjie’s party branch since 1977. In other villages, such as Zhulin (Henan), Xudong (Hubei), and Yonglian (Jiangsu), the leaders remain unchanged during the entire reform era. Their leadership is typically paternalistic but not necessarily coercive, allegedly thanks to their prestige, competence, integrity, and entrepreneurial talents. The personal role of the longtime village leaders was so critical that the collective economy, as some observers anticipated, might perish once they are gone (Cao Jinqing 2000: 157–65; Jiang Zhenchang 2002; Liu, Li, and, Xin 2003; Zeng Shi 2008). Third, the industrial basis in most of these villages was laid down in pre-reform years and could even be traced back to the Great Leap Forward of 1958. Thus, collectivism for the sake of industrialization did not come from nowhere but stood for historical continuity. These villages’ success stories could also be accounted for by a developmental strategy that capitalized on their local advantages and resources. Nanjie’s collective economy built on its traditional strengths in food processing, poultry farms, packaging, and transportation. Some new collectivist villages, such as Sanyuanzhu (Shandong), Hongguang (Heilongjiang), and Dongguan (Zhejiang), gave priority to high-tech industries. Some, such as Liuminying (Beijing), achieved the massive production of special fruits through cultivating large orchards. Others, such as Liuzhuang (Shandong), were keen to invest in export-oriented sectors (Xinhuawang 2003). The category of “new collectivism” can hardly be circumscribed rigidly, as its borderline is blurred. Rural villages have more or less collective economy, assets, and revenue. Whether or not they should be defined as “new collectivism” depends on how important the collective economy is to fellow villagers and how much redistributive power village cadres could obtain from it. In rural China, if a village has collective assets and annual revenue combined exceeding 100 million (yi) yuan in value, it would earn an honorable title of “yiyuan village.” For an average-size population, the economic capacity of the yiyuan village could bear on fellow villagers’ well-being to a substantial degree. In this study, therefore, I would arbitrarily use yiyuan as a threshold figure to define “new collectivism.” An accurate estimate of how many yiyuan villages China has is unavailable, other than one disclosed by an official source in 2007.

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By then, China had 8,000 yiyuan villages, which constituted 1.3 percent of China’s 600,000-plus administrative villages (WZ 2007). Despite its small number of followers, the influence of new collectivism should not be underestimated. It was hailed by avowed Maoists as pointing to the right direction for China’s rural development (Cao Jinqing 2000: 138–39). Two case studies To explore the impact of a dominant, cadre-controlled collective economy on village governance in the era when market forces prevail in the rural economy, I selected Huaxi and Jiangxiang, which represent two sub-types of new collectivism in Jiangsu, for an empirical investigation. Huaxi’s collective economy has never been dissolved – not even in the heyday of decollectivization.23 When collective land and assets were carved up among peasant households everywhere, Huaxi stood firmly against it – under the watchful eyes of the reform leaders. The “anti-reform” cadres could get away with it only because of Huaxi’s long-serving chief, who came to national prominence for turning poor Huaxi into one of China’s richest villages as early as the 1960s. His defense of Huaxi’s continued collectivism won sympathy from higher authorities. In pre-reform years, Huaxi had altered its economic structure by shifting its priority of development from agriculture to industry. In 1981, of the total villager income, 80 percent came from VOE employment. Of the village’s workforce, only 8 percent were still engaged in traditional farming – a figure suggesting that decollectivization of agricultural production was of little relevance to Huaxi (Feng Zhi 2006: 169–73). In 2012, Huaxi possessed 104 joint-stock VOEs whose businesses extended from the production of steel, textile, and chemical fiber to services, construction and real estate, finance, and tourism.24 The Huaxi Corporation was listed on the stock exchange in 1998 and exported to more than forty countries. The village’s total collective assets reached a staggering 35.8 billion yuan. In 2012 forty alone, the village government 23

24

Huaxi and Nanjie are often extolled as two model “socialist villages.” Unlike Huaxi, Nanjie did turn to family farming in the early phase of rural reform; however, the reform was soon undone when an income gap among villagers emerged. Since 2001, Huaxi has merged twenty neighboring villages and expanded into a greater Huaxi whose population multiplied from nearly 2,000 of “old Huaxi” (thereafter renamed as the “central Huaxi village” [Huaxi zhongxin cun]) to 35,000. In terms of its economic and welfare structures, “old Huaxi” differs considerably from “new Huaxi.” To avoid excessive complexities, the “Huaxi” here denotes “old Huaxi” only. Details about “new Huaxi” can be found in Appendix A.

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took in net revenue of 200 million yuan with per capita income rising to 88,000 yuan (Coonan 2012; Jizhe 2013).25 The ownership pattern of Huaxi’s VOEs differs from that of traditional ones in that they are joint-stock companies in which nearly all the villagers are both employees and shareholders. However, these VOEs’ shareholding structure, which stands at the core of Huaxi’s distribution and welfare systems, is unique. A villager’s income from VOE employment consists of two parts. The first part is salary that ranges from 1,300 to 1,600 yuan monthly. The second part is bonus whose amount varies with net VOE profits. The allocation of profits follows the “2–8” and “1–3–3–3” formula: 20 percent to be handed over to the parent corporation and 80 percent retained by the enterprise. Of the latter portion, 10 percent is rewarded to its general manager, 30 percent to managers and technicians, 30 percent for ordinary workers as dividends, and the remaining 30 percent for reinvestment. However, each villager as a shareholder is permitted to cash in only 20 percent of his/her dividends and the majority must be added to his/her VOE share.26 This compulsory purchase of shares has invited criticism that it limits the shareholders’ legitimate right to their due income (Zeng Shi 2008). In addition to salaries and bonuses, Huaxi villagers are entitled to share collective revenue through a variety of welfare benefits, which is alleged to be the “hallmark” of collectivist superiority. Each household was allocated one house. The houses were constructed with unified standards: three stories, roughly 500 square meters, and a market price (2008) of 2 million yuan. The house is not free, though, as the rent is deducted from the household’s VOE shares. Each year, the villager has the privilege of buying rice at a discount price (half of its market price) up to a maximum of 300 kg. He/she is also offered a food voucher with the value of 1,200 yuan that is acceptable only at VOE canteens and Huaxi’s restaurants. The village government pays an annual pension of 6,000 yuan to all the elderly (female fifty-five and male sixty or above). All the medical expenses of villagers are covered by village finance. Collective funds have also been used to improve infrastructure and public welfare projects, such as hot water and natural gas pipelines, forestation, and environmental 25

26

Tini Tran (2009) referred to Huaxi as China’s “richest village” in which average family assets “total [US]$150,000 in a nation where annual per capita income hovers around $2,000.” In 2012, as Huaxi’s VOEs showed signs of decline, the distribution policy was modified to increase village revenue by stimulating the “internal demand.” Of the 20 percent for cashed dividends, villagers now could receive only 8 percent in the form of cash; the rest was replaced by vouchers that were valid only in Huaxi’s village-owned shops, restaurants, and hotels (Zheng Daosen 2013).

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protection. However, the village authorities warned that once a villager leaves Huaxi or quits VOE employment, he/she would no longer be qualified for any of these benefits (Feng Zhi 2006: 292–314; Wen Ke 2011; Huaxi Yuekan, February 5, 2013: 4).27 I conducted fieldwork at Jiangxiang twice with a ten-year interval (December 2002 to January 2013). Unlike Huaxi, Jiangxiang did switch to family farming in the early 1980s. But decollectivization there was partial and limited even at its heights. In an effort to provide each peasant household with optimal farming conditions, and probably also to prevent its authority from weakening, the village government took the responsibility for cultivation and irrigation of all the farmland that by then had been leased to each household. For these collective undertakings, village cadres continued to mobilize villagers – a Maoist practice that was obsolete under the reform regime. To keep the “spirit of collectivism” alive, village cadres borrowed money to build houses for all the families (He Jianming 2011: 64–65). In 1992, seeing industrial development as a “shortcut” to “collective affluence,” Jiangxiang’s leadership persuaded fellow villagers to abandon family farming and return their land to the collective in order to transform the village economy from agriculture to industry. Again unlike Huaxi, which left no space for private businesses, Jiangxiang’s industrial strategy allowed both the collective and private sectors to thrive. Since the early 1990s, the village’s annual industrial output has skyrocketed from zero to more than 1 billion yuan, of which 70 percent pertains to the “Jiangsu Changsheng Corporation” (JCC) – a village-owned conglomerate consisting of four joint-stock companies and with the village party secretary, Chang Desheng, as its chairman. Alongside the JCC, Jiangxiang has fifty to sixty private enterprises (CD 2012). When I visited Jiangxiang in 2002, it had 760 villagers (excluding 1,000-plus outsiders), and nearly 80 percent of its workforce was employed in its VOEs. By 2012, Jiangxiang’s population had climbed to 830. Per capita annual income (including welfare) was 31,000 yuan – triple that of ten years before. Of its workforce of 460, 200 were employed in private enterprises; 70 to 80 engaged in family businesses; 16 households contracted collective land for farming (“big farmers” [zhongtian dahu]); 30-plus villagers took charge of the village’s collective tourist industry, restaurants, and hotels; 70 to 80 did the collective business of fish breeding and poultry raising; and only 60 villagers, along with approximately 3,000 migrant workers, worked in the JCC.28 27 28

Also interviews with Huaxi residents between December 25, 2012, and January 3, 2013. Interviews with cadres and villagers at Jiangxiang during January 4–9, 2013.

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In 2011, Jiangxiang had a collective income of 15 million yuan, of which 6 million was net JCC profits and 9 million was reaped from other collective undertakings, private enterprises (mostly land rent), and big farmers. Because villagers are also JCC shareholders, each of them was paid an annual dividend of 7,000 yuan (2012), which is expected to increase to 10,000 yuan in 2015. The welfare services the village authorities offer villagers include medical insurance, pension (female 55 and male 60 or above: 4,500 yuan; 70 or above: 5,000 yuan; 86 or above: 10,000 yuan each year), subsidized housing,29 and free housing for the elderly. The village budget also covers the cost of water, electricity, Internet, cable TV, newspaper subscription, and attending kindergarten for all families (au. int.; NKF 2012). Comparing the workings of economic power At Huaxi and Jiangxiang, high-powered cadres have both similarities and differences with regard to the resources and functioning of their power. Although VOEs in both villages are joint-stock companies of which fellow villagers are shareholders, the proportion of shares for ordinary villagers is too small for them to exert any influence. On the contrary, cadres control the VOEs and can thereby use the allocation of dividends to intimidate recalcitrant villagers. The cadres owe whatever authority they have to their political appointments, but this authority derives mostly from their capacity as VOE bosses (gongsi laoban) and the managers of village finance. To be more specific, cadre power is built on their control over both VOE employment and distribution of welfare benefits, but the former is much more critical than the latter. Indeed, it is none other than their VOE employment that demotes the villagers to a new subordinate position of dependence. However, despite the rhetoric suggesting otherwise, cadre power has no political content: to the extent that it functions, it serves, not the party-state’s policy goals, but the cadres’ personal interests. The changing economic base of cadre power at Jiangxiang suggests that however beneficial it may be to fellow villagers, the provision of welfare can make cadre authority “respectable” but hardly frightening or, for that matter, effective. Its contrast with VOE employment in terms of the impact on cadres’ position of power was observable from my two investigations. In 2002, when most of the villagers worked in VOEs, the village government exercised impressive power that could be coercive if 29

The market price of the house was 300,000 yuan, but the household only paid 128,000 yuan.

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it chose. A decade later, more than half of the village workforce earned a living independent of VOEs, but the welfare benefits the village government allocated to villagers had swelled enormously. The consequence is that the village government now must resort to the “prestige” of its chief, material rewards, or other “soft” powers to deal with villagers.30 Welfare provision is much less effective than VOE employment in boosting cadre authority, not simply because of its smaller impact on villagers’ livelihood. As VOE bosses, village cadres’ relations with their employees are not substantially different from those in any private corporation in a democratic-capitalist society. It would not bother cadres to find “legitimate” reasons to fire or punish employees whose performance is “unsatisfactory.”31 But welfare benefits by definition are collective assets that are supposed to be equally owned and shared by all the villagers. Cadres may run into trouble if they discriminate against those they dislike in welfare distribution – an observation that confirms the positive but not linear correlation between redistributive power and cadre authority. The leaders of successful “socialist” villages are usually local celebrities or “role models” who are keen to shun negative publicity related to favoritism, corruption, and power abuse. In this “boss-via-cadre” model, even though village cadres are obligated to govern as regime agents, the regime relies on them to a decreasing degree, particularly after the AAT, which minimized their administrative responsibility. The post-AAT tasks the regime assigned for village cadres are largely limited to maintaining stability, offering services to peasants, and helping peasants get rich – none of which has much substance. Unless peasants rebel against the state or complain about the government, cadre authority as political authority is irrelevant. If cadres, along with their administration and policies, are popular among villagers – as I observed at Jiangxiang – coercion is not often needed. To head off confrontation on contentious issues, Jiangxiang’s cadres prefer positive inducements, rather than intimidation and punishment, to get jobs done. Huaxi presents a contrasting picture. In rural China, if cadres are compelled to assert their authority, they usually do so either for policy 30

31

Interviews in January 2013. For instance, the village government had to use material rewards to encourage fellow villagers to attend its meetings – 100 yuan for a big conference and 50 yuan for a small meeting. Villagers are not allowed to construct their houses without approval. If they abide by the rule, they will be rewarded with 1,000 yuan. If not, they will be “penalized” by not getting the reward. The growth of vegetables must not cause damage to the environment. Those who comply acquire a reward of 200 yuan, which is not available to violators. The benefits that accrue to VOE employment but could be lost as a result of punishment are not confined to salaries and bonuses but include the VOE’s own welfare (au. int.).

158

The mechanisms of political power in villages

implementation or to pursue private gains. Given its anti-reform nature, peasant grievances in villages of new collectivism are less likely to arise from state policy or be politically motivated. Regardless of their higher income, affluence, and even pride in their village’s fame, resentment among Huaxi villagers is far deeper and stronger than Jiangxiang’s. Thus, coercive and repressive cadre power is necessary for governance at Huaxi. This power is family based or virtually private rather than political because the target of villager grievances – as far as I could tell from my interviews and media accounts – is not the party-state, not even the local government, but the village leadership. At Huaxi, aside from the covert deprivation of most of their dividends, villagers have to pay a high price for their VOE income. They are forced to work all year long with only two Lunar New Year holidays. What was more astounding, when Wu Renbao retired in 2003, he selected one of his sons to succeed him while himself hiding behind the curtain to control all village affairs. When Wu died in March 2013, his three sons and daughter-in-law held Huaxi’s top four leadership posts (ZHX 2013). According to Zhou Yi, a sociologist and longtime Huaxi watcher, the Wu family controlled 90.7 percent of total Huaxi wealth in 2004.32 My interviewees, who likened Huaxi’s “Wu dynasty” to North Korea’s “Kim dynasty,” concurred that such a preposterous lineage-based succession would have been unimaginable under the “CCP leadership” were it not for Wu’s protective “umbrella” shielding him from castigation. What I experienced as a researcher and an interviewer at Huaxi allowed me to feel the fear and terror in which the villagers were living. The village government’s economic control translates into family control that is exercised first and foremost to seal the lips of opponents and grieving villagers. To maintain a veneer of the “democratic” base of family dominance, any villagers who complain to visitors or higher authorities can be severely dealt with. The punishment is usually executed by economic means but could go beyond that.33 Conclusion The role of the VPB as providing formal leadership remains unchallengeable in the rural structure of political authority. Neither village elections 32 33

My telephone interview on December 26, 2012. One notorious case was Dai Jinxing, who as Wu’s most outspoken critic was arrested by the police for “slander.” My interviewees were either “new Huaxi” residents or migrant workers who agreed to talk only on the condition of anonymity to avoid reprisals. The “old Huaxi” villagers I met or was introduced to either quickly walked away or refused to converse.

Conclusion

159

nor any form of villagers’ self-government could destroy the appearance of party hegemony in villages. However, the functioning of cadre power hinges on a number of socioeconomic factors that differ from village to village. Debunking a widely held belief, the results of the statistical analysis of the data collected from China’s five provinces show that the positional authority of village cadres is less related to the factors beyond their control, such as the village affluence and economy, than to their own performance. Whether or not village cadres are perceived to have sincerity and devotion to serve fellow villagers can make an even bigger difference than the services they have actually delivered. The sources of power at the discretion of village government do not translate precisely into an equal amount of authority. Analysis of the empirical cases points to two scenarios in which political authority could be dysfunctional in villages. One has occurred in many impoverished villages where the collective economic and financial resources have dried up, thereby depriving cadres of their economic leverage to get things done and leaving village governance adrift. Another scenario is more common in corruption-plagued villages with a moderate amount of collective wealth. Cadres’ abuse of power for private gains and redistributive injustice costs them moral authority to lead in sharply divided villages. The findings presented reveal the attenuated or complex link between the collective economy and cadre power, suggesting that the conventional approach, to lump all forms of the collective economy together in the study of its impact on village governance, needs revision. Nonetheless, village governance with new collectivism shows that despite prevailing market forces and a drastically changed socioeconomic setting, control over the collective economy remains the cornerstone of formidable cadre power in villages as long as the scale of the economy is large enough to dominate fellow villagers’ well-being. The cadre-peasant relationship of the two new collectivist villages suggests two types of economic power that differ in their effects on boosting cadre power. Control over fellow villagers’ VOE employment is much more critical to cadre power than is the provision of welfare benefits.

6

Village finance Its deterioration and consequences

In the late 1990s, the collective economy and finance of villages in most of the countryside underwent remarkable change. Money-losing VOEs closed down, whereas lucrative ones were privatized as the state policy mandated. The disintegration of the village’s collective economy was expected to increase, by default, the importance of finance as another major source of redistributive power. Nonetheless, the 1994 tax reform threw rural finance into a structural crisis that was transferred downward and, before long, fell on village finances. In debt-laden and povertystricken villages, most of which were located in traditional agricultural regions, the lack of collective funds often paralyzed village administration. Strong village finance allows the village government to offer more welfare benefits to fellow villagers and thereby boost its redistributive capacity. It also can bolster the provision of public goods and services, the historical foundation for the authority of village leaders. For these leaders, the formula of governance in a marketized socioeconomic environment is patently clear: no money, no service (for fellow villagers), no authority. Village finance is critical to village administration first and foremost because it needs to spend. As important, if not more so, the amount in village government coffers is tied to village cadres’ personal income advantages and privileges, which in turn shape their incentives to work on behalf of the regime. Needless to say, as the key link on the “power transmission belt,” the performance of village cadres determines the effectiveness of policy implementation and communist rule at large in China’s rural society. Over the past two decades, village finance has not improved; instead, it has further deteriorated. More and more village governments across rural China, the vast majority of which remained agriculture-dominated, have been operating on the verge of financial bankruptcy. This chapter explores how village finance, which was previously victimized by the township’s growing budget deficits, slipped into a more grave crisis in the early 2000s, particularly in the immediate aftermath of the TFR (2002– 2004), and how the acute shortage of village revenue took a heavy toll on 160

The TFR and the village revenue structure

161

village cadres’ incentive structures, village governments’ administrative capacity, and the development of rural party organizations. Aside from the townships’ continued efforts to squeeze village finance, the TFR cost village government its largest source of revenue, which in turn exacerbated the village’s debt crisis. The near exhaustion of collective funds undermined village cadres’ opportunities for obtaining private gains, made it considerably harder for them to fulfill assigned tasks, and thus demoralized them as “regime agents” in rural communities. On the other hand, the depletion of village coffers hobbled the village government’s ability to provide public goods and thus weakened its authority among fellow villagers. The loss of benefits, privileges, and power for village cadres reduced the allure of party membership, making it increasingly hard for party organizations to absorb fresh blood in the countryside. The TFR and the village revenue structure As noted in Chapter 4, the TFR virtually abolished compulsory payment of fees by peasants, except that a small portion of the fees was added to agricultural taxes. Given the zero-sum game between the two, peasant burdens (mainly fees) had to be reduced at the cost of village revenue – unless the revenue loss was compensated for by higher authorities. However, depending on the income-generating capacity of non-agricultural sectors and the extent to which village revenue relied on fees, the impact of the TFR on village finance was different. To illustrate the disparities, three villages are compared (Table 6.1).1 To make better sense of the comparison, more statistics and information should be provided. Most of D village’s (southern Jiangsu) revenue in the pre-TFR decade (95 percent in 1993) derived from enterprise remittance, whereas the fees levied on villagers remained negligible – below 2 percent for most years. As the profits and remittance from village enterprises plummeted, village authorities charged these enterprises new “environmental protection” or “anti-pollution” fees.2 Thanks to the village’s favorable location, its land had great commercial potential and enabled the village cadres to find a new source of revenue by renting or selling collective land and other collective properties to developers 1 2

For more information concerning the three villages, see Chapter 3 (Table 3.6). Although no further account was offered in the source, a reasonable explanation for the dramatic change in the earnings from village enterprises was the ownership reform of VOEs that swept the countryside at that time. The VOEs should still make money when they were sold out – most likely – to incumbent managers or insiders. Another possibility was the shutdown of VOEs, but this scenario was less common in southern Jiangsu.

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Village finance: its deterioration and consequences

Table 6.1 A comparison of three villages in terms of revenue structure (%) 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 D village Sale and/or renting of 0 0 1.5 3.7 3.2 20.7 9.3 40.3 59.8 35.8 collective property Enterprise remittance∗ 84.5 95.0 88.3 80.1 93.8 73.2 63.3 33.7 16.0 27.4 Anti-pollution fee∗∗ 0 0 0 0 0 0.8 14.7 0.7 7.8 18.7 E village Fees∗∗∗ Sale and/or renting of collective property Fine on birth-control violation F village Fees∗∗∗ Other income

69.9 15.1

– –

– –

58.8 11.6

– –

– –

75.0 15.7

– –

77.0 15

2.7

–

–

20.5

–

–

0.7

–

5.0

99 1

– –

99 1

92 8

98 2

– –

96 4

83 3

95 5

– –

–

Source: Based on the data provided in Cao Liqun (2004); Liao Hongle (2004: 38–44); Ma Yongliang (2004: 157–61); Zhang Zhaoxin (2004: 127). ∗ VOE profits and/or the village government’s share of the profits of private enterprises in the village. ∗∗ This fee was charged on private enterprises in the village. ∗∗∗ Mostly village deductions.

and businesspeople. The proportion of these earnings in the village’s entire revenue soared from zero in 1993 to 59.8 percent in 2000. By comparison, because E (Hebei) and F (Heilongjiang) villages had little non-farming business, by far the largest proportion of revenue came from fees collected among the villagers. It is therefore easy to understand why E and F, which represented the vast majority of villages in China’s traditional agricultural provinces, were the villages most financially devastated by the TFR. Because the TFR explicitly barred village deductions and other compulsory fees, it took away the largest source of post-decollectivization revenues at both the township and village levels. Whereas the township was granted a larger share of agricultural taxes, the compensation for the village consisted of “two surtaxes” – namely the agricultural surtax, which was 20 percent of agricultural taxes; and the special product surtax. An investigation of the wrenching effects of the TFR conducted in two pilot counties in Hubei found that village revenue from the two surtaxes amounted to only half of pre-TFR village deductions, on average (Wang, He, and Chen 2004: 60). The TFR’s greatest victim was village

The TFR and the village revenue structure

163

finance in the hinterland, where the fees collected from peasants made up by far the largest proportion of village revenue.3 In addition to the “two surtaxes,” the village was supposed to share more of the transfer payments. As transfer payments for rural villages were sent to the township for somewhat discretionary distribution, the amount each village received varied widely within and across regions, largely depending on the financial conditions of both the township and its villages. Because township finance deteriorated in the aftermath of the TFR as well, it was not rare for the township to withhold transfer payments to build up its own coffers, so very little trickled down to the village level. The township’s growing reluctance to share transfer payments with villages might also be causally related to the change in county finance and county-township fiscal relations. In Anhui, the TFR cost its poor and ¨ agricultural northern counties up to 60 percent of their revenue (Gobel 2011). Small as it was (if it existed at all), the transfer payment for villages was usually earmarked for specified purposes – mostly for poverty relief only.4 In Hubei, transfer payments for villages were allocated according to the standard of 15 yuan per capita. At a “representative” village, the pre-TFR village deduction alone exceeded 90,000 yuan. The total postTFR village revenue – the two surtaxes and transfer payment combined – plunged to 34,000 yuan, and further dropped to 21,000 yuan after the AAT (Zhang and Qiu 2006). Village finance in some regions was hit particularly hard by the TFR. Village deduction was calculated according to the per capita income of households, whereas the amount of the two surtaxes varied depending on the per capita size of farmland. For a village with less farmland, in terms of total size, if levied agricultural taxes failed to reach the designated quota, the township government often used the two surtaxes to fill the gap – in an effort to ensure the abundance of its own tax revenue. It was highly likely that agricultural taxes would not reach their quota if villagers’ income from farming was adversely affected by weather, or if they refused to pay taxes for whatever reason, or if they had joined the floating population and could not be reached. Statistics shed light on the general wretched plight of post-TFR village finance in agricultural provinces. At Liuxia village (Jiangxi), its post-TFR revenue consisted of the two surtaxes (30,609 yuan), transfer payments 3 4

Among 48 villages of a township, post-TFR village revenue on average was less than 10 percent of pre-TFR fees (Yang and Wu 2004). Only villagers who lost their ability to earn a living (i.e., wu bao hu) qualified for poverty relief. Besides, according to the policy-based quota, there could be only one wu bao hu among every 200 households, and the quarterly subsidy for each wu bao hu was 200 yuan (Zhang and Qiu 2006; au. int.).

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Village finance: its deterioration and consequences

(13,000 yuan), and others (5,000 yuan). The total amount was 48,609 yuan – 27 percent less than the pre-TFR revenue – and its expenditure was 70,000 yuan for the year (Hu and Huang 2004). In Hubei, the average village income deriving from the two surtaxes was 16,000 yuan – a mere third of the pre-TFR village deduction (46,000 yuan) (Wang, He, and Chen 2004: 60). A survey among 48 villages of a township in the hinterland revealed that average village deduction in 2001 was 79,000 yuan and its post-TFR equivalent was only 8,542 yuan, not even sufficient for cadre salaries (Yang and Wu 2004: 59).5 One positive side was that because of the dramatic decrease in postTFR revenues, village remittance to the township was annulled by default. Villages’ outlays for education were also cut back, because the pool of pupils diminished with the enforcement of the birth-control policy, and also because much of the fiscal responsibility for rural education shifted back to the county. Even so, most village expenditures remained. And village administration, management, and public projects and welfare were three budget priorities.6 For rich and developed villages, another major expense was the purchase of capital goods for industrialization or investment in fixed assets. Administrative expenditure consisted mainly of the salaries of top village cadres and the “compensation for public service” (wugong buti) for sub-village leaders. “Management” covered expenditures on “public relations,” office facilities, loan interest, newspapers and journals, militia training, execution of the birth-control policy, party (member) activities, and so 5

6

The preceding analysis of D, E, and F villages suggests that the effect of the TFR on village finance could be vastly different, depending on the weight of village deduction and other fees in village revenue. As a survey of 100 villages carried out in early 2005 revealed, village revenue could even increase slightly after the TFR. Similar to the case of D village, in a number of villages where fees made up less than 40 percent of total village revenue, their loss in the TFR was offset by increased revenue from transfer payments, land and asset sales, contract payments for land and from enterprises, and a surtax rebate from agricultural taxes (Bird, Brandt, Rozelle, and Zhang 2009). But that survey, too, found that, like E and F villages, 40 percent of the surveyed villages “experienced a drop in fiscal revenue of 25 percent or more.” On the other hand, I have found no case in my own samples supporting the observation that the TFR by itself led to “significant redistribution in favor of the poorest villages;” and that the decline in revenue for the poorest villages “was much more than offset by the increase in transfers.” Although this could indeed happen in western provinces, my findings suggest that many poor villages were located in poor townships whose governments typically tried desperately to withhold transfer payments for villages to fill their own budget gaps. Interviews at Yangshao, Xiezhuang, Jiuchengli, and Buqiao villages (Shandong) in June 2006; Luxi, Qiugang, and Fengxi villages (Anhui) in January 2006. In the accounting of many villages, the expenditures for village administration and management are merged, listed as the “village administrative management” expenditure (au. int.). For my analysis, these two items are separated if relevant data are available. A change in either item has different implications.

Worsening village debts

165

Table 6.2 The post-TFR fiscal balance of Zhongtang village, Lucheng township (Lujiang, Anhui) (2004) (unit: yuan)

Revenues

Expenditure

Agricultural surtaxes

Transfer payment

27,000 Cadre salaries 22,000

5,000 Compensation for public services 5,400

Balance

Total 32,000 Management 7,000∗

Poverty relief 9,600

44,000 –12,000

Source: Adapted from He and Wang (2005). ∗ Subscription to newspapers and journals, which was mandatory, alone took 500 yuan.

on. Within the category of public projects and welfare, its basic items included providing infrastructure, running water, electricity, poverty relief, and medical insurance. Table 6.2 shows the influence of the TFR on Zhongtang’s finance and administration. This village apparently slashed post-TFR spending to a minimum, as its bills did not contain a single cent of spending on public projects and welfare except on “poverty relief,” for which the transfer payment was earmarked. After paying cadre salaries (22,000 yuan), agricultural surtaxes (27,000 yuan) – the major source of village revenue – had only 5,000 yuan left. For all its efforts to cut back on spending, the village’s deficit (12,000 yuan) grew to nearly one quarter of total expenditure. The counties and townships struggling with gaping holes in their budgets notoriously tended to extort money from villages and peasants as much as they could. Multiple incidental or miscellaneous expenses – including the fees village cadres had to pay for taking county-organized training sessions; board and lodging for attending township conferences; the money used to entertain inspection teams from higher authorities; and the payment to the county for its allocated seeds and saplings – were often given priority over basic spending items (Ni Ming 2003). For village cadres who aspired to earn achievements but were constrained by shortage of funds, the only solution was borrowing. Worsening village debts In connection with peasant burdens and deficit spending, net village debt began to surface as a nationwide problem at the end of the 1980s. From 1990 to 2001, total village debt in China increased by a factor of seven – from 40.3 to 279.6 billion yuan (Wang Runlei 2004). Village

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Village finance: its deterioration and consequences

indebtedness as a whole escalated through three phases in terms of its causes and the use of debts. The first phase (1990–93) was characterized by the explosive growth of total village debt – from 40.2 to 102.1 billion yuan, an increase of 154 percent. The bulk of borrowing was invested in VOEs. In the second phase (1994–97), village debts mounted by 84 percent and were used mainly to meet all kinds of cadre performance indicators, among which public projects and welfare, including education and infrastructure, were the most expensive. From 1998 to 2002 – the year when borrowing began to slow down, or even ground to a halt in some areas – total village debt increased by 45 percent, reaching the astounding figure of 279.7 billion yuan. Although public projects continued to dominate spending, some of the borrowing – much more in agricultural provinces – was remitted to the government in place of the taxes that failed to be levied among peasants (Yang and Zhao 2006). In 2001, a shocking 81 percent of China’s rural villages were debtburdened (Niu Zhumei 2002).7 To comprehend the implications and consequences of village debt, some key differences should be taken into account. In the first place, village debts were unevenly distributed across the country: half of them were actually owed by only 10 percent of the villages (Chen Dongping 2003: 10). Loans were taken for diverse reasons, depending on a village’s affluence and the purposes of borrowing. In backward and typically traditional agricultural regions, village governments with a lean purse often counted on borrowing or deficit spending for routine administration and the provision of basic public goods. Villages with thriving economies based on lucrative enterprises and non-farming business often took loans not because of empty coffers but because they needed to expand the scale of their investment. The scope of borrowing for this purpose was usually much larger compared to borrowing for basic administrative spending. A statistical analysis of village debts (up to 1998) among fourteen provinces and 218 prefectural cities revealed the rather appalling finding that the average village debt in one of the most advanced cities in Guangdong was ten times that in a city of medium affluence in southern Jiangsu, whose average village debt in turn was ten times that of northern Jiangsu, Hubei, and Anhui – all of which were relatively underdeveloped, agricultural regions (Chen Dongping 2003: 13). Capitalizing on their sound infrastructure, strong industrial base, and other advantages, some 7

In Shandong, 72 percent of the 249 surveyed villages were in debt in 2002 (Ji, Zhao, and Yuan 2003). In Qipan township (Jianli, Hubei), none of the villages was debt-free (Li Changping 2002: 73). Obviously, most of those that borrowed heavily without the ability to repay belonged to the first two types of villages (Appendix A, Table A.1).

Worsening village debts Debt repayment 18%

167 Investment in enterprises 22%

Administrative management 7% Remittance 14%

Public projects and welfare 39%

Figure 6.1 The purposes of borrowing in 676 villages of 105 counties in 2002 Source: Adapted from He and Wang (2005: 22).

affluent villages entered a “virtuous circle” of borrowing: loans were meticulously used for well-chosen and well-designed industrial projects; thus they reaped high returns, boosted local economic prosperity, and encouraged village cadres to borrow further. Their strong financial capacity to repay the debt and their good credit standing with financial institutions allowed them to gain easy access to a variety of lower-interest loans.8 These villages’ success stories suggest that the consequence of village debts for village governance in essence does not hinge on the amount of debt per se, but on a village’s financial capacity to repay. And this capacity is, to a great extent, determined by the entrepreneurship, management ability, and market power of the village cadres – provided that they do not pursue a self-serving agenda. However, for most deficit-spending village governments, even small debts could be devastating. In terms of the general level of village affluence and stage of rural industrialization and socioeconomic development, the eastern (or coastal) and western provinces stand at the opposite ends of the continuum, with central provinces in between. Village debt increased most rapidly in the central provinces. A study of the finances of 690 villages in 105 counties found that the average village debt in central provinces rose 21.2 percent between 1998 and 2002, followed by the western provinces (19.97 percent) and eastern provinces (0.55 percent) (He and Wang 2005: 22).9 Figure 6.1 presents an overall picture of the purposes of village debt in 8 9

Interviews at villages of Shatan, Yinbei, Jiangxiang, and Baimi (southern Jiangsu) and villages of Yeshu and Shuguang (northern Jiangsu) between 2003 and 2005. The small increase of cumulative village debts in the eastern provinces did not necessarily mean that they borrowed less but most probably that they had stronger capacity for repaying.

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Village finance: its deterioration and consequences

three major parts of China. It shows that up to 2002, 39 percent of village debt was spent on the supply of public projects and welfare – an unmistakable indication of heavy pressure on cadres to perform with less available village revenue. Altogether, 78 percent of debts were used for non-profitable productive activities. This structure of borrowing was ominous because of the bleak prospects for villages being able to repay their loans, particularly those in agricultural provinces. After the sweeping policy-based ownership reform of VOEs in the late 1990s, few poor villages still owned, let alone continued to invest in, collective enterprises unless land requisition fees, if there were any for village authorities, were earmarked for developing a form of collective economy in an effort to offer employment to landless peasants. Considering the differences in the borrowing patterns and the economic structure of rich and poor villages, debts for “investment in enterprises” (22 percent) were most probably owed by rich villages that did not have to borrow to provide public goods, manage village affairs, or remit in lieu of unpaid taxes and fees. Besides, although the difference in the increase of village debts between the central and western provinces is small and statistically insignificant, it suggests no linear correlation between the poverty of a village and the amount of its debt. In the least developed western provinces, village government expenditure was traditionally small and fewer creditors were available. The villages with bulging debts that could precipitate a grave crisis of governance usually shared three related features: (1) the bulk of their revenue was agriculture related; (2) they were laden with frequent or constant deficits; and (3) village finances did not allow cadres to accomplish their administrative duties. The three villages presented in Table 6.3 were representative of debt spending before and after the TFR in the heavily agriculture-dominated areas. They did not run into debt in developing VOEs. However, unlike some poor, fiscally deficient villages, they owed no debt for education expenses either after 1998.10 The data on “administrative management” indicate that the borrowing in this category went almost entirely toward village cadres’ salaries and compensation, leaving very little for other administrative expenses. A particularly revealing aspect is the extent to which village debts were used as remittance in lieu of taxes and fees (37–38 percent between 2001 and 2004). 10

For the reasons noted earlier, borrowing for education at the village level has decreased nationwide since 1998. Even so, the lack of borrowing for education in poor villages suggests two possible scenarios. One was that education was simply neglected or sacrificed as limited collective funds were used elsewhere. Another was that the cost of education was borne by rural government. Both scenarios were common in agricultural provinces (au. int.).

Worsening village debts

169

Table 6.3 The structure of debt-spending on average in three villages of an agricultural township in northern Jiangsu (%)

Public projects/welfare (a) Education (b) Road construction (c) Poverty relief Administrative management Salaries and compensation for cadres Others Remittance in lieu of (a) Taxes (b) Fees∗ Others (mostly for entertainment)

1998

1999

2000

2001

2002

2003

2004

27 7 3 17 7 5

24 0 4 20 11 9

27 0 8 18 10 8

28 0 10 18 9 9

29 0 12 17 10 10

28 0 12 16 10 9

27 0 11 16 9 9

2 30 10 20 36

2 33 11 22 32

2 28 15 13 35

0 37 24 13 26

0 38 21 15 23

1 37 25 12 25

0 38 26 12 26

Source: Adapted from Su and Liu (2006: 52). ∗ The TFR was implemented nationwide in 2002, but the debts incurred for remitting unpaid fees remained.

As a common if not routine practice in agricultural regions, if village authorities failed to raise fees and taxes whose amounts had been set by the township and state policy, respectively, they filled the gap with borrowed money. Township officials usually rewarded village cadres who fulfilled the assigned quota of tax-and-fee revenues and transferred it by the stipulated time. Amid bitter complaints about their runaway burdens, peasants commonly delayed payment of taxes and fees, or refused to pay at all, forcing village cadres to make up the shortfall through borrowing in order to earn the rewards. With the TFR and the AAT, the problem with borrowing for remittance was alleviated in general as most of the fees were scrapped; but it was not rooted out, especially in regions where rural taxation encountered obstacles. Village cadres often failed to collect or transfer the due amount of tax on time, under one or all of three circumstances: where payable (mostly agriculture-related) taxes had not been adjusted to the reduced amount of arable farmland arising from rural urbanization or industrialization; when the time of tax collection did not fit into harvest seasons that varied (especially when new crops were being grown for the first time); and/or if large numbers of villagers worked outside the village and were therefore unreachable (au. int.). Contrary to the situation in rich villages, the debts owed by poor villages caused a vicious cycle. Because these debts

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Village finance: its deterioration and consequences 40

10,000 yuan

35 30 25 20

Village debts Village revenue

15 10 5 0 1993

1995

1996

1999 Year

2001

2003

2004

Figure 6.2 The average debts and revenue of 62 villages in Jia township Source: Formulated according to the data provided in Su and Liu (2006).

were used to cover administrative deficits, they generated no returns that could be used for repayment – particularly at a time of declining village revenue. These villages earned bad credit ratings for defaulting on their loans. After being turned down by banks and state financial institutions, they had to turn to individuals or private agencies for usurious loans, thus making repayment even more unlikely. This scenario might explain why so many creditors were individuals in the countryside. A survey conducted by the Ministry of Agriculture among 161 villages in 1997 revealed that of the average village debt of 1.04 million yuan, borrowing from individuals made up 57.5 percent (Yang and Zhao 2006). Jia was an average agricultural township in terms of per capita income (3,000 yuan annually). Figure 6.2 shows that within 12 years between 1993 and 2004, the average debt of 62 villages in this township multiplied 5.64 times, whereas village revenues decreased 2.48 times. In 1993, average village revenues (71,500 yuan) still exceeded village debts (65,600 yuan); in 2004, the debts (370,200 yuan) were 12.85 times the revenues (28,800 yuan). Obviously, without massively augmented transfer payments for these villages, there would be no feasible solution for the debt problem. Altered incentive structure of village cadres As Shue (1988) observed, village cadres had rarely served as the communist regime’s wholehearted agents – not even in the Mao era. Their loyalty to the party-state and passion for performing their designated duties was often diluted by personal agendas shaped by their

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circumstances. Even so, the Maoist state could still use political campaigns as a stick and privileges as a carrot to make them comply. By the late 1990s, most of the once-powerful political and economic incentives for village cadres were gone. The transition toward a market economy had shaken the long-enduring value system that regarded a political career as the most glorious and admirable for rural elites; a market economy provided numerous options for career development. Political campaigns were discontinued, the ideological straitjacket was forsaken, and the personal attachment of village cadres to the party-state became attenuated, breaking the latter’s old-fashioned “sticks” and impelling it to resort more to positive inducements. As noted earlier, in China’s hierarchical power structure, the township leadership (its party committee and government) is the immediate – and usually ultimate – boss of village cadres. But the incentive structure of village cadres is not exclusively determined by township officials and could be affected by the party-state policy as well. Before the 1990s, village cadres could be promoted into the government (usually at the lowest township level) and hence draw their salary from state budgets. The chances of promotion grew slimmer thereafter until 1996, when it was stipulated that rural “civil servants” (i.e., government officials) must not be selected directly from among incumbent village cadres – a policy that amounted to blocking their political careers and thus cost the government much of its leverage to control them. To cushion the blow of this policy change – in combination with other discouraging market-related factors – to the morale of village cadres, the township leadership raised material rewards for cadres and at the same time became more lenient toward their malfeasance.11 Because of its own shrinking economic resources and growing deficits, however, the material rewards that the township could afford to offer were both restricted and diminishing. Under the commune system, production brigade/team cadres did not receive a salary except for a small subsidy that compensated for the loss of “work points” arising from the performance of official duties. With decollectivization and the reduced workload for village cadres, the subsidy shrank nearly to zero until the mid-1980s, when it was restored to reward village cadres who were required to carry out the unpopular birth-control policy. The amount of the reward was quite small – below 11

Indeed, in terms of incentive structure, township officials and village cadres are very different. As Stig Thøgersen (2008) put it, a village head is usually a local resident living in the community he/she leads and therefore “holds no realistic ambition of advancing further.” By contrast, top township officials, as career bureaucrats, are typically outsiders who will be promoted if they perform well and will then leave the locale.

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1,000 yuan annually for top village cadres – in the late 1980s, but rose sharply thereafter. A village usually had ten salaried cadres, with the party secretary, village head, and accountant at the top of the payroll. In Jingmen (Hubei), the average annual salary for a village party secretary leaped from less than 2,000 to 4,000–5,000 yuan in the 1990s.12 A village cadre’s salary consisted of two parts: basic (fixed) and floating (performance-based). To link material rewards more closely to performance, the ratio of the two components changed from 60:40 in 1998 to 30:70 in 2000, and further to 10:90 in 2001 (He Xuefeng 2001: 28; au. int.). The change in the ratio was not simply intended to pressure village cadres to deliver; it stemmed to a large extent from deteriorating village and township finances. Although the amount of each village cadre’s salary was set and paid by the township, the money was not taken out of the township’s funds but from the village revenue, unless the township was able and willing to make financial “self-sacrifice.” Other material benefits for village cadres, such as bonuses and subsidies, were only procedurally paid by the township; the costs very likely ultimately fell back on village finance. In other words, the financial conditions of both the township and the village determined the most critical part of village cadres’ incentive structure. As long as VOEs made money, village governments usually had revenue to pay their cadres. Moreover, VOE profits or a village’s fiscal surplus would be shared with the township, which explained why affluent villages’ cadres were usually better paid. In the late 1990s when many VOEs shut down or were sold, village deduction – plus other fees levied on villagers – was left as the main, if not sole, source of village revenue. A large number of villages shifted from situations of budget surplus to deficit, rendering cadre salary a problem. Meanwhile, both county and township finances fell prey to the institutional biases of the 1994 tax system that weakened their ability to make up villages’ fiscal shortfalls. The intention of townships to force village cadres to solve the problem of funding their own salaries was clear in the design of the “floating salary.” In Shenji (Hubei), for example, the floating component of cadre salaries was based on a cadre’s performance in fulfilling ten tasks. Collecting taxes and fees was by far the most important, making up 45 percent of the floating salary in 2001 – in sharp contrast to other tasks such as the adjustment of agricultural structure (10 percent); management of land resources (5 percent); agricultural production 12

In Shenji township, as peasant income slumped, the salary of village cadres on average increased from 3,474 yuan in 1997 to 3,810 yuan in 2000 (He Xuefeng 2001: 29).

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(5 percent); village finance (3 percent); and others (He Xuefeng 2001; au. int.). Substandard performance in any of these tasks would result in the deduction of the corresponding percentage from the floating salary. As the levying of fees became increasingly critical to village revenue, village cadres who could not squeeze enough from fellow villagers lost nearly half their floating salary. However, the village’s financial shortage had larger consequences as well. Increased peasant burdens in the late 1990s set off fierce peasant resistance, adding to the difficulty in collecting taxes and fees. Of course, villagers’ refusal to pay tax was also attributable to the decrease in their income,13 as well as to their awareness that state policy defined many fees as “illegal” or “unreasonable.” In addition, the conflict of interest between village cadres and villagers was made even more personal and apparent under this system: fee collection was mostly perceived by villagers as the cadres’ effort to extort money for their own salaries. A vicious cycle built on itself: the harder it was for village cadres to do their jobs – levying taxes and fees in particular – the lower their salary, and the less passion they had for their positions. In a number of villages I visited in Hubei, Anhui, and Shandong, cadres claimed that their salaries could not even cover the cost of implementing their administrative tasks. A village party secretary in Shayang, Hubei, complained that his annual salary (4,000 yuan) was less than the bills for phone calls and transport (au. int.). Nonetheless, given that the government agenda assigned top priority to cadres’ task of levying taxes and fees, the consequences of failure would be even more grave than losing part of their salaries. Township officials often threatened village cadres with other sanctions, such as public reprimand, dismissal from their posts, and party disciplinary actions. These sanctions, along with their desire for a higher floating salary, drove many village cadres to desperation. To fulfill the tax-and-fee quota, some borrowed money from their friends or family members. And they joked that ironically they were virtually using their own money to pay their salaries, or to buy their money-losing offices.14 The debt crisis often made village cadres’ jobs not only difficult but literally a financial liability. Because of the village’s collective nature, the 13

14

After 1996, the price of grain declined from 0.80 yuan to 0.30 yuan per jin (500 g). The percentage of peasants who were financially unable or unwilling to pay taxes and fees spiraled up from 5 in 1996 to 50 in 2000 (He Xuefeng 2001: 45). Interviews with the party secretary of Zhenggang village (Hubei) on December 17, 2002; the deputy head of Yingjie village (Hubei) on December 16, 2002; the former head of Silong village (Chongqing) on December 28, 2005.

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responsibility of repaying village debts would ultimately fall on all villagers, adding to what the theory of group solidarity might term their “membership tax” (Hechter 1987: 40–58). This frightened many households into moving out of their villages. In some rural areas, the repayment of debt replaced the levy of taxes and fees, to dominate the routine agenda of village government. Village debts did not only signify a village’s dim economic prospects and serve to discourage aspiring young cadres; village debts could sometimes be turned into village cadres’ personal debt and ruin their lives. As reported by Nanfang Zhoumo (Southern Weekend), one village party secretary earned multiple honors and rewards for his achievements. But these achievements were built on massive debts that he owed on behalf of his village. After he stepped down, his successor refused to acknowledge these debts. When creditors tried to force the former party secretary to repay the debts, he committed suicide (Ni Ming 2003). Similarly, a village party secretary in Jingmen told me that he had paid village debts out of his own pocket. He spent most of his time dealing with creditors, some of whom threatened to kill him if the debts were not repaid. (Part of the section draws on my analysis in Chen [2007].) The fading function of village government on public goods/services provision The provision of public goods and services is usually a powerful lever for village authorities to mobilize villagers and maintain village cohesion as a rural community. If the levying of taxes and fees represents coercive authority, offering public goods serves to bolster moral authority. In imperial China, the prestige and respect – and hence the authority – the gentry enjoyed in villages was not built merely on their wealth, education, and political connections, but perhaps in larger part derived from their contribution to local public projects, arbitration, and welfare matters such as relief works, public cemeteries, and orphanages, which benefited all villagers (Fei 1953; Chang 1955: 51–70). As part of its responsibility to the populace, the imperial state usually bore much or most of the cost of developing infrastructure, especially gigantic cross-regional works for irrigation, flood control, and transportation networks. Rural public goods in the Maoist state – along with agriculture in general, and the peasantry as a whole – were victimized by a development strategy that gave priority to its industrialization programs and the welfare of urbanites. Whereas public goods and services in urban areas were either covered by state budgets or heavily state-subsidized, those in the countryside were paid for by the peasants themselves.

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Who paid for rural public goods? Nonetheless, the failure of the party-state to fulfill its responsibility to serve the peasants did not undermine its authority, as one might expect from historical experience. The communist regime’s all-powerful organizational and economic control system was the key to understanding the structural base and coercive nature of party authority. The peculiar way in which rural public goods and services were offered under the commune system was relevant as well. The commune was the rural part of government structure that differed from the township in terms of its functions and sphere of power. The commune was responsible for providing local public goods, but only a tiny portion of the funds earmarked for that purpose were allocated by the state; the bulk was taken from the peasants in the form of the “accumulation fund” (gong ji jin) and “public welfare fund” (gong yi jin). The proportion of the two funds as part of total commune revenues increased from 6 percent in the 1960s to 13 percent in the 1970s (Li Hua 2005: 61). Under the highly centralized redistributive system, all revenues from collective agricultural production and enterprises at the production brigade/team level were first given to the commune for reallocation among its members according to their workload and the work points earned. The accumulation and public welfare funds were not separately levied on individual peasants but added to total collective work points. Needless to say, the more work points a commune’s total revenue was divided into, the less value (money) each work point would contain. In other words, with the extra work points assigned for the two funds, the number of work points each commune member earned would remain the same, but less cash was paid for each work point. Therefore, rural public goods and services were nominally provided in the name of the government (commune) but actually paid by the peasants. This complex form of self-funding, coupled with more or less state subsidies and party propaganda, made it very confusing to ascertain who really paid for rural public goods; it was not strange at all if peasants gave the credit to the government.15 15

Interviews with an official of Xiayuan township (Jiangsu) on December 30, 2004; a bureau director of Yucheng township (Shandong) on June 14, 2006; a few cadres of Shatan village (Jiangsu) on December 23, 2002, and July 23, 2005. Presumably because of the administrative nature of the commune, little research has been done regarding who paid – and how – for rural public goods under the Mao regime. According to Jean Oi (1989: 108–10, 121–24), under the commune system, peasants were required to contribute 30 to 60 work days for public works projects such as irrigation and road building. Most labor expenditure for public works projects was paid by the state until around 1969. As an outcome of the decentralized funding, the projects organized by the

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As each peasant household became an independent unit of production and accounting in the wake of decollectivization, the sourcing of collective funds for rural public goods surfaced as an acute issue that was soon thrust into the limelight. With economic decentralization and marketization, the role of the central state in the provision of local public goods did not expand but diminished, leading to the flow of smaller state subsidies into the countryside. At the same time, the dismantling of the commune system caused financial problems for rural socioeconomic development and led to a reduction in public goods provision. This had a direct and unequivocal impact on peasants in the forms of santi wutong and various kinds of fees. The amount of affordable rural public goods thereby hinged on the ability and willingness of peasants to contribute to the collective funds, as well as to provide requisitioned labor. Before the TFR, however, santi wutong and most other fees imposed on peasants were compulsory, and thus township and village governments continued to virtually force peasants to pay for rural public goods exactly as the commune had. What changed was peasants’ perception of who really paid for rural public goods. This change was politically consequential, as it ratcheted up tensions among the party-state, the rural cadre elite, and the peasants. The impact of rural fiscal crisis Both my empirical findings in the villages I visited and plenty of relevant reports suggest that the decollectivization, or the family farming system, had few immediate adverse effects on rural public goods provision. In fact, from the 1980s to the early 1990s, the amount of public goods reached historical heights in many rural regions, thanks in large part to the abundance of collective funds at both the township and village levels. With increased income, many peasants not only could afford but were willing to pay taxes and fees. The legitimacy of agriculture taxes was taken for granted by Chinese peasants, who called it “royal grain” and perceived its payment as a duty enshrined in historical tradition. Although santi wutong and other fees were not based in law or levied in the name of the state, their collection encountered little resistance at first. Under the HRS, the land leased to each household was owned and managed by the village government on behalf of the state. Peasants were required to pay duties for renting collective land. Payment for santi county, commune, or brigade were no longer funded by the state. “Once financing fell to the localities, production teams bore the brunt of the costs.” The teams usually used team reserves to pay for requisitioned labor.

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wutong and other fees were part of these duties, and this was explicitly written in the contract signed between the peasant and the township government. If peasants refused to pay, they would not be legally prosecuted, but they would be seen as violating their contractual terms, and this would then be dealt with through negotiation, persuasion, and coercion if need be. Deficits in rural finance spiraled rapidly in the late 1990s, both because the effects of the 1994 tax reform flowed down to the township and village level, and because the deterioration of peasant income weakened peasants’ ability and willingness to pay taxes and fees. The two factors were causally related and mutually reinforced, causing rural public goods and services provision to take a sharp turn for the worse. An investigation in Hebei, Jiangsu, and Heilongjiang in 2002 found that up to the mid-1990s, most village-level public goods were heavily subsidized by the county and township governments; after 1997, financial support for the village from above almost totally evaporated. The widening hole in township budgets immediately set off a crisis in village finance, and public goods provision was usually the first to be trimmed from the village government’s spending plan (Zhang Zhaoxin 2004).16 Spending on public goods and services diminished markedly even in rich villages, not to mention villages long mired in debt. In the village of Hebei selected for this investigation, the expenditure on public goods was at a record high in 1995, rising to 55,869 yuan or 37.3 percent of the village’s total public expenditure. The figure plunged to 12,241 yuan in 2000, even lower than in 1989. Because drastically reduced village revenues had to be spent on other priorities, the proportion of public goods provision in the village’s total expenditure shrank to 5.7 percent (Zhang Zhaoxin 2004). In poor villages, where much of the workforce joined the floating population, the shortage of funds for public goods combined with migration to make the situation even worse. Rachel Murphy (2002: 52–87) described how the stagnation or deterioration of peasant income, coupled with village inequalities, redistribution of burdens, and tensions over resource allocation, resulted in large-scale

16

A comparison of the three villages whose financial relations with their respective townships is discussed in Chapter 3 (Table 3.6) suggests the extent to which public goods provision in a village depends on the fiscal conditions of the township and village governments as well as the affluence of peasants. At D village in Jiangsu, spending on public goods and services took 18.2 percent of its budget in 2000, but only 5.7 percent at F village in Heilongjiang, whose basic administrative expenditure (mostly cadre salaries) alone made up 47.4 percent, compared to 17.2 percent at D village. This expenditure structure, of course, did not suggest that F village’s cadres were greedier, as D village’s administrative spending was 6.9 times F village’s (Liao Hongle 2004: 42–49).

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migration that added further to the difficulty in mobilizing labor for public works.17 As noted earlier, on the eve of the TFR, the collection of santi wutong and other fees had become exceedingly difficult and painstaking. The decline of peasant income made these fees an increasingly painful financial burden that sparked widespread protests and resistance. As village finance deteriorated, a larger proportion of santi wutong and other fees were not used as promised, to provide services for peasants, but were channeled to make up for the shortfall in administrative expenditure – a chunk of which was village cadres’ remunerations. According to the contract between the peasants and the government, santi wutong must be included in the collective funds earmarked for local socioeconomic development and public welfare projects, and all the other fees must be spent on improving local conditions or services for agricultural production (with each village as a unit). The unauthorized change in the use of these fees was thereby a breach of the contract and made peasants even more reluctant to pay. Fewer government subsidies and the depleted purse of village government meant that fewer collective funds were available; however, this variable is not itself sufficiently accountable for the reduction of rural public service provision. The delivery of public goods was often ranked as one of the lowest priorities on the spending agenda of village authorities. As Lily Tsai (2007: 27–85) found from her 1999–2002 surveys, the township did not care about public goods and services such as repairing roads because “there are no benefits (xiaoyi), no returns (huibao).” Village cadres who had sufficient funds did not have a particularly strong incentive either to invest them in public goods because of fiscal decentralization and the failure of the higher-level authorities to supervise them. Although all these factors – ranging from the lack or misuse of collective funds to the absence of supervision and cadre corruption – were important, one crucial variable, namely the criteria by which village cadres’ performance was evaluated by local government, has not been adequately explored in the existing literature in explaining why public goods provision was so low on village authorities’ agendas, particularly at a time of financial stress. Among the administrative duties assigned to village cadres, their “hard” and “soft” targets, which were closely associated with their level of remuneration, were not fixed but subject to situational needs. The weighting of these targets in their performance evaluation was 17

For instance, as Murphy (2002: 81) observed, twenty days of labor were requisitioned from households on an annual basis for collective projects. “Migration households escape this obligation by paying 6 yuan per day as a substitute for their labor.”

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explicitly written into a contract, called “the reward-and-punishment system of village management responsibility,” to be signed between each village and township government.18 According to these government-village contracts, the “core” work of village government included reaching targets of economic development, implementing social policy (mainly birth control and social stability), “party-building” (dangde jianshe), and the “building of spiritual civilization” (jingshen wenming jianshe). Whereas the last two tasks were largely rhetorical matters without a great deal of substance, the target of economic development was obviously the top priority. It was not only “quantified” with the highest reward but was further itemized into attracting investment, increasing fiscal revenues, adjusting agricultural structure, engaging in multiple businesses, spreading agricultural technology, managing the collective economy, maintaining irrigation works, increasing and protecting forests, training migrant peasants, and so on. Of all these items, only one (irrigation works) was strictly a public good. Because these contracts were only slightly different, their contents were most probably based on guidelines devised by the central leadership. According to an investigation in a remote village of Sichuan, the provision of what one could define as public goods was worth less than 10 of the total 100 marks in the scheme of village cadre performance evaluation, even fewer than the largely rhetorical “party-building,” which was allocated twelve marks (Wang Ximing 2009: 262–63).19

The TFR and public goods By the early 2000s, it seemed that much of rural China remained disconnected from the thriving national economy. Until 2003, only 41 percent of rural residents in China had access to tap water. Whereas 60 to 70 percent of China’s entire population lived in the countryside, rural medical resources, such as the number of doctors and hospitals, constituted only 20 percent of the national total. In most rural areas, medical and health services were turned from a previously public to a private service, until the “new rural co-operative medical system” was launched in 2002–03. Profit-driven private clinics became the principal health-care 18

19

In a number of village government offices I visited, this contract was hung on the wall as a poster printed in large characters – an indication of its paramount importance in the formulation of the village governments’ priorities. These villages included Yinbei (December 29, 2008), Chen’gao (July 25, 2005), Baimi (July 26, 2005) in Jinagsu; Silong (December 28, 2005) in Chongqing; Xiezhuang (June 15, 2006) in Shandong. My fieldwork in December 2011 and January 2012 produced findings suggesting that public goods provision ranked even lower on the agenda of village government in Jiangsu. See Chapter 7.

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providers at the village level. Rather than offering subsidies for these clinics, some village governments charged them rent. Rural education fared slightly better than rural medical services, but lagged far behind urban education. In terms of classroom size and the number of laboratories, computers, and libraries, resources for secondary education in the countryside were only about 30 percent of the nation’s total in 2001 (Li Hua 2005: 71–72).20 To scrutinize the real and exact impact of the shortage of funds, one has to distinguish between public goods and services provided by village government. To avoid excessive complexity, the discussion here excludes basic public administrative services. The public goods and services taken care of by higher levels of government and the “image projects” (xingxiang gongcheng) are excluded as well. The latter were implemented only to make the rural governments appear impressive and effective for the purpose of performance evaluation; they had little relevance to peasant life. The public services that ought to and used to be offered by village government were mostly associated with agricultural production, such as technological assistance; farm implements; the control of plant diseases and pests; and the processing, preservation, marketing, and transportation of agricultural products. Since decollectivization, these services have decreased as a general trend nationwide, but the reasons not only differ across regions but differ from the reasons for public goods provision, because public services did not involve finance as much. In prosperous villages with advanced industry and commerce, lucrative non-farming businesses and employment in industrial enterprises has long replaced farming as the main source of peasant income. In poverty-stricken areas, peasants tended to forsake unprofitable farming and joined the “floating population” in search of urban employment. In both areas, peasants either gave up farming or farmed for their own consumption only. The new structure of peasant income thus no longer required the same kinds of agricultural services.21 In other rural areas, township and village governments either failed to update their services to cater to market-driven agricultural 20

21

In a survey in five provinces (Jilin, Hebei, Shaanxi, Sichuan, and Jiangsu), before the TFR, many villages invested heavily in public goods, and the major source of finance was the village itself. Between 2000 and 2004, expenditure on public goods continued to increase but was more and more often financed by transfer payments. Meanwhile, public goods provision showed a “marked bias towards roads and bridges, followed by irrigation and drinking water” (Bird, Brandt, Rozelle, and Zhang 2009). Interviews with a few township officials of Yucheng and Wangmiao (Shandong), June 14–17, 2006; some village cadres and peasants in Tangshu township (Anhui), January 2–5, 2006.

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structural adjustments or simply lost the incentive and passion to do something about the changing conditions, thus forcing peasants to purchase directly from markets or use other channels for services they needed. Table 6.4 shows that the progressive maturity of markets in the countryside allowed and prompted peasants to rely mainly on themselves in acquiring various services for farming. These figures are highly revealing, and not merely because they expose the extent to which village governments were sidelined and cadres’ ability to help (and hence control) peasants in provision of agricultural services weakened. The findings are also indicative of astonishing changes in social relationships in rural communities that, aside from wearing away the base of cadre power, have set the provision of public services in villages adrift from the traditional mode of intra-village cooperation. In contrast with agricultural services, tighter fiscal constraints and the greater difficulty of fund-raising threw basic rural public goods, such as roads and bridges, facilities for irrigation and water conservancy, education, electricity, and running water, into more grave disrepair. Regional differences were spectacularly large, however. For instance, in coastal provinces, thanks to urbanization efforts and dense regional commerce and transportation networks, rural and urban infrastructure was closely meshed. But large numbers of townships and villages in interior provinces were still not connected to local main roads and also lacked some basic necessities (Li Hua 2005: 71–72).22 In theory, the TFR did not necessarily scale back collective funds for public goods; it simply altered the method of raising funds to provide them from being mandatory to voluntary. As the new state policy stipulated, any fee levied must be earmarked for a specific project and collected with the consent of villagers. This democratic method, labeled as “one-issue-one-discussion” (yishi yiyi), was adopted to minimize arbitrary and predatory bureaucratic behavior in fund-raising and public goods supply. Villager consent, however, was often hard to come by, when township and village leaders gained notoriety for graft or for misusing village funds, and had thus lost the trust of fellow villagers. In addition, Mancur Olsen’s (1965) logic of collective action also applies to this situation, in which villagers actually preferred to be “rational” free riders. 22

Both from my discussions with village cadres in these regions and from the government’s criteria for their performance evaluation, irrigation projects invariably stood out and ranked as the first priority in the provision of rural public goods, obviously because irrigation required collective effort and was often decisive in achieving successful agricultural harvests. Even so, irrigation projects in some poor regions could not escape the funding crunch, nor were they considered a special priority by rural governments.

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Table 6.4 The provision of services for agricultural production (2005) (%) (a) On whom/what do you rely to control plant diseases and pests? Self-organized My own experience, Government peasant departments in experienced fellow villagers or technology expertise learned from media charge of association agricultural technology services 73.6 15.6 3.0 (b) From whom do you obtain information about new crops? Self-organized Better-informed fellow villagers, Government peasant flyers of companies or departments in technology charge of advertisements in media association agricultural technology services 73.5 17.7 6.3

Village government and cadres

3.6 Village government and cadres

0

(c) How do you purchase means of agricultural production, such as chemical fertilizers and pesticide? Collective Purchase my Joint purchase Collective Delivery own from purchase from door-to-door by a few purchase from markets markets∗ households county-township by salesmen or companies cooperatives 75.1 2.9 6.3 13.0 2.1 (d) How have you acquired equipment for agricultural production? My own purchase and use Rent from others Collective purchase and use 47.9 39.1 3.8 (e) How do you prevent livestock epidemics? Seek help from veterinary surgeons in the village

21.6

Joint purchase and use by a few households 6.9

Rely on my own experience or consult fellow villagers with expertise 66.0

Source: Based on survey data from 6,442 copies of a questionnaire distributed nationwide in July–August 2005. The respondents were ordinary peasants. The surveys were organized by China’s Center for Rural Studies (Cheng and Chen 2006). ∗ “Collective” purchase means an organized purchase. The organizer could be anybody – any association or organization, such as a clan or church. There was no indication at all of the relevance of village government.

A reporter wrote that in all the villages he visited in a township, he found only one case in which the much-needed funds for a public project were obtained from villagers through yishi yiyi. For other public projects, however greatly the estimated benefits would outweigh the costs, either

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no consensus among the villagers was achievable or the villagers refused to pay despite their verbal support or promise. A village party secretary complained that no public goods provision would be possible “if only a few villagers did not cooperate” (Shen Shiguang 2006). In most of the villages surveyed for a public goods study, infrastructure – roads and irrigation works in particular – and school buildings were in poor condition and hardly usable, but funds for repairing them could not be obtained under the yishi yiyi principle (Zhang Haiqing 2003).23 The decay of rural party organizations As village government lurched from one budget crisis to another, which was coupled with the demise of the collective economy, redistributive power and income advantages for cadre positions and potentially for party membership diminished. The shortage of funds compelled village government to abandon much of its traditional role as public goods provider, thereby hollowing out its administrative power and mobilizational capacity. These effects have shown up and reinforced one another in a vicious cycle, causing party organizations in many villages to fade toward irrelevance or cease to function. In the era of market reform, rural party organizations have been plagued by multiple problems, especially the alleged loss of the “party spirit” (dang xing) among peasant party members. Until the 1990s, party membership was regarded as an honor or a symbol of higher status in the rural socio-political hierarchy. However, as wealth replaces political identity as the new standard for social status, party membership is no longer a source of pride. Rather than enjoying any tangible benefits, party members must take the lead in paying taxes and fees, or face the party’s disciplinary action – thus explaining the prevailing belief of “losing out if joining the party (rudang chikui)” among young villagers (au. int.). A party journal reporter found in Jiangxi that party membership among villagers made no difference to them except that members had to pay a membership fee (between 20 and 50 cents per month).24 23

24

Zhang quoted a local jingle: “Yishi yiyi is really good. Village cadres do not have to work and we do not waste money.” My interviews in some poor villages in Anhui, northern Jiangsu, and Chongqing suggested that when the villagers did not want to “waste” their money on improving infrastructure, it was not just because they thought of village cadres as being corrupt or untrustworthy. They did not have much money to contribute in the first place. Encouraged by the prevailing “socialist” discourse or widely propagated (new) state policy that urged rural governments to shift their priority to “serving peasants,” they expected that the government would, at the end of the day, bear the costs for public goods anyway, as the officials needed them (for promotion) even more than did the peasants. Elderly party members felt the changing times most keenly. They complained that they were ignored and treated as garbage by the VPB in discussions about village affairs (Zhou Wei 2003; Chen 2007).

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Table 6.5 Average annual number of applications for party membership in 1998–2007 in 46 villages No. of applications

No. of villages

Percent

1 2 3 4 5 6 8 9 10 Total

14 17 8 1 1 1 1 2 1 46

26.9 32.7 15.4 1.9 1.9 1.9 1.9 3.8 1.9 88.5

Source: Author’s surveys conducted in Shandong, Jiangsu, Zhejiang, Sichuan, and Hubei from November 2007 to January 2008. Note: Mean: 2.67

Table 6.6 Average annual number of recruited party members in 1998–2007 in 46 villages No. of recruited party members

No. of villages

Percent

0 1 2 3 4 5 6 Total

3 28 10 2 1 1 1 46

5.8 53.8 19.2 3.8 1.9 1.9 1.9 88.5

Source: The same as Table 6.5.

Frustration and low morale among party members account to a large extent for the lack of new recruits. As Table 6.5 shows, among fortysix villages in five provinces, fourteen (26.9 percent) each received, on average, merely one application annually for party membership, and seventeen (32.7 percent) two applications. Recruited party members were even fewer (Table 6.6). In most of the villages (53.8 percent), only one villager joined the party each year. In the three villages (Yingjie, Chaigang, and Zhenggang) in Jingmen (Hubei), which I visited in December 2002, there had been no applicants for party membership or new recruits in the previous two years. In Hubei, Shandong, and northern Jiangsu, the peasant party members I met were very old

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people, ex-servicemen, or laid-off workers who had returned to their birthplaces.25 Although peasants showed little interest in joining the party, elaborate formalities and strict criteria also deterred potential aspirants. For instance, the candidate must be “tested” for one or two years before formal admission as a party member (with one-year probation). To be selected as a candidate, a villager must first be elected to the villagers’ committee or as a villager-group leader. In other words, new party members need to already have a base of support among fellow villagers, and therefore be capable of assisting the VPB in performing its duties.26 Behind the formalities and impressive-sounding requirements for party membership, some complexities hide. Even if a peasant is keen to join the party and meets all the criteria, he or she may still have a long way to go. Applications and recruitment often encounter different obstacles in rich and poor villages. Poor villages are usually afflicted with high deficits and debts, and cadres have fewer privileges, income advantages, or power to abuse for private gains. Because most peasants join the party with their eyes on office, villagers in poor villages typically have no motive for party membership, nor do party cadres bother to block their efforts. As a result, party organizations there sink almost into oblivion. Villages surrounding Guiyang, Guizhou, were among the poorest in China. Only 1.7 percent of peasants in this interior traditional agricultural province were party members, far below the nationwide average of 5.1 percent. In the three years preceding 2003, 35 percent of VPBs did not recruit a single new party member (Wang Xiaodong 2003). The situation is more complicated in affluent villages where cadres often manage a considerable amount of village-owned assets and economic resources. Thanks to the attendant redistributive power and privileges, leadership posts in these villages are coveted and quite hotly contested. Evidence suggests that cadre positions tend to be more tempting in affluent villages or where village authorities enjoy a budget surplus. As more villagers apply for party membership in an attempt to compete for offices, party cadres are often more disposed to reject their applications in order to minimize potential contenders and keep their grip on power. Of 129 VPBs in Shijiazhuang (Hebei), 67 percent of the chiefs had served for five to fifteen years, and 31 percent for more than fifteen 25

26

A study found that in the villages surveyed, not a single villager had joined the party in nearly two decades. All new party members were demobilized soldiers who had returned to their native villages (Zhang Jiandong 1997). Interviews with some cadres of Chaigang and Shiniu villages (Hubei), December 17–19, 2002; the former village head of Silong (Chongqing), December 28, 2005; a leading party cadre of Yangshao village (Shandong), June 6, 2006.

186

Village finance: its deterioration and consequences

years. For all their alleged merits and contributions, many, if not most, party secretaries did a poor job in party member recruitment. They perceived fellow villagers who were competent, popular, and had strong market power as a potential threat. In some investigations, village cadres’ attempts to eliminate challenges to their authority and privileges are identified as the main obstacle to “party-building” (Mao and Chen 2001; ZSSZ 2005). In quite a few villages, party secretaries were infamous for recruiting party members exclusively from their cronies, children, and relatives, leading to the so-called clanization of the VPB (Li Xinliang 2005; ZZZZ 2005; Chang Chengcheng 2007). The worsening crisis of rural party organizations is also manifested in the aging of peasant party members. Wondering why it was hard to find young people at village-level party meetings, People’s Daily lashed out at the VPBs for “having never systematically recruited new members since the 1990s” (Renmin Ribao Reporter 2005). The concern of the party mouthpiece was not unwarranted. In the four villages (Yingjie, Chaigang, Zhenggang, and Shiniu) I visited in Jingmen, the average age of party members was fifty, fifty, fifty-nine, and fifty-five, respectively. Among a total of 6,486 peasant party members in Meihekou (Jilin), 44 percent (3,035) were above the age of fifty-five and only 12.6 percent (814) were under thirty-five (Chen Nan 2006). Aside from the problem with senility, an official survey in Anhui revealed that 67 percent of peasant party members had received only elementary education (ZZZZ 2005). Village (party) cadres were usually selected from among relatively better-educated peasant party members. Even so, in Shaanxi, Henan, and Hubei – three underdeveloped agricultural provinces – only 16 percent of village cadres received a minimum of senior middle school education (Zhang, Bai, and Tan 2007). Of 1,035 party secretaries and village heads in 618 villages in Bangzhong (Sichuan), the majority had received only elementary or junior middle school education, and only 11 percent were below the age of forty (Feng Shujun 2003). The shortage of well-qualified candidates has taken a heavy toll on the competence of village leadership.27 Unsurprisingly, the reform regime has faced a rapidly shrinking pool of suitable candidates for once-coveted village party posts in poor agricultural regions. Competent party members do not want the posts; incompetent ones do not meet the standards (Renmin Ribao Reporter 2005). In a village where the VPB had not recruited any party members 27

Among 1,820 village cadres in Meihekou, 54 percent “lacked an ability to lead their villages to affluence.” It was notable that in the six months of the AAT, forty-seven party secretaries or village heads in 303 villages either resigned or were dismissed. Most of these villages had both weak collective economies and high village debts (Chen Nan 2006).

Conclusion

187

in eight years, the township could not even find a replacement when the old party secretary stepped down. Demoralized village cadres complained that they “have neither political future nor economic hope” (Li Xinliang 2005). Presumably because new party members, if any, are young, capable, and well educated, they usually do not stay in villages long before being lured away by urban employment or lucrative businesses. Apparently in an effort to improve the quality of village leadership, since around 2001, the government has adopted measures to encourage university graduates to take on leadership posts in villages.28 The composition of the villagers’ committee, which used to consist almost exclusively of party members, has changed as well. The data presented by Landry (2008: 236–39) show considerable variations in the number of party members elected to village committees – “from Tibet’s low share of 30% to Shanghai’s record of 77%, in contrast to a national average of 46%.” And the CCP’s success in village elections “seems tied, to some extent, to the economic fortunes of rural areas.” As rural income levels rise, the share of CCP members is expected to increase.29 Conclusion Village cadres played a pivotal role in ensuring that Communist Party power extended to the very base of China’s rural society and were highly instrumental in establishing the Maoist state’s totalitarian control over the peasantry. For all the socioeconomic and political structural changes over the course of three decades of rural reforms, the party-state continues to rely, though to a lesser degree, on village cadres as its governing agents in the countryside. Nonetheless, the interests of these rural political ruling elites have been least represented and protected in the formulation and implementation of rural reform policies. From an institutional perspective, market transition theory does indeed find powerful evidential support in Chinese village cadres’ experience with marketization. Most of their redistributive power was stripped away, initially in exchange for the increased efficiency of agricultural production and subsequently for the success of the market economy. Scrutiny of the entire rural reform 28

29

I interviewed many of them. They usually started their careers as assistants to village chiefs. Their main task was paperwork, such as drafting village government reports to be submitted to higher authorities. Many actually “returned,” as they grew up in the villages. In recent years, the rising unemployment of university graduates has strengthened this trend. The government has promised them that if they perform well, they will have a good chance to join the ranks of “civil servants.” In Sulongkou (Yuanping, Shanxi), the percentage of party members among villagers’ committee members fell to 30 percent in 2002. In this township, more than 60 percent of young party members worked in cities and returned to their villages only during long holidays (Guo Yaoting 2003).

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Village finance: its deterioration and consequences

process may lead to the conclusion that village cadres have been deliberately sacrificed on the altar of decollectivization and marketization so as to bring prosperity, stability, and, most importantly, regime legitimacy to the countryside. However, unlike old political elites in Eastern Europe, Chinese village cadres were not mere prey to the natural political outgrowth of a market economy – however harmful its consequences have seemed to be for them – because the pace and depth of marketization in rural China have been consistently manipulated by the reform regime. As market forces made inroads into the traditional redistributive sphere, the deteriorating fiscal crisis at the village level produced even more devastating effects on village cadres’ income advantages and their incentives as regime agents. This fiscal crisis was only marginally or remotely related to marketization, as it was largely a by-product of the party-state policy agenda that was supposed to have been dominated by strategic, macropolitical considerations. Under the 1994 tax system, the township government tried desperately to salvage its own budgetary balance at the expense of village finance. As village authorities attempted to make up widening fiscal shortfalls by extracting more from peasants, the central leadership sided with peasants and implemented the TFR, which amounted to cutting off the biggest source of village revenue. The reform regime has had to pay a political price for pushing ahead with rural reforms at the cost of village cadres. The reforms thus far have run the risk of destroying the well-established system of communist rural governance that is founded primarily on village cadres’ authority and political loyalty. As village cadres lost their incentives for implementing state policy and no longer possessed adequate financial capacity for providing public goods and for sustaining their authority, they became neither willing nor able to control the peasantry on behalf of the partystate. What is most threatening to the communist regime, the image of village cadres as losers in the reform process has adverse consequences for the development of rural party organizations, which formerly provided human resources and, in fact, the very basis of Communist Party rule in rural society. To a large extent as a function of worsened village-level fiscal crisis, the party-state lost much of its control over village cadres, who, as discussed in later chapters, in turn lost their control over peasants. Thus, the two links in the top-down transmission of central power fell apart almost simultaneously.

7

The abolition of agricultural taxes and village governance

The decline of political authority in Chinese villages has not arisen simply from the spread of the market economy; it is more precisely a direct policy outcome. To solve the puzzle of why the decline has been allowed to occur under China’s enduring one-party rule, it is necessary to explore the extent to which the reform regime needs village cadres to achieve its policy goals, which have changed profoundly in an increasingly marketdriven socioeconomic environment. The authority of village cadres consists basically of redistributive and administrative powers. Whereas redistributive power stems from the control over economic resources, administrative power represents the state-sanctioned authority required to fulfill office-related duties, such as the maintenance of social and political order, policy implementation, and management of village affairs. The legal-rational basis of administrative power hardly allows any outright challenge from peasants, even though this power was often notoriously abused by cadres. In the process of decollectivization and marketization until the TFR, village cadres were not only stripped of most of their redistributive power, but their administrative power dwindled as well. While streamlining village cadres’ administrative undertakings, the TFR nullified a large portion of their discretionary power – power that had once been especially formidable in regard to fee collection. Even so, village cadres still were assigned a considerable administrative workload and thereby retained some of their traditional authority. They still decided on land reallocation – although they had to use this power cautiously, as land reallocation was formally illegal. Village authorities also granted approval (or disapproval) when villagers applied to rebuild houses on their own land (zhai ji di)1 – although, 1

The building of new private houses by villagers, which has been in fashion especially in affluent villages since the late 1990s, has served to strengthen the authority of village government, particularly if it manages a large zhai ji di. In Wujiadun village (Zhejiang) where the party branch was apparently authoritative, after most of the collective land

189

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The abolition of agricultural taxes and village governance

again, villagers would sue if cadres did not comply with legal formalities.2 Village cadres were held responsible for levying surcharges, surtax, and fines (mostly for breach of the one-child policy), mediating disputes among fellow villagers, and providing public goods and services. If a village had not totally exhausted its collective funds, cadres would be in a position to decide who benefited and how much – even though cadre power, particularly relating to spending and welfare distribution, was constrained by the villager assembly, at least on paper. Because the hukou system had not been thoroughly dismantled, villagers often needed certificates – for marriage and urban employment, for instance – from the village authorities. Cadres were also usually in a better position to offer government connections and services to villagers who aspired to develop private businesses (Guang and Zheng 2005); to distribute rationed and inexpensive agricultural input – though this role was decreasing with the expansion of markets; and to supply much-needed market information. Above all, from the perspective of the township – which invariably treated the village as its administrative arm – until the abolition of agricultural taxes (AAT), the duty of overriding importance for village cadres was levying agricultural taxes. Their state-stipulated role was to “assist” the township government in fulfilling its tax collection quota. In fact, the bulk of practical tax-related work fell on the shoulders of village cadres, who lived among and dealt with fellow villagers on a day-to-day basis and knew how best to play the tax-collecting game with them. Because the performance of township officials in taxation was critical to their

2

was leased to investors or for commercial uses, only 800 mu was left: half was used for farming and another half was zhai ji di. The competition among fellow villagers for the use of zhai ji di prompted them to keep on good terms with village cadres. Interviews with the village cadres on July 28, 2005. Indeed, villagers who became enraged with village cadres sometimes lodged complaints with the higher authorities and demanded that the cadres be punished. Some media accounts and my interviews suggest that when peasants decided to take legal action (da guansi), this was related to the modus operandi in the local culture and was highly “contagious.” In some regions, it has become fashionable for villagers to file lawsuits against cadres – as another weapon of the weak. Some villagers knew that they might not win the case but just wanted to “intimidate” or make trouble for village cadres, who were usually “risk-averse” unless their private interests were at stake. Interviews at some villages of Hubei, Shandong, and Jiangsu between 2002 and 2008. But in general, lodging complaints or going to court was not as frequent as people might expect considering the number of peasant grievances. As Ethan Michelson (2008) indicated, the dense network of social relationships in villages discouraged peasants from appealing to the state or taking formal legal action to solve their problems. Instead, the “social disincentives” and “social costs” of those actions led resentful peasants to search for “local informal solutions.”

The abolition of agricultural taxes and village governance

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own career prospects, they designated tax collection as a top priority on the agenda of village government and linked most of their rewards to it. Therefore, although the TFR certainly curtailed village cadres’ workload, it did not make them useless. The administrative responsibilities to be fulfilled at the village level justified the existence of village cadres, even consolidating their authority in agricultural regions. Because administrative power was contingent on administrative responsibilities, the AAT, by default, stripped village government of the largest portion of administrative power it had ever wielded. Also, the effectiveness of administrative power depended in large measure on village budgets or the extent to which the village government could influence fellow villagers’ livelihoods.3 As village finance took a turn for the worse in the aftermath of the TFR, it weakened village cadres’ redistributive capacity still further, particularly in traditional agricultural regions where many villages had no collective economy or non-agricultural income. The steep decline of both the redistributive and administrative powers of village government in the wake of the AAT prompted its functions and agendas to change accordingly. Because the communist regime has relied on village cadres to govern in the Chinese countryside, to assess the long-term consequences of the AAT for rural politics one must look at the impact of the ATT on village cadres and village government. This chapter starts with an examination of how the AAT reshaped village cadres’ incentive structure in terms of their losses and gains arising from the AAT. The empirical findings presented illustrate the process by which the effects of the AAT on village government in China’s agricultural regions unfolded and evolved. The discussion shows that the AAT cut back massively on village cadres’ workload, leaving village governance almost adrift. It did not take long, however, for many village governments to come around and to switch to a different track. Where local conditions allowed, partly under the pressure of the township and partly on its own initiative, the village government “degenerated” into a business company whose primary function was generating as much revenue as possible through “attracting investment” for both the township and itself. The shared stake of township and village leaders in increasing revenue led to the formation of a financial symbiosis that deepened the disengagement of village government from 3

A comparison with the commune system (1958–84) and the early years of rural reform would reveal that administrative power was hardly workable without redistributive power. As economic resources under village cadres’ control diminished, administrative power became less effective but more coercive – a change that was manifested in the fiercer resistance in policy implementation, particularly the tax-fee levy, and the aggravated tensions between cadres and villagers.

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The abolition of agricultural taxes and village governance

ordinary peasants and altered its role as a party-state tool for village governance.4 The AAT: a mixed blessing for village cadres Despite the disincentives of their positions, village cadres still enjoyed a few privileges in even the poorest villages, including easier access to township officials (for patronage and public resources); a salary and bonus; exemption from taxes and fees, and tuition fees if their children attended village-run schools; invitations to dinner parties for higher officials; kickbacks from collective projects; and the chance of receiving payments in gratitude, or bribes (au. int.; Cao Jinqing 2000: 561; Wang Jingyao 2002: 85–103).5 However small, these benefits made village leadership posts not entirely unattractive to cadres who somewhat lacked market power. In agricultural regions, the AAT produced devastating effects on village finance and exacerbated the imbalance of gains and losses associated with cadre positions.6 Village government deficits grew precipitously because of the abolition of the two surtaxes, which, after the TFR, had become the sole source of revenue – except for small transfer payments – for villages with little or no non-agricultural economy. According to a large-scale survey conducted in 100 villages of five provinces, the fiscal subsidies from higher authorities (mostly transfer payments) plus the two surtaxes amounted to merely 58.6 percent of the pre-TFR fees on average. Even though the central and provincial governments increased transfer payments for villages by a large margin to compensate for their loss of 4 5

6

It contradicts the view that economic achievements or benefits for peasant incomes would be critical to cadre authority (Schubert and Ahlers 2012). The number of privileges available varied. In a poverty-stricken village in Hengshan, Hunan, the only privilege for village cadres was having free food and drinks at meeting times (Yu Jianrong 2001: 504). In his investigation of the effects of the AAT in agricultural regions, Li Bingwen (2008) took note of the following conversation from his interviews. Former village party secretary: “When I was the secretary, our revenue was quite good. Each year, we collected at least 50,000–60,000 yuan which was enough for our normal administrative expenditure.” Current village party secretary: “Some years ago, the village coffers were full enough to entertain the officials from above. Village finance suddenly collapsed after the AAT. Nowadays if you want to buy a pack of cigarettes for your boss, you have to foot the bill yourself – let alone other expenses.” Current village head: “Before the AAT, if cadres did legwork diligently and had thick face skin, they could collect more or less money to spend in the worst situation. Now, no way! No reason to collect money anymore. I have lost interest in my work.” Villager A: “Obviously, they [cadres] now have a hard time. Some years ago, in addition to spending village funds to dine frequently in restaurants, each of them annually received at least 10,000 yuan (as salary). The party secretary had no difficulty at all in supporting his two children financially to attend the university. Ordinary villagers had to borrow to pay their children’s education fees.” Villager B (a restaurant owner): “Some years ago, cadres in my and nearby villages frequently dined in my restaurant and on average spent 20,000 yuan each year. It changed all of a sudden after the AAT. Last year [2006], the spending dropped to a few hundred yuan.”

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the two surtaxes, the total amount of village revenue was still only 60.1 percent of the pre-TFR fees. On paper, village revenue did not decline with the AAT but even increased slightly. In reality, much of the revenue could not be cashed. Before the AAT, the central state stipulated that the two surtaxes were exclusively village revenues and must not be touched by the township. Despite the massive increase of post-AAT transfer payment for rural areas, the method of distribution remained unchanged. Transfer payment was delivered only to the township level to be distributed among its villages according to their fiscal conditions and needs. However, in agricultural regions where township finance relied heavily on agricultural taxes, their deepened fiscal crisis arising from the AAT often prompted the township authorities to withhold even more transfer payments from the villages, except the mandatory outlay for village cadres’ salaries (Xu, Luo, and Zhang 2009). For instance, most of the villages in Hubei had neither VOEs nor natural resources or advantages that could turn into sustainable revenues, so transfer payment was left as their only post-AAT stable revenue. But the amount of transfer payment available to them (40,000, 30,000, and 20,000 yuan for a large, medium-size, and small village, respectively) was barely enough to cover cadre salaries and routine office expenses. The surplus, if any, was spent on entertainment, poverty relief, and repaying village debts, with very little left for the provision of public goods and welfare projects (Yang Chunjuan 2011). Village finances in Hubei seemed to fare better compared to many other agricultural regions. A survey found that a village government in traditional agricultural provinces needed at least 25,000 yuan annually to operate, but each village’s total post-AAT revenue, which was largely limited to the transfer payment alone, was merely 22,200 yuan on average (Zhang and Qiu 2006).7 Funds for once-important village-organized affairs – such as party member activities, militia training, and regular meetings for villagers – had to be taken off village government’s agenda as part of a frugality drive. In Hunan, each township used to give party members a subsidy (20 yuan each) for attending party activities, but this no longer occurred (Wang Yefei 2006). In many villages whose coffers were nearly empty, leaders did not just eat idle bread without attempting to tap their villages’ revenue-generating potential. Their efforts to seek new revenues started right after the TFR, 7

Items of spending for village authorities varied. Luxi village (Anhui) received a transfer payment of 30,000 yuan annually. But its cadres complained about their heavy expenditure responsibilities. Little was left after using it on prioritized items, which included subsidies for retired veteran cadres. Interviews on January 3, 2006.

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if not earlier. In some villages whose land was requisitioned by the government for urbanization or public projects, the shortfall in their budgets was more or less made up by land compensation fees and land contracting fees. In others, fund-raising efforts were redoubled to include the sale of village-owned assets and the rent of village land to private contractors who managed orchards, forestry, and so forth. However, most of these revenues were of onetime or expedient nature and could hardly be sustained.8 While cadre salary outlays and basic administration expenses remained largely stable, the depletion of village coffers caused the expenditures on welfare to plunge in both poor villages (67 percent) and rich villages (65.5 percent) (Xu, Luo, and Zhang 2009). The continued deterioration of village finance and the exhaustion of newfound sources of village revenue was presumably one of the factors that propelled the profound transformation of the function and agenda of village government in recent years. However severe its consequences were in financial terms, the AAT did create gains that outweighed the losses for at least some village cadres. Ironically, although the AAT was the last straw for many heavily indebted villages, this led to village debts being suspended by default. According to the new policy spirit, where it was impossible for village authorities to pay back a debt, given their financial situation, all debts were to be “laid aside” until a probable “final” solution was created by the central government to address this thorny issue nationwide. Although the wait for this solution continues to this day, it is widely anticipated that in the end the state will have to pay the bills.9 In villages that struggled in a quagmire of debt, this was no small benefit for village cadres, as tackling debt repayment 8

9

For instance, in the investigation of 100 villages, the revenue per capita from land compensation dropped from 17.8 to 13.4 yuan from 2004 to 2007. With the shutdown or privatization of VOEs, the revenue from VOE profits plummeted from 8.3 yuan per capita to 0.1 yuan. As a result, the importance of selling collective property to village finance rose rapidly – from 1.9 yuan in 2000 and 6.8 yuan in 2004 to 14 yuan in 2007, although this source of income was expected to be exhausted soon (Xu, Luo, and Zhang 2009). Interviews with the cadres of Luxi, Qiugang, and Xitang villages (Anhui) in early January 2006; the cadres of Buqiao,Yangshao, and Xiezhuang villages (Shandong) in mid-June 2006. To the extent that the new policy spirit is complied with, it only applies to debts owed to government-related financial institutions. A large proportion of poor villages’ debts were owed to individuals through private channels and are thus beyond the scope of state regulation. Village cadres did not always worry about village debts. In many villages in northern Jiangsu, village debts were incurred because villagers refused to pay fees. Therefore, the debts were theoretically owed by the villagers, and the responsibility for repayment was expected to fall eventually on the shoulders of the collective; village cadres were neither blamed nor held accountable for the debt problem (Luo Jianjian 2009: 129–45). However, in a number of villages, debts were owed to their own cadres. For instance, the village government of Buqiao borrowed 100,000 yuan from its party secretary before the AAT and could not repay it (au. int. June 14, 2006).

The AAT: a mixed blessing for village cadres

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had been their highly distressing but unavoidable undertaking after the mid-1990s. On the other hand, since the AAT, village cadres’ salaries have been paid out of transfer payments and are therefore no longer linked to tax collection or village revenue, meaning that undue pressure for performance has been alleviated. The AAT decimated village finances but cut back on the administrative responsibilities of village government as well. In agricultural regions, the AAT relieved village cadres of a chunk or the bulk of their workload, particularly the most onerous tax collection. The dwindling scope of routine village administration and the necessity of saving administrative costs have pushed local government to shed many or most salaried village posts. The first step in this direction was appointing cadres to multiple positions. A typical village used to have seven to ten salaried cadres.10 As a result of the AAT, “village group leaders” were no more, and their duties were transferred to leading village cadres who remained on the payroll: these were usually the party secretary, villagers’ committee chair, accountant, and in some areas, the birth-control cadre (Zhang and Qiu 2006). In Henan, one of the largest agricultural provinces, the drastically curtailed workload scaled down the cadre quota to between five and seven cadres for a large village with a population of over 2,000 and to three or four for a smaller village (Reporter 2005). Merging administrative villages was another way to reduce human resource outlay. The adoption of this cost-saving measure not only was widespread but also started before the AAT. Between 1993 and 2003, the numbers of villagers’ committees and village cadres nationwide decreased from 1.01 million and 4.56 million to 0.66 million and 2.59 million, respectively (Zhang Xinguang 2007a). The trend of village merging continued, or even accelerated, after the AAT.11 Expanding the scope of the administrative village through merging seemed especially common in regions with large numbers of small villages, such as Ganzhou (Jiangxi), 31 percent of whose 10

11

In Jingmen, the total number of personnel who were paid by the village could reach beyond twenty. In addition to all village cadres, the payroll also included the township officials who were either sent to the village to “guide” its management (“baocun ganbu”) or belonged to the township’s “seven stations and eight agencies” (qizhan basuo), which were supposed to serve peasants directly (Ding Jianjun 2008). A large number of such cases were reported. Fengjie county, Chongqing, merged all 829 administrative villages into 370 in 2003. In Jiangsu, 32,000 villages were merged into 20,000, with the ongoing TFR – a reduction of 37.5 percent. After the AAT, the number of townships in Kaijiang county (Sichuan) dwindled from 26 to 20, and villages from 294 to 194 (Reporter, 2006). Niancheng township (Guzeng, Anhiu) reduced its villages from 17 to 12 and village cadres from 203 to 96 (Liu and Fang 2005). In Chengdu, villages and village cadres were cut by half and 40 percent, respectively (Li Congli 2007).

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The abolition of agricultural taxes and village governance

4,318 villages had fewer than 1,000 villagers (Zhang Mingchu 2001). In Wenzhou (Zhejiang), the municipal government merged all villages with fewer than 500 residents (Dang Guoying 2009).12 For large villages, mergers immediately gave rise to problems with governance, as the number of village cadres was cut roughly by half and their administrative responsibility thereby doubled. In Shanxi province, which is located in a mountainous area, villages typically cover vast territories with widely scattered households. After merging, each new village was allowed three to five cadres only – the same number as in each old village, or even fewer (Dong Jiang’ai 2006). Presumably because of village leaders’ expanded jurisdiction as well as the need to raise the allure of village leadership posts to woo talented people, massive retrenchment was followed by enhanced remuneration. Figure 7.1 compares annual salary distribution among village party secretaries during the three phases. The figure displays an incremental increase of annual salary for the party secretary – the pre-eminent leader in a village. The mean annual salary crept up from a pre-TFR salary of 2,500–3,000 yuan to a post-TFR range of 3,000–4,000 yuan, before leaping up to 5,000–6,000 yuan.13 The data conform perfectly to the self-assessment of village cadres surveyed: 73 percent reported a salary/welfare increase, and more than 12 percent said that the increase was large (Figure 7.2). In some provinces, such as Hubei, to further boost village cadres’ material incentives, local governments promised to offer pensions to those who served out a ten-year term (Guo Junxia 2010). The enhanced remuneration for village cadres who survived retrenchment undoubtedly added considerably to their material incentives. It also 12

13

To offer a reference for measuring the size of a village’s population, among the 52 villages that were selected for my surveys because they were representative in terms of socioeconomic development, between November 2007 and January 2008, 5 had a population of more than 3,000 each; 11 had 2,000–3,000; 22 had 1,000–2,000; and 13, fewer than 1,000. The data from the surveys also show enormous regional differences. Among ten village party secretaries surveyed in Shandong, five had a post-AAT annual salary of 1,000– 2,000 yuan; three 500–1,000 yuan, and one below 500 (one missing). (According to a separate interview I conducted in Yutai in June 2006, village party secretaries each received 150 yuan per month plus a small amount of “performance salary” [jixiao gongzi] from the county’s Organizational Department.) Presumably, the small size of the villages was one of the reasons the figure was shockingly low compared to the other four provinces surveyed (Jiangsu, Zhejiang, Hubei, and Sichuan). The average population of these ten villages was only 1,071 (December 2007) – roughly half of the national average before the recent wave of merging. The post-AAT hike of village cadres’ salary was confirmed by He Xuefeng, whose investigation in Anhui and Henan found that the post-AAT number of village cadres in the two provinces was cut by half but that their salaries doubled. Interview with He.

The AAT: a mixed blessing for village cadres

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Before the TFR

30%

26.8%

Percentage

25% 20% 14.6%

15%

14.6%

12.2% 9.8%

10%

7.3%

7.3%

7.3%

5% 0% 6,000 6,000

Between the TFR and the AAT 25% 19.6%

20% Percentage

17.4% 15.2%

15%

13.0%

13.0% 10.9%

10%

8.7%

5% 2.2%

0% 6,000 6,000

Figure 7.1 The change in annual salary for the village party secretary Source: My surveys in fifty-two villages (ten each in Jiangsu, Hubei, Sichuan, and Shandong; twelve in Zhejiang) between November 2007 and January 2008. Note: N = 52, Valid = 41, Missing = 11, Mean = 2,500–3,000. Note: N = 52, Valid = 46, Missing = 6, Mean = 3,000–4,000. Note: N = 52, Valid = 49, Missing = 3, Mean = 5,000–6,000.

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The abolition of agricultural taxes and village governance After the AAT

35% 30.6%

30%

Percentage

25%

22.4%

20% 14.3%

15%

12.2% 10.2%

10% 5%

6.1%

4.1%

0% 6,000

Figure 7.1 (cont.) 70% 61.06%

60%

Percentage

50% 40% 30%

25.66%

20% 12.39%

10% 0.88%

0% No change

Decreased a little Increased a little Salary/welfare for village cadres

Increased a lot

Figure 7.2 Village cadres’ self-assessed AAT impact on their salary and welfare Source: The same as Figure 7.1. Note: N = 121, Valid = 113, Missing = 8.

sent a clear message that the reform regime still recognized the usefulness of village cadres in rural governance – at least for a short post-AAT period. In fact, the benefits the AAT brought to surviving village cadres were not confined to salary hikes but included intangible gains as well. Figure 7.3 shows that thanks to the AAT, village cadres’ own perception of their status (measured by popularity or “superiority”) and prestige

The AAT: a mixed blessing for village cadres

199

60%

Percentage

50%

47.79%

40% 30% 23.01%

20% 12.39%

13.27%

Decreased Decreased Increased a lot a little a little The change in village cadres’ status

Increased a lot

10% 3.54%

0% No change

60%

56.14%

Percentage

50% 40% 30% 20%

18.42% 16.67% 7.89%

10% 0.88%

0% 1

4 3 2 The degree of respect by fellow villagers

5

Figure 7.3 Village cadres’ self-assessed AAT impact on their status and respect in the villages∗ Source: The same as Figure 7.1. Note: N = 121, Valid = 113, Missing = 8 Note: N = 121. Valid = 114, Missing = 7 ∗ As a number of respondents explained, fellow villagers actually did not “increase” respect for them as cadres but as their “folks” (xiangqin). The AAT “demoted” cadres almost to the status of ordinary villagers. Because they no longer made any charges on villagers, they were able to shake off their “bad guy” image.

200

The abolition of agricultural taxes and village governance

improved as well. Sixty-one percent of the cadres surveyed thought that their status in the villages was boosted by the AAT to varying degrees; 73 percent received greater respect from fellow villagers. In their replies to the survey questions, many cadres gave credit for the improvement to the simple fact that after the AAT they no longer had to take from villagers – whether allegedly in the interests and name of the state, the collective, or themselves – but instead were in a position to give – more or less. Both the tangible and intangible benefits for village cadres generated by the AAT have proved instrumental in reviving their passion to some degree.14 This factor should be taken into account in assessing the reform regime’s changing relations with its rural agents. The revival, of course, should not be construed as the AAT magnifying the allure of cadre position in villages, nor has the AAT enhanced village cadres’ governing capacity. The increments in cadre salary are far from sufficient to make up for their loss of income advantages associated with a village’s budget surplus.15 In their own calculations, village cadres’ newly acquired “respect” and “status” actually make little sense when compared to their lost authority and privileges (au. int.). In any case, the tremendous consequences of the AAT for village finance, village administration, and village cadres would inevitably reshape the role of village government and the mode of village governance. The AAT’s immediate effects on village administration After its political control over the peasantry was consolidated by the mid1950s, the communist state’s overriding goal of rural governance turned to the extraction of agricultural surpluses for industrialization. Accordingly, the role, function, and agenda of village government were reformulated to revolve around and best serve this goal. After the forced grain-oil purchase and excessive peasant burdens phased out in the reform process, agricultural taxes were the last but not the least “contribution” the regime demanded of the peasantry. Whether or not the AAT might have been motivated merely by the leadership’s desire to improve peasant life, this reform in effect fundamentally altered the goal and nature of the party-state rule in the countryside. 14

15

A recent investigation conducted in Anhui, Hubei, and Henan found that as a result of post-AAT lighter workload and receiving (state) salary, some village cadres who quit a few years before wanted to resume their positions (Ouyang Jing 2011). According to my interviewees at Yangshao village (Shandong), the party secretary’s post-AAT salary was taken out of the township’s coffers and was indeed higher than before. However, before the AAT, he could use the collective funds appropriated from the township for private purposes; doing so now is explicitly banned (au. int. June 14, 2006).

The AAT’s immediate effects on village administration

201

The villages in which I investigated the initial impact of the AAT were representative of traditional agricultural regions where agricultural taxes and surtaxes were critical to both township and village finances; the tax and surtax levy was therefore the “core task” of village government.16 Aside from a village in Chongqing, I visited a number of nearby villages in Anhui and Shandong in an attempt to see an average picture. Given their similarities in terms of revenue structures and AAT experiences, I have selected for my analytical purposes one typical village from each region. I chose Silong (Chongqing) as my first research site because its township (Jiuxian) was among a few where agricultural taxes were ended shortly before 2005.17 As was typical of agricultural regions, the preAAT agenda of Silong’s village government was dominated by tax-andfee matters. Now that fees and taxes were all gone, the formerly neglected issues and responsibilities took their place. As the party secretary and his colleagues recounted, they felt as if the AAT, all of a sudden, removed a heavy “stone” from their backs. Indeed, tax collection offered village cadres opportunities to show off their authority and “leadership” status, but they preferred not to have it. Even though the levy of taxes, in contrast to the pre-TFR fee collection that frequently involved violence, was more peaceful, it remained a “displeasing” or “offensive” job to do, particularly if they had to deal with lower-income, recalcitrant villagers. Cadres had neither means of control nor ability to help fellow villagers and most of the time had to rely on the latter’s “mercy” to fulfill this duty. The AAT brought an abrupt end to what had been habitually treated as their “core task” and thereby created a large vacuum of village administration. One year after the AAT, village cadres apparently had not yet recovered from this pleasant “shock” and still struggled to adapt. Despite the vague instructions, if any, from the township, cadres were confused about what their new “core task” should be. However, they allegedly 16

17

I did fieldwork at Silong village (Chongqing) in December 2005; villages of Luxi, Qiugang, Xitang, and Fengxi (Anhui) during December 2005 and January 2006; and also at villages of Jiuchengli, Xiezhuang (Wangmiao township, Shandong), Buqiao, and Yangshao (Yucheng township, Shandong) in June 2006. Chongqing and Anhui terminated agricultural taxes in 2005, whereas in the two townships of Shandong, agricultural taxes were not scrapped until January 2006. For more details about these villages, see Appendix A. Also see Chen (2014). Not all rural areas abolished agricultural taxes in 2005–06. Earlier abolition might suggest that the peasants there were unusually poor and burden-related conflicts abounded. On the other hand, some economically advanced regions took the lead in the AAT thanks to their abundant industrial and commercial revenues, which allowed them not to care about losing agricultural taxes.

202

The abolition of agricultural taxes and village governance

remained “busy” with other (old) tasks that they described as “trifling” but “important.” The list of their tasks included enforcing birth control, taking care of disabled elders and wu bao hu, offering certificates for applicants for state subsidies, providing connections or information for urban job seekers, mediating conflicts among villagers, improving irritation and infrastructure, recommending lucrative crops or agricultural products with market potential, and helping “big specialized households” (zhuanye dahu) and those who aspired to develop family businesses to obtain bank loans, raise funds, build workshops, and sell products. They were also expected to woo investors (although to no avail). They were indeed assigned a few new responsibilities, such as bird flu prevention and the advertisement of the state-sponsored medical insurance, namely the “new rural cooperative medical system.”18 Luxi (Anhui) had neither collective economy nor collective assets. Like Silong, its land was not requisitioned by the government, nor was it leased to private investors. Luxi’s post-AAT revenue was transfer payment alone (annually 30,000 yuan), which was barely sufficient for cadre salaries, basic office expenses, and subsidies for retired cadres. Cadres and villagers disagreed over the extent to which the AAT reduced the village authorities’ workload. Cadres alleged that the AAT cut back their workload by 20 percent. They were now absorbed mostly with four undertakings: enforcing birth control, mediating intra-village conflicts, constructing bridges and roads, and levying water fees. The villagers told a different story, however. One change was most visible, namely that after the AAT cadres seemed to have disappeared. Villagers rarely saw – let alone interacted with – them in everyday life and thus had no idea what exactly they were doing all day long. What villagers knew for certain was that cadres were no longer relevant to them except for the periodic collection of water fees. Most probably because the township no longer needed them to assist in tax collection, village cadres seemed to be forgotten. The once close and amicable working relations between township and village leaders almost immediately cooled down. Birth control remained a thorny issue. Because the enforcement of birth control often met with emotional defiance that village cadres were keen to avoid, they deliberately left the most sensitive or potentially confrontational part of the job to the township’s “birth-control office,” confining their own role to paperwork, such as compiling statistics and storing archives. The fees for building bridges and roads must be raised at the villagers’ assembly through “one-issue-one-discussion.” Even though each villager was required to pay less than 15 yuan per year, many refused 18

Interviews with some cadres and villagers at Silong on December 27–28, 2005.

The AAT’s immediate effects on village administration

203

to pay. Thus, public goods provision was assumptive rather than real work. In many of Anhui’s villages, the number of salaried cadres was cut in half because of the AAT.19 In Yutai county (Shandong), agricultural taxes were abolished on January 1, 2006. In June of that year, only six months after the AAT, I did fieldwork at Wangmiao, one of its townships, as well as some of Wangmiao’s villages. Township officials seemed to be demoralized, if not panicked, more than village cadres, not least because the AAT dealt a crushing blow to township finance as well. At the time of my visit, the “rumor” was spreading that as the AAT rendered the township “redundant,” most township-level personnel would be either laid off or transferred to lower-salary posts in the ongoing bureaucratic streamlining (fenliu) reform. But village cadres would not be affected. By summer 2006, village merging had been going on for years in some provinces and was accelerated in the aftermath of the AAT, but it had yet to take place in Yutai. Thus, the overriding concern of village cadres there was the loss, not of their offices, but of their “responsibilities” or administrative power, which would cause them to be marginalized in community life. The psychological impact of the AAT on cadres could be discerned from their reactions, which were characterized by a mixture of relief, joy, loss, bewilderment, and uncertainty. Although they celebrated the eventual end of their long-lasting “torment,” they perceived themselves as being relegated to the status of ordinary villagers. The AAT allowed village cadres to have more leisure for playing at the mahjong or poker table and to spend more time taking care of their family businesses. However, probably driven by “inertia” or a hidden superiority complex, they did not intend to relinquish their “leadership roles.” Cadres at Jiuchengli allegedly offered endorsement for fellow villagers who applied for credit services; provided technical services for using pesticide and chemical fertilizer; formulated a blueprint for housebuilding land; delivered farming subsidies door to door; and “planned” to set up a shareholding cattle-feeding factory. Because most households owed a small fishpond, cadres organized a “fish-breeding association” to improve their fish-breeding skills. The village party secretary explained to me that they did not receive any new assignments or instructions from above but just performed their duties out of “conscience” or “habitually” (Chen 2014).20 19

20

Interviews with cadres and villagers at Luxi on January 1–5, 2006. The nearby villages (Qiugang, Xitang, and Fengxi) that I also visited in the same period more or less shared Luxi’s experience with the AAT. Also discussions with Zhang Deyuan and his colleagues at the Center for Rural Studies, Anhui University. Interviews with Wangmiao’s officials, village cadres, and peasants at Jiuchengli, Buqiao, Yangshao, and Xiezhuang, June 14–16, 2006.

204

The abolition of agricultural taxes and village governance

Nonetheless, a distinction should be made between the AAT’s shortterm and long-term effects. With regard to its immediate effects, the AAT on the surface did not alter anything except that cadres stopped levying taxes and, later on, village governments no longer had to wrestle with their debt problems. For many years, taxation was village cadres’ “core task.” After this task was taken off their agenda, the reform regime obviously did not fill in the void right away by placing new responsibilities on their shoulders but instead somehow let villages go adrift. In nearly all the villages I visited, a feeling of disorientation pervaded the entire cadre elite, who apparently did not know what their new priorities and the new criteria for their performance evaluation would be. Without instructions from above or new tasks assigned, some previously neglected or softtarget tasks emerged as “important” ones. Three responsibilities, namely the allocation of farming subsidies, the implementation of the programs of the new rural co-operative medical system, and birth control, were prioritized.21 State subsidies for peasants In villages, state subsidies used to be available only to those with the lowest incomes. The amount provided not only was small but also was often docked and used for village government expenditure. After the AAT, the state provided farming subsidies to encourage farming and to alleviate a potential food crisis. The subsidies varied in amount, depending on the market value of crops and on the state’s need to optimize the structure of agriculture. Farming subsidies fall into three categories. The first is the “grain subsidy,” which is 15 yuan per mu for growing crops such as corn. The second is the “fine strain (liang zhong) subsidy,” which adds 19.72 yuan per mu to the “grain subsidy” (so, 34.72 yuan) and applies to crops such as wheat and rice. The third is the “comprehensive subsidy” – 9.66 yuan per mu – for the purchase of diesel oil and chemical fertilizer. From 2007 onward, the state began to offer subsidies for electric appliances in some pilot regions such as Shandong and Henan. Initially, village cadres had to visit each household requiring a state subsidy and then distribute the subsidies personally. Later, each household was given a bank account where subsidies were remitted directly. The work left for cadres was to verify the size of the subsidized farmland and crops being grown 21

As is discussed later in this chapter, as a result of the AAT, public goods provision was defined as a responsibility of the state and thereby removed from the agenda of the village authorities.

The AAT’s immediate effects on village administration

205

twice a year, and to ensure that each household received the appropriate amount of cash.22 New rural co-operative medical system China’s rural comprehensive health-care system, which was embedded in the commune system, was dismantled with decollectivization in the early 1980s. After a twenty-year hiatus, the central government launched a new medical system for peasants in October 2002 in a bid to address their grievances in seeking medical services. This system, which took shape based on experiments in fourteen pilot counties between 1994 and 2002, had four features. First, it was non-compulsory, and hence peasants were allowed to join and leave it voluntarily. Second, in contrast with the old medical system that was administered by three levels of authority (i.e., the county, township, and village), the new system was managed exclusively at the county level. Third, because county governments were granted considerable autonomy in designing their own medical programs without stringent or specific central directives, the programs of the new medical system varied among counties or regions in terms of participation fees, financial contributions of county and provincial governments, and eligibility to join. Fourth, the new medical system only covered inpatient treatment and serious illnesses. The new medical system was almost like a form of medical insurance for peasants, and total costs were supposed to be shared by the central government, local governments (the province and county), and the participant. In accordance with the central guideline, the individual participation fee should be at least 10 yuan, but in reality it could be up to 40 yuan in some counties. The individual fee must be matched by 20 to 40 yuan provided by local governments – the precise figure hinging on the state of the county’s finance. Initially, the central government offered a 10-yuan match for western and central regions; later, in 2006, its contribution not only increased to 20 yuan but was extended to some eastern and southern provinces (Zhongyang Wenjian 2002; Brown, Brauw, and Yang 2009). Although the responsibility for implementing the new medical system rested with the county alone, most of the administrative burden associated with it was immediately transferred to the county’s 22

Interviews at Luxi and Xitang in early January 2006; officials of Yucheng (Shandong) on June 14, 2006; cadres and villagers at Yinbei (southern Jiangsu) on December 29, 2008; two villagers at Yannei (Fujian) on December 14, 2008; cadres at Chen’gao (northern Jiangsu) on December 30, 2008; a few officials at Pengxing township on December 25–26, 2009. Also He Xuefeng (2008a).

206

The abolition of agricultural taxes and village governance

subordinate units – that is, township governments. Because participation must be voluntary and coercion was banned, participation rates in each county were used as one of the criteria for evaluating county officials’ overall performance. In addition, the percentage of rural residents who were enrolled in the new medical system determined how much in matching funds could be obtained from the center. The center only financed the programs of the new medical system in counties where at least 80 percent of the rural population were enrolled. As could be expected, county authorities had to rely on township officials and village cadres to persuade peasants to join the new medical system. This task was imposed as a hard target from the county to the township, which in turn set it as a high priority for village cadres. In one township, the party secretary claimed that he could mobilize 80 village cadres to induce peasants to participate in the new medical sys¨ tem (Klotzbucher, L¨assig, Qin, and Weigelin-Schwiedrzik 2010). Village cadres were responsible for advertising the new medical system among villagers who were both ignorant and suspicious of it. Cadres’ work was heavy and time-consuming, not only because it involved the dissemination and explanation of pamphlets and numerous household visits. At the outset, the efficacy of persuasion was limited. Because all members of a household must enroll together, the participation fee could be large and daunting, especially for a multi-member family. Many peasants were wary of low reimbursement rates, cumbersome reimbursement procedures, and restrictions on types of ailments and hospitals. Because this was the reform regime’s first nationwide attempt to establish a rural medical insurance system, neither rural officials nor peasants were initially certain of whether or how the new medical system would function. Earlier surveys found that except for some developed coastal provinces, local governments at first refused to bear its costs (Zhang Zhaoxin 2004: 129–30). Over several years of implementation, during which the central government demanded that local governments augment their share of matching funds and improve other terms in favor of individual participants, this new medical system seems to have won credibility in the countryside.23 As survey data show, enrollment rates in some counties were staggeringly high, allegedly proving the satisfaction of participants and the 23

Regions varied in terms of the funding of the new medical system for each participant – with an average 43, 45, 62, and 52 yuan in western, central, eastern provinces and nationwide, respectively (Brown, Brauw, and Yang 2009). It was planned that in 2010, the total annual medical insurance fee for each participant under the new medical system would increase to 200 yuan according to the ratio of 80 (the center): 80 (local government): 40 (the individual participant). A clinic was expected to be installed in every village (au. int.).

The AAT’s immediate effects on village administration

207

success of this system. A Ministry of Health survey claimed that 90 percent of those enrolled in the new medical system were willing to participate the following year and 51 percent of those not yet enrolled were interested in participating (Brown, Brauw, and Yang 2009). Although consolidating the new medical system remained high on the agenda of village governments where participation rates had yet to be boosted, the number of peasants nationwide who were left to be “persuaded” by village cadres tended to decrease. Birth control Birth control has invariably been one of the top priorities for village cadres. O’Brien and Li (1999) observed that village cadres who understood how to survive their performance evaluations tended to distinguish between “hard” and “soft” targets, as well as between the “hard” and “soft” dimensions of hard targets. Job security required village cadres to treat tax/fee collection and birth control as the two “hard,” if not hardest, targets. However, at the time of the AAT, birth control was no longer as much of a headache for the government as it used to be and was more manageable in many rural areas. In fact, evidence showed that Chinese peasants’ traditional mind-set about “more sons, more happiness” tended to wane not long after decollectivization, that is, in the late 1980s (Greenhalgh 1993). As Greenhalgh and Winckler (2005) observed, a number of social changes effected by marketization over many years of reform – such as growing consumerism and individualism, privatized health care and education, and more chances for upward social mobility – brought the fertility preferences of Chinese citizens, including rural families, more in line with the government’s “one-child” policy. Based on his surveys in a Hubei village, Hong Zhang (2007) described how state and village fertility norms converged. Traditional thinking that saw child rearing as insurance against old age softened up. In addition, because of surging education costs and the mounting burden of raising “high-quality” children, rural parents were financially unable to afford the best education for many children. However, the effects of enforcing birth control and peasant preferences varied widely across regions. Where birth control became more manageable, peasants’ waning desire to have many children might not be the only cause. The means of enforcing the one-child policy had also changed from penalties to rewards (Sun and Wen 2007). In a survey among rural cadres in 2007, only 5.56 percent still perceived birth control as the township government’s most important work (Wu Licai 2008).

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The abolition of agricultural taxes and village governance

It was not surprising that birth control was easier to enforce in affluent coastal provinces, as rural families there had developed an urban lifestyle and tended to prefer one child. Considerable differences existed among agricultural provinces. As I observed during my fieldwork, the one-child policy was popular in Hubei, but not in Anhui. One of the explanations I was given was that traditional social ethics, such as children’s filial devotion to their parents, had weakened in Hubei, whereas peasants in Anhui still strongly expected children to keep the family line alive.24 As Graeme Smith (2010) found, family planning in Anhui remained part of paramount work for the township government and its sent-down village cadres. Other duties A combination of the results of my own investigations and other empirical studies might present an overall picture of what kind of work was left for village government in agricultural provinces in the wake of the AAT. Aside from the farming subsidies, the new medical system, and birth control, other duties for village cadres could be divided into three types. The first was paperwork or bureaucratic red tape, allegedly necessary to “standardize” the management of village affairs. Village authorities needed to create or improve the archives for each major category of village affairs, including civil lawsuits, criminal cases, and birth control. In Jingmen (Hubei), an average village government stored in its archives fifteen dossiers for birth control alone, and these provided details of all women of child-bearing age and all pregnancies in the village. Cadres were “tormented” to tears by these over-elaborate bureaucratic formalities which, in their eyes, were merely “much ado about nothing (meishi zhaoshi),” “meaningless,” and a “showcase” (Shen Duanfeng 2007). The second type of work was handling trivial routine affairs. To the extent that any “red tape” made sense, it proved the “worth” of village cadres; however, the necessity of their role in other village affairs was questionable, as most of these affairs seemed too trivial to deserve political appointments.25 The government still needed village cadres to assist 24 25

Interviews with cadres and villagers at Chaigang and Zhenggang (Hubei) in December 2002; at Qiugang, Fengxi, and Xitang (Anhui) in January 2006. Some instances in Jianshi county (Hubei) exemplified village cadres’ routine work. Here, cadres took care of the elderly and children in cases of emergency, such as deaths and accidents, as adults in the families worked in faraway cities. They were asked to intervene in disputes among fellow villagers and were sometimes called at midnight to mediate in family quarrels. A village party secretary spent “many nights” and made “strenuous

The reduction of village cadres’ workload

209

in addressing some issues of deep concern, such as the misuse of farmland, forest fires, birth control, and political stability. But most of this work remained relevant only in theory, as the problems were contingent and cadres’ actual capacity for assisting the government was also negligible. Village cadres were required to manage crises such as severe acute respiratory syndrome (SARS), bird flu, food safety, flood, drought, and other natural disasters – the third type of their duties. Even in crisis management, they were still seen as “helpers” whose role was often vaguely defined and confined to odd jobs such as posting flyers on the door of each household (He Xuefeng 2008a, Part 5). As discussed in Chapter 3, if a large amount of farmland was expropriated for state projects, the county government usually asked village authorities – through the township government – to negotiate with fellow villagers regarding land compensation fees and resettlement conditions. Given their kinship ties and social networks, many village cadres could indeed help the government by persuading villagers to accept low payments. Rural governments often used village cadres’ role in land requisitioning negotiations as one of the criteria to evaluate their performance (Zhao Deyu 2009). Of course, perfunctory cadres could easily escape being judged harshly by their superiors, if they could prove they were unable – but not “unwilling” – to offer any substantial help. For conscientious cadres, what they could do – in their own words – was little more than distributing information (fafa cailiao), filling out forms (tiantian biaoge), and making telephone calls (dada dianhua) (au. int.). The reduction of village cadres’ workload To find out how representative the post-AAT changes in the villages I investigated were, I conducted surveys in fifty-two villages across China’s five provinces from November 2007 to January 2008. These surveys were conducted both by distributing questionnaires and by interviews. The performance evaluation system usually prompted village cadres to emphasize, if not exaggerate, their “heavy” workload. Even so, among 105 cadres surveyed, 51.30 percent reported some degree of workload reduction, whereas 37.39 percent said the opposite (Figure 7.4). Whereas the AAT made less of an impact on workload in coastal provinces, the greatest work reduction took place in agricultural regions. In my efforts” to help a fellow villager get rid of trouble arising from his extramarital relationship. The involvement of cadres in trivial village affairs changed villagers’ expectation of them accordingly. Some villagers complained about cadres’ “poor” performance only because the latter failed to intervene when some peasants used electricity to catch fish (He Xuefeng 2008a, Part 3; au. int.).

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The abolition of agricultural taxes and village governance

40%

37.39%

35%

Percentage

30% 24.35%

25% 20% 13.91%

15%

13.04%

11.30%

10% 5% 0% No change

Decreased a lot

Decreased a little

Increased a little

Increased a lot

The amount of work

Figure 7.4 Village cadres’ self-perceived change in the amount of their post-AAT work Source: Author’s surveys in 52 villages (10 each in Jiangsu, Hubei, Sichuan, and Shandong; 12 in Zhejiang) between November 2007 and January 2008. Cadres surveyed were village party secretaries and the heads of villagers’ committees. In a few villages, other leading cadres were surveyed as well. Note: N = 121, Valid = 105, Missing = 16

conversations with a few cadres who “complained” about a “heavier” workload, they admitted that none of their post-AAT tasks was really important or “hard” and that actually most of the “increased” work was only to do with trivial matters (jimao suanpi). Indeed, the “trivializing” of village cadres’ routine work was reflected in Figure 7.5. Of 109 leading cadres, 53.91 percent thought that the AAT made their work easier to do, whereas 36.52 percent thought the opposite. My interviews might offer more clues as to why post-AAT work could be “more difficult.” Much of this “work” was to do with selfimposed or “optional” targets, such as inviting investors and providing public goods.26 Even more financially detrimental than the TFR, the 26

My surveys were conducted on the eve of the great transformation of the functions of village government. Because of the depletion of village coffers, public goods provision was no longer designated by the government as a “must” for village authorities. My findings echoed a researcher who stated that in his post-AAT interviews with village cadres, what he heard most frequently was: “If you want to do something, the things would be too many for you to do; if you do not want to do anything, you have to do nothing” (Ding Jianjun 2008).

The reduction of village cadres’ workload

211

40% 36.52%

35%

Percentage

30% 25% 21.74%

20%

17.39% 14.78%

15% 10%

9.57%

5% 0%

No change

Reduced a lot

Reduced a bit

Increased a bit

Increased a lot

The difficulty of work

Figure 7.5 Village cadres’ self-perceived change in the difficulty of their post-AAT work Source: The same as Figure 7.4. Note: N = 121, Valid = 109, Missing = 12

AAT led to the almost total emptying of village coffers in many poor agricultural regions and reduced village authorities’ spending power to close to zero. In the meantime, intangible resources at cadres’ discretion as part of their power base, such as the capacity to assist fellow villagers economically, continued to wane in the emergent market economy. The investigation of L village revealed how significantly the AAT altered the amount and nature of village governments’ workload in agricultural regions. As Table 7.1 shows, the AAT reduced the categories or kinds of routine administration and economic development work conducted by village governments, but added to its tasks in terms of public welfare and security. Far more strikingly, the village government’s amount of administrative work was cut by 59 percent and economic development work by 58 percent. By contrast, its workload for public welfare and security doubled, supplanting routine administration to become its most demanding work. All in all, the AAT slashed the village government’s workload by 42 percent. The new mechanism for public goods provision Since the late 1990s, as village finance has gone from bad to worse, public goods provision has been slipping among the long-lasting priorities of

212

The abolition of agricultural taxes and village governance

Table 7.1 The impact of the AAT on L village government’s total workload 2004 (pre-AAT)

2006 (post-AAT)

Categories Actions % of total Categories Actions % of total or kinds taken∗ actions or kinds taken actions Routine administration Economic development Public welfare and security Others

27 11 10 6

463 228 94 75

Total

54

860

53.8 26.5 10.9 8.8 100

24 7 12 4

190 95 193 20

47

498

38.1 19.1 38.8 4 100

Source: Based on the data provided in Li Bingwen (2008). ∗ The number of “actions” taken may be used to suggest work amount – though this is imprecise.

village government in agricultural regions. As is proved by the empirical case studies later in this chapter, the increasingly prevailing post-AAT quantified performance evaluation of village cadres has resulted in public goods provision dropping even lower on village governments’ agenda. Based on my observations, public goods provision has been de-emphasized in cadre performance evaluation largely for two reasons – aside from the technical difficulty in quantifying this undertaking. First, many village governments had no money anyway – a fiscal plight they themselves could not be held responsible for, particularly after the AAT. Even if they wanted to provide public goods, they had to ask the township for the funds. But if township officials did have funds, they would prefer to do it on their own and thereby take the full credit for the sake of promotion. Second, rural villages differed vastly in terms of the status quo of their infrastructure and other public goods as well as the availability of collective funds. It was therefore neither fair nor reasonable to apply the unified criteria to measure all the cadres’ performance. Supplying the most important public goods such as roads and bridges is not something cadres need to do all the time. For instance, in a few villages I visited, the roads and some other expensive public goods had already been there in good condition. In an apparent attempt to alleviate the pressure on post-AAT village finance, village government was relieved from two large spending responsibilities, namely cadre salaries and public goods provision. Unless the villages obtained abundant revenue on their own (e.g., through “attracting investment”), cadre salaries were no longer taken out of the village coffers but paid by the township using transfer payments. On the other

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hand, as the AAT was going on across the country, a central party decision (Xinhua 2005) proposed “building a new socialist countryside,” one of whose programs was shifting the responsibility of providing rural public goods to the state, thereby removing a major traditional function from the agenda of village government. As a result, village government lost another administrative responsibility that had been even more critical to its authority than was tax collection. Ahlers and Schubert’s (2012) investigations in Shaanxi, Zhejiang, and Jiangxi illustrated how the “new countryside” programs reshaped the way rural public goods and services were provided. Under these programs, county and township governments were strongly motivated by the possible inflow of funds from upper levels to formulate and implement developmental programs, which included road building, extension of irrigation systems, the introduction of new agricultural technology, and cultivation techniques. The provision of these goods and services did involve the participation of villages, which were asked by the township to recommend projects that could attract the “new countryside” funding. In this process, however, village cadres seemed to play a marginal role. The projects to be implemented must be supported by a majority of villagers through the voting of the “villagers’ assembly” or the village’s “new countryside council,” both of which were not dominated by cadres at all. Probably in an attempt to bypass village cadres, county and township leaders frequently went among villagers to consult them.27 Although peasants did benefit from them, the “new countryside” programs were of a more or less ad hoc nature, conditioning on how much funding they could receive from above. Also, the pattern of public goods provision Ahlers and Schubert (2012) described applied mostly to “model villages” or the villages with special advantages. For many villages in agricultural regions, the woeful lack of funds and the new criteria for cadre performance assessment made the village governments unable or 27

It should be noted, however, that there seem to be vast differences in the extent to which the effects of the AAT have changed the relations between township authorities and ordinary villagers. Probably, only where the “new countryside” programs were effectively executed could their relations be closer. Where “attracting investment” was prioritized and successful, township authorities usually dealt with village cadres only. Another investigation in Hubei found that the frequency of township officials going to villages reduced considerably after the AAT. Even if they went, most of the time they played poker or ate and drank with village cadres (Tian and Chen 2010). According to a survey among peasants in Henan in 2010–11, only 9.8 percent of the respondents “dealt with” (da jiao dao) township officials, whereas 81.2 percent did not. Only 13.4 percent thought that the township government played an active or positive role in rural socioeconomic development, whereas the others thought not. Those who had a “good” impression of township officials made up only 11.6 percent of the respondents (Song Yanbing 2012).

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unwilling to bother about public goods anymore, whereas the state obviously was not forthcoming in taking over this responsibility. This scenario could partly explain why, although the TFR and the AAT undoubtedly removed peasant burdens, peasants did not give the party-state as much credit as might have been expected. It spurred awareness among peasants that many of the fees and taxes they paid in the past were spent on selfconsumed public goods for which they were justified to hold the village authorities accountable. Now that the TFR and the AAT had emptied village coffers, the target of their resentment at the lack of public goods somehow shifted from village cadres to the reform regime.28 Until the end of the 1990s, the pattern of public goods provision at the village level was relatively simple and unitary, with village government acting as the principal, if not sole, provider. As its fiscal capacity shrank considerably, first with the TFR and then with the AAT, village government in agricultural regions has tended to be sidelined on this matter. The shortage of collective funds did not necessarily mean, though, that public goods completely ceased to be supplied in villages. Instead, in a large number of villages, the financial sources, patterns, and organizing forces for public goods provision have more or less diversified. In some villages, funds were raised and public goods provision was coordinated by “activists” who had no cadre positions but, for various reasons, enjoyed good reputations. They managed to tap into a network of most likely donors, such as the political, social, and economic elites who had long left the village but maintained close ties through family lineage and thus cared about village affairs (Zhang Shiyong 2009: 178– 90). In some villages whose leaders owned profitable family companies, the leaders bore part or all of the cost of selected public goods.29 For some vital public goods and services, such as water (for both drinking and irrigation), households formed their own water association and elected its president. In this pattern, water supply was virtually privatized, and the association charged water consumption fees (He and Luo 2006; Ding Wei 2009; Yu and Zhang 2011). 28

29

Interviews with cadres and villagers at Yangshao and Buqiao (Shandong, June 14–15, 2006); Qiugang and Fengxi villages (Anhui, January 2–4, 2006); Shuguang (northern Jiangsu, January 1–3, 2009). Some of my interviewees were initially happy with the reduction in their burdens but expected that the TFR and the AAT would be accompanied by more government subsidies for public goods provision. They realized that they actually paid a price for burden reduction when the government failed to deliver. The failure led some peasants to construe the TFR and the AAT as state policies that let the countryside and peasantry “survive or perish on its own” (zisheng zimi), meaning that the state had abandoned its responsibility for rural development and peasant life. However, the survey (Bird, Brandt, Rozelle, and Zhang 2009) cited earlier suggests a huge regional difference regarding the extent to which public goods provision at the village level was financed by transfer payments. See Chapter 9.

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Where village cadres remained the organizers of public goods provision, their methods for obtaining funds as well as their motives had changed. In the past, funds were taken from the village purse, from the subsidies channeled through the township government, or from “oneissue-one-discussion” after the TFR. Now, funds might still flow from the state, but from a variety of government departments which could even be at the provincial level. The amount of funds village cadres received depended not only on the necessity and urgency of the goods or services requested, but more importantly on cadres’ social connections and their communication skills.30 Nonetheless, the availability of funds is a necessary but not sufficient condition for the village government to provide public goods. Village cadres have never had a strong personal incentive to use whatever funds they could obtain for that purpose. As noted previously, after the AAT almost ruined village finance and rural governments refused to come to its rescue, village government was actually discharged of its duty as public goods provider. It is therefore worth explaining why cadres in some villages still enthusiastically sought state subsidies and donations in an effort to provide public goods for fellow villagers. Lily Tsai (2007: 80–85, 252–56) offers part of an explanation that remains valid in some regions of the post-AAT countryside. She found that village government’s public goods provision did not correlate strongly with its economic development and affluence, or with “better implementation of election procedures and villagers’ representative assemblies.” Instead, “solidary groups – such as temples, lineages, or tribes that are based on shared moral obligations and ethical standards – can provide informal rules and norms” to hold village cadres accountable for public goods provision. If village cadres are members of these groups or embedded in the groups’ activities and institutions, they “have a strong incentive to provide public goods and services because doing so earns them moral standing among fellow group members as well as the help of other local elites in implementing state policies.” Tsai’s findings are undoubtedly true, but her theory, as she herself has recognized, is applicable only to one of the village patterns that is far from dominant in the Chinese countryside. Investigations expose the real motives or hidden agenda of some village cadres who have tried hard after the AAT to raise funds for public goods provision. They are not pressured by the higher authorities but volunteer 30

Among rural public goods, transportation projects, namely repairing roads, usually get government subsidies most easily. In Hubei, the provincial government stipulated after the TFR that all sub-provincial governments must share the cost of repairing roads connecting villages (Chen Tao 2009: 119).

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to do so; however, they are interested only in public projects that could bring them private gains. Public goods provision involves tendering, contracting, purchasing of raw materials, and so forth, which would provide the organizers with multiple opportunities for taking bribes or stealing from the collective funds. In Jingmen (Hubei), a greater number of village cadres have been punished or even jailed for graft in the supply of public welfare projects in recent years (Chen Tao 2009: 118–25). “Public services” were also delivered for private gain. At a village in northern Jiangsu, cadres colluded with salesmen and companies to lure the peasants into buying fake chemical fertilizers and pesticide against “new” plant viruses (Luo Jianjian 2009: 147–57). Although corruption in public goods provision is not new, weaker mechanisms of government supervision apparently account for its increase. Diversified sources of collective funds also make it harder for the township government to monitor the cadres. Because many township officials also either have been facing retrenchment or have not been paid due to the government deficits, they can hardly be expected to supervise village cadres more closely. The commercialization of village government31 However cost-ineffective it might have made village cadres to the partystate, the AAT has not resulted in the abolition of village government – at least at present – but instead transformed its incentive structure, functions, and agenda. Meanwhile, the reform regime, too, attempted to adapt its rule in the countryside to the new socioeconomic landscape. In October 2005, the Central Committee approved a five-year plan (2006–10) that stipulated “new” responsibilities for rural officials, namely “to expand production, improve [farmers’] living standards, promote civilized way of life, improve sanitation, and ensure democratic administration [in villages]” (Xinhua 2005). In October 2008, the third plenary session passed another resolution on “important issues on rural reform” that reiterated the post-AAT tasks and goals (Xinhua 2008). In the two party decisions that informed the would-be long-lasting effects of the AAT on rural governance, actually nothing substantial was added to the functions of rural government to fill in the void left by the AAT. The only meaningful addition was the extension of the urban 31

This section and the next adapt material published in my article, “How has the abolition of agricultural taxes transformed village governance in China?: Evidence from agricultural regions,” China Quarterly 219 (September 2014), pp. 715–35.

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social security system to rural areas (at or above the township level).32 The provision of public goods as one of the “new countryside” programs was explicitly defined as the state’s responsibility, but it was apparently a soft-target one to which no quantified or concrete standards would apply. The lack of regularized, hard-target responsibilities, coupled with the party-state’s failure to set out the parameters of what they were allowed to do, gave the reins to township officials, prompting them to set their own self-serving agendas with which village cadres were urged to keep their role aligned.33 In agricultural regions where rural finance relied heavily on agricultural taxes, township government was bogged down in an even worse fiscal crisis than the village in the aftermath of the AAT and thus tried desperately to share whatever revenues the village authorities could obtain. Township government did not wait long to set revenue-generating ability as the highest criterion for evaluating village cadres’ performance.34 The widening shortfall in budgets, nearly empty coffers, and shared stake in finding new sources of revenue compelled both township and village governments to set increasing revenue through “attracting investment” (zhaoshang yinzi) as their goal of overwhelming importance and urgency.35 Under the township’s pressure, village cadres were so deeply 32

33

34

35

Linda Li’s (2006) “non-dualistic” argument may shed light on why party decisions provided only general guidelines for rural governments. The center would encourage or allow local governments to play an “instrumental” role in refining and redefining the central policy in an effort to adapt it to diverse local conditions. The impact of the AAT on township government was much greater than the removal of a task but spilled over to other domains as well. He Xuefeng (2011) found in agricultural regions that before the AAT, 90 percent of township officials’ time and energy was absorbed by the issues relating to agriculture and peasants. After the AAT, 90 percent was spent on attracting investment and urban construction. The township’s pressure on villages for revenue generation was not new but existed to varying degrees from the early 1980s. As Jean Oi (1989) indicated, the fiscal reforms during that period hardened budget constraints on local governments but also granted them rights to the revenues generated from local development. Both Wu Yi (2007: 577– 81), and I observed that before the AAT, townships in some agricultural regions already used the ability to lure investors as one of their criteria to select and reward village cadres. From party decisions, which were typically full of clich´es or “jargon” and liable to loose interpretations, the township and village leaders alike identified three priorities for their agendas, namely developing the (local) economy, increasing peasant income, and maintaining political stability. Interviews at the townships of Juegang (December 26–30, 2008), Xiayuan (January 1–2, 2009), Jiangduo (December 27–28, 2011), and Huagang (December 31, 2011 to January 2, 2012), northern Jiangsu. “Developing the (local) economy” used to be a buzzword in the party and government documents concerning rural governments’ tasks, but no longer. From the changing political discourse since the early 2000s, one could see that this ambiguously defined responsibility has been supplanted by the more specific task of “increasing agricultural production.” My interviews suggested that rural cadres at both township and village levels either did not

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immersed in “attracting investment” that this undertaking in effect turned village government commercial. In an effort to trace the longer-term post-AAT development of village governance, I investigated Chen’gao (Juegang township) and Shuguang (Xiayuan township) in northern Jiangsu in the winter of 2008–09 – four years after the AAT. It appeared that cadres at both villages had settled on their new agendas, which had undergone notable change from the AAT. In the meantime, the state not only increased its farming subsidies (to 85 yuan per mu) but set up an account for all rural households in their county’s “Rural Credit Cooperative” (nongcun xinyong hezuo lianshe). Thus, the government no longer needed village cadres to deliver the subsidies to each household but remitted the money directly into their accounts (“yi zhe tong”). At Chen’gao, enforcing the one-child policy was fairly smooth and did not bother cadres much. The township still demanded that cadres persuade villagers to join the new medical system by paying 30 yuan as a membership fee, but the job became less arduous as the reputation of the system improved and the number of its members grew. Besides, the township assigned a variety of minor or nearly substance-free duties for village cadres, such as filling in statistical tables, unifying house-building standards, environmental protection, and forestation. The most remarkable change was village cadres’ obsession with wooing investors. As they said, this task was not new at all but had been one of their long-standing and consistent responsibilities from the early 1990s onward. However, for the first time, wooing investors became their primary concern – due to both the township’s demand and their own initiative. In practice, village cadres were merely township officials’ assistants who played a subsidiary role for this undertaking. Chen’gao had an industrial park for private enterprises that was set up and regulated by the township but jointly managed by the village and township authorities. The township was responsible for searching for potential interested developers (both domestic and overseas), whereas the village contributed (leased) its land. Because most of the land was requisitioned from peasants, village cadres were obligated to persuade them to give up their land-use contracts on the one hand, and haggled with the developers for a “reasonable” rent on the other. In my interviews, the cadres likened themselves to a “bridge” or “brokers” both between the township notice this “rhetorical” change or deliberately ignored it. In any case, “developing the economy” is invariably politically correct and, more importantly, may justify “attracting investment,” whereas “increasing agricultural production” cannot. This finding does support Sebastian Heilmann’s (2008) “dualistic” approach, which suggests that local cadres executed only the central policies from which they could skim rents.

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and the developers and between the developers and the villagers whose contracted land was targeted. It appeared that the role of the “broker” who had to deal with all the sides concerned was truly heavy and almost exhausted their office hours. Chen’gao’s industrial park had already existed for a number of years, but its expansion gained momentum not long after the AAT. The revenue it generated thereby became critical to both township and village finances. The peasants whose land was requisitioned usually received the lion’s share, if not all, of the rent the enterprises paid. This method of handling the land rent was common but was not the only one in northern Jiangsu. Another method was to negotiate with both individual villagers and their villagers’ group’s head. After the villagers’ land was leased, the rent was paid to the villagers’ group to be distributed equally among all group members. Thereafter, the land of the group was equally re-allocated among all its households, including those whose land was leased (au. int.). But for the village-owned land, which was mostly unusable wasteland, the rent was all taken by the village authorities. The enterprises also paid taxes that could not be legitimately shared by the village, but most of those falling in the local-tax category entered the township coffers. Until the TFR and the AAT, farming was notoriously a money-losing business. The AAT did enhance the value of land to peasants, but not by much. At Chen’gao, those who were busy with growing crops in fields were nearly all elderly people and women. Actually, most of the households preferred their land to be requisitioned, as the rent they were paid was much higher than their net income from farming. The benefits for these villagers were not confined to the rent alone. Cadres negotiated with the enterprise owners to make sure that the landless villagers could be offered a job. Furthermore, cadres were allegedly keen to “protect” the villagers as enterprise employees in regard to wage, welfare benefits, and working conditions. Thus, the domination of “attracting investment” on the village government’s agenda was well justified as it allegedly fit perfectly into the reform regime’s goals of boosting the local economy and helping peasants get rich. Of course, the main driving force behind attracting investment could be found in the deep personal stakes of both township and village leaders. The thriving industrial park contributed considerably to village and township revenues, offered their leaders abundant income advantages, and improved their performance evaluations.36 36

Interviews with the village party secretary (and concurrently village head), his assistant, and ordinary villagers, December 29–31, 2008.

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Just as in Chen’gao, the transformation of village government at Shuguang was characterized most noticeably by its fixation on “attracting investment.” The cadres treated this as their new “core task” whose importance eclipsed all others’. Among all the village governments of Xiayuan, the ranking of priorities was determined by the township, whose top criterion for evaluating village cadres’ performance was how successful they were in attracting investment. The success was measured by the number, capital assets, output value, and employment of private enterprises at each village and, above all, how much tax revenue they generated for the government. On the eve of the AAT, the village had only four private enterprises. Five years later, the number had leaped to twenty-six. The village was located on the fringe of the township, and its efforts to woo investors were handicapped by its out-of-date infrastructure and inconvenient transportation. Except for one outsider from Sichuan, all of the private entrepreneurs were native villagers who grew up in the village but left during the early years of market reform in search of business opportunities. After they established themselves in business, village cadres lured them back on “preferential” terms. Beyond that, constrained by the village’s unfavorable environment, it seemed difficult for cadres to do more. Because the investors had extensive family ties and social networks in the village, they did not bother cadres much. Unlike their counterparts at Chen’gao, enterprise owners at Shuguang preferred to hire fellow villagers who, aside from being relatives or friends, could take care of their own board and lodging and hence spared the enterprises extra outlay.37 These enterprises contributed a great deal to village revenue, which cadres claimed to have spent in the collective interest.38 One of my most striking findings at Chen’gao and Shuguang, which was corroborated by the results of my follow-up fieldwork discussed later, 37

38

Otherwise, private enterprises, such as those at Chen’gao, would not like to hire the villagers. Most of the villagers-turned-workers lacked skills and training and were therefore uncompetitive in the job market. Driven by a mentality of job security and patronage, some did not work hard or abide by enterprise regulations. Interview with an enterprise owner at Chen’gao. At Shuguang, the households whose per capita income was below the state-stipulated subsistence level (annually 1,680 yuan) (di bao hu) were not only subsidized by the government. They also received 120 yuan monthly from the village. The village authorities also offered subsidies to those whose annual income was between 1,680 and 2,800 yuan in case of emergencies, such as grave accidents or hospitalization. In this village, every villager was asked through “one-issue-one-discussion” to pay an annual 20 yuan for the provision of public goods, plus 8 yuan as an irrigation fee. If the amount raised was not enough, the village would make it up from its coffers. Interviews with the party secretary, accountant, the head of the villager-serving office, and villagers, January 1–3, 2009.

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was that although the initial process of attracting investment involved ordinary villagers, the village government’s main function was even farther removed from these villagers than what I witnessed a few years before.39 The AAT dispensed with one of cadres’ responsibilities that often required the use of coercive power and thus constantly caused tensions. After the AAT, however, tensions were replaced not by harmony but by disengagement. The AAT seemed to have failed to boost cadres’ status, improve cadre-villager relations, or raise villagers’ respect for cadres; it just drove them farther apart. The assistant to Chen’gao’s village head complained that village cadres did not count as “cadres” at all and their de facto status in village affairs was even lower than ordinary villagers who often “hurl all kinds of abuse” toward cadres without scruple.40 The AAT stopped the reversal of power relations between cadres and peasants but did not reinstate cadre authority. The detachment from villagers provided the cadres with a considerable amount of autonomy that partly explained why they could afford to turn the village government into a commercial interest group. Cadres’ dwindling power and growing autonomy did not result from the AAT alone but was a function of the rural market process. What happened at Shuguang exhibited how market forces progressively dominated the rural economy and peasant life at the cost of cadres’ leverage. Shuguang was well known for strawberries and pig feeding. For many years, cadres’ authority or “prestige” built on fellow villagers’ reliance on them for technological assistance, market information, and outlets for their products. Now, villagers could obtain all these from the market.41 For instance, the strawberries villagers grew had formerly been purchased by the city’s (Rugao) canned food company via the village government for export to Japan. Now the company got around cadres to sign contracts directly with each household. At Chen’gao, rice and pork traders periodically entered the village and purchased from villagers door to door according to market price. If any product was unsalable or the market price plummeted, cadres could not help. While marketization weakened peasants’ dependence on cadres, the AAT reduced cadres’ need to engage villagers. These two changes undermined cadres’ commitment to “serving villagers,” which, as some admitted in private, was previously conditioned on villagers’ obligation to pay fees and taxes. This 39 40 41

Thus, while the task of attracting investment did more or less reactivate the village government, it did not revive its authority or administrative effectiveness. Interview with him on December 30, 2008. In that regard, what happened at Shuguang was representative. In an increasingly marketized rural economy, villagers more and more often sought help from the village’s own non-cadre “elites” who were respected for their market power (Zhou 2011).

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no-pay-no-service mind-set turned many cadres into “businessmen” whose “services” fellow villagers must pay for on an individual basis.42 Comparing post-AAT village governments The success of the efforts for attracting investment could not be guaranteed but varied with a variety of local conditions, such as proximity to the regional commercial hub or main communication routes.43 To find out how and to what extent the success or failure of attracting investment could bear on the pattern of village governance and the functions of village government in agricultural regions, I selected two sharply contrasting villages, namely Qiuliu (type I), at Jiangduo township, and Lijiazhuang (type IV), at Huagang township, in Jiangyan (northern Jiangsu), as my research sites in December 2011 and January 2012 – seven years after the AAT. The agendas of both village governments were reset in conformity with each township’s criteria for performance evaluation, which were laid down allegedly in compliance with the central policy spirit. At Jiangduo, village cadres were evaluated according to their performance on ninety-four tasks that were quantified as totaling 997 points (Document 2011).44 Without question, the number of points for each task was the most telling indication of its importance. The final allocation of points, as Schubert and Ahlers (2012) observed elsewhere, would “produce a strict hierarchy” and thereby put heavy pressure on those whose score was low. All the tasks were divided into three large categories: (1) The Building of the Party [Organizations] and Spiritual Civilization (202 points), (2) Social Undertakings (235 points), and (3) Economic Construction (560 points). The first category was divided into seven sub-categories: (a) organizational work (36 points), (b) disciplinary inspection (25), (c) propaganda (40), (d) mass associations (12), (e) the people’s armed forces [i.e., militia] (25), (f) development of ecological village (37), and (g) letters and calls [xinfang] (27). Under the second category were (a) birth control (50 points), (b) public order and production safety (30), (c) civil administration (15), (d) transportation (15), (e) village-building, management of state land, and house-building (18), (f) environmental protection (11), (g) labor and 42 43

44

Interviews with cadres and villagers at Jiuchengli, Buqiao, and Xiezhuang (mid-June 2006); Shuguang (January 1–2, 2009); and Qiuliu (December 29, 2011). The enormous differences in local conditions for attracting investment applied to townships as well. Many townships that lacked the relevant advantages could not land good industries except those that caused pollution or were unprofitable (Smith 2010). According to a nationwide investigation, the quantification of village cadres’ performance evaluation was adopted in many provinces in China (Zhao Shukai 2010: 177–87).

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social security (34), (h) culture and health (30), (i) village finance (30), (j) statistical work (9), and (k) finance (i.e., farming subsidies) (10). The third category consisted of two major tasks only: (a) industrial development (i.e., attracting investment) (300) and (b) agricultural economy (246). The first category contained seven sub-categories that comprised thirty-eight tasks. After deleting hollow or “formalistic” ones that made sense only for propaganda purposes, only one task was real, namely preventing villagers from lodging complaints to higher authorities (shangfang). If any villagers brought their grievances to Beijing, the performance of all cadres in that village would fail to pass the evaluation – a rule known as “one-vote veto.” This black mark was expected to deter cadres from offending peasants. The second category had eleven sub-categories and forty-nine tasks. Except for the two hard-target ones of birth control and the levy of “new medical system” fees, this category, too, had a “one-vote veto” task – that is, to avoid any criminal case that was grave enough to cause a sensation throughout the region. “Public goods provision” (mainly infrastructure) belonged to “transportation” and deserved only seven points (out of 997). In stark contrast, “attracting investment” alone took 300 points, far exceeding all others. A village cadre admitted in private that at least 70 percent of the tasks on the list for performance evaluation were senseless and should be scrapped.45 Many tasks sounded magnificent but were abstract or intangible and therefore technically hard to undertake or evaluate. The pressure cadres keenly felt from the township was focused on two top priorities, namely attracting investment and maintaining a veneer of stability.46 These criteria applied not only to all village cadres at Jiangduo township but to the entire Jiangyan region, regardless of the diversities among villages. Given the overriding emphasis on attracting investment, village cadres were supposed to be fully engaged in it. An intriguing question was: What would happen to the villages whose insurmountable disadvantages stymied the efforts to woo investors? If village cadres could do nothing about attracting investment, what did they do? Qiuliu was such a case. For all the endeavors made, this village had only five or six small private enterprises. The taxes they paid were taken by the government, and the enterprise owners paid rent (800–1,000 yuan 45 46

Interviews on December 27 and 29, 2011. These two tasks dominated the agendas of county and of township governments as well. In Graeme Smith’s (2009) study of China’s county officials, they seriously and wholeheartedly undertook only those tasks that were important to annual assessment, raised revenue, and brought them personal benefits.

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per mu) to the households who leased their land. The small scale of the enterprises did not bring the village government much benefit, except “some influence” over their hiring. The village finance used to bank on fees and taxes but was almost deleted after the AAT as the village had no other revenues. The disadvantages for inviting investment were not confined to Qiuliu alone but existed in many of the villages in this township. As a consequence, attracting investment at the village level contributed little to township finance. Presumably because of the decline in its own revenue, the township was reluctant to share transfer payments with villages on a regular basis. The transfer payment Qiuliu received was allocated not to the village government but to individual cadres. Each year, aside from their salaries, the party secretary was given 120 yuan (for basic administration expenses); the village head and accountant each 100 yuan; and other three cadres each 80 yuan.47 Apart from this tiny amount of funds, village revenue was zero. The township finance could afford to offer pension, social security, and medical insurance only to the village party secretary. The village party branch admitted a private company owner into the party, and thereafter the township appointed him as the village’s deputy party secretary. The village government was so poor that much of its expenditure, including the bill it paid for my lunch, was taken out of his personal pocket. Constrained by the disadvantages for wooing investment, cadres allegedly shifted their priority to the development of a “service-oriented” village government that fit into the loosely interpreted evaluation criteria. On the wall of its office, I saw a complete list of the services the village government was obligated to offer. They were referred to as “entrusted services” (daili fuwu), which meant that cadres represent peasants on an individual basis vis-`a-vis the government. More specifically, cadres would work as fellow villagers’ agents or run errands for them if they applied to the government for: (1) registration of private companies; (2) a house-building license; (3) registration, change, or cancellation of house ownership; (4) license of a salt sale; (5) sale of medicine; (6) a birth certificate; (7) a subsidy for purchasing new-type farm machines; (8) farming subsidies, (9) land circulation, (10) small or “help-poor” (fu pin) loans; (11) use of electricity; (12) a certificate of temporary (urban) residency; (13) leasing of a house; (14) fee payment for irritation projects, drinking water, electricity, cable TV, and mobile phone; (15) a death certificate; (16) an identity card; (17) insurance for pension and subsistence; (18) compassionate (cishan) assistance; (19) a disability certificate; (20) 47

When I visited, the party secretary was concurrently the village head and thus received 220 yuan each year. The deputy party secretary was concurrently the accountant (180 yuan).

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consultancy on laws concerning marriage, family, and labor; and (21) legal assistance. My observation and interviews showed that these services to a large extent remained on paper. In fact, villagers seldom asked cadres to help. Indeed, some of their applications had to go through the village government – its stamp or the head’s signature was needed. But applicants usually preferred to file applications on their own as entrusting these to cadres could make the process even longer and perhaps more complicated. Also, because they no longer paid taxes or fees, villagers did not want to owe cadres any personal “favors” that they would be morally obligated to repay. If an application was turned down, village cadres were usually helpless, as they were in no position to influence government officials. Cadres’ routine work was not limited to the “entrusted services” but included some other responsibilities, such as filling in statistical tables; collecting the fees for pensions (nong bao), cable TV, the new medical system, and “one-issue-one-discussion”; ordering rice and wheat seeds and delivering them door-to-door; banning stem burning (to avoid air pollution); handling state subsidies for ex-servicemen, the elderly, and households below the poverty line;48 supplying labor for the region’s irrigation projects; planting trees (forestation); mediating between quarreling villagers; coordinating enterprise-villager relations; and enforcing birth control.49 Although these seemingly trivial or hypothetical tasks could indeed keep cadres “busy,” how did ordinary villagers assess what cadres did? The villagers I talked to agreed at least on one point: their everyday life almost had nothing to do with cadres. To the extent that the village government did function, it was largely irrelevant to villagers. Villagers received farming and other state subsidies directly from the government and relied on the market or social networks for all they needed. They were free to sell their products at the price they desired in free markets without any state intervention. If villagers did need the village government’s stamp or signature for any certificates or applications, they were not requesting cadres’ favor at all. If cadres were reluctant or slow to respond and thereby triggered confrontation, they would most likely be punished for failing their duty and imperiling “stability.”50 48 49 50

The subsidies were allocated by the township. Village cadres’ job was to verify villagers’ qualifications for subsidies and file applications on their behalf. Birth control was not a problem at this village. I was told that the villagers did not want more children mainly because of high education costs. As a cadre complained, in this village, ordinary villagers were “grandfathers” (daye), whereas cadres were “grandsons” (sunzi). If the party secretary or village head refused to endorse whatever villagers applied for, the villagers would refuse to leave his or her home. Interviews.

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The cadres did not have to treat “serving villagers” seriously, either. For all the rhetorical emphasis, this function counted little in their performance evaluation as it was not specified on the township’s list of criteria. More importantly, performance in “serving villagers” was hard to quantify (au. int.). In many villages, the redistribution of collective assets was a divisive issue. But Qiuliu had neither collective economy nor collective funds, so the village government’s redistributive power was zero. After the AAT, cadres and fellow villagers no longer needed each other, nor did they see often each other.51 Village cadres’ power abuse was often a catalyst for peasant protests. At Qiuliu, as cadre power evaporated, stability obtained because few villagers went to higher authorities to lodge their grievances. Therefore, although “attracting investment” and “maintaining stability” were the two top priorities imposed from above, cadres at Qiuliu had to do neither.52 Another village, Lijiazhuang, was strikingly different from Qiuliu. This village was located at Huagang – a township whose industry and finance were much better than Jiangduo’s. Some villages at Huagang were endowed with manifold advantages for wooing investors, the most critical of which was their proximity to three main highways, one railway, and Taizhou city, the hub of the regional economy. Aside from its developed infrastructure, Lijiazhuang enjoyed an additional advantage, which was its traditional strengths in the production of spare parts of cars, motorcycles, and bicycles.53 At Huagang, Lijiazhuang was one of the most successful villages in attracting investment. The village government’s endeavor to adapt its functions to the “new countryside” goal was touted as “exemplary.” Huagang’s criteria for evaluating village cadres’ performance resembled Jiangduo’s, but cadres at the two villages pursued different agendas and did different things. Lijiazhuang had more than 100 private enterprises, of which two had output value exceeding 100 million yuan (hence 51

52

53

It seemed that the poorer the village government was, the less contact it had with fellow villagers. In Gansu, one of the poorest provinces in the interior, collective income was close to zero in most villages. A survey conducted there found that many village governments were nothing more than a signboard. The top leaders, namely the party secretary and village head, spent most of their time making money for themselves outside the village (Li, Zhao, Shen, and Li 2012). I was invited to attend a village leadership meeting at Qiuliu and was therefore able to meet and interview all the cadres. Also interviews with a number of ordinary villagers, December 27–30, 2011. Attracting investment at both Lijiazhuang and Huagang benefited from the restructuring of industrial production in coastal provinces, such as southern Jiangsu and Zhejiang. As low-value-added industries lost their competitive edge in recent years, much of their production shifted to the countryside or agricultural regions, thereby boosting rural cadres’ efforts to woo investors (Pei, Zhang, and Wang 2009).

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yiyuan qiye) and ten each more than 10 million yuan (called dingbao qiye). How did the township government, the village authorities, and ordinary villagers benefit from this village’s astonishing achievements in attracting investment? The total taxes these enterprises paid annually reached approximately 40 million yuan and were divided into joint and local categories to be shared between five levels of government from the center to the township. Under China’s 1994 tax system, the township was only entitled to part of local taxes. For Huagang, this part was 10 million yuan, which was huge for a township’s finance. Obviously, Lijiazhuang was not alone in adding to the township coffers. The taxes paid by private enterprises in all the villages at Huagang made up 30 percent of its total revenue.54 Attracting investment also generated two benefits for ordinary villagers. First, the land rent the investors paid belonged exclusively to the household that leased the land. The rent, 1,300 yuan per mu per year, was higher than that in Qiuliu (800–1,000 yuan), whose land was apparently of less commercial value.55 Second, land-leasing villagers were employed in these enterprises with a monthly salary of 3,000 yuan, roughly equaling, if not surpassing, that of urban workers. These peasants-turnedworkers also retained a small plot of land on which to produce for their own consumption. How the success in attracting investment affected villagers’ livelihood could be seen from a comparison. Qiuliu had 1,300 villagers, 600 of whom left the village for urban employment. By comparison, Lijiazhuang had a population of 1,718, of whom fewer than ten joined the floating population. Most of the villagers were hired by the village’s private enterprises. Lijiazhuang’s finance benefited enormously from these enterprises. The village government had a well-filled purse with annual revenue spiraling to 2.41 million yuan. Of its total revenue, 30 percent was the profit 54

55

I did not inquire how or on what projects the township government spent money, but I knew one thing for sure. The Huagang government did not rely on transfer payments or state-allocated funds for most of its public expenditures. The township’s financial self-reliance made the next-higher authorities’ (Jiangyan) hierarchical supervision difficult. As Xueguang Zhou (2012) argued, when the state imposed hard responsibilities for township and village governments without adequate funding, it “distorted [their] budgetary process and weakened fiscal discipline.” Rural cadres were compelled to increase their revenue in their own ways and therefore could hardly be held fiscally accountable. Jiangyan benefited a great deal from Huagang’s success in attracting investment but refrained from restraining its fiscal autonomy. Land requisition fees differed vastly, depending on not only the commercial potential of the land per se but also who requisitioned it and for what purposes. In some rural areas in Fujian, the government expropriated land at a price of 88,000 yuan per mu (38,000 yuan for unharvested crops; 30,000 yuan for relocating; 20,000 yuan for land compensation). Interviews at Yannei (Fujian), December 14–15, 2008.

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of its collective economy, which was based on the production of crab food. The private enterprises contributed 70 percent (1.70 million yuan) to the village coffers in three ways. The first was the rent (0.30 million yuan) they paid for leasing the collective land. The second was the “management fees” (0.40 million yuan) the village government charged them for its services, which included paving roads, installing electricity facilities, applying to the government for licenses on behalf of the enterprises, cleaning garbage, land requisitioning, mediating between capital and labor, and so on. The third (1 million yuan) was the so-called gratitude fee that the enterprises paid to thank village cadres for assisting their “technological upgrading” (jishu gaizao). What the “assistance” or “upgrading” exactly meant was not specified or clarified. So this largest portion of village revenue seemed to be “gray income,” which was vague and opaque. Lijiazhuang received 100 thousand yuan of transfer payments from the township – 178 times Qiuliu’s amount – presumably thanks in large part to its contribution to township finance. Whereas most of these payments were earmarked for poverty relief, the rest was spent on cadre salaries. Like some other villages with their own abundant and stable revenues, Lijiazhuang’s cadre salaries were paid out of both the transfer payments (at the township’s disposal) and the village coffers.56 Lijiazhuang had six cadres who were among the best paid in the region. The large budget surplus allowed the village authorities to launch some ambitious programs, such as one that aimed to develop the village into an industrial and business district. How did the successes of attracting investment at Lijiazhuang transform cadre-villager relations? Again, a comparison with Qiuliu was intriguing. At Qiuliu, cadres had the ability neither to attract investment nor to offer fellow villagers much help. At Lijiazhuang, except the first phase of attracting investment that involved negotiation with villagers for land requisition, cadres were almost entirely immersed in dealings with enterprise owners and the township authorities. Cadres at both villages were obligated to provide fellow villagers with a long list of services that were more rhetorical than substantial. However busy Lijiazhuang’s cadres appeared, what they did most of the time was unconnected with villagers’ needs and concerns. Thus, the post-AAT deepening of disengagement between cadre and villager was not significantly correlated with success or failure in attracting investment. 56

The contribution to township finance and the deep pockets of the village were important but not sole factors in determining village cadres’ salaries. A study suggested that the level of their salary was also based on the economic development and population of the village (Kung, Cai, and Sun 2009).

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Nuanced differences could be discerned, however. Lijiazhuang’s importance to township finance accounted for the much more intensive personal interactions between the village and township leaders, which seemed to have made cadres’ “entrusted services” more effective than at Qiuliu.57 Regarding the village government’s “leadership role,” what was brought up in my interviews at Lijiazhuang was its ability and willingness to offer financial assistance. Lijiazhuang’s villagers were relatively affluent with average per capita annual income of 16,300 yuan. If they needed funding for starting a private business, for instance, the village government would help them obtain credit loans. Private irrigation and land cultivation fees, though not much, were paid from village revenue as well. Whatever the cadres allegedly did for fellow villagers, it did not seem to have made the village a harmonious community. Ironically, Qiuliu was a poor village but “stability” was not a problem, whereas conflicts at Lijiazhuang were sharper – not only between cadres and villagers but between enterprises and villagers. In some villagers’ perception, they were entitled to share more of the collective wealth. The cadres asserted that most of village revenue had been spent on collective development projects; however, these projects obviously had not generated immediate and tangible benefits for fellow villagers. However village revenue was actually spent, few villagers seemed to care much about it. This apathetic attitude on the part of villagers stood in sharp contrast with the pre-AAT era when cadre corruption often sparked protests. At Lijiazhuang, how much revenue the village obtained and for what proposes it was used did not bother villagers much, probably not because the villagers earned a decent income on their own or trusted cadres but because of the change in the sources of village revenue. Because villagers had stopped paying taxes and fees and thus no longer contributed to village finance, the credit for increasing village revenue was exclusively taken by village cadres, who arguably did a good job in attracting investment. Cadres’ greater responsibility for finding new revenues not only provided them with greater autonomy but made them less accountable and controllable. On the other hand, clashes between enterprises and villagers at Lijiazhuang happened from time to time. Even though these villagers were “well paid” enterprise employees, they were alleged to be “unhappy” to 57

One of the indicators of the township-village relationship was the frequency of the meeting between village cadres and township officials. At Qiuliu, the party secretary went to the township government fewer than fifty times a year (at most once a week). Lijiazhuang’s (nominal) party secretary was concurrently the deputy township head. The de facto top village leader was the village head, who went to see the township leadership almost every day. Interviews at both villages.

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see that the enterprise bosses reaped “excessive” profits on their land. They therefore demanded sharing more of enterprise profits and, for that matter, higher salaries and better welfare benefits. The high profitability of the enterprises and the “red-eye disease” recently prompted more native villagers to turn themselves from enterprise employees to enterprise bosses.58

Conclusion Since the beginning of China’s rural reform in 1978, the importance of the AAT in terms of its political and economic consequences perhaps can be paralleled only by decollectivization. If decollectivization allowed the peasantry to get rid of the party-state’s complete economic control, the AAT has transformed the functions of village government and thereby the way the countryside is governed. As a reform of China’s tax system, the AAT’s political impact has far outweighed its economic or financial one. The abolition of agricultural taxes altered the nature, goal, and trajectory of the Communist Party’s rule in rural China. Village cadres’ sluggish responses to the AAT and village governance coming adrift in its wake suggested that the reform regime might not, indeed, have executed the AAT as part of a deliberately designed reform package. The findings from empirical investigations revealed how village cadres in agricultural regions struggled to adapt themselves to the immediate effects of this tax reform as both their “core task” and the tax-based source of village revenue were eliminated. Almost at once, they found that they had no (major) functions to perform, no authority to govern, no capacity to undertake tasks, and no motivation to work. The removal of tax collection left a vast vacuum in village administration. Where village government’s fiscal capacity to provide public goods shrank to nothing, one of its historically essential functions ceased to work and was taken over by the government and social actors. This responsibility shifted away from village government at the cost of its administrative capacity to organize, mobilize, or engage villagers. As a result, village governance was trivialized to deal mainly with frivolous village affairs. When the dust settled, village cadres found themselves in a significantly changed situation. They were not assigned much substantial work by the reform regime, nor did they receive much state-allocated revenue. On 58

Interviews with the deputy (Huagang) township head and concurrently village party secretary of Lijiazhuang, the village head, some other cadres, a few enterprise owners, and villagers on December 31, 2011, and January 1–3, 2012. Also based on Lijiazhuang government (2011).

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the positive side, cadres were granted considerable leeway to make up for the shortage of village revenue for either collective or personal benefits. Before long, their efforts to find new sources of revenue accorded fully with the demand of cash-strapped township government, which looked forward more eagerly to fiscal “contributions” from villages to balance its budget. The shared interests in increasing revenue to a large extent have led to the convergence or even “merging” of the functions of township and village governments in agricultural regions that have collaborated well in placing “attracting investment” top on their agendas. If the villages had advantages for attracting investment and were successful in accomplishing the goal, private enterprises could indeed generate large revenues for both township and village. As attracting investment has replaced tax-fee levy to be village cadres’ new “core task,” most of the time they need to deal only with township officials and private entrepreneurs. Thus, “villagers’ autonomy” has metamorphosed to “cadre autonomy,” which is of little relevance to ordinary villagers.

8

Transformed peasant society and re-alignment in rural politics

Although the AAT discharged village cadres of their most difficult and painstaking responsibility and thus removed a large portion of their workload, it also eroded the core of their administrative power and diminished their capacity for governance. Under China’s system of rural governance, in which politics and economics are conjoined, the AAT’s disastrous consequences for village finance proved to be the straw that broke the camel’s back in many agricultural regions. Therefore, the decline in political authority and growing cadre-peasant disengagement in villages should be ascribed to the party-state reform policy itself no less than to the impact of marketization of the rural economy and peasant life. The mystery that needs to be unraveled is not the reform regime’s true motivation for the AAT, but rather its apparent inaction toward the political ramifications of this policy. The regime is supposed to have spared no effort to salvage VPB power in a bid to maintain hegemonic political order in rural society. Quite obviously, it has not done so. In sharp contrast to the central leadership’s deep concerns about the erosion and possible loss of rural political control in the 1990s, no signs suggest that they now still care about the powerlessness of village cadres. A ready explanation is that given the trade-off between the two, the reform leaders have had to abandon often abusive cadre power in exchange for the success of market reform and greater regime legitimacy among Chinese peasants. Indeed, revamping the tax system that victimized rural finances and downsizing the cadre elite through merging villages does support this view and points to a probable hidden agenda on the part of the reform regime that aims to minimize its reliance on village cadres for rural governance. This explanation begs questions, however. An investigation into this conundrum of immense importance should start, once again, from the premise that the ultimate goal of market transition in China is none other than to consolidate Communist Party rule through improving the rural economy and peasants’ living standards. Thus, the refusal of the reform regime to bolster the governing capacity of its rural agents should not 232

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be interpreted as surrendering its political control in the countryside. Rather, this inaction seems to be part of a grander strategy that aims to adapt rural party-state rule to the new socioeconomic landscape. Like it or not, the dramatic changes the TFR and the AAT effected in China’s rural society have made the traditional structure of political authority unsustainable, obsolete, dysfunctional, or at least undesirable. This chapter inquires into the de-alignment and re-alignment or reconfiguration of power in Chinese rural politics that has arisen not only from the consequences of an array of economic, financial, and administrative reforms but from the partial revival of traditional peasant society in the reform process. The marketization of the rural economy since the 1990s has profoundly reshaped social relationships in the countryside. It has torn holes in the social fabric on which political authority is founded and somehow has also awakened the dormant traditional, rural, non-political ruling elites who tend to compete with party cadres for influence in one way or another. As a corollary of the radical transformation of peasant society and the functions of village government, the relations among four main players in the rural political game, namely the party-state, township officials, village cadres, and ordinary peasants, have been significantly restructured.

Marketized and atomized peasant society1 Under the influence of what some Chinese researchers refer to as a new culture of “excess materialism and individualism” that has taken shape with marketization (au. int.), voluntary collective action for public works in a (small) village has become even more unlikely than in a large organization – a phenomenon that contradicts Mancur Olsen’s logic. According to Olsen (1965: 61) and some others (James 1951), even with the quality of non-excludability and the “free rider” problem, public goods could still be offered by some people who are motivated by social incentives, because “social status and social acceptance [arising from contributing] are individual, noncollective goods.” In China’s rural society today, those who provide gratuitous services for the collective may not acquire the desired “social status” but in fact, just the opposite – a somewhat appalling finding by He Xuefeng (2008b: 128–34), who investigated the relationship between the dominant social culture and public goods provision in Jingmen (Hubei). 1

The atomization of peasant society basically means the loosening of social bonds among peasants or a divided and fragmented peasant society.

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In a villagers’ group consisting of forty households, each household needed to pay 10 yuan per mu for an irrigation project that would serve all of them. Their refusal to pay for this project caused a 20 percent decline in their grain output – a loss of income that amounted to 150 yuan per mu. Actually, the total cost of such a project was not so substantial, and a few wealthy households could have borne it themselves – not to mention that they would have benefited more from the project because of their larger plots of land. Ironically, here their economic incentives were outweighed by their social disincentives, as such behavior would have been ridiculed by fellow villagers as stupid, insane, or disreputable. The prevailing rural social value that discouraged the otherwise exemplary deed was crystallized in their attitude: “I do not mind how much I will gain or lose. It would be a folly to contribute to this if others can derive free benefits from what I’ve given.” In China’s increasingly mobile, differentiated, heterogeneous rural society, market institutions have developed at the cost not only of political authority, but of all types of authority in villages. Extensive market penetration into the rural economy has broken up Chinese social, cultural, and ethical traditions that have endured for thousands of years. As the rural reform enters its fourth decade, marketization has recast social relationships in the Chinese countryside in a way that leaves any type of authority volatile, circumscribed, and fragile. The monolithic and all-encompassing power that was once monopolized by village cadres has decomposed into polycentric powers that work to offset one another, resulting in a pluralistic structure of authority or even the virtual absence of authority. This transformation is indeed fundamental: it has almost ruined the social foundations of Communist Party rule in rural China, and it renders a return to traditional village governance problematic as well. A village in imperial China was characterized by its cohesiveness and collectivity, which built on both close family ties and what James Scott (1976: 40) pinpointed in rural areas of Southeast Asia as its function to provide “risk insurance.” Typical villages in north China “were surrounded by walls and had gates that could be closed at night.” Through village associations that operated in a loose fashion and whose leadership usually rotated among family heads, villagers actually lived under a mutual-aid system that was self-organized to pursue collective goals, such as crop-watching, education, self-protection through the night watch, the arbitration of disputes, and religious observance (Gamble 1963: 16, 32–125). In rural lineage-based communities in south China, the focal ancestral hall played a dominant and unifying role among villagers. An array of

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interlocking social institutions of kin, community, class, market networks, and religion “were woven together to form the moral and cultural fabric of the world of the peasants and their educated elites” (Siu 1989: 36). Ritual life, revolving around the cycle of birth, marriage, death, and annual festivals “toward the harvest and toward the triumvirate of gods, ghosts, and ancestors,” underpinned rural social relationships (Parish and Whyte 1978: 248–97).2 As state power embarked on a process of gradual withdrawal from the countryside and rural party organizations faded out, village life has assumed some of its pre-1949 features. In traditional Chinese villages, where the moral economy view (Wolf 1955; Scott 1972, 1976; Migdal 1974) is more or less applicable, social relationships were constructed on the basis of a network of patron-client relations, villagers’ shared interests, reciprocity, and the commitment to norms, which combined to bolster authority and harmony. Nonetheless, the consequences of market transition under China’s reform regime have been different from what moral economists would expect. The villages that have been penetrated by market forces are formerly socialist rather than “pre-capitalist corporate” ones. The normative socialist morality and discourse requires the government to play the role of ultimate “patron” to the victims of the market economy, and for that matter to provide them with “risk insurance.” On the other hand, Chinese peasants had long been averse to socialist collectivism, not only because it proved less efficient but out of “fear of being cheated by the officials” (Madsen 1984: 7). Jonathan Unger (1989) argued that if peasants could not tolerate it, it was not necessarily because of agricultural collectivism in itself but the state’s “repeated, multifaceted despotic intervention in village affairs . . . [so] political despotism destroyed rural socialism.” Contrary to the moral economists’ assumption, this pent-up aversion to collectivism was converted into an enthusiastic embrace of the market economy, as it offered them access to more avenues for wealth acquisition as well as the opportunity to get rid of corrupt and abusive village cadres. Marketization has certainly destroyed village solidarity and cohesion, but what has emerged in its place is not 2

The rural areas of south China were not undifferentiated, however. Dong Leiming (2002) suggested that although rural communities in southern coastal provinces were in general less cohesive or organized than in north China, peasants in southern Jiangsu had a particularly weak sense of collectiveness or social connections for two reasons. First, the functions of the clan and its cohesive power in villages were relatively weaker. Second, high returns from farming led to a higher degree of land concentration. Tenants leased land from local landlords on an individual basis and did not have much opportunity to develop strong horizontal relations. Most landlords lived in nearby cities and their leadership roles were therefore diluted by distance.

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necessarily hostility or confrontation but an “all-pervading individualism” that, as William Hinton (1968: 55) observed in a typical peasant society, “made cooperation between peasants on any level other than the family extremely difficult.” Without doubt, any kind of authority would find it challenging to function in such a social context.3 Since the late 1990s, marketization, social mobility, and individualism in the Chinese countryside have developed hand in hand – in some regions perhaps to an extent unparalleled in history. Routine peasant life is more dependent on the market than on cadres and intra-village relations.4 Expanding markets have allowed peasants to live well without recourse to the centuries-long patterns of cooperation and mutual help among villagers. In Jingmen (Hubei), because each household possessed small plots of farmland, one farm bull would be enough to meet the needs of several families. But the households preferred not to share but rather acted alone. The probe into peasants’ collective action on irrigation by He Xuefeng (2008b: 128–34) and his team concluded that a large, cost-effective irrigation project was far less likely to be built than a small, wasteful household-based project. Differing from Samuel Popkin’s (1979) “rational peasants” and Mancur Olson’s logic, the failure of cooperation should not be attributed to the “free-rider” problem alone but to the lack of trust among villagers and their “excessive selfishness” as well. Indeed, the mutual distrust and estrangement among villagers should not be explained away simply by the “degeneration” of social morality in the process of monetizing rural life. It is embedded in the impersonal market relationships as well. As noted earlier, compared to northern China, villages in coastal provinces, particularly in southern Jiangsu and Zhejiang, were historically weaker in terms of cohesiveness and social relationships. Greater social mobility and exposure to the market have further atomized Chinese peasants and rural communities. For instance, the employment of villagers in industrial enterprises has shaped a new, rigid timeline of everyday life, reducing the “visits and chats with their

3

4

An empirical study on peasants’ reactions to the 2006 bird flu in Ningxia, Liaoning, and Guizhou not only proved the difficulty of taking collective actions in China’s rural society but came to the conclusion that cohesiveness, collective security, and mutual aid, which characterized village governance for thousands of years in China, have been lost in peasants’ pursuit of selfish interests. In this process, Chinese peasants have been atomized and returned to a “heap of loose sand” (Guo and Li 2012). This scenario does not just occur in regions with an advanced market economy. In some interior provinces, many peasants live and work in cities and hence have developed an urbanized lifestyle. They no longer see their home villages as their homes or care about village affairs. They have lost interest in their villages’ development (Yang Xueyun 2010).

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neighbors” (chuan men) – which were the traditional channels for socialization in rural life.5 The stereotypes of ritual life, which are critical to maintaining traditional social relationships, have also lost their relevance. In traditional Chinese society, villagers usually managed marriage ceremonies and funerals with the support of their neighborhood. Nowadays, they more often than not turn to the marketplace for all-inclusive commercial services that are not only efficient, professional, and trouble-free but could even cost them less. This scenario has occurred in other aspects of everyday life as well. When villagers build their houses, they now prefer to contract the project to a construction company rather than to request fellow villagers to help as they used to. Village “harmony” or the spirit of collectiveness has been sacrificed in the pursuit of narrowly defined self-interest.6 Rejecting long-established norms for conflict resolution, some villagers attempted to get the upper hand in intra-village clashes by seeking help from criminal organizations (He Xuefeng 2008a: Part 3; au. int.). Although strong family ties (but not large, cohesive, and dominant clans) are not incompatible with the “atomization” of rural society, the family as the most basic unit in the fabric of society is not immune from the divisive impact of the market, which has corroded Confucian family ethics and solidarity. As more children refuse to fulfill their filial duty to their parents, parents in turn have lost much of their motive for investing in their children. Where birth control has been successful, generational alienation has allegedly contributed substantially to its success (Yan Qingfeng 2008). The revival of traditional non-political elites Village cadres are political elites because they have state-sanctioned authority and are representative of the regime. By contrast, elites within the nonpolitical category, according to Carl Friedrich (1963: 316–17), 5

6

Interviews with enterprise employees at Longyan (Wuxi, Jiangsu on July 23, 2005). Villagers’ stressful and fast-paced lives have reduced daily interactions among them. For example, in the past, villagers usually got together to chat or exchange social news outside their houses on hot summer evenings. Nowadays, they stay at home and watch TV, enjoying electric fans or air conditioners (Dong Leiming 2002). Unsurprisingly, the atomization of rural communities is especially common in many villages of the third and fourth types. As some scholars argue, “excess” individualism as one of the defining characteristics of China’s marketized rural social relations has destroyed, rather than boosted, intra-village unity, making a return to the traditional pattern of village governance difficult (Yang and Chen 2009).

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are capable of wielding considerable power but do not participate formally in government decision making.7 For good or bad, the decline of political authority in villages and the growing influence of market institutions have substantially weakened the cohesiveness of rural communities. However, the re-atomizing trend in China’s rural society may not necessarily render villages ungovernable, even in the absence of entrepreneur cadres or the “boss-via-cadre” – the two new types of village (party) cadres discussed in Chapters 5 and 9, respectively. Where no political elites are in place for stewardship in the Chinese countryside, nonpolitical or more precisely non-establishment elites fill the yawning power vacuum by default. As a manifestation or a consequence of growing social pluralism, even if the authority of party cadres – of whatever type – has been firmly established in villages, they may still face challenges from nonpolitical elites who, with a base of support of their own, may constitute a check on unbridled cadre power. Unlike party cadres or elected village heads, most nonpolitical elites have neither government connections nor access to political power resources. Thus, they may join the fray or hold sway but lack political legitimacy to govern villages on their own. Even so, their influence over village affairs in many regions should not be underestimated. And this influence is entrenched in the local social and cultural traditions that endured for hundreds of years before the communist victory and have been resurrected in the era of reform. Although the nonpolitical elites have not yet developed any explicit antiestablishment agenda, their rise as organized, autonomous and potentially countervailing social forces beyond the party-state’s institutional or organizational reach could imperil the existing political order in the countryside. Churches The flip side of the transition toward a market economy is the decline of the communist ideology in China and the subsequent “belief crisis” that has made space for the expansion of religion. In the early 2000s, more than 100 million Chinese were religious believers; 90 percent of them, and most religious associations, were in the countryside. Statistical data and empirical findings suggest that the spiritual void among Chinese citizens left behind by the socioeconomic transformation has 7

In terms of power distribution, Harold Lasswell (1950: 201) defined those with “most power” and “less power” as the “elite” and “mid-elite” groups, respectively, in contrast with the “mass,” who hold “least power.”

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not been filled by traditional Oriental religions, such as Buddhism and Daoism, but by Christianity – mainly Protestantism. With the increasing exposure of Chinese society to Western culture, Christianity has spread from China’s western and northern regions, where it has firmer historical roots, to southeastern provinces. In recent years, churches have been built in almost all townships of Jiangsu, whose Christian population surged from less than 200,000 in the early 1980s to nearly 1 million in 2002. There were also “countless” unregistered Christians (Zhao Qiong 2006). In Jiangxi, Protestants multiplied from 2,492 in 1979 to 230,000 in 1994 (Xiao Tangbiao 2003a: 336–40). According to the data released by the Chinese Academy of Social Sciences (CASS), by early 2010, the total number of Christians in China had risen to 23.05 million – 1.8 percent of the entire population – and 73.4 percent of them had converted to Christianity after 1993 (Yu Lan 2010). Researchers found a number of “Christian villages” in which nearly all villagers had converted to Christianity (Shao Chunbao 1996). The spreading of Christian values among Chinese peasants in itself seems to have had little or no political motivation but is often spurred on by “superstition” – a phenomenon resembling Falungong’s rise.8 A survey in 2006 revealed that missionary work was the prime channel through which Christians (39.5 percent) initially came into touch with Christianity, followed by hearsay (23.9 percent), persuasion by Christians around them (18 percent), and family influence (12 percent). They converted to Christianity because this religion could make them “immune from diseases” (58.1 percent) or “ensure family members’ peace and safety” (26.9). Accordingly, 44.9 percent of Christian worshipers donated out of a desire to “avoid calamities and diseases.” Peasants were also induced to attend church activities, such as prayers, Bible study, and singing hymns, which added a lot of fun and entertainment to their “boring” daily life (Cheng and Liu 2007).9 In villages with large numbers of Catholics, churches often hold greater authority than do VPBs in regulating villagers’ conduct (Dang Guoyin 1997). Some church leaders or activists have capitalized on their appeal among fellow villagers to undermine cadre power. In one case of a timetable clash, villagers were drawn away from government-organized 8

9

Even so, because most Chinese Christians worship in unregistered house churches, the regime has guarded against their potential political threat and prevented them from attending international evangelical conferences (LaFraniere 2010). Christianity in China is often referred to as a “religion of the poor.” A report of the Chinese Academy of Social Sciences (Yu Lan 2010) indicates that approximately 70 percent of Chinese Christians are women. More than half of Christians have received only elementary or no education. College graduates make up only 2.6 percent.

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events to join church activities scheduled at the same time by church leaders. Christians also gathered to protest against or even besiege the village government when it interfered “improperly” in church affairs or “obstructed” the construction of a church. Although most church leaders are careful not to overtly challenge village cadres, who represent “legitimate” authority after all, their persuasive power over Christian worshipers often compels the village government to seek their cooperation on thorny issues (Luo Xingzuo 2003; Zhao Qiong 2006). Quite a few ruling elites in “Christian villages” are both village cadres and clergymen. In Jingmen (Hubei), at the homes of some village cadres I visited in 2002, the picture of the Virgin Mary replaced that of Chairman Mao and political posters on the front wall of the living room. Clans The traditional family or kinship system was historically the basis of China’s rural politics. According to John King Fairbank (1992: 20), this prepared “the Chinese to accept similar patterns of status in other institutions, including the official hierarchy of the government.”10 In the Maoist state, the structure of the stratified pre-1949 social order was denounced and destroyed, as it contradicted the communist ideology and policy that aimed to consolidate party rule in the countryside through class struggle and the reorganization of village life. The reform regime has retained the use of harsh rhetoric about the role of clans or kinship ties in village governance; however, the revival of the ancestor cult and other ritual trappings of clan organizations has become a trend in rural communities that is probably too popular, potent, and widespread to be quashed. Its influence over village politics is remarkable (Yang Shanhua 2000). Unlike churches, clan organizations in China’s rural villages strictly do not represent an alternative or political alien force but rather overlap the political establishment to a large extent. It is not hard to find village leaders with triple identities: they are concurrently party cadres, clan leaders, and private entrepreneurs. A combination of private wealth and entrepreneurship, political appointments, and seniority in the hierarchy of the clan lineage provides them with an almost unshakable foundation of authority. A nationwide survey of 241 villages in 2002 discovered that 34.1 percent of party secretaries and 30.1 percent of village heads came 10

As Richard Madsen (1984) found, the Confucian ethos stressing the sacredness of kinship remained alive in rural China even during the Cultural Revolution. A dense network of kin would give a rural cadre many advantages in building a solid and secure power base. However, the traditional influence of kinship-connected families over village politics has nonetheless failed to escape the impact of marketization.

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from their villages’ largest clan or “family name.” According to another survey, in 157 villages of Jiangxi and Shanxi where kinship ties were especially strong, the percentages were 47.1 and 42.9, respectively (Xiao Tangbiao 2006). The role of clans in village politics varies across regions. Where village cadres are from the village’s largest clan or the biggest family in the clan, they bear more similarity to the gentry in imperial China. However, the hierarchical order of traditional Chinese clans, which was historically constructed on the basis of wealth, education, prestige, seniority, and connections with the state, was demolished in the aftermath of the 1949 revolution and has not been fully reinstated after a hiatus of nearly half a century. Thus, under the reform regime, clans were revived but were restructured from the bottom up. Among the building blocks of the new hierarchy of clan organizations, the political status of clan members is of paramount importance – a reflection, as well as an acknowledgment of China’s political reality, that often makes village cadres undisputed, if not natural, clan leaders. As regime agents, they not only wield statesanctioned power but are commended by clan members as role models who have added glory to the clan. Where village cadres are clan leaders responsible for taking care of clan interests, the functions of clan organizations are usually reduced to the mobilization of clan members in village elections as well as the organization of the village’s social and cultural events (Zhao and Hong 2005; Lily Tsai 2007: 148–86). Cadres whose authority fails because of corruption or a lack of control mechanisms are forced to manage the village by recourse to the cooperation of clan organizations. Nonetheless, as is implied in the next chapter, village cadres with the three identities often obtain their power much more from their capacity as private entrepreneurs than from their status as clan leaders (Xiao Tangbiao 2006; Zheng Yiping 2000). Clan leaders have emerged as real power elites in parallel to, or in confrontation with, village cadres in some regions where kinship ties or clan organizations have historically played a central role in village affairs, but where incumbent village cadres are members of smaller clans or families. As the foregoing data imply, the largest clan or family does not necessarily rule the village. During the pre-reform years, the Maoist state was on guard against the resurgence of clans and often deliberately appointed small clan/family members as village leaders. In the era of reform, the depletion of administrative resources has prompted rural governments to search for strongmen to execute unpopular state policies and control recalcitrant peasants. Governments more often than not selected village cadres from within large clans or families in an attempt

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to capitalize on their kinship ties and add one more dimension to cadre power. However, with the incremental withdrawal of party-state power from the countryside, the reform regime’s apprehensions about the anti-state potential of clans have not evaporated but in some ways have deepened – an overriding factor that constrains the formal leadership role of large clans or families.11 In Hunan and Jiangxi, governments explicitly banned all clan-related activities. Some local public security bureaus even defined clan organizations as an illegal force that ought to be prosecuted (Hu and Huang 2004). In spite of all the government can do, the leverage of clans with village governance can hardly be eradicated in a more pluralistic society. In a nationwide survey in the late 1990s, 40 percent of respondents reported the influence of clans in village elections (Xiao Tangbiao 1998). Big clans or families do not invariably win village elections, though, as small clans or families often join forces against them (Zhao and Hong 2005). However, market forces work against clans. Peasants – younger ones in particular – do not necessarily vote along clan lines but emphasize the competence and leadership qualities of the candidates in developing the village economy and helping fellow villagers get rich (Sun Long 2000; Xiao and Dai 2003).12 If large clans or families are excluded from or “inadequately” represented in the village leadership, tensions could arise. Unless market forces or other factors have eroded the cohesion of clans or families to a significant degree, a tussle for authority between village cadres and clan 11

12

A comparative study found that in Jiangxi, which stands out in clan influence in village politics, peasant burdens often gave rise to organized, massive, and violent protests. By contrast, peasant burdens in Hubei were far worse than in Jiangxi. However, Hubei’s clans were weak, and thus peasant resistance usually took the form of delaying the payment of taxes and fees on an individual basis (He and Tong 2002). In more commercialized and industrialized provinces such as southern Jiangsu and Zhejiang, the role of clans in village politics seems to be negligible. Most of the villages in the two regions I have visited since 2002 have multiple surnames. In the lists of village cadres, including all party branch members, all villagers’ committee members, and villager-group heads, I found no dominant clans or families. Few of my interviewees ever mentioned the clan as a factor that should be taken into account in village governance or village elections. Jiangxiang (Jiangsu), as its title suggests, was historically a village inhabited by the villagers who all carried the “Jiang” surname. Until the early 2000s, “Jiang” was still the largest “clan,” although its proportion had shrunk to one-third of households. Its long-serving party chief was Chang Desheng, an outsider. According to Jiang Yuying, Chang’s assistant, nowadays “Jiang” as a surname or symbol of the old clan has become completely meaningless both in village governance and in fellow villagers’ everyday life (au. int. on December 27, 2002). A study found that as a result of the enforcement of one-child policy, some traditional ties of blood or close relatives, such as brothers, sisters, cousins, nephews, and nieces, have diluted and tend to die away in rural society (Yang and Chen 2009).

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leaders can result in the paralysis of village governance. In a few villages in Jiangxi, village cadres were sidelined, superseded, or dominated by clan leaders. Clan councils overrode party branches in deciding on village affairs. And council chairs (zun zhang gong) could call the shots and were more authoritative than party secretaries or village heads. The clan leaders who lost in village elections either formed another “villagers’ committee” to seize power from the village government or declared “independence” in their own residential areas. In quite a few villages, cadres served as clan agents more than as regime agents. They placed clan affairs higher on their agenda than government-assigned duties (Xiao and Xing 1997; Sun Long 2000; Xiao Tangbiao et al. 2001; Jin Taijun 2002). The governance of some villages was characterized by “cohabitation” or “tripartite confrontation” (sanzu dingli) under which the village government, the church, and the clan coexisted as leaders on an equal footing (Xiao and Dai 2003). Under the powerful Chinese party-state, it is extremely unlikely that non-political forces could formally replace VPBs to exercise the highest authority over a long period – even in remote areas – before being suppressed by the regime. Where it has a strong base of support among peasants, the church or clan can at best be an “underground” leading force. Ideological and political structural constraints in China will readily nip any organized anti-system or extra-system force in the bud before it grows to the extent that it could threaten the party-state’s hegemonic appearance. The high risks involved explain why most churches and clans in the countryside avoid interfering in the exercise of village governments’ administrative power but rather confine their roles to social and cultural affairs and public welfare (Zheng Yiping 2000; Hu and Huang 2004).13 Between the elite and the mass Aside from church and clan leaders, in every village, there are a few villagers who do not hold any position in the village government, church, or clan but have won some level of support among fellow villagers that 13

To gauge the influence or authority of clans and churches over village affairs, some key variables should be controlled for. The analysis of lineages and religions in village politics conducted by Duara (1988: 86–117) is still largely applicable. Even in the early twentieth century, the lineage and religious frameworks in rural China could only partially explain the nature of leadership and power structure in villages. In religious communities, “class background, influence, and ability were important in determining the leaders.” Kinship, too, “failed to provide village leaders with an adequately cohesive constituency.”

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allows them to have a hand in decision making by village authorities and even to sometimes snatch the spotlight away from genuine elites. Standing between the elite and the mass, these “quasi-elites” include former village cadres whose long service has earned them fame and social capital, noncadre private entrepreneurs and businesspeople who are generous donors to collective welfare, and otherwise ordinary villagers who are connected to party-state apparatus through family ties. This category also covers a variety of transient “elites” whose clout flows either from the market resources at their disposal or from the niche they have created or found for themselves. Unpredictable and constantly fluctuating markets have brought enormous risks to rural households, many of whom are disconnected and disorganized, and have to bear full responsibility for their productive and commercial activities. The powerlessness of local and village governments in dealing with market forces and managing business risks for peasants caused them to be marginalized in rural communities and created chances for those whose social networks and capacity to coordinate market transactions enable them to help fellow villagers mitigate the risks of their commercial undertakings. Xueguang Zhou’s (2011) ethnographic research in a township in northern China discovered how the modes of market transactions reshaped the patterns of social organizations and authority relationships at the village level. Zhou studied the four-cornered relationship between a winemaker, arbitrageurs, local agents, and grape growers in villages where winemaking grapes provided more than half of the annual income for households. The villagers chosen by the arbitrageurs to act as their agents in the purchase of grapes turned “spot transactions” into “relational transactions” in the marketplace and thereby brought these villagers – who were not different from any other village members – not only cash but also respect, authority, and “elitist status.” Another investigation found that where villagers are poorly informed and geographically insulated, the possession of any channel of market information could translate into VIP standing in the village (He and Tong 2002). Since the early 1990s, spontaneous peasant associations have mushroomed – a development that somehow counterbalances the trend toward atomization in Chinese rural society. A few of these associations are aimed at promoting collective welfare through fund-raising; many more are functional mutual-aid associations that supply their members with useful market information and technological services for agricultural production. In some villages, retired cadres were not relegated to a state of powerlessness but formed “Elders’ Associations” (laoren xiehui)

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in a bid to audit village government accounts and supervise incumbent cadres.14 Villagers also created organizations according to their hobbies and talents, such as groups of fashion lovers, associations for sports or calligraphy, and dance, drama, or opera troupes. Although they are too loosely structured to be reckoned with as a cohesive or organizational force, these associations offer those aspiring to power a base to rally support or to transform them into celebrities to be brought into the loop of village decision making. In some areas, criminal gangs called the shots; chief gangsters or loafers were village “elites” as well, and cadres dared not offend them but in fact kowtowed to them. Such gangs typically attempted to monopolize lucrative businesses in villages by intimidating or blackmailing village authorities (Jin Taijun 2002; Luo Xingzuo 2003; Hu and Huang 2004; Feng and Li 2006; Yang and Chen 2009).15 Although most of the self-organized associations serve villagers’ needs and are harmless to the regime, they may produce a spillover effect with political ramifications. In Hengyang, Hunan, peasants who could no longer tolerate excess burdens formed independent “peasants’ unions” to negotiate with the government. The unions allegedly functioned as “pressure groups” to demand that peasants be represented in the formulation of relevant state policy (Li Zhang 2003; Yu Jianrong 2003). The restructuring of four-cornered relationships The Chinese communist regime has relied on township officials to manage village cadres for achieving its goals in the countryside: largely the extraction of agricultural surpluses, policy implementation, and the maintenance of political control over the peasantry. The change in partystate goals, which has arisen from the mutual reinforcement of the effects of market and fiscal reforms since the early 1990s, has altered the main functions of village government in a way that tends to marginalize it 14

15

Elders’ associations are reportedly more active and influential over village affairs in southern Jiangsu and Zhejiang. They typically consist of retired cadres, former teachers, and enterprise managers, many of whom pursued their careers outside the village and returned to their native villages after retirement. These people usually enjoy high prestige among villagers thanks to their vision, knowledge, and experience. However, because they have no rural residence registration, they are barred by law from obtaining a formal position in village government (Chen and Meng 2006). A 2007 survey in a township (Hubei) discovered that in eight of its thirteen villages, the construction of roads was contracted to rural rascals in illegitimate ways. In 2008, 70 percent of the forestry in a township in Jiangxi was controlled by five chief gangsters (Yang and Chen 2009).

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in rural governance. This development has radically reshaped the relationships of village cadres with both the reform regime and township authorities. Because their alignment built first and foremost on the need to control and manage Chinese peasants, the analysis of its breakdown must start with a scrutiny of the evolving cadre-peasant relations in villages. Cadres and villagers drifting apart Under the reform regime, village cadres have played a dual role in rural politics that bears some similarity to that of Chinese people’s congress deputies, as Kevin O’Brien (1994) described it. They are both the regime agents who represent party-state authority and interests and remonstrators who bring the needs and wishes of fellow villagers to the attention of decision makers. Village cadres are expected to serve as the bridge connecting the party-state and the peasantry and function as the key link in the top-down imposition of political power and the bottom-up feedback chain. However, the impact of the AAT on village governments’ finance and responsibilities, the changing nature and goal of party-state rule in the countryside, and the market-driven economy and social relationships have combined to transform the status and role of village government in village affairs and pulled cadres and villagers farther apart. This scenario was most common in traditional agricultural regions, particularly in interior provinces, where the village authorities did not manage a robust collective economy or control an adequate amount of collective assets. Maturing market institutions reduced villagers’ economic dependence on cadres almost to zero. The end of the levy of agricultural taxes and public goods provision abolished two of village government’s functions that had not only required regular engagement with villagers but bolstered their administrative authority. On the other hand, as villagers ceased to pay taxes and fees, cadres no longer needed their “mercy” to accomplish tasks, nor were cadres obligated to maintain their commitment to villagers’ welfare. Under the Maoist system, Chinese peasants were subject to the control of village (i.e., brigade and production team) party branches in both political and economic terms. Decollectivization boosted peasants’ independence but did not topple cadre dominance in villages. As peasant income came to a standstill and the problem of peasant burdens emerged at the end of the 1980s, power relations in villages were somewhat reversed. Cadres were often pressured into requesting fellow villagers’ “cooperation” to collect taxes and fees that in some measure decided their own

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salaries and bonuses. This scenario applied to the execution of birth control as well.16 Of course, behind village cadres’ humble or even servile appearance and the “hardships” they faced in levying taxes was the statesanctioned authority that meant they would triumph eventually in cases of disobedience or confrontation (au. int.). The TFR and the AAT brought the “who-controls-whom” debate virtually to a halt. Instead, these two reform policies seem to have plunged many agriculture-dominated villages into kind of social-political “anarchy” in which cadres and villagers are detached in everyday life. As the two cases (Qiuliu and Lijiazhuang) in the last chapter illustrate, this deepened disengagement was mostly caused by the AAT itself (and also the removal of public goods provision as one of cadres’ responsibilities), regardless of how and in what direction village government’s post-AAT functions had evolved. Figure 8.1 points to the rising number of the villagers who “never” or “rarely” contacted village cadres after the AAT. Although “very frequent” contact grew slightly for unspecified reasons, those who reported “frequent” contact dropped more.17 As market institutions corroded redistributive and administrative privileges and as village finance continued to deteriorate, the ability of village authorities to help villagers and villagers’ need to seek their help had both decreased accordingly (Figures 8.2, 8.3). The findings from my surveys are echoed by other investigations. According to Li Bingwen (2008), at L village – where farming dominated productive activities – while the post-AAT categories of sources

16

17

An investigation of why the one-child policy failed to be executed in some villages revealed how the central state’s efforts to appease disobedient peasants placed village cadres in a powerless position. Birth control has undoubtedly been one of the hardest targets. Village cadres used to implement it by the harshest means, such as forced abortion and seizure of the private property of a family who refused to pay the fine for policy breach. After these means were explicitly banned by the state around 1999, cadres had to turn to less effective “soft weapons” and tried to persuade villagers to cooperate. More births than the policy stipulates involved corruption in some areas: birth-control cadres implicitly encouraged more births – provided that the families were willing to pay the fine, which was a source of cadre income (Chen Xinxiang 2004; au. int.). Indeed, the post-AAT change in the frequency of cadre-villager contacts, as is shown in Figure 8.1, was not as dramatic as people might expect. This needs to be explained. This figure is actually not suggestive of the change in power relations or degree of mutual dependence. In other words, to the extent that cadres and fellow villagers contacted each other after the AAT, they tended to do so as equals. For instance, in a few villages, I observed that cadres and villagers sat around a table to play mahjong. Without asking, I would not have known who the cadres were. In this scenario, the cadres were not “cadres” in its real sense anymore. One may reasonably assume that in some villages where cadre-villager relations had always been relatively amicable for whatever reason, the loss of cadres’ authority and assigned “offensive” jobs could bring them even closer.

Frequency statistics 400 350 347

No. of respondents

350

289

300 251 250

247

250

221

217

195

188

200

170 140

150 100

64 57

81

50 0 5

4 3 2 Rating (from “never” [1] to “very frequent” [5])

1

Before the TFR

Between TFR and AAT

After the AAT

Figure 8.1 The change in the frequency of contacts between village cadres and villagers Source: Author’s surveys in fifty-two villages (ten each in Jiangsu, Hubei, Sichuan, and Shandong; twelve in Zhejiang) between November 2007 and January 2008. The respondents were ordinary peasants. Note: N = 1,037 Frequency statistics 450 399

400

371

No. of respondents

380

345

350 300

271 249 236

250 203

200 156

150

121 102

100 58 61

50

34 37

0 1

4 3 2 Rating (from “none” [1] to “a great deal” [5])

Before the TFR

Between TFR and AAT

5

After the AAT

Figure 8.2 The change in the extent to which village cadres need fellow villagers’ help to perform their duties Source: The same as Figure 8.1. Note: N = 1,020

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Table 8.1 The post-AAT change in the sources of L village government’s work 2004 (pre-AAT)

From fellow villagers From the government Self-imposed From others Total

2006 (post-AAT)

% of total actions

Categories or kinds

Actions taken

11

155

18

25

468

17 1 54

212 25 860

Categories or kinds

Actions taken

% of total actions

9

82

16.4

54.4

23

344

69.1

24.7 2.9 100

14 1 47

69 3 498

13.9 0.6 100

Source: Based on the data provided in Li Bingwen (2008).

Frequency statistics 500 435

450 385

No. of respondents

400

408 337 345

350

320

300 250 200 150

168 143 159 105

100

85

81 42

50

22 32

0 1

2

3

5

4

Rating (from “none” [1] to “a great deal” [5]) Before the TFR

Between TFR and AAT

After the AAT

Figure 8.3 The change in the extent to which villagers need the help of village cadres in everyday life Source: The same as Figure 8.1. Note: N = 1,036

of work contracted slightly, the work cadres did at the request of fellow villagers decreased (47 percent) more than the work assigned by the government (26 percent) (Table 8.1). The striking contrast suggests either that fellow villagers’ dependence on village cadres dropped, or that

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cadres were less willing to serve the villagers. The plummeting of their self-assigned work (by 67 percent) should be interpreted as cadres’ lack of initiative or passion for their duties.18 The changes illustrated in Figure 8.2, Figure 8.3, and Table 8.1 are probably symptomatic of a more widespread trend, namely that oldfashioned reciprocity and cooperation between village leaders and villagers are dying out. The figures also reveal a tendency toward asymmetrical relations. The post-AAT need of villagers to have village cadres’ help did not decrease as greatly as the other way around. The diversities of the countryside may be taken into account in explaining this phenomenon. In coastal provinces, many villagers were wealthy and many village cadres were economic elites who did not encounter as much difficulty in collecting taxes as did their counterparts in agricultural provinces, nor did they have to resort to fellow villagers’ goodwill in performing their duties. As villagers’ economic activities switched increasingly toward non-farming businesses, they might need to rely even more on cadres for their market power and entrepreneurial capabilities. This scenario should apply in some degree to other agricultural regions where villages were governed by private entrepreneurs. As a matter of course, the trend of cadre-peasant disengagement could be traced back to decollectivization. This trend has since been reinforced with each step of rural market reform, whose thrust was reducing the party-state’s role in the rural economy and peasant life. Although the AAT cost traditional village cadres in agricultural regions their remaining redistributive and administrative powers, it also led village cadres and fellow villagers to drift farther apart and was therefore conducive to the alleviation of conflicts and tensions between them.19 The peace came at a price, though. Village cadres were no longer encumbered by their commitments to villagers that were rendered non-binding or merely rhetorical by the abolition of taxes and fees. As a result, large numbers of cadres allegedly turned the management of village affairs from villagers’ “self-government” into their own “autocracy” (Liu and Fang 2005). If village cadres did serve as “brokers” in the past, the disengagement in

18

19

As the analysis in Chapter 5 shows, the failure to deliver services to fellow villagers in itself may not necessarily undermine cadres’ authority if they proved that they cared deeply about the villagers but lacked the ability to help them. One scholar likens the cadre and villager to a husband and wife. In the past, the couple often fought and quarreled. After the AAT, they do not fight or quarrel anymore but instead ignore each other (Chen and Qi 2008). To develop their family business, some cadres had to seek help from ordinary villagers with market power, which made them “lose face” (Ding Jianjun 2008).

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effect cut off a traditional, “institutionalized” channel for peasants to communicate with the government.

The de-alignment of township officials with village cadres Governance in rural China has hinged for the most part on a symbiosis between township and village leaders. The township government must rely on village cadres for accomplishing many of its administrative tasks that are strictly the state’s responsibilities, and village government as an “autonomous” organization theoretically is not obliged to get involved. On the other hand, although village administration is by law villagers’ self-government, the township is held accountable for any problems arising from it, particularly if the problems jeopardize rural political stability. How well township officials perform their duties affects both their political career and their personal income. Thus, the power relations between township officials and village cadres resembled those between village cadres and villagers. Despite the former’s hierarchical superiority, they were in reality placed at the mercy of the latter more than the other way around. With the deterioration of its finance, the township could no longer afford to control village cadres by boosting their material incentives, but attempted to rope them in by showing more tolerance for their “gray” income. It therefore became the practice in almost all agricultural regions that townships permitted village cadres to bind otherwise unwarranted fees, charges, and surtaxes together with taxation. They tended to forgive village cadres who embezzled collective funds, took bribes to sell collective assets at below-market prices, or reaped exorbitant profits through usury (Chen Baifeng 2007). The relationship of the state with village government is handled almost exclusively by the township, not simply because the village was far too low in the political-administrative hierarchy. After all, the village’s “autonomy” or villagers’ right for “self-government” was explicitly written into the Organic Law for Villagers’ Committees. Even though the party-state’s vertical organizational control over village affairs through VPBs rendered this legal stipulation virtually meaningless, the village was not part of the state in legal terms and for that reason should not be required to perform government functions. Thus, how busy village cadres were, what responsibilities they were obligated to fulfill, and how their routine agendas were made did not have much to do with the central, provincial, or even county authorities but were concretely decided by township officials who paid salaries

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to village cadres and “hired” them as assistants in policy implementation. Township and village governments were linked so closely by shared undertakings, interests, and fortune – the collection of taxes and fees in particular – that one was portrayed by villagers as an “evil person” and the other an “enemy” (O’Brien and Li 1995; au. int.). Taxation was one of the key indicators of performance for village cadres and township officials alike. However, township authorities could hardly even reach peasants – let alone force them to pay taxes – without village cadres’ assistance. My interviews shortly after the AAT showed that, most likely because the township no longer needed them to assist in tax collection, village cadres seemed to be forgotten or deserted. The once close and amicable working relations between them cooled down almost at once.20 Even worse for village cadres, because the AAT relieved township government of tax-related distress as well, it could now afford to turn its back on its erstwhile “allies” when they were at odds with peasants. Numerous media accounts of how village cadres’ abuse of power sparked off riots showed that they could make more trouble for the government than the problems they were supposed to tackle. These troubles often imperiled the government’s efforts to “maintain stability” (wei wen), which had replaced tax collection to dominate the township’s agenda after the AAT. As many village cadres complained, in an endeavor to appease resentful peasants and avert potential riots, township officials no longer stood by cadres. This abrupt turnaround was construed by cadres as a warning that the township would prefer them to do nothing rather than to offend villagers in order to achieve state goals (Shen Duanfeng 2007).21 The grounds for the long-standing and “natural” alliance between township and village leaders against peasants vanished after the AAT – not simply because of the paramount need to maintain stability. Township officials were out of favor with their old allies first and foremost because the AAT rendered village cadres less useful except in villages that had great advantages for “attracting investment” and thus could improve township finance. But this does not mean that the AAT

20

21

Interviews at Buqiao, Yangshao, Jiuchengli, Luxi, Qiugang, Xitang, and Fengxi. In contrast to his frequent pre-AAT contacts with township leaders, the party secretary of Jiuchengli seldom went to see or was called on by them after the AAT. Interview with him on June 15, 2006. Interviews with village cadres at Jiuchengli, Buqiao, and Xiezhuang in June 2006; Chen’gao in December 2008; Shuguang in January 2009; and Qiuliu in December 2011. Some cadres expressed their understanding of the changed stand of the township. Since “maintaining stability” was a “one-vote-veto” responsibility, its failure might more than offset all of the cadres’ achievements.

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rendered township officials friendlier toward peasants.22 On the other hand, some of the shared interests between township and village leaders that had bolstered their “partnership” were undermined by the greater degree of intervention by county authorities in village affairs after the AAT. In Henan and some other provinces, if a peasant household wanted to use its leased land to build private houses, the application formerly had to be approved by both the village and township authorities. The township would usually “rubber stamp” the agreement and then shared with the village the possible “collective income” stemming from the deal. In recent years, the approving authority for this kind of deal has been transferred up to the county’s land bureau. Previously, fines for breaching the one-child policy and the water resource (shui ziyuan) fee, among other charges, were collected by village cadres but most of them went into township coffers. Now, the right to this “income” rests exclusively with the county (Chen Baifeng 2007; Guo Junxia 2010). Perhaps the most important reason why the township could afford to treat village cadres harshly after the AAT was the change in the way they were paid. Although village cadres’ salaries and remunerations have always been decided and paid by the township, the money used to be taken out of the village’s own coffers. The linkage between village finance and cadre salary told part of the story of why cadres condescended to fellow villagers during the tax-collection season.23 In agricultural regions where the AAT eliminated most village revenue, cadre salaries have been delinked from village finance and instead paid by the government. Although the township obtains an earmarked transfer payment via the county to pay village cadres and to finance village administration, the actual amount of payment to them is at the township’s discretion. Aside from hardening the detachment of village cadres from villagers, this new method of payment has produced a paradoxical impact on townshipvillage relations. Township officials can now accomplish their post-AAT administrative work without recourse to compelling or luring village cadres into cooperating. When the AAT cost village cadres much of their instrumental utility 22

23

He Xuefeng (2011) found in Henan in 2010 that the AAT actually widened their distance because “attracting investment” and other tasks for village cadres assigned from the township involved little participation of villagers. This finding was in agreement with my own empirical observations at Chen’gao, Shuguang, and Lijiazhuang. The necessity of using peaceful means for tax collection placed cadres in a highly vulnerable position indeed. Whereas peasants had little to lose if they refused to pay taxes, cadres would be penalized for their failure to fulfill the quotas. Some of my interviewees ridiculed village cadres who, after the AAT, “no longer have to use the money grabbed from peasants to pay themselves.”

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to township government, they were placed under its tighter financial control, which further weakened their bargaining power and secured their obedience.24 As the earlier discussion indicates, the township did not squander their obedience but instead exploited it to serve the township’s narrowly defined bureaucratic interests. Since the AAT bound township and village finances more tightly, the prime function of village government was “downgraded” to little more than the township’s cash-making machine.25 This phenomenon was not limited to my own research sites but was found in other agricultural regions and was referred to as the “bureaucratization” of village government (Ouyang Jing 2011). Regional differences should be noted here, however. The effectiveness of reining in village cadres through controlling their purses is diluted in two types of villages. The first is in villages governed by economic elites or private entrepreneurs who, as is examined in the next chapter, are too wealthy to care about salaries. The second is in villages whose governments did not rely heavily on agricultural taxes but had other sources of income for both cadres and the collective, such as a robust collective economy and abundant natural resources. It also includes villages, such as Lijiazhuang, that have found a large new source of village revenue in “attracting investment” in recent years. A fixed “state” salary is valued by village cadres in poor agricultural regions not necessarily because of the salary per se but because of its psychological impact. In one county, nearly 90 percent of the villages lost their revenues to the AAT. After the cadres were paid from townshipcounty finances, its effect was captured in a conversation recorded by a researcher (Li Bingwen 2008): A township official: “Previously [before the AAT], they [village cadres] raised funds for their own salaries, so we could not demand too much from them. Nowadays, they are paid entirely by the government, so they are obligated to work for the government.” A village party secretary: “Now all my remunerations come from the government. It is therefore unjustifiable if I refuse to do legwork (pao tui) for the government.” 24

25

The township could control village cadres or village affairs in other ways. In some regions, they assigned bureaus and offices to “tutor” villages (Ahlers and Schubert 2012). In others, a large number of personnel in the township bureaucracy were appointed as village ¨ leaders (Gobel 2011). Various checks were employed to keep cadres under control, including villagers’ monitoring (Alpermann 2001). After the township lost the revenue of agricultural taxes, the increased transfer payment was far from enough to make up its deficits. On the other hand, as Ben Hillman (2010) indicated, fiscal decentralization from the early years of the reform set a trend that continues today, namely that given their wider latitude to collect revenue and greater discretionary power to spend it off budget, making money became local governments’ primary task.

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The head of a villagers’ committee: “Now my village has no money for development, nor do fellow villagers care about it. I receive my salary from the government, so it is inappropriate not to do legwork for the government.”

In terms of the legally stipulated working relationship, the township is only supposed to “guide” the village. If “autonomy” used to creep into village cadres’ minds, the AAT should have smashed this desire.26 With the township’s lessened reliance on but tighter control over village cadres, it is no longer tolerant of their corruption and power abuse but attempts to get rid of them by making village elections more free and fair (Chen Baifeng 2007). Indeed, as some investigations found, in recent years, township officials in agricultural regions seem to have been less motivated to interfere in village elections to ensure the election of their favorite candidates (Yang Xueyun 2011).

The reform regime, peasants, and village cadres As township agencies and officials have retrenched as part of the AATpropelled administrative reform,27 village cadres have emerged as even more powerless without the backing of the government. In tandem with this, due to the combination of the AAT and the rural market process, the importance and usefulness of village cadres to both peasants and the party-state is irreversibly ebbing away. Reinforcing this trend, the township government has taken over more duties from village authorities – not invariably because of the latter’s weakness. The transformed economic environment and distribution channels make the government more suitable and capable for implementing rural state policy and providing services to peasants, such as the distribution of pro-farming subsidies. Because village government is not real government, its capacity for governance is increasingly inadequate and limited. Presumably as a consequence of administrative reform, township government is no longer encouraged to let village authorities perform state functions.28 Indeed, the drastic downsizing of the village leadership speaks volumes about their downgraded role. During the earlier phases of rural reform, the regime’s dwindling control capacity in rural society, which was reflected in weakened VPB 26 27 28

A survey in Hubei showed that 75.5 percent of village cadres and 63.5 percent of ordinary villagers perceived the township as “leading” the village (Ding Jianjun 2008). For details, see Chapter 4. Interviews with cadres at Yinbei village (December 29, 2008) and officials at Pengxing township (December 25–26, 2009).

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authority, was an unintended and undesired, if not unanticipated, byproduct of market reform and thus caused the party leadership deep concern. Most probably because they have lost much of their perceived value in the reorientation of the party-state’s rural policy, village cadres’ post-AAT marginal status or even “do-nothingism” seems to embody the central decision makers’ new thinking – if not an explicit policy – about village administration. Although it is yet to be seen whether the AAT was intended to set the stage for the reform regime’s experiment with a variation of the traditional, pre-1949 mode of rural governance, the AAT has undoubtedly expedited the pullout of party-state power from rural communities. The reform regime’s new approach toward rural governance, or its thinly veiled intention to “depreciate,” if not abandon, its rural agents following the AAT, may well be the ultimate choice in the trade-off between cadre power and market reform. More likely, however, it stems from the regime’s growing confidence that the expanding autonomy of rural communities will not necessarily generate a political threat to the regime. The highly atomized peasantry and individualistic market relationships can be a double-edged sword. They are certainly not conducive to the consolidation of political authority, but they are also impediments to any attempts to organize or mobilize peasants for large-scale anti-regime rebellion. The reform regime’s confidence has most probably been shored up by its improved relations with the peasantry as well, as they are supposed to have been the AAT’s biggest beneficiaries. With its self-perceived enhancement of legitimacy among peasants as their “benefactor (enren),” the central leadership seems to have concluded that even if village cadres are not damaging to its prospective mode of rural governance, they have lost or will lose most of their cost-effectiveness in the long run.29 In fact, considering the targets and causes of recent peasant protests, the role of township and village officials in maintaining “stability” in China’s post-AAT rural society could be more negative than positive. Indeed, for all the flaws in its bottom-up feedback channels, the leadership’s optimism is not unfounded. A comparison with the years when peasants were saddled with their worst burdens sheds light on the extent to which they have benefited from the AAT. In the late 1990s, half of a peasant’s income from farming in a typical agricultural province was 29

This conclusion and the reform regime’s seeming readiness to sacrifice its rural agents, especially village cadres, are not surprising but can be traced back to an array of rural policies. A number of scholars interpreted the introduction of village elections as reflecting “an unusual implicit alliance” between central leaders and rural citizens “at the expense of the incumbent corps of village cadres,” who were unruly, unresponsive, abusive, and corrupt (Landry 2008: 226–27).

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snatched away by cadres in the forms of taxes and fees, and the other half was largely absorbed by rising farming costs, which turned farming into a money-losing business. Based on their investigations in Hubei, Yang and Liu (2008) examined the balance sheet of AAT-generated losses and gains for peasants. A household that grows wheat on a five-mu plot of land used to be obligated to pay 375 yuan in taxes and fees. The AAT allowed this household not only to be exempt from taxes and fees, but to obtain 200 yuan as a farming subsidy (40 yuan per mu). Thus, in one practical measure of the change, the AAT brought the household a net income of 575 yuan. The central reformers also seem to have been buoyed up by postAAT opinion polls. To gather peasants’ reactions toward the AAT, a large-scale survey was conducted in seventy-two villages in five provinces (Guangdong, Hunan, Shaanxi, Sichuan, and Liaoning) with a sample of 3,352 rural residents in 2006 and 2007. More than 70 percent of the respondents supported the TFR and the AAT. In addition, 57.9 percent voiced “confidence” in China’s “socialist road” – which should be read as the “CCP leadership” in China’s political jargon, contrasting to 7.4 percent who thought the contrary. Eighty-two percent agreed that the AAT made village elections more democratic (Chen and Qi 2008). Closer scrutiny, however, indicates that at least some of the leadership’s optimism may be misplaced, as AAT-generated benefits for peasants might have been miscalculated and peasants’ true sentiments misread. In the survey just mentioned, only 33.5 percent said that they had benefited a great deal from the AAT; 29.3 percent did benefit but not much; and 33 percent reported no benefits at all. Confirming my empirical findings cited earlier, most of the respondents complained about the downside of the AAT, which included a shortage of funds for local public goods. As Chen and Qi (2008) estimated, peasants’ loss from the undersupply of public goods could vastly outweigh their gain from the AAT. On top of this, much of the AAT-related gain was canceled out by the costs of agricultural production, which soared in tandem with the AAT. Most means of production – including pesticides, seeds, farm machinery, plastic-film cover (for protecting seedlings), diesel oil, and so on – were 20 to 40 percent more expensive, and the prices of some important goods, such as chemical fertilizer, had risen by over 50 percent (Yang and Liu 2008).30 What might be alarming for the reform regime was that the AAT has not proved itself a panacea for appeasing discontented Chinese 30

Also interviews with peasants at Xiezhuang, Yangshao, and Jiuchengli (Shandong) in June 2006.

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peasants or for maintaining rural “stability.” Instead, some observers even thought that the AAT had in effect deepened the crisis of rural governance. Peasants were not, in reality, adequately placated, and the AAT had further eroded the already weak governing capacity of village and township governments (Tian and Yang 2009).31 Yet the reform regime may still find comfort in the peasantry’s changed mind-set. Unlike the earlier burden problem, marketization has become a vehicle for channeling some peasant complaints, such as those about rising prices or production costs, against market institutions and non-political agents. A statistical and comparative analysis of the complaints Chinese peasants lodged with higher authorities in 1997–2002 and 2003–09 indeed reveals a “depoliticizing” trend. From the first to second period, the cases of wei quan (defending legitimate rights [against the local government]) dropped from 58.43 percent to 4.31 percent, whereas the cases of “seeking help on private matters” and “solving civil conflicts” rose from 13 percent and 13.6 percent to 29.5 percent and 51.1 percent, respectively (Yang and Wang 2011).32 The identity of the target of popular resentment may make a big difference in terms of political consequences.33 Because higher prices and living expenses are allegedly market-driven and have affected all social sectors, upset peasants tend to accept this as the logic of a market economy rather than laying much blame on the government, which is deemed to be only partly or indirectly responsible. The reform regime’s favorable assessment of its own relationship with Chinese peasants may further reduce the perceived importance of rural cadres in maintaining the stability of rural society, thus making possible a greater degree of villager autonomy. Because of the huge diversity and complexity of the Chinese countryside, the restructuring of the four-cornered relationships could not have

31

32

33

Indeed, as the cases cited at the beginning of the book imply, the reform regime’s efforts to please the peasantry could backfire. Quite a few rural officials I talked to shared the concern that concessions or pro-peasant measures taken by the party-state might end up emboldening peasants and feeding their appetite for more. These figures illustrate only one of the dimensions of peasant discontent and should be taken with caution. The drop in wei quan cases is not a reliable or accurate indicator of state-peasant relations. Such cases could easily escalate beyond “lodging complaints” and turn into street protests. In some “bureaucratic authoritarian” regimes (such as Chile), the state’s efforts to extricate itself from the economy considerably reduced the intensity of political opposition, as the targets of economic grievances were companies and firms (Stepan 1985). In others (such as Brazil), the workers’ wage demands led to strong anti-government action mainly because the government had a major hand in wage determination (Collier 1999: 183–85; Chen 2003).

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only a single pattern. In post-AAT rural villages, cadre-villager disengagement seems to be a general trend across rural China. However, in villages managed by economic elites, cadres’ market power and expertise may be useful to villagers who attempt to develop private businesses and thus may bring them together. The improvement of state-peasant relations arising from the AAT and subsequent farming subsidies has apparently been greater in traditional agricultural than industrial regions. The de-alignment of township officials with village cadres is most likely to take place where the villages (mostly types I and II [Appendix A, Table A.1]) have little or nothing to contribute to the township government in terms of either its finance or “administrative achievements” (zheng ji). By contrast, in many townships and villages (types III and IV) with large industrial and commercial sectors and abundant revenues, their “alliance” continues – no longer in order to deal with recalcitrant peasants in the process of policy implementation, but to pursue their shared, self-serving developmental agendas, namely increasing revenues through attracting investment. Conclusion The AAT was first and foremost designed as a measure of burden relief for Chinese peasants, but its implementation has tended to alter the basic structure of the six-decade-long Communist Party rule in the Chinese countryside. As the central policymakers expected, the AAT did indeed immediately relieve peasants from state-imposed burdens. Although other tensions between the reform regime and the peasantry, such as the discontent arising from land seizures, remain or have worsened in some regions, the AAT effectively defused one of the most explosive situations, which once sparked widespread riots in rural areas. The AAT’s symbolism and substance are equally important: for the first time since its founding, China’s communist party-state no longer takes from but gives to peasants – at least in terms of the face value of the policy change. The functional change of the government from the “exploiter” of peasants to their “servant” was supposed to have spruced up the reform regime’s image. The leadership’s self-perceived improvement of regime legitimacy and stability, coupled with village government’s hollowed-out capacity for governance, the marketized rural economy and social relationships, the increasing rural social heterogeneity, and the rise of nonpolitical elites, has to a large extent broken the long-standing de facto alliance among the central state, township officials, and village cadres who used to collaborate to keep the peasantry under the party-state control. As village cadres and villagers are drifting apart, the dependence

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of the central state and township officials on village cadres for village governance has decreased. Without question, in this restructured rural political order, village cadres are the losers. The reform regime’s apparent confidence in the post-AAT political stability of rural society may account for its indifference to changes in the wake of the AAT that by all accounts have gravely undermined the foundations of rural party-state rule. It seems that the central decision makers have taken no remedial measures to salvage village cadres’ shaky or crumbling authority. Sharp watchers of Chinese rural politics may have even noticed that the party propaganda machine has recently paid little lip service to the necessity of consolidating “party leadership” in the countryside. Of course, this silence or the reform regime’s refusal to countenance bolstering village cadre power does not mean that it prefers to stand on the sidelines and watch the countryside slip into anarchy or Thomas Hobbes’s “state of nature.” Instead, the political discourse that has prevailed in recent years has sent signals that the central leadership has been searching for an adaptive strategy or an alternative mode of rural governance that better fits the post-AAT rural society, and thereby better serves its new policy goals. Although an outline of this new strategy has yet to be drawn or identified, a new type of authority exercised by new power elites in villages has emerged under the explicit endorsement and encouragement of both the central and local governments.

9

Entrepreneur cadres as new rural ruling elites

In rural China, village cadres are authorized by the communist partystate to govern villages and control peasants. Because their authority is inherent in their political appointment and is exercised on behalf of the party-state, it is equivalent to party authority or political authority. This authority is both redistributive and administrative in nature and can be wielded in coercive ways. As discussed in the preceding chapters, the more than three decades of rural reform, especially the 1994 tax reform, the TFR, and the AAT, has made both dimensions of traditional party authority dysfunctional in rural villages. However, despite the consensus among observers about the decline of party authority in villages, and the difficulty faced by village cadres in clinging to power in a marketized social setting, the Chinese countryside can hardly be painted as a picture of chaos, anarchy, or disorder. The considerable regional differences in cadre power and governance in villages are, to a great extent, a function of the vast regional diversity in village finance and economy, village cadres’ personal traits, and villagers’ sources of income. Although cadre authority has ceased to work typically in poverty-stricken, agriculture-dominated, or corruption-plagued villages led by traditional village cadres, it remains strong and continues to play a pivotal role in village governance in others. However, where cadre power works effectively, it differs significantly from the former kind of cadre power in terms of its nature, base, and scope. Many holders of such power are no longer traditional village cadres but private entrepreneurs or “capitalists.” I therefore label them “entrepreneur cadres.” This new type of village cadres and the concomitant new patterns of authority in village governance seem to be a good fit for the reform regime’s search for an adaptive and cost-effective mode of governance for the post-AAT countryside. Entrepreneur cadres have emerged in village politics since the late 1990s. They probably represent the mainstream of new rural ruling elites in reform China today and have been constantly placed under the media spotlight in recent years. Entrepreneur cadres hold double identities and 261

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exercise a type of authority unparalleled and unprecedented in Chinese history. Like traditional cadres, they are appointed directly or indirectly by the party-state as village leaders, mainly village party secretaries, and are thereby in a position to wield state-sanctioned coercive power. However, for these new power elites, their authority or governing capacity associated with cadre position has also been subject to drastic decline in the process of market and fiscal reforms. Contrasting sharply with traditional cadres, however, entrepreneur cadres are also successful entrepreneurs whose private wealth and market power allow them to shift their base of authority from political appointments to their private capacity to control fellow villagers by economic means. To the extent that their power works, it is soft in nature and does not build on coercion. Thus, it can hardly be wielded over time against the villagers’ will. Given their double identities, entrepreneur cadres bear some resemblance to the traditional gentry class, but the differences are pronounced. Like the gentry, they tend to exchange their services to the regime for the stamp of legitimate authority, which in turn brings them social status, prestige, and privileges. In addition, because their authority does not depend on the party-state to be effective, they enjoy some amount of autonomy. Unlike the gentry, however, entrepreneur cadres as political appointees are agents of development. They are more compelled to seek an appropriate accommodation with the regime for two reasons. First, the party-state can still rein them in or constrain their behavior to a certain degree through party discipline and organizational control, even though these mechanisms of control have weakened with the expansion of markets. Second, the office or political position is highly conducive to entrepreneur cadres’ private business, and not only because it provides government connections and privileged access to state-monopolized resources. Cadre position is also somewhat equivalent to a warranty of “business credibility,” which is an invaluable asset for private entrepreneurs and businessmen in China’s poorly regulated markets, where cheating and dishonesty prevail. This chapter is devoted to an analysis of the burgeoning entrepreneur cadres and the foundations of their authority. In highly market-driven and atomized peasant communities, these new rural ruling elites and the related new model of village governance most likely represent the new direction of China’s rural political development. The rise of entrepreneur cadres Although political authority in its real sense has collapsed or declined at the village level in much of the Chinese countryside, this has not resulted

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in the disintegration of (administrative) villages (known as xingzheng cun as against “natural villages” or ziran cun), nor has it atomized the peasantry to a degree that makes villages ungovernable. In fact, in large numbers of villages, authority has remained well entrenched or has somehow grown even more formidable in some aspects. With a few exceptions, where traditional clans or churches hold sway, authority in these villages has not fallen into the hands of extra-system forces that have the potential to challenge the political establishment, but instead remains firmly with the leading village cadres who are the party-state’s appointees or “regime agents.” Nonetheless, in terms of the nature and base of their power, these cadres have little in common with their counterparts in the Maoist state or in the earlier phases of rural reform. Instead, they hold double identities as both party cadres and private entrepreneurs. Most of these cadres are the owners of sizable private companies; hold private contracts for a large portion of village land and assets; or are involved in economic projects for which they have bidden successfully on their own. Their authority over fellow villagers does not stem from their political appointments but is based on their private property and wealth, with little or no connection to their office. Thus, this type of authority is far from thorough or complete but instead is fragmentary and admonitory, and it can hardly be exercised in a forceful way. More importantly, to the extent that it is successful, their authority is typically de-politicized, personalized, and largely beyond the party-state’s organizational or institutional regulations. Since the late 1990s, marketization has provided Chinese peasants with easier access to economic resources and has opened more avenues for them to pursue wealth. The political authority embedded in the state monopoly on resources has accordingly lost most of its relevance to peasant life. On the other hand, market transition has intensified the stratification of the rural society and placed heavier pressure on the government to achieve “common affluence” – not necessarily for the sake of socialism but for “stability” and “harmony.” The socioeconomic consequences of marketization, which were amplified with the TFR and the AAT, have somehow “downgraded” village cadres from the status of “rulers” to “servants” – this time closer to the real or officially stated purpose of their role. Although the reform regime could add very little to their “serving” capacity, village cadres’ authority in a village has become increasingly divorced from their political appointments and rather is associated more closely with their personal traits or strengths. Data collected from some surveys have added further weight to the growing body of evidence that authority – to the extent that it bolsters village governance – has fallen into the hands of economic elites in a rapidly growing number of villages, and that these elites have used the

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wave of market reform to enrich themselves. Empirical studies show that this trend took shape and gained momentum in the late 1990s.1 A survey conducted in 2001 among 316 villages in four provinces revealed the following: 59.2 percent of village party secretaries or village heads were former VOE managers and private entrepreneurs, and 49.1 percent were concurrently private company owners, compared to 37 percent of their immediate predecessors (Xiao Tangbiao 2006).2 In 2002, village elections were held in Zhejiang’s nearly 40,000 villages, many if not most of which should be assigned to types III or IV. Of 133,222 elected villagers’ committee members, those who possessed large family wealth and thus were referred to as “rich people” (furen) made up 30 percent, and the percentage reached sixty in rural areas adjacent to cities (Ji, Zhou, and Chen 2003). In Zhejiang’s industrially advanced regions such as Yiwu, successful private entrepreneurs were elected as village heads in 60 to 70 percent of the villages in 2005 (Huang Junyao 2007). Entrepreneur cadres also emerged in many type I and type II villages of agricultural regions. By 2003, over 38 percent of village leaders in the Yubei region of Chongqing were private entrepreneurs. Among 24 leading village cadres in Yufeng township, half had personal wealth exceeding 1 million yuan (Reporter 2004). Since the AAT, it seems that the trend of private entrepreneurs or “rich people” assuming village leadership posts not only has accelerated but has more rapidly spread to the hinterland and other agricultural provinces. According to data released by the government, in many agricultural regions, 50 to 60 percent of village leaders were economic elites or “rich people” (or to put it bluntly, “capitalists” – a word that remains a taboo in political discourse) by 2008. That year, in the entire province of Zhejiang, two-thirds of village party secretaries and village heads were private entrepreneurs (Jin and Jin 2011). An investigation of an agricultural township of Hubei found that only three of its twenty-two top village leaders (namely party secretaries and village heads) relied only on cadre salary and earnings from farming to live. Among all others, six were big 1

2

In a sample from Bruce Dickson’s (2003: 123) surveys in eight counties in 1997 and 1999, eighty-one private entrepreneurs (16.1 percent) were candidates in village elections. Private entrepreneurs, most of whom were party members, ran for village chief posts or villagers’ committee membership in twenty of the twenty-five townships and towns investigated. More (40.6 percent) “co-opted” entrepreneurs participated in village elections than did other entrepreneurs. The original data obviously do not add up. Based on my communications with Xiao Tangbiao, who conducted the survey, many of those who were concurrently private company owners and cadres were former VOE managers, so there should be an overlap between the two categories. Besides, the exact number of private entrepreneurs who quit private business after being elected or appointed as village leaders is hard to pinpoint; presumably it should be very small, if any.

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contractors who managed natural resources (such as mines), reclaimed mountains, or rented large tracts of village land for mechanized farming, developing orchards, and so on. Four owned private fish-breeding or poultry-raising companies. Three did the business of selling agricultural products and means of agricultural production. Two owned shops or restaurants. Two owned transportation companies. And two were insurance company managers (Ouyang Jing 2011). Entrepreneur cadres can be divided into two categories. Some were appointed or elected as village leaders only after they had firmly established themselves in the private sector. Others were long-serving village party cadres who somehow took advantage of their position during the ownership changes of the 1990s to amass private wealth through various forms of predatory behavior. As their private enterprises flourished and expanded, they allowed fellow villagers to share the gains and thereby shifted their power base, at least partially, to their capacity as private entrepreneurs. Empirical cases I visited Yingjie, a type III village (Dongbao, Jingmen, Hubei), in December 2002 and have since tracked its development. The village is located near a large state-owned reservoir that offered multiple business opportunities. However, most of these opportunities were monopolized personally by Zhou (the party secretary) and Yang (the village head). They contracted reservoir-related construction projects, not as village leaders, but as private entrepreneurs. As a result, the profits that should have belonged to the collective mostly flowed into their own pockets. Despite the suspicion that both cadres used their position to secure the projects, Zhou and Yang persuaded the villagers that were it not for their political connections and social skills, the projects would have been grabbed by other villages. Zhou, who was the village’s party chief from 1988 on, appeared popular in the village, as he managed his private business empire in a way that favored fellow villagers. He hired only fellow villagers for contracted projects, in which a quarter of the village’s households were involved. He was also a big “landlord” and managed a 200-mu orchard by contracting village land, paying good wages to the villagers who worked for him. He often paid taxes and fees on behalf of poor households and provided public goods, such as paving roads, constructing office blocks, and irrigation, at his own cost. In the 2002 village election, thanks to the support of villagers who owed him a personal debt of gratitude, Zhou was elected village head and shortly reappointed as party secretary. In the eyes of the township leaders, Zhou was an ideal village leader who was capable of

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helping fellow villagers get rich and, it was hoped, leading them toward “common affluence.” His fellow villagers listened to him and accepted his leadership (au. int.; Chen 2007). Sanjiazi (Shiwen, Fushun, Liaoning) used to be a type I village with a deplorable reputation for poverty, mismanagement, and cadre corruption. Its new leader, Wang Chenghai, was “co-opted” after his private business prospered and county-township officials encouraged him to run for the position of village head. Wang owned a brick factory and confined the privilege of employment to his fellow villagers. His employees, who were recruited from nearly half of the households in the village, were offered enviable wages and abundant welfare benefits. With no interest in the village head post, he did not run for it and initially refused to accept it when most of the villagers spontaneously voted for him in the election. The government urged him to accept the post and also to apply for party membership – in a bid to qualify him for appointment as village party secretary. He finally agreed to be the village head; the incumbent party secretary deferred to him, making him actually the top leader in the village. Wang reportedly donated a large portion of his private property for public projects and rallied fellow villagers around him (Feng and Li 2006: 163–65). Sang Hongji was a capitalist who ran for the village head position in his home village (Mengjia, Jilin) in 1998. However, villagers who were “jealous” of his fortunes voted for his rival, whose appeal was his impeccable reputation for integrity and morality. Three years later, Sang ran again and won the election. It was amazing that within such a short period, the voting behavior of his fellow villagers changed dramatically. They abandoned the former village head, whose untainted moral image could neither help villagers improve their life nor bring development to the village. Sang, as the new village head, donated more than 1 million yuan to help the poorest households and repair the worn-out village roads. Capitalizing on his extensive social networks, he invited a number of rich people to invest in the village and converted 200-plus fellow villagers from farmers to well-paid workers. He allegedly adhered to the “four-no” principle: take no salary, reward, or remunerations; reimburse no expenses for his services; spend no money from the village purse; and levy no fees on fellow villagers (Editor 2004; Reporter 2004). The incentive structure of entrepreneur cadres The preceding real-world cases provide a snapshot of how private wealth was embedded in public authority to create a new model of village leadership and cadre-villager relationships. What is described here is certainly

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Table 9.1 Ordered logistic regression of leading village cadres (VCs)’ eagerness to take on leadership posts on their own economic conditions VCs’ eagerness Great Medium Little

Selected variables

Coefficients

Odds (Exp)

Reference group Family annual income Self-rated economic status in the village Family annual income Self-rated economic status in the village

–0.680 (0.295)∗∗ –0.805 (0.360)∗∗ –1.340 (0.403)∗∗∗ –1.621 (0.606)∗∗∗

0.507 0.447 0.262 0.198

Source: Author’s surveys in 52 villages (10 each in Jiangsu, Hubei, Sichuan, and Shandong; 12 in Zhejiang) between November 2007 and January 2008. Cadres surveyed were village party secretaries and the heads of villagers’ committees. In a few villages, other leading cadres were surveyed as well. Notes: N = 121, Valid = 113, Missing = 8. Overall percentage predicted correctly: 67.3%. ∗ p ⬍ 0.1; ∗∗ p ⬍ 0.05; ∗∗∗ p ⬍ 0.01 Dependent variable is village cadres’ eagerness to take on leadership posts. Standard errors in parentheses.

not a local/regional occurrence, nor should it be seen as peculiar to a transitional stage of rural development. Rather, over the decade, having spread from economically developed coastal provinces to impoverished traditional agricultural regions, this model has become one of the most prominent features of China’s new village politics. The analysis in Table 9.1 shows that wealthier village cadres with better economic conditions – an indicator of owning lucrative private businesses, in most cases – are usually more eager to take on leadership posts in villages. “Cadres’ eagerness” in this equation was measured by the question asked of 121 leading cadres in 52 villages: “To what extent do you desire to continue as village cadres?” (In filling out the questionnaire, one more question followed: “How much do you value your village cadre identity or position?”) The effect of the respondents’ economic condition on the dependent variable was examined by two questions. The first was about their family’s annual income (eight choices from below 500 yuan to 6,000-plus yuan). The second question was: “On a 5-point scale from the poorest to the richest, how do you rate your family’s economic status compared with other households in your village?” The results showed that the respondents’ eagerness increased with the growth of their annual family income and self-rated economic status in the village. If economic status was controlled for, each 2,000-yuan increase in annual family income reduced the odds of having “medium” eagerness by 49.3 percent and

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“little” eagerness by 73.8 percent. The .447 and .198 odds ratio for selfrated economic status in the “medium” and “little” groups, respectively, indicates similar effects. The results of the foregoing analysis are confirmed not only by empirical observation but by a plethora of reports that have described how the rich or private entrepreneurs aspiring to village government made sacrifices in an endeavor to win the support of both fellow villagers and the township leadership. When they ran for leadership posts in village elections, they swore to contribute to the improvement of fellow villagers’ livelihoods with their private wealth, market expertise, and social connections. Some promised not to accept any salaries or rewards for their services; some guaranteed that once elected they would donate generously to collective welfare and public projects; others pledged to mortgage their private property to collective enterprises (Ji, Zhou, and Chen 2003; Zhao and Lin 2010).3 In a few rural areas, candidates with substantial funds attempted to win village elections by offering “free gifts” to villagers. This bribery grew so commonplace in Zhejiang that the provincial government was prompted to use legislation to prevent the rich from obtaining (village) cadre position by buying votes (Commentator 2005). The finding that wealthier people are usually more eager to take on cadre positions adds complexity to the argument thus far made about the general trend in the countryside, namely that because of the loss of redistributive and administrative powers as a result of market transition and the new tax policy, most of the benefits and privileges monopolized by village cadres were gone, thereby diminishing the allure of the longcoveted cadre position in villages. To explain why hollowed-out cadre power and the reduced income advantages inherent in the cadre position have not dampened but even increased the enthusiasm of wealthy people for village government posts, an analysis needs to be conducted to examine their motives and the interplay between cadre positions and private wealth in a monetized rural society. 3

Evidence shows that in the past decade, village elections in many regions have become more substantial and competitive. Villagers or their representatives were apt to pose challenging questions to the candidates and asked for concrete replies. The questions included: “If you are elected, what would be your solution for the pollution caused by the reservoir?” “In what specific ways will you build the road connecting our village to the main road?” Private entrepreneurs’ wealth made their promises or “platforms” more credible. For instance, in Guanxing village (Chongqing), the elected village head was a big “vegetable boss” with more than 10 million yuan. He promised in the election that once elected, he would purchase all the vegetables grown by fellow villagers at a higherthan-market price and provide them with free seedlings. At Yufeng village, a construction boss pledged that as the village head, he would personally bear all costs of paving two roads for the village (Reporter 2004; au. int.).

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Those who are eager, if not desperate, to transform themselves from economic to political elites in villages most probably have mixed or multiple motives that may not be discernible until after their election or appointment. Judging by what they have done over time as new village leaders, their prime motivation usually fits into one of three main categories. Some economic elites were idealists who were inspired by their convictions to participate in village governance. Discontented with the corrupt or incompetent incumbent village leadership, they aspired to bring prosperity, affluence, or redistributive justice to fellow villagers – many of whom were their family members and relatives. Village leaders in this category usually garnered considerable mainstream media coverage and were trumpeted as representative or exemplary in terms of their leadership credentials, performance, and achievements (Tao and Chen 1998: 207–12; Jin and Jin 2011).4 Unsurprisingly, the “darlings” of China’s propaganda machine were longserving cadres who owned profitable private companies but had been allegedly motivated to take on leadership posts by a sense of responsibility as “vanguards” or “role models” and, of course, by the “socialist ideals of economic equality.” Some private entrepreneurs were also spurred on by “spiritual” factors to seek political position, but their aspirations were “selfish.” Some of them had been on the margins of society, or part of the “underclass” trampled underfoot in their own villages under the Mao regime, but had risen to affluence and obtained “elite” status in the era of reform thanks to their superior talent in private business, or because of other previously untapped advantages such as overseas connections or family-owned resources. They were eager to translate their wealth into political power to compensate for their past misery and suffering as political pariahs. Cadre position was especially tempting to some ordinary peasants who had long admired cadre status but never had a chance to feel like a cadre. According to a deputy director of Yiwu’s Bureau of Civil Administration, who conducted research into entrepreneur cadres and their motivations, some of them pursued cadre position only because they wanted to know what it “tasted” like to be the village’s “ruling elite,” or they were simply driven by a “cadre addiction” (guan yin) (Zhang Dongqing 2003). 4

For instance, a private company boss, after being elected the village head, reportedly donated more than 1 million yuan to relieve the distress of poverty-stricken villagers and improve the village economy. “The progress [of the village] made within one year of his election,” an investigator claimed, “was greater than in the previous 20 years” (Ji Bushu 2003). It was reported that a growing number of entrepreneur cadres in Zhejiang constructed village roads at their own cost, shared their private company stocks with fellow villagers, or donated their cadre salaries to the village’s “elders association” (Guo Jianming 2010).

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Still caught up in a mind-set deeply rooted in China’s traditional culture, which regards holding office as bringing glory to their ancestors and clans (guang zong yao zu), a large number of nouveaux riches desire not only to exchange their wealth for political authority but also to enhance their social status and obtain prestige, respect, and other intangible assets inherent in cadre offices (Chen and Liu 2004; Huang Junyao 2007; Jin and Jin 2011). An investigation of entrepreneur cadres laid bare the true motivation of many. The reform regime strongly encourages private entrepreneurs to lead villages and has often conferred on those who stand out a variety of honorary titles, such as the (local) people’s congress deputy and the “model worker.” These titles are valuable and tempting to private entrepreneurs, not just because of the associated glory and honor but because the titles would bring them opportunities to make the acquaintance of government officials (Zhao and Lin 2010; Gui Hua 2011). For all the “spiritual” contributing factors, the overwhelming majority of entrepreneur cadres have presumably been lured to village leadership posts by the immense potential these posts offer for boosting their own tangible personal interests. This does not mean, however, that these entrepreneur cadres are corrupt or inclined to abuse cadre position to enrich themselves. On the contrary, most entrepreneur cadres seem to have earned a reputation for being clean, generous, and warm-hearted toward collective welfare. In the first place, they are perhaps too wealthy to be tempted to “steal” from collective assets, particularly in poor villages whose coffers are mostly empty. As fellow villagers have a growing say in the elections of village heads as well as in the appointments of village party secretaries, any corrupt behavior by village leaders would amount to political suicide. Obviously, wealthy people or private entrepreneurs seek political position in villages not for instant or short-term benefits but to pursue long-term, legitimate private interests.5 The enduring income advantages For holders of political office in the village, particularly the party secretary and village head, the appeal of the benefits of the post varies, depending first and foremost on the source of their income. For those whose 5

Interviews with the former party secretary of Yingjie village (Hubei) on December 16, 2002; the manager of Yeshu (village) Forestry Company (Jiangsu) on December 30, 2004; an official at Wangmiao township (Shandong) on June 14, 2006; cadres and villagers at Baimi village (Jiangsu) on July 26, 2005; the assistant to the village head at Chen’gao (Jiangsu) on December 30, 2008; and two cadres at Shuguang village (Jiangsu) on January 1, 2009.

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families rely mainly on farming to earn a living, cadre salary in itself may be a sufficient inducement. For entrepreneur cadres, the potential gain from the cadre position is enormous: their identity as village cadres could be invaluable to their family business. As implied earlier, large numbers of new rural power elites are actually old faces, whose formal positions of authority have been left intact in the wake of market reform. In the early years of marketization, their cadre positions brought them exclusive advantages to get wealthy quickly and kick-start their private businesses. The increase of cadre advantage in the transition from a command to a market economy stands at the core of the state-centered perspective, namely that owing to the successful transformation of political capital into economic capital, marketization does not undermine but rather strengthens the old elite and thus allows previous forms of stratification ´ to persist (Hankiss 1990; Staniszkis 1991; Rona-Tas 1994; Cook 1998; Morduch and Sicular 2000; Walder 2002). Nonetheless, what happened at least in some parts of rural China confirms Victor Nee’s (1989, 1996) observation that marketization caused a decline in the significance of the positional power of the village cadres who had failed to enter into (private) entrepreneurship. Despite the conflicting views between the statecentered and market transition hypotheses on the impact of expanding markets on political positions, both of these views can find some support in the Chinese countryside. However, because of the marginal status of village leaders in China’s cadre structure and the unique nature of rural market reform as a partymanipulated process in China, neither hypothesis fits squarely into the overall picture. Most of China’s old ruling elites in rural villages have taken three different paths since the start of rural reform. Some have remained as the “administrative elite” who are not private entrepreneurs and thus have had to continue to govern with dwindling administrative resources. Others have established and developed private businesses by taking advantage of their redistributive power. Among these new economic elites, some have left their cadre positions while others have chosen to stay on as cadres and continued to occupy political posts. As such, these “entrepreneur cadres” actually are not the equivalents of the “old elite” in the state-centered analysis who, as Victor Nee (1996) construed correctly, were “former cadres, not government officials currently in power.” The income advantages of entrepreneur cadres in marketization was statistically proven by Andrew Walder’s (2002) study of village cadres and rural reform in China, which presented a sharp contrast in rural household income among four household types. (Walder referred to this

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new category of village cadres as “cadre entrepreneurs” to highlight their differences from non-cadre entrepreneurs or the importance of cadre status to their income as entrepreneurs.) In 1996, the mean annual income (67,360 yuan) of rural cadre entrepreneur households who “own and operate a substantial private family business” exceeded cadre households’ (12,338 yuan), entrepreneur households’ (13,947 yuan), and ordinary households’ (6,577 yuan) by a factor of 5.46, 4.83, and 10.24, respectively. For cadre entrepreneur households, 84.5 percent of their income (56,919 yuan) came from enterprise, contrasting with 65.1 percent for entrepreneur households (9,079 yuan). In other words, concomitant cadre status alone annually brought an entrepreneur 47,840 yuan more income. The benefits of cadre positions for those who are keen to develop their own private businesses have varied with each stage of rural market reform. The diminishing scope of cadre power in villages in the 1980s and early 1990s did not undermine their control over VOEs. As a prevailing arrangement, many village cadres were concurrently VOE managers or directors. In the transformation of VOEs that typically started with individual contracting or leasing, and culminated with ownership reform in the late 1990s, village cadres enjoyed almost exclusive privileges in turning VOEs into their own family enterprises. Thanks to their double authority as village leaders and VOE directors, as well as the backing of the government, which was usually eager to privatize rural collective enterprises (Whiting 2001: 289–90), village cadres were in an advantageous position to contract or lease collective assets on highly favorable terms and eventually purchase these assets at a price much lower than their market value (Wang Hansheng 1994). This pattern of “power conversion” was particularly dominant in coastal provinces, such as southern Jiangsu and Zhejiang, where capitalism was a century-long economic tradition and rural industrialization was more successful and on a larger scale (au. int.; Kung 1999; Sargeson and Zhang 1999; Xu Sijian 2001: 26–30). After the late 1990s, the private value of the cadre position decreased with the spread of markets, the completion of VOE ownership changes, and further shrinking of cadre power in both the redistributive and administrative domains. Some entrepreneur cadres thus quit their posts and devoted themselves full time to running their family businesses, and some private entrepreneurs refused to accept cadre positions or the burden of village governance. Even so, the number, or percentage, of entrepreneur cadres multiplied. Of the total sample (2,992) in Walder’s 1996 quantitative study, only 0.33 percent (10) were “cadre entrepreneurs” or the “hybrid” elite who were “defined

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by high levels of cadre participation in private household business” (2002). This percentage was much lower than entrepreneur households (7.6 percent or 228) and cadre households (3.4 percent or 103), respectively. However, as the data cited previously show, up to recent years, most village leaders in some or many provinces were entrepreneur cadres. The data indicate that either or both of the two scenarios are extant. First, in the sweeping, policy-based VOE privatization that took place in a concentrated period around the 1997 party congress, plenty of privileges enabled many village cadres to establish private family businesses and thus considerably swelled the ranks of rural private entrepreneurs. Second, in the “power conversion” process, the loss of some cadre advantages was often more than offset by gains elsewhere – provided that cadres clung to their positions. All in all, given the complexities and uncertainties of the new system in which politics and markets are intertwined to an extent that probably exceeds that in any genuine market economy, the allure of the village cadre position for private entrepreneurs has not decreased but increased. After the privileges gained from the privatization of collective assets were exhausted, village cadres’ advantages remained in the development of social networks and political connections – crucial factors affecting the fate of their infant family businesses. It is universally applicable that political offices generate a variety of advantages for their holders in a capitalist society – a phenomenon that does not necessarily involve corruption. However, the association of village cadres’ private business with their political position is particularly relevant in the Chinese context, because of the overriding importance of guanxi (connections) in politics and society (Hamilton and Biggart 1988; Whyte 1995; Kipnis 1997; Gold, Guthrie, and Wank 2002). As early as the 1980s, in rural commerce, connections could help cadres to “gain access to lucrative business opportunities and avoid the extortionary license fees slapped on other rural businessmen by local officials” (Shirk 1989: 340). Marketization has slightly diluted the effects of political connections, but it has made social connections more important. As my discussion of Yingjie village and other examples (Huang Junyao 2007) suggest, political position could significantly improve village leaders’ credibility as law-abiding private entrepreneurs and thus enhance their potential customers’ and business partners’ trust in them. Their image as local “celebrities” or “role models” often proves a huge asset in China’s still unorthodox market economy, where cheating in business is rampant. Social networks produce a snowball effect as well: the more friends you

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have in business, the more help you can offer fellow villagers – and the more villagers will request your help and pay you respect.6 Wu Yi (2007: 476–92) spent more than a year (2003–04) in an agricultural township in central China to investigate the effects of the TFR and the expected impact of the AAT on village governance. This was one of the most difficult years for village cadres, who described their routine work as having to either “beg for mercy [from fellow villagers]” or “fight [them] fiercely.” Wu soon found out, however, that despite their bitter complaints or threats to resign, none of the village leaders chose to step down. As a cadre told Wu in private, they actually cared very much about their offices and would not quit unless forced to. This cadre, Luo, was a village head and deputy party secretary who ran a family-owned restaurant in the township’s business center. As he told it, the great success of his restaurant depended to a large extent on his position as the village head. Luo’s cadre identity placed him in a position to establish close ties with the township government, thus making him a worthwhile friend to both fellow villagers and business partners. As long as the government still controlled some resources or remained influential in certain aspects of rural life, Luo’s value as a personal friend, broker, or middleman would not vanish. For those who wanted to approach or meet Luo, the best way was to dine at his restaurant. Government officials, who looked to Luo to collect taxes and execute state policies in his village and were therefore keen to take care of him, frequently brought the government’s guests and visitors to dine there. The daughter-in-law of this village’s party secretary was a taxi driver who earned far more than her peers. Many people vied to take her taxi to curry favor with her father-in-law. Even the government hired her taxi for public business.7 Of course, the tangible economic benefits a cadre position may generate are far from government favors. In many villages that had large tracts of wasteland or were rich in mineral resources, entrepreneur cadres used their entrepreneurship and market power to develop profitable projects, such as building luxurious houses for sale and creating new VOEs.

6 7

Interviews with township officials and village cadres in Rugao (Jiangsu), December 29– 30, 2004; in Yutai (Shandong), June 14–16, 2006. At a township of Anhui, the richest village party secretary used to be a peasant migrant. In 2004, he returned to the village and ran a small pig-feeding factory. In 2005, he was appointed as the village party secretary. Several years later, the scope and profits of his factory grew three times. His (top) cadre status allowed him to enjoy preferential treatment in the distribution of the government’s forage and other subsidies. The township also permitted him to appropriate village land for expanding his factory (Ouyang Jing 2011).

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Without question, entrepreneur cadres as village leaders would be the biggest beneficiaries (Zhao and Lin 2010; Gui Hua 2011). The AAT offered even more incentives for private entrepreneurs to take up village leadership positions. First, the AAT removed the most painstaking task from the village government agenda and thus eliminated a major disincentive for those who might aspire for the cadre status and identity. The drastic reduction of administrative responsibilities for village cadres means that entrepreneur cadres do not have to sacrifice too much of their time and energy to the fulfillment of their official duties. So, as cadres, they will still have plenty of time to manage their private businesses (Ouyang Jing 2011). Second, compared to traditional village cadres, entrepreneur cadres are in a much stronger position vis-`a-vis the township government. Since the AAT, the township has relied mainly on the payment of salary to control village cadres. But this “weapon” does not work if applied to entrepreneur cadres who do not care at all about their “petty” cadre salaries. Therefore, township leaders have to offer more favors and privileges in exchange for their willingness to work for the government (Guo Jianming 2010).8 Why do peasants like entrepreneur cadres? Despite the three-cornered conflict of interest between peasants, village cadres, and the township government in the implementation of rural reform, the new configuration of authority in villages, as embodied by the emergence of private entrepreneurs as village leaders, seems to represent a positive-sum game in which all principal players get what they want. As noted in Chapter 5, the selection of village leaders has incrementally evolved into a more participatory and inclusive process since the late 1980s. Not only are village heads elected with less government intervention, but efforts to improve the legitimacy of party power have also allowed a greater amount of input from ordinary peasants in the appointment of village party secretaries. As a consequence, the popularity of entrepreneur cadres among fellow villagers has been critical in their rise to dominance in the hierarchy of village politics. Peasants prefer entrepreneur cadres to be their leaders simply because entrepreneur cadres best meet their expectations and serve their interests. The orientation of the rural economy to markets has 8

Also based on my interviews with township officials in Qiangtou (Zhejiang) on December 30, 2009; Pengxing (Hubei) on December 26, 2009, and Zhangdian (Jiangsu) on January 3, 2011. “Entrepreneur (village) cadres” is not an issue that could be investigated effectively at the village level. One reason was that a village cadre’s family wealth was usually a sensitive and “private” issue that was not supposed to be “investigated.”

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not only decreased the extent to which peasants need help from village authorities but has changed the context in which such help is usually sought. In empirical studies, it has not been hard to find long-serving village party secretaries who had little or no private business but lived on their salary, remunerations, and family farming. Some continued to receive support from fellow villagers during most of the rural reform era, thanks in large part to their prestige, which was built on their reputation for integrity and fairness; their past “contributions” to their villages; cumulative reciprocity (i.e., personal favors, affections, debt of gratitude, friendship, etc.); and usually extensive family ties. However, this “moral authority” or “soft power,” as the case of Sang Hongji displays, has been stripped of its appeal in a marketized and monetized environment that impels peasants to be more practical and “rational.” Besides, with the growing market allocation of economic resources and declining government functions, villagers no longer need cadres’ help as much in dealing with the government and in gaining access to state-monopolized resources. Instead, peasants exhibit a preference for village cadres who can offer real, down-to-earth assistance as they struggle to cope with market forces and to obtain wealth through the market economy (Ji, Zhou, and Chen 2003). Villagers have depended increasingly on the guidance and help of entrepreneur cadres to do business – particularly where the tradition of commerce is weak, so that peasants have few social connections and limited access to market information and lack experience with market mechanisms. The traditional village cadres who have a complete lack of knowledge about markets and entrepreneurship can hardly meet their expectations (Sun Long 2000; Hu Xuhang 2007). A survey was conducted in twenty villages (Jiangxi) governed by traditional cadres who were typically very old, poorly educated, and had a long “revolutionary” career and old-fashioned mind-set with little knowledge of markets. Among the villagers surveyed, 51.9 percent wished that village cadres would lend a helping hand; but 59.8 percent of them were disappointed because they perceived the cadres as having no ability to help at all. In recent elections at these villages (Table 9.2), 53.8 percent of voters selected the “ability to lead villagers to get rich” as by far the most important requirement for the village headship. Only 12.5 percent and 12 percent emphasized “integrity” and “impartiality” (in the exercise of redistributive power), respectively. These categories used to top their list of preferences. In the years when village cadres monopolized much of the economic resources and held formidable redistributive power, personal relations with the candidates or lineage largely decided the voting behavior of

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Table 9.2 What quality or ability of the candidates did you emphasize most in recent village elections? (%) Ability to lead villagers My clan Party member to get membership rich or relative

Would dare to speak out for villagers

Would dare Has good to boycott Integrity; relations Don’t morally “local” policy good Impartiality with me care

3.6

12.5

2.8

53.8

0.4

12.5

12.0

0.4

2.0

Source: Based on the data collected from the surveys in 20 villages of Jiangxi (Tang Xiaoteng 2005).

peasants. But now only 0.4 percent of the villagers still considered either of these two factors as being decisive. “Would dare to speak out for villagers” and “Would dare to boycott [unpopular] ‘local’ policy” were the leadership qualities peasants highly appreciated when they suffered from heavy burdens imposed from higher levels of government. The fact that many fewer villagers still emphasized these two qualities as important indicates that the TFR had indeed successfully alleviated peasants’ grievances against party-state policy. In village elections, the rich or private entrepreneurs have proved to be much more electable. In a rural region of Chongqing, 2,912 ran for village headships in 2003. Of them, 1,025 were incumbent village cadres, and 690 were “rich people” who were either private company owners or “big” farmers. The electability (i.e., the percentage of getting elected) of “rich people,” who had held no political position before election, was the highest (49.1 percent), followed by incumbent village cadres (38 percent) and (township) government personnel (11.3 percent). Because many incumbent cadres themselves were also private entrepreneurs, the 2003 village elections enlarged the proportion of entrepreneur cadres among village leaders in that region to 38 percent (Reporter 2004). Compared to Jiangxi and much of Chongqing, which were traditional agricultural regions, entrepreneur cadres were even more well-liked among peasants in affluent provinces in which the model of wealth-based authority in villages was historically dominant and time-honored. Of the peasants surveyed in Zhejiang in 2005, 51.1 percent said that rich people were more capable of bringing prosperity to the village economy. The performance of entrepreneur cadres was rated as “competent” or “excellent” by 60 percent. By comparison, only 6.3 percent assessed them as “incompetent” (Huang Junyao 2007). Nonetheless, an empirical study on post-AAT change in the popularity of entrepreneur cadres reveals a backlash against them. In fact,

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since the AAT, the votes for private entrepreneurs in village elections in Zhejiang have rarely exceeded 60 percent. It was reported that entrepreneur cadres in some villages were interested only in using collective resources to serve their family businesses. Many entrepreneur cadres were keen to manage personal relations with the government but were reluctant to help fellow villagers or spend adequate time managing village affairs. Some private entrepreneurs, once elected, became bossy, arrogant, and authoritarian or backtracked on their promises. In village elections, most private entrepreneurs promised to be full-time village cadres if elected. But in Zhejiang, fewer than 10 percent of entrepreneur cadres took cadre responsibilities as their full-time job (Guo Jianming 2010).9 Why does the government choose entrepreneur cadres? The Central Committee decision in 2001 to revise its charter and to invite capitalists to join the party removed the ideological risks inherent in appointing entrepreneur cadres, making this practice even more fashionable – particularly in rural areas with advanced industry and commerce, such as Guangdong (Levy 2003).10 Zeng Qinghong, one of the top party-state leaders and a Politburo standing committee member, emphasized that rural party organizations must give priority to “turning party members into ‘fortune-makers’ [i.e., zhifu nengshou – political jargon for rich people or private entrepreneurs], absorbing fortune-makers into the party, and then encouraging fortune-makers with party membership to become village leaders” (Editor 2004). The (township) government and peasants apparently share a stake in entrusting village governance to entrepreneur cadres, but the government is driven by a different agenda. Township officials certainly want village cadres to be authoritative enough among fellow villagers to maintain “stability” and smooth policy implementation; however, they are clearly 9 10

This phenomenon is obviously not limited to Zhejiang. I heard similar complaints from the township officials of Huagang whom I interviewed on December 31, 2011. On the part of the reform regime, the co-opting of new economic elites is more aligned with the new situation to which rural reforms have given rise (Dickson 2003). The political re-definition of private entrepreneurs, however, seems to be especially sought after by rural officials, presumably because the change favors them more directly. Referring to Jiang Zemin’s theory of “three represents,” a township party secretary in northern Jiangsu, whom I interviewed on December 30, 2004, claimed that private entrepreneurs represented “advanced productive forces” in the countryside. According to another township official I met in Yutai (Shandong) on June 15, 2006, the key criteria the government applied in the past in the selection of village leaders were just two: being obedient and capable in levying taxes and fees. The AAT and related changes made the old criteria obsolete.

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Table 9.3 Ordered logistic regression of leading village cadres (VCs)’ self-perceived authority on selected variables VCs’ selfperceived authority Strong Medium

Weak

Selected variables

Coefficients

Sig.

Reference group Intercept Self-rated economic status in the village Ability to help villagers Intercept Self-rated economic status in the village Ability to help villagers

7.475 (2.036) –1.353 (0.425) –0.986 (0.439) 10.188 (2.500) –1.782 (0.578) –1.642 (0.527)

0.000 0.001 0.025 0.000 0.002 0.002

Odds (Exp)

0.258 0.373 0.168 0.194

Source: The same as Table 9.1. Notes: N = 121; overall percentage predicted correctly: 68.5%; p ⬍ 0.05. Dependent variable is village cadres’ self-perceived authority. Standard errors in parentheses.

aware that traditional cadre power has lost its base of support and no longer works. Given its own financial crunch, shrinking administrative functions, and power resources, the township is not in a position to offer any substantial help if village cadres fail to hold sway. The optimal scenario for the township, therefore, is that village leaders are capable of controlling village affairs and villagers on their own – but on behalf of the government. Entrepreneur cadres seem to perfectly match this need. In possession of a large amount of private wealth and market power, entrepreneur cadres can help ordinary peasants in plenty of ways, such as through employment in their own private companies, lending money, sharing market information, and offering all kinds of technical assistance the government is either unwilling or unable to provide. In a nutshell, their authority in villages is contingent on their own ability to help fellow villagers but – to the extent that it is effective – can be used by the government to serve its own policy goals. The links between village cadres’ self-perceived authority and two variables are analyzed in Table 9.3. The dependent variable was measured by the question asked of them: “Does the village government have authority among fellow villagers? If yes, how much?” To make the notion of “authority” unmistakable, the question was rephrased in the brackets as “Do fellow villagers [how many] listen and follow [how actively] when you ask them to cooperate in implementing state policy and managing village affairs or more precisely to do what they are otherwise unwilling

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to do?”11 The respondents were asked to choose among three categories that represented “strong, medium, and weak” authority. At the same time, they were asked to answer two questions (independent variables) among others. The first question was about their self-rated economic status in the village, which to a large extent indicated whether or not they were private entrepreneurs. The second question was: “As cadres, to what degree are you able to help fellow villagers solve their problems?” Four degrees from low to high were given for the respondents to mark. The coefficients presented indicate that controlling for the effect of their ability to help villagers, the odds of village cadres perceiving their authority as “medium” and “weak” decrease by 74.2 percent and 83.2 percent, respectively, for a one-point increase in their self-rated economic status. This result, coupled with other relevant statistical analyses, provides compelling evidence that wealthier village cadres are significantly more likely to have strong authority among villagers. The logic behind the correlation might be that their fortunes or higher income somehow strengthened the cadres’ sense of responsibility for the collective, which in turn improved their performance and boosted their authority. The two independent variables are themselves related and affect the dependent variable in similar ways. As cadres’ ability to help villagers increased by one degree, they were 62.7 percent and 80.6 percent less likely to assess their authority as “medium” and “weak.” Echoing the empirical findings cited earlier, where village cadres hold solid authority, a large number of them are private entrepreneurs, “landlords,” and big contractors. The logic behind this phenomenon seems to be that the wealthier they are, the more likely they are to have a strong sense of responsibility for the village, the more capable they should be of helping fellow villagers, and the more commanding a presence they would have in the village. The attitude of the reform regime or local governments toward entrepreneur cadres has evolved through several stages: from outright ban, discouragement, and reticence to tacit consent, implicit encouragement, explicit support, and the (local) policy-based requirement that village cadres must be private entrepreneurs (Ji, Zhou, and Chen 2003; Zhao and Lin 2010). Indeed, these policy shifts have been dramatic and profound. In the late 1990s, local government officials in many regions still harbored reservations about the private entrepreneurs and businessmen who ran for office in village elections. In a survey conducted at 11

The questions about “authority” for village cadres were slightly different from the questions asked of ordinary peasants – some of whom needed specific examples to precisely understand “authority.” See Chapter 5.

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this time, 72.6 percent of officials supported the candidacy of private entrepreneurs in village elections only if they had “proper qualifications” (Dickson 2003: 125). After “capitalists” were allowed to join the party in 2001, the central leadership did not go still further to place them in (party) cadre positions, obviously for fear of potential damage to the CCP as a selfproclaimed Marxist party. However, the “spirit” of the central policy was well comprehended and translated into a local policy by many rural governments that listed private entrepreneurship per se as one of the most important qualifications for taking on a village leadership post. For instance, the government in Taicang (Jiangsu) stipulated that leading village cadres must step down if they failed to develop their private business during their term of office (Liu, Li, and Xin 2003). Village cadres in Sheyang (Yancheng, Jiangsu) were required to have ongoing private “lucrative projects” and possess at least two “get-rich” skills (Ji Bushu 2003).12 A group of researchers who conducted surveys in seven provinces reported that many rural governments enforced an intensive training program that aimed to familiarize village cadres with market institutions and teach them how to “swim” in the sea of a market economy. Village cadres were instructed to set a good example for how to get rich through developing private entrepreneurship. Private entrepreneurs with party membership or party cadres with profitable private enterprises were most favored by the government in the selection of village leaders (Feng and Li 2006: 163). Once elected as village heads, non-party entrepreneurs were often quickly admitted into the party and then appointed as village party secretaries or deputy secretaries (Zhou Wei 2003; Zhao and Lin 2010). Entrepreneur cadres have found favor with rural governments for three reasons. First, given their entrepreneurial expertise, familiarity with market institutions, and vision as economic elites, they deserve their reputation of being the best leaders for developing the village economy and leading fellow villagers to affluence. Second, entrepreneur cadres are capable of translating their private economic power into private authority, and political appointments can turn their private authority into public authority. As long as a political position is useful to them and they desire to keep it, entrepreneur cadres would not refuse to work in the interest of the party-state. 12

In my interview (June 16, 2006), the party secretary of Jiuchengli village (Shandong) told three requirements for being appointed as a village party secretary: (1) being rich himself/herself (i.e., owning family enterprises); (2) having patrons among the township leadership; and (3) being popular among fellow villagers.

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Third and relatedly, rural governments – especially in traditional agricultural provinces – were often motivated by a hidden agenda, that is, to use entrepreneur cadres’ private wealth for public spending to save government resources. After the 1994 tax reform, rural officials were placed under heavier pressure to perform under much more stringent fiscal constraints. Cadre positions were expected to compel private entrepreneurs – very wealthy ones (so-called siying dahu) in particular – to personally shoulder financial responsibility for the development of rural communities, which would have otherwise fallen on the government itself.13 Indeed, in contrast with traditional village cadres, entrepreneur cadres have often proved themselves capable of managing village affairs well without bothering the government for help or “squandering” government resources. A case study illustrates how township government and entrepreneur cadres could play this positive-sum game to maximize their respective interests. A villager (named GDK) owned a small garment factory that was categorized as a “collective” enterprise in the 1980s. This categorization enabled his factory to rely on village-owned resources to thrive. In the 1990s, the factory expanded into a large, profitable joint-stock corporation whose shares were held by both GDK and the village government. Shortly after controlling the corporation as its biggest shareholder, GDK joined the party and was appointed as the corporation’s party secretary. With the endorsement of township leaders, he seized power from the village government and gained control over village affairs through merging the VPB into the corporation’s party committee. Standing at the helm of the village, GDK transformed it into a rural developmental model that grabbed headlines. In addition to the village’s new, “luxurious” residential district, GDK’s private company took on a major responsibility for fellow villagers’ employment, labor insurance, pensions, education, medical services, and so forth. Township officials, who did not share any of the costs or “hardships,” took most of the credit because GDK’s achievements allegedly would have been impossible without their “strong” leadership (Song and Yang 2005). GDK was to some extent representative of the rise of entrepreneur cadres across the Chinese countryside. In Zhejiang, many economic elites have managed to turn themselves into “political elites” and assumed top leadership posts in villages through similar routes (Feng and Li 2006: 165). Entrepreneur cadres are similar to leaders in villages of new collectivism in that they dominate only to the extent that they control economic resources and fellow villagers’ livelihoods. Compared with the 13

For empirical cases, see Chapter 7.

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“boss-via-cadre,” however, entrepreneur cadres’ position of authority is dependent on and bolstered by the economic resources in their private possession. As a result, the nature and foundation of their authority have shifted from the public to the private domain. Although they hold political positions, entrepreneur cadres usually do not wield power on a rationallegal basis but by resorting to private inducements or appealing to fellow villagers’ reasonably calculated self-interest. In China’s rural society, this virtually private authority historically worked most effectively when it was meshed with and reinforced by a village’s multiple traditional social and cultural functions. Therefore, how entrepreneur cadres work with the government for the sake of village governance is an intriguing question. The double identities of entrepreneur cadres are not closely linked, in the sense that their private businesses do not, for the most part, depend on the political appointment but could benefit from it to varying degrees. Entrepreneur cadres thus no longer work merely as party-state tools or regime agents but more as gentry-like intermediaries between the regime and the peasantry. Perhaps it is to this pattern that Shue’s (1988) misplaced cadre-gentry analogy applies. Their working relationships with the regime are more cooperative than subordinate. As John Watt (1972: 14) described the gentry-official relations in imperial China, in conflict they could cause a good deal of mutual trouble. “In concert they represented an almost unchallengeable local combination of political authority and social and economic power.” Similar to the pattern of interaction between county (district) magistrates and the gentry in imperial times, the township government must offer entrepreneur cadres all kinds of favors and privileges that are valuable enough for them to be willing to manage the village on its behalf; but the government is not actually able to control them by any effective means.14 Conclusion With the wide diffusion of once highly centralized power in the rural context of a market economy, entrepreneur cadres who are endowed with both public authority and private wealth have sprouted as the most powerful ruling elites in more and more villages. Unlike cadres in new collectivist villages whose economic power remains linked to political 14

The gentry represented an autonomous social class beyond the imperial state’s administrative control. As Chung-li Chang (1955) indicated, because admission to the gentry depended on obtaining an educational degree, the only mechanism for the state to control the gentry was the state-controlled examination system. However, the crucial difference that sets entrepreneur cadres and the gentry apart is that the former, after all, have formal political offices and are therefore less independent than the latter.

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appointments, entrepreneur cadres are first and foremost private company bosses whose businesses can benefit from but do not depend on their political appointments. Likewise, their authority represents a kind of private authority that could be boosted by but is not contingent on a political position. Entrepreneur cadres also differ from other traditional rural power elites, such as church and clan leaders. The influence of church leaders is confined largely to religious affairs, whereas clan leaders’ power is limited by the lack of a legal-institutional basis. Entrepreneur cadres enjoy special or unique advantages that by all accounts seem to meet the needs of the reform regime to reorganize rural social and political order in a way that best fits Communist Party rule to a marketized rural society. The growing dominance of market institutions and the atomization of peasant society have rendered post-Mao authoritarian control – let alone the Maoist model of totalitarianism – neither workable nor sustainable in the countryside. The fundamental change in the reform regime’s goals for rural governance has produced two causally related consequences. The first is the massive decrease in village cadres’ roles, functions, and overall workload. The second is the great reduction in the perceived necessity to keep tight political control over the peasantry. These consequences have probably prompted the party-state to believe that it does not have to continue to support a huge and unwieldy rural bureaucracy. More importantly, as a function of the 1994 tax reform, rural governments have been deprived of their fiscal capacity to feed a large contingent of professional village cadres. For the reform regime, the unparalleled advantage of entrepreneur cadres is their private wealth and market power, which have proved more crucial than political appointments to the establishment and consolidation of authority in villages in the era of marketization. In exchange for entrepreneur cadres’ willingness to use their private authority to serve the regime, the regime must allow them to profit adequately from their services and thus play a win-win political game with them. This seemingly cost-effective strategy for the blending of private wealth and public authority is a reminder of how rural villages were managed in imperial China. To the reform regime, however, relying on entrepreneur cadres to govern villages is not without problems. Entrepreneur cadres are economically independent and are therefore not so much attached to the regime as traditional village cadres are. Therefore, the regime lacks effective institutional or organizational mechanisms to ensure their loyalty and obedience. The AAT has deepened the crisis of township government, which in turn makes party-state control over entrepreneur cadres even more difficult.

10

Prospects for China’s rural governance

That democracy is fostered as an effect of capitalist development or marketization has been shown to be true many times in world history. Capitalism shifts the balance of power among social classes in favor of democratic transition. At a certain stage of its development, a market economy gives rise to a powerful pro-democratic middle class and creates a civil society that constitutes the major building block of a democratic system. A structural correspondence between capitalism and democracy – embodying factors such as peaceful competition, individual choices, socioeconomic pluralism, and the rule of law, among others – has been established as well. Capitalism separates the economic and political spheres and thus forges a balance of power between state and society. Except for the democratic experiences of formerly communist Eastern Europe and the USSR, democracy has invariably grown out of a free market context or a capitalist society (Rueschmeyer, Stephens, and Stephens 1992; Diamond, Linz, and Lipset 1995; Potter, Goldblatt, Kiloh, and Lewis 1997; Anderson 1999). The political logic of capitalism, however, is difficult to apply to post1978 capitalist development in both urban and rural China (Nathan 1997; Zhao 2000; Chen 2002b; Dickson 2003; Pei 2006; Kellee Tsai 2007; Wu 2011). Marketization has indeed resulted in the stratification of Chinese rural society, but it has failed to be translated into democratic dynamism – not even in terms of social class conflicts of the kind witnessed in urban China. Marketization has also transformed China’s rural social relationships and peasant life in ways that strengthen the independence and individualism of peasants, and thus undermine the social foundation of all forms of authority. Despite the growing autonomy of rural communities, no meaningful democratic progress has been made. To the extent that the village election makes an impact on rural politics, it has been a party-sponsored “innovation” with few, if any, links to the thrust of marketization or to pressure from peasants themselves. The glaring absence of democratic transition in tandem with or in the wake of marketization does not mean that the authoritarian structure of 285

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political power in the Chinese countryside has escaped the influence of increasingly dominant capitalist forces. Instead, the decollectivization, marketization, and privatization of China’s rural economy have led to a transformation of allocation mechanisms and the structure of ownership that is even more thorough and profound than the reform of its urban economy. The change of economic resource allocation from the partystate to market institutions has corroded the economic basis of the reform regime’s coercive power over the peasantry. In the transition to a market economy, village party cadres have gradually but steadily lost their redistributive and administrative powers, on which the party-state’s authority and governing capacity in the countryside are founded. Thirty-five years ago, Deng Xiaoping initiated the decollectivization of agricultural production for a modest and presumably expedient goal, namely to consolidate Communist Party rule in the countryside by increasing grain output and coming to the rescue of starving peasants. Thirty-five years later, while Chinese peasants’ living standards have been significantly raised, party-state authority at the base of rural society has declined or crumbled everywhere. To China watchers, this outcome may be puzzling, if not shocking, as the entire rural reform process has never spun out of the reform regime’s effective control. The dynamism of China’s rural reforms China’s rural reform since 1978 should be seen as a self-reinforcing process whose dynamics have been generated by the complex interplay of both market and non-market factors. As Deng and his reform-minded colleagues groped their way forward in the reform process “by feeling the stones,” the “stones” progressively narrowed down policy alternatives, leading to a specific course of development that was increasingly difficult, if not impossible, to reverse. In terms of its long-term impact on village governance and rural politics, this path-dependent process may be divided into three phases. The first phase, which ran from 1978 through the 1980s, was characterized by the first wave of decollectivization that allowed Chinese peasants to shake off the party-state’s direct control of their productive activities, to which they had been subjected under the Mao regime. However, the decollectivization did not extend from farming or agricultural production to VOEs and thus failed to dissolve one of the key components of the collective economy, on which redistributive power was built. Instead, the decollectivization motivated party cadres in many villages to expand VOEs in an attempt to compensate for the economic power lost in the new HRS. Thus, while some old powers and privileges for village cadres

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vanished, other new ones were created, such as the formulation of contracts for land-use rights and the control over access to non-agricultural jobs. In the hybrid state-manipulated markets of the 1980s, village cadres were in a position to decide on the distribution of both rationed and inexpensive agricultural inputs and to monopolize market information that was critical to the income opportunities of peasants as autonomous producers. The abundance of grain resulting from the HRS met its original goal, but it also made the old system of state-monopolized grain purchase obsolete. The party-state’s decision to liberalize grain markets in 1991 should be seen as the onset of the second phase of rural reform, as the decision marked a turning point in the marketization of the rural economy. Because of the considerable contraction of planned trade in agricultural products and fast-growing transactions through rural fairs and periodic markets, village cadres’ role in and control over fellow villagers’ economic life and village affairs withered still further. The ripple effect of marketization and privatization, which advanced in full swing nationwide during most of the 1990s, soon spread to the village-owned economy. Except in coastal provinces, VOEs failed to survive fiercer market competition and shut down, were privatized, or moved to urban areas. Where the decollectivization process concluded with the demise of VOEs, cadre power over farmland had nearly disappeared as well. After the extension of land-right guarantees for thirty more years in 1999, the central government forbade any substantial change in the status quo of land allocation. The adoption of the law on land contract in 2002 imposed even more stringent legal restraints on village authorities’ discretionary powers over land allocation. As village cadres’ redistributive capacity shrank, their administrative power diminished along with it. Village authorities used to use the hukou system to block rural-urban migration and to constrict villagers’ efforts to look for non-farm jobs. In the late 1990s, labor markets were liberalized and local governments began to open urban employment to peasant migrants, thereby leading to the partial breakdown of the hukou system. The decay of both the redistributive and administrative functions of village authorities began to create a potential structural crisis of rural governance. In the meantime, rural governance was gravely compromised by deteriorating rural finances. Communist Party rule in rural society depends on village party branches and cadres to be effective, but the expansion of market institutions and growing financial deficits in villages made village cadres not only less able but less willing to govern on behalf of the regime. The root of the rural fiscal crisis can be traced back to the 1994 tax reform. This reform had virtually no direct or immediate

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connection with marketization but was intended to correct the effects of fiscal decentralization that worked against the central finance. The central state’s attempt to change the tax-sharing rules to increase its own tax revenue at the cost of local finances escalated the fight for financial resources among local governments. The necessity of balancing their own budgets compelled local governments to shift revenue loss and expenditure responsibilities downward. As the bottom of the administrative hierarchy, the township had no alternative but to salvage its budgetary balance through squeezing village finance and peasants, particularly in agricultural provinces, which made up most of the Chinese countryside. The township’s desperate efforts to transfer its fiscal crisis onto villages drove peasants to an impasse. By the end of the 1990s, increasing peasant burdens and tumbling incomes sparked widespread protests and violent resistance, which imperiled the hegemonic political order in rural China. In response to the critical situation of political crisis, the TFR and the AAT were implemented in 2002–04 and 2005–06, respectively. With these two landmark policies, rural reform embarked on its third and probably most radical phase, which is expected to fundamentally transform the system of China’s rural governance. The TFR and the AAT were designed to alleviate peasant burdens, but their implementation triggered a chain reaction with consequences far beyond what was initially hoped for. The TFR and the AAT slashed village cadres’ administrative duties and workload to such an extent that they became much less useful to the reform regime – both as implementers of state policy and as managers of village affairs. The TFR and the AAT also eliminated the key tax-fee base of village revenue and thus drove many village governments to fiscal bankruptcy. Compared with the 1994 tax reform and the TFR, the AAT’s effects on village finance and governance were far more detrimental in agricultural regions. Village cadres’ income advantages and opportunities for private gain were closely associated with village finance. Despite some degree of rise in salaries for surviving cadres, as village coffers emptied in the aftermath of the AAT, not only were most of the personal benefits that had accrued to cadre positions lost; village authorities were also stripped of sufficient collective funds to dispense welfare benefits and provide public goods and services – two crucial facets of village leaders’ authority throughout Chinese history. The declining authority of village cadres accounts to a large extent for the accompanying decay of rural party organizations, reflected in their fading influence among fellow villagers and the diminishing number of applicants for party membership. As a result, the political authority wielded by the VPB – the core of village government – has waned or fallen apart in much of the countryside. In

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recent years, as the reduction of responsibilities and the urgent need to find new revenues have transformed the function and agenda of village government, political authority has faded toward irrelevance in village affairs. Since the late 1990s, market and fiscal reforms have led to the emergence of a new ruling class in villages. As traditional village cadres fell into disgrace, private entrepreneurs have risen to leadership positions in an increasing number of villages. In contrast to traditional cadres, entrepreneur cadres do not derive their authority from political appointments or cadre positions but from their own private wealth, entrepreneurship, and market power. For them, political appointments grant legitimacy to their otherwise private authority and thereby convert it into public authority to be exercised on behalf of the party-state. Compared to traditional cadres, entrepreneur cadres are, of course, less politically loyal or manageable but seem to better serve the reform regime’s new goal of governance in a marketized rural society. A political paradox The failure or decline of the communist regime’s authority in the Chinese countryside has been established as a given in numerous studies and reports. This study attempts to offer an explanation of how the market and fiscal reforms in the past three and a half decades, particularly since the late 1990s, have contributed to this failure or decline. The evidence points toward the conclusion that to the extent party authority in villages ceases to work, the change has not stemmed from peasant rebellion or a challenge from political opposition, but should be accounted for from economic and financial perspectives. These perspectives also explain why the breakdown of the existing structure of rural political authority does not necessarily give rise to chaos and anarchy in China’s rural society, nor has it offered any opportunity for anti-system forces to fill in the power vacuum. The hitherto radical changes in the realms of politics, economy, finance, and society in rural China, which have been examined in previous chapters, have displayed a logical sequence from which a set of propositions may be constructed. For the purpose of salvaging its “legitimacy” and “stability” in the countryside, the communist party-state needs to improve the efficiency of agricultural production and peasant life. The realization of that goal requires decollectivization and marketization. However, each step toward a market economy costs village cadres their redistributive power, on which party authority is mostly founded. The erosion of redistributive power weakens the administrative power

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conferred on village cadres to perform their state-assigned duties and tasks. The reduction of both redistributive and administrative powers undermines village cadres’ capacity to implement state policy, manage village affairs, and control villagers on behalf of the regime. Meanwhile, the progressive maturity of market institutions within the state economy directly or indirectly prompts change in the intergovernmental fiscal distribution system. The growing fiscal autarky of each level of government intensifies competition for financial resources among all levels of government, but leads to township and village finances losing out because of their marginal status in the political hierarchy. The more victimized and devastated township and village finances become, the greater the loss to traditional village cadres’ redistributive and administrative powers and party-state authority in the countryside, and the greater influence economic elites and other social, non-political actors have over village affairs. As traditional cadres continue to be superseded or marginalized in village politics, rural party organizations continue to decline. These logically and deductively interrelated propositions are suggestive of a paradox in market transition under a communist one-party state. Given the pragmatic nature of rural reforms and the central reformers’ lack of experience with the market forces they have unleashed, they have had to navigate in uncharted waters and could not foresee the political logic of market reform – namely that the more market institutions are ushered in to improve economic efficiency, peasant life, and regime legitimacy and thereby consolidate party rule, the more the long-established foundations of party rule are undermined, thus compelling the leadership to reform the existing system of rural governance, and for that matter to allow village government to depart from its traditional role – to search for new types of village leaders, and new bases and sources of authority in villages. While China’s rural reform experience proves the conventional wisdom that the market erodes political authority, it also shows that eroded party-state control does not necessarily lead to the emergence of democratic forces or democracy. Simply put, in the context of rural China, for all the apparent political progress such as village elections, the democratic significance of market transition is limited – at least up to now. The dilemma of village governance In poor agricultural regions, serious deficiency in revenue has virtually bankrupted many township and village governments and left them administratively paralyzed. The decline of political authority almost

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everywhere in the countryside and the substantially altered function and agenda of village government has in effect expedited the exit of the communist party-state from the bottom of China’s rural society. Presumably because it has taken place in a greatly transformed socioeconomic environment and hitherto has not and does not seem likely to give rise to political opposition or democratic pressure, this situation obviously has not set alarm bells ringing among the highest leadership – an anomaly during the reform years. As noted earlier, the TFR and the AAT have, to a significant degree, reshaped the four-cornered relationship between the (central) partystate, township officials, village cadres, and ordinary peasants. To varying degrees at different times, China’s communist regime is known to have followed the Stalinist model of industrialization, which gave top priority to heavy industry by capturing agricultural surplus at the cost of peasants’ livelihoods. The AAT has in fact buried this model, as it amounts to the abandonment of the party-state’s economic demands on the Chinese peasantry. Thus, the AAT, coupled with the effect of related rural reforms, has arguably changed the nature, goal, and trajectory of the CCP’s rural governance. The new goal is no longer to extract economic resources from peasants but to maintain peace and (political) stability, if not harmony, in rural society. To manifest this fundamental policy change, the reform regime has not only stopped “taking from” but begun to “give to” Chinese peasants, in the forms of state subsidies for farming and medical insurance, and a variety of government-sponsored public goods and services. To realize this apparently much less demanding goal, the reform regime no longer needs traditional village cadres as much as it did before, if at all. Even at the pinnacle of their political importance, village cadres caused as many troubles for the reform regime as they solved. Since the late 1990s, village cadres have deviated increasingly from their principal role as regime agents and evolved more or less into interest groups with their own self-serving agendas – a trend that culminates in the commercialization of village government in many agricultural regions in recent years. Because marketization has restructured rural social relationships in a way that re-atomizes and de-politicizes rural communities, tight political control over the peasantry seems to have become even less possible and necessary. However, this scenario does not mean that the reform regime will leave rural governance adrift. To assess the prospects and future trajectory of governance in rural China, it is important to take into account the enormous diversity of the Chinese countryside in nearly all relevant aspects. Vast differences exist, not merely between industrial (or coastal),

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developed, and traditional agricultural provinces, as categorized at the beginning of this book, but also within each of these provinces. As ample evidence proves, redistributive and related administrative powers have been eroded to different degrees in villages, to a large extent depending on the situation of the collective economy and finance. The decline of political authority as embodied by the changing VPB power status has varied as well, depending on more variables such as the personal prestige, image, and social capital of village cadres and their ability to help fellow villagers and provide public goods and services. The TFR and the AAT almost ruined the finances of many villages in traditional agricultural provinces, particularly those where transfer payments were either inadequate or failed to reach villages, but they had little impact on villages in coastal provinces where revenues flowed mostly from non-agricultural sectors. These differences have deeply affected the functions of township and village governments alike. In traditional agricultural regions, particularly those that are located in the hinterland and thus have little hope of attracting investment, many villages no longer have any governing authority, but neither has there been much rebellion. Instead, with large numbers of villagers joining the floating population, the villages have tended to be emptied or disintegrate as rural communities. In many villages of medium affluence, with a modicum of collective resources, cadre corruption and redistributive injustice often make cadre power a catalyst for unrest. In a few rich and developed villages, new collectivism has strengthened cadre power. In many more villages, cadres have rebuilt their authority based on their private wealth and economic power. The remarkable diversity among and within rural regions defies a rigidly uniform, nationwide model for rural governance in China. Nonetheless, since the late 1990s, under the guidance of the central “policy spirit,” the patterns of village leadership in both rich and poor rural areas have shown a trend of convergence. As discussed in Chapter 9, in a rapidly growing number of villages, traditional cadres have been replaced by entrepreneur cadres as new leaders who, by all accounts, are highly capable of developing the village economy, attracting investment, and propelling fellow villagers toward common affluence. As long as political appointments generate sufficient benefits and privileges for entrepreneur cadres, they are willing to use their private wealth for public spending and manage villages on behalf of the party-state. It seems that entrepreneur cadres best serve the adaptive strategy of the reform regime for post-AAT rural administration. The blending of their private wealth with public authority probably also represents the most cost-effective mode and long-term trend of village governance.

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Without question, the founding of political authority on private economic power poses a potential threat to Communist Party rule in the countryside. For all the worth of political appointments, entrepreneur cadres depend on the party-state neither for their private business success, nor for their positions of authority. Although traditional village cadres were never really part of the party-state bureaucracy, entrepreneur cadres are even less attached to the party-state in either economic or organizational terms. Thus, entrepreneur cadres do not function as regime agents but serve as middlemen between state and peasant – resembling the gentry in imperial China. This scenario tends to push village governance back to its historical mode under which the gentry as de facto village leaders maintained a more cooperative than subordinate working relationship with the imperial state. Under China’s still exceedingly dominant party-state, however, entrepreneur cadres can hardly expect a degree of independence comparable to that of their imperial counterparts. Likewise, the reform regime is unlikely to leave village governance to the power elites over whom it has no effective means of control. The reform leaders in Beijing may have found out that the ramifications of the AAT have landed them in an enormous dilemma with regard to overhauling the system of governance in rural society. To guarantee long-term rural social “stability,” the loss of political control at the village level must be compensated for at the township level. The fate of the township As the pattern of entrepreneur cadres gaining power in villages spreads rapidly across the countryside, the township – both its party committee and government – is becoming more critical in maintaining partystate control over these new village leaders, and in ensuring that they do not re-envision themselves into rebel leaders, or at very least, do not deviate too far from the basic party line. However, as examined in Chapter 4, township government’s financial crisis, the massive reduction in its responsibilities, the county’s excessive presence in township administration, and township officials’ plummeting morale have reinforced one another to make it increasingly difficult to maintain this level of government. In contrast to villages and village cadres, who are expected to survive the change in the communist regime’s goal of rural governance and the subsequent reorientation of its rural policy, the township and its officials are facing the possibility of “extinction.” Because the restructuring of authority in villages is already irreversible, the reform of the township and its potential impact on the entire rural

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political structure will need to take priority on the agenda of the central policymakers. The AAT has sparked debate on the status and future of the township as a formal administrative level. Although the center has not yet sent any clear signal to abolish the township, none of its assigned new roles is substantive or serves any “hard,” measurable targets. In fact, a view has percolated through researchers on rural reform, policy advisors, and township officials themselves that, as the township drifts into irrelevance in a changed rural society, its abolition is merely just a matter of time. All township-related reforms thus far – deliberately or unconsciously – serve to pave the way to realize this goal but to make the process less painful. In this view, the township in reality has been playing little more than the role of the county branch; its disappearance should not have any pernicious impact on the party-state’s capacity for rural governance if the county government’s functions are extended. On the other side of this debate, which has been brewing for years, quite a few scholars and officials have lent fervent support to the township on the grounds that with the collapse of political authority in many villages, the township by default has obtained a new and irreplaceable role as the bridge or “middleman” connecting the peasantry and the regime. Abolishing townships would force state power to roll back to the county level, as in imperial China, but the county government is unable or unready to rule the peasantry directly. Indeed, whether or not the township is dismantled will most probably be determined by the extent to which its remaining functions can be transferred wholesale to the county government. Some scholars insist that state power did not reach beyond the county level under the imperial system but must do so nowadays for two reasons. First, even though peasants made up over 90 percent of the entire population in ancient China, their absolute number was far smaller than that of rural residents today. A county government’s administrative burden would therefore be unbearable if it was exposed directly to the demands of peasants without any “cushion” or buffer zone. My findings from fieldwork prove this to be the case. In Hubei, an agricultural province in central China, a typical county holds jurisdiction over ten townships, each of which manages thirty-two to forty (administrative) villages. Each village has a population of 1,000 to 2,000. If the township is abolished, a county government would have to manage 320 to 400 villages directly – clearly an impossible mission given its current staff size.1 1

Interviews with scholars and students at the Center for China’s Rural Governance, Huazhong University of Science and Technology (Wuhan, China), December 22–24, 2009.

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Second, standing aloof from rural society, the imperial state did not demand much from peasants, nor was it responsive to their needs. By comparison, the responsibility of the reform regime toward rural communities is far heavier and broader thanks to both the due functions of a modern state and the still dominant socialist discourse. When Chinese peasants find themselves at an impasse, they tend to eventually look to the “people’s government” for help.2 If the county’s status becomes the base of the administrative hierarchy, the government would be too far away from peasants – even simply considering geographical distance. Both sides of the debate agree that the county government now cannot be compared with its traditional imperial counterpart in terms of its functions and responsibility. Even the foes of the township think it necessary to install a county branch as an intermediary between the county and village rather than removing the township totally. Still, although some researchers support maintaining the township, they have proposed more radical political reform that aims to extend “autonomy” or “selfgovernment” from the village to the township and thus would allow peasants to elect township leaders directly (Zhang Mingchu 2001; Chen and Shi 2006; Cui and Zhang 2006; Fan Hongliang 2006; Chen Tao 2007; Sun and Wen 2007; Zhang Xinguang 2007a). The voice for direct and competitive election of township government has been louder in recent years, and even a number of township officials are supportive. In a 2007 survey among mostly township personnel in three provinces, 85 percent agreed that township leaders should be chosen via competitive elections, and 33 percent saw the time as already ripe for direct election of township leaders (Wu Licai 2008). For all its pros and cons, it is less controversial that the township as it stands can no longer be preserved. To say the least, neither the central nor regional governments would likely give up much more of their own fiscal resources to salvage the township, whose functions have declined precipitously. However, the adverse effect on rural governance of dismantling the township could be enormous and profound. Even if the party-state no longer “exploits” peasants but instead strives to serve and appease them, it may have realized from continuous rural riots – for whatever 2

As some township officials reported, peasants habitually look to the government to help mediate disputes because they cannot afford to file expensive lawsuits (au. int. at Pengxing). Sanhu township government in Hengyang (Hunan) allegedly solved more than 100 disputes among peasants each year. One business dispute would have cost thousands of yuan if taken into court but took only one day to be settled free by the government (Qu Shuanghu 2007). On the other hand, peasants in a survey complained about the township government because it “imposed services” on them that they did not want but failed to provide what they wanted. In the post-AAT environment, peasants want the township government to offer them market information, agricultural technology, and skill training that is required for seeking urban employment (Chen Peng 2006).

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reasons – that it cannot afford to leave rural society ungoverned, at the very least for the sake of “stability.” For all the institutional interference of the county in the township’s administrative domain, dismantling the latter will create a huge power vacuum in rural China. It may lock the reform regime onto a path leading to fundamental political institutional reform – probably against its own desire or its original policy goal. The optimal strategy for the reform regime is, of course, to dismantle the township without compromising the established political order or undermining party-state rule in the countryside. Although the two goals sound inherently contradictory, there are several options available to the central decision makers, and each of them has its merits and faults. Option A: a downsized but stronger township government To downsize township staff is the thrust of the ongoing administrative reform, but hardly a long-term or ultimate goal. Despite the abject failure of efforts to slash township bureaucracy over the reform years, the combination of reduced workload and growing deficits in the wake of the AAT has considerably enhanced the chances of its success. In actuality, the key to this option is not downsizing per se but whether or not the township government needs to exist. If it does, it must be much stronger and perform far more substantial functions. Thus, this option contains the necessity of revamping tiaokuai guanxi between the county and township with the aim of increasing the township’s importance and hence justifying its existence. Specifically, most county branches should be transferred from vertical to horizontal jurisdiction – a structural readjustment that would be expected to reduce the county government’s presence in township administration and to allow the township government to wield power that is proportionate to its responsibility. This institutional rearrangement was undertaken in Laiwu city, Shandong, in the late 1980s. It was known as the “Laiwu experience” and recommended as a model to some other provinces. More than twenty branches of the county and municipal government were transferred to the township government to be placed under its jurisdiction. However, this model failed to take root or to spread to the rest of the country, and the authorities concerned apparently backed away from it (Zhang Xinguang 2005; Zhao Shukai 2008). In the late 1990s, a similar experiment was conducted in Ding, Hebei. The county government gave up nearly all its branches, including those that were financially successful, and brought them under direct township management – a measure that allegedly improved the township governments’ efficiency. Again, this exemplary county appeared and then vanished swiftly without garnering

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much media attention. No follow-up reform was set in motion nationwide (Xie Qingkui 1998: 19). The failure of these earlier attempts suggests that this option cannot be taken in isolation. By cutting off its ability to reach to the township level, the county government’s functions and responsibilities would be narrowed to a considerable degree, and it would be compelled to share more of its fiscal resources with the township. Some researchers point to the often zero-sum bureaucratic and financial games the county and township have played. Considering the exceedingly complex crisscrossing jurisdictions between the two, they contend that if the township government is to be strengthened, the county and perhaps municipal governments should be weakened, or even abolished (Shi Lei 2005). Yet if the county is weakened, the geographical size and population under a township’s jurisdiction, which would have grown “too large” as the result of township merging, should be diminished in order to make the seat of government geographically close enough to peasants.3 Option B: the township to be reorganized as a county branch This option, in essence, means that the township level of government would be abolished and the township government recreated as a county branch. This is structurally more profound than Option A in that it will streamline China’s local governmental hierarchy from four to three levels. A few years ago, the provincial government of Heilongjiang tentatively proposed this administrative restructuring to the central government, but it was turned down on the grounds that it was unconstitutional and hence would not be possible until an amendment to the Constitution was made (Shi Lei 2005). Option B seems to be preferred by most reformers. In the first place, since the county branch staff is projected to be only 10 percent of the township bureaucracy, this proposal appears to offer the ultimate solution to the redundancy of township institutions and personnel.4 Second 3

4

As a scholar calculated, a township government should manage an area whose farthest distance allows its residents to walk to it or its market town within one to two hours, so they do not have to stay overnight there (Wang Hongbo 2006). The major obstacle to this option is how to handle the laid-off officials. A number of options were suggested for township officials who do not want to resign or cannot find jobs: (1) the government could assist the officials with entrepreneurship and market expertise in setting up and running their own companies; (2) farming-related township bureaus could be transformed into profit-making, self-financing, and market-driven companies; (3) more welfare benefits could be offered to encourage aged officials to retire earlier; (4) officials could be sent for training in market skills before being laid off; and (5) township officials could be appointed to village leadership posts (Ma and Wu, 2006).

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and relatedly, the corresponding abolition of township finance will minimize rural government spending.5 As its functions and responsibilities grow, the county government is supposed to be granted priority in state allocation of financial resources. Thus it does not have to resort to predatory behavior or illegitimate fees to fill in its coffers, thereby preventing the problem of extortion from peasants once and for all. This option presumably fits well into the reform regime’s strategy to adapt its rule to a marketized rural society by harnessing the complex bureaucratic web and re-orienting rural governments’ functions toward provision of public goods and services.6 Third, thanks to deep-rooted tiaokuai guanxi, this reform is technically easy to implement, as county branches and personnel are already in place and need only moderate adjustments in their roles and jurisdictions. Last but not least, as the replacement of the township government by the county branch trims some parts of the rural bureaucracy, it eliminates out-of-date or undesirable government functions by default, and therefore more effectively constrains administrative interference in the normal functioning of market institutions. Most township-managed bureaus have recently played minor roles in rural administration, and some of their functions, such as providing services and technological assistance for agricultural production, should be performed by the private sector. The county branch only needs to take care of matters that strictly fall into the category of state responsibilities, such as law enforcement, policy implementation, public security, basic education, judicial affairs, property rights protection, environmental protection, social security, taxation, medical insurance, household registration, market regulation, and birth control (Deng Dacai 2001; Fu Guangming 2001; Zhou Shaojin 2004; Kennedy 2007). Option C: an autonomous township government If Option B stands for the further withdrawal of party-state power from rural society, Option C is politically more radical as it extends peasant autonomy from the village to the township level and, if adopted, represents a great leap toward the democratization of rural governance. 5

6

An official estimate indicates that if only half of current township staff retain their jobs in the succeeding county branch, it could still save 104.5 billion yuan in expenditure on salaries and administrative outlay (Fu Guangming 2001). It also conforms to the recent approach that Mertha (2005) refers to as “soft” centralization. To “regulate and discipline local government agents,” more bureaucratic offices are no longer subject to the authority of the same level of government but “directly controlled by their functional administrative superiors.”

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As some researchers (Zhang Xinguang 2005; Xu Renzhang 2006; He 2007) indicate, autonomy below the county is a long-standing tradition of governance in imperial China and the best form of administration to accommodate market-driven socioeconomic development in the countryside. A democratically elected township government may be defined as an administrative layer but by definition should not be subject entirely to the authority of the county government or the party-state at large. A survey in early 2006 revealed sharply divided attitudes between rural residents and cadres toward this option: 70.2 percent of the former were for it and 62.9 percent of the latter against it (Chen Peng 2006).7 Nonetheless, how an autonomous township government can be embedded in a one-party system will pose a challenge.8 Considering the manifold social responsibilities of a modern state – let alone a selfproclaimed socialist state – China’s imperial experience is of limited relevance. Even under democratic forms of government, local government does not enjoy full freedom; local government’s autonomy has actually declined in Western states since the nineteenth century. As John Kingdom (1991: 478–512) commented on the British system, for all its autonomous functions, authority, and an “element of balancing power,” a local authority “cannot exceed those powers given to it by Parliament.” “Power to legislate” is thus the central state’s “key weapon” to weaken local government. The acquisition of autonomy by a democratic township government in the political structural context of China would raise a critical question: how is it supposed to handle the conflicts between its popular mandate and its obligation to enforce policy and law formulated by the central party-state? The scholars who favor this option recommend the division of all the functions performed by both the township government and county 7

8

This survey, which was conducted in Hubei, Jiangxi, and Henan, exhibited the growing confidence of Chinese peasants in the direct election of township heads. In another survey on the same issue in Jiangsu in 2000, 22.3 percent of the respondents (peasants) thought that direct elections should start immediately, in contrast to 25.8 percent who supported the idea but saw the time as not yet ripe for direct elections. And 55 percent agreed that ordinary peasants cared more about village elections than township elections (Xiao Tangbiao 2003b). The degree of autonomy of a township government logically correlates to a large extent with the degree to which it is democratically elected. In recent years, the selection of township leaders (both party secretaries and government chiefs), as Thøgersen (2008) observed in his fieldwork, became more consultative and competitive and allowed more popular participation. Some innovative methods adopted in the selection, such as “open recommendation, open selection” and “public recommendation, direct election (of party secretaries by party members),” did indeed contain democratic elements. However, the township leaders produced in these ways did not seem to have acquired any autonomy in either the political or the administrative sense.

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branch into three categories. The first category contains the most basic administrative functions that are exclusively state responsibilities and should be transferred to the county government. The second category falls in the domain of local autonomy beyond party-state interference. It covers decision making for local socioeconomic development and local education, cultural events, public health, infrastructure, urbanization, irrigation projects, training migrant workers, environmental protection, sports, and so forth. These functions would be given to the township government and congress. The third category includes most if not all of the service-related functions, which should be left either to market institutions or to peasant associations (Wang Hongbo 2006; Xu Renzhang 2006). The feasibility or desirability of the foregoing options must be assessed in connection with other factors. Option A is grounded on the assumption that the party-state still needs to maintain firm political control over the peasantry. Option C, which brings villagers’ autonomy to new heights, is permissible only in a situation of peace and “harmony” in the countryside or if the reform regime has sufficient confidence in the stability of rural society. Option B stands in between in terms of the magnitude of partystate presence. The choice of option will involve both the change in the county government’s status and the existing mode of village governance. In this equation, one key variable that weighs heavily in the minds of the central reformers needs to be taken as a given, namely that party authority in many villages has probably irreversibly crumbled and the growth of villagers’ autonomy is hard to arrest. As entrepreneur cadres continue to emerge as new village leaders in vast areas of the countryside, and because the pattern of their authority more or less matches that of their imperial counterparts, village governance has been drifting away from the reach of the party-state, and both Options B and C are apt to accelerate or consolidate this trend. Option D: a policy of differentiation Unlike in urban areas, the Chinese countryside is not only far more expansive, but is also a great deal more diverse in terms of affluence, economic development, government revenues, peasant income, population density, urbanization, and conditions for wooing investors. Most township governments in agricultural regions have lost the bulk of their revenues and workload and are laden with heavy debts. Many have failed to find new sources of revenue and are dysfunctional, paralyzed, or redundant. By contrast, township governments in coastal provinces often have

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full coffers thanks to their competitive and profitable industrial and commercial undertakings and can thereby afford to extend their functions into new domains. One more option arising from this huge rural diversity is that the central government may not devise an undifferentiated (yidaoqie) strategy to be executed nationwide. Instead, different approaches may be adopted in different types of township – for instance, xiang (township) and zhen (town). Option D, which has been explored in academic circles (He and Dong 2003), stems from the understanding that uneven developments have caused township governments in their present forms to differ enormously in their functions, capabilities, and finances, and thus reform measures should vary on a case-by-case basis, depending on actual government utility rather than a generalized blueprint. As this apparently middle-of-the-road option goes, township governments in poverty-stricken areas, most of which are xiang located in the hinterland and traditional agricultural provinces, would be dissolved. Little work is left to them, and their financial crisis is usually the worst, as these townships’ economies are typically supported by traditional agriculture with a weak tax base. Even if these cash-strapped township governments continue to exist, their lack of revenues would paralyze them or turn them into just a “fac¸ade,” which has been the status quo for years. However, town (zhen) governments in affluent regions, particularly in coastal provinces where rural industries are equipped with cuttingedge technology and are highly competitive, should continue to exist. In recent years, these governments seem to have found the right niche for themselves. As is shown in Qiangtou, their principal role is to provide services for private enterprises that have sped up local economic development, improved employment, increased government revenue and, as a matter of course, brought township officials more income advantages. Because these governments are capable of collecting abundant tax revenues, they have rarely had to bother about balancing budgets. Their well-filled purses have even enabled them to venture into new businesses. The downside of this option is nonetheless apparent. First and foremost, it would disrupt the integrity or unity of China’s administrative structure – a problem whose effects may entail a complete overhaul of the entire government system. Second, this option neglects the political dimension of the issue. Although large-scale anti-regime peasant protests are harder to organize, the decay of rural party organizations, particularly VPBs, has dismantled the party-state’s system of organizational control over the peasantry, thus making its legal-institutional control critical. But legal-institutional control, which is exclusively exercised by

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the (township) government, is needed more in poor rural areas where party organizations are weaker and peasant society is more atomized.9 Therefore, how to deal with financially exhausted, administratively paralyzed, but politically important township governments will be at the crux of the reform surrounding the township and post-AAT rural governance at large. Although the prospects for China’s rural governance are still uncertain, to maintain the status quo is no longer a possible option. What to do with the township is still up in the air. The outcome most likely hinges on the extent to which political considerations outweigh economic ones, and how much of an economic price is worth paying for political purposes. Considering that the township has existed for decades as an integral part of the Chinese party-state, any substantive structural reform of township government is likely to become a catalyst for more fundamental political change in rural China. 9

Aside from the issue of control, township officials in poorer areas may be more important than in affluent areas in delivering public services (Kennedy 2007).

Appendix A: Fieldwork and research sites

As is highlighted in the discussion of China’s rural reforms and politics in the past thirty-five years, the vast diversity of the Chinese countryside defies generalization. China’s rural villages can be divided into five types in terms of the economic structure and political implications (Table A.1). The selection of the villages as my empirical research sites was based on both my own and my assistants’ personal ties and the villages’ representativeness in the relevant province (or region). My interviews with the village cadres, ordinary villagers, and township officials, whose results are widely cited in this book, provided the firsthand information that constitutes part of the basis of my analyses and arguments. The following extracts from the notes I took during my fieldwork are intended to provide the reader with adequate knowledge of these research sites (Table A.2), which resembled one another in some aspects but differed in others. As Timothy Rapley (2001) indicated, an interview takes place in a specific local context, and an “awareness of that context” is “vital” to understanding what is said. These extracts may boost the reader’s understanding of the highly diverse contexts in which rural reforms were implemented and affected political authority in villages. Because my field research spanned ten years, the reader may also catch a glimpse of the changes effected by the rural reforms, particularly the TFR and the AAT, across the countryside. However, my notes as presented here do not offer the complete and updated information on the relevant villages to which the reader can have easy access through their own websites. Instead, the information, which was collected at the time of my interviews, was somewhat fragmentary, as my interviews usually proceeded in an open-ended way. I did have lists of questions prepared ahead of time, and the questions had a more or less different priority or focus for each trip. In the interview process, I allowed the conversation or discussion to start with my questions but flow in a spontaneous way. I attempted to bring the conversation or discussion back “on track” only when it was carried too far away from my research interest. 303

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Table A.1 The typology of China’s rural villages in economic terms∗ Type I

Type II

Type III

Type IV

Type V

∗

Impoverished villages that lack resources of their own; with very little or no collective economy; village revenue is limited to transfer payments or government subsidies; villagers either have joined the floating population or live mainly on traditional farming. Primarily agricultural villages with a small amount of industrial or commercial economy (collective and/or private), which adds to some degree to village revenue; villagers earn a living from both farming and non-farming businesses. Villages that have their own resources, with a substantial non-agricultural sector that is usually a mixture of collective and private ownership; a considerable amount of collective assets and revenue. Farming contributes only a small proportion of villagers’ income. Affluent villages that have substantial private industry and commerce and abundant collective revenue. Nearly all of villagers’ income comes from enterprise employment and land compensation. Villages of “new collectivism” whose scope of the collective economy and amount of collective wealth are so large as to bear on villagers’ livelihood to a significant degree.

This typology provides only a general reference or rough identification and cannot cover all the villages in rural China. The borderline between the types is not always clear-cut.

My interviewees’ observations and viewpoints on key issues, along with the dates of interviews, are already cited in the chapters. These extracts do not repeat them but provide some supplementary information. I have selected the information from my notes that I see as meaningful to this study. The facts were not chosen for purposes of comparison. Instead, the extracts exclude many shared features of reform implementation and village governance, particularly if the villages are located in the same region and therefore have had similar reform experiences. Information that I judged to be “bragging” or flattery is also excluded. It should be noted that some of the data collected were based on the interviewees’ estimation, memory, or a record in their personal notebooks rather than formal documents. It was not rare that during my interviews, cadres and villagers argued among themselves about the accuracy of relevant figures. Although the numbers might not be accurate, they should not deviate far from the truth. By the same token, the conversations and discussions as recorded often contained contradictions, inconsistencies, ambiguities, and discrepancies – especially the talks on politically sensitive topics – and are therefore not all reliable as research material. These problems mirror the limitation of interviews conducted in China’s rural villages.

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Table A.2 The villages and townships where I did fieldwork between December 2002 and January 2013∗ Province

City

County∗∗

Township

Village

Type

Anhui

Liu’an

Shucheng

Tangshu

Hubei N. Jiangsu Chongqing∗∗∗ Hubei

Jingmen Taizhou Jingmen

Shayang Jiangyan Tongliang Shayang

N. Jiangsu

Nantong Taizhou

Rudong Rugao

Shenji Jiangduo Jiuxian Shenji Shilipu Juegang Xiayuan

Shandong

Jining

Yutai

Shandong

Jining

Yutai

Fujian Hubei N. Jiangsu S. Jiangsu S. Jiangsu N. Jiangsu S. Jiangsu

Xiamen Jingmen Taizhou Suzhou Suzhou Taizhou Wuxi

Jimei Dongbao Rugao Kunshan Taicang Jiangyan Binhu

Zhejiang Zhejiang S. Jiangsu

Wenzhou Hangzhou Suzhou Wuxi

Longwan Changshu Jiangyin

Tianhe Kangqiao Renyang Huangshi

Fengxi Luxi Qiugang Xitang Zhenggang Qiuliu Silong Chaigang Shiniu Chen’gao∗∗∗∗ Taoyuan Yeshu Xiezhuang Yangshao Jiuchengli Buqiao Yannei Yingjie Shuguang∗∗∗∗ Baimi Yinbei∗∗∗∗ Lijiazhuang Shatan∗∗∗∗/∗∗∗∗∗ Longyan∗∗∗∗∗ Jinyi Wujiadun Jiangxiang∗∗∗∗ Huaxi

I I I I I I II II II II II II II II II/III II/III III III III III III IV IV IV IV IV V V

Hubei N. Jiangsu Zhejiang

Xiaogan Taizhou Ningbo

Xiaonan Jiangyan Xiangshan

Pengxing Zhangdian Qiangtou

∗

Wangmiao Yucheng Wangmiao Yucheng Houxi Zhanghe Xiayuan Zhangpu Shaxi Huagang Hudai

In most of the villages, I interviewed and conversed with township officials as well. Actually, my visits to a number of villages were arranged by them. At three townships (Pengxing, Qiangtou, and Zhangdian), however, my fieldwork was conducted at the township level only. ∗∗ This category includes “county-level cities” (xian ji shi) and “districts” (qu). Both are the administrative equivalents of the county. ∗∗∗ Chongqing is China’s southwestern metropolis, an administrative equivalent of the province, and exercises jurisdiction over large underdeveloped rural areas. ∗∗∗∗ I visited twice to investigate the changes effected by the TFR and/or the AAT. ∗∗∗∗∗ Shatan and Xixi merged to become Longyan village in August 2004.

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In nearly all the villages I visited, I interviewed the party secretary or village head or both, partly because they usually knew most about their own villages. However, my interviewees were not limited to these. Except in those villages in which I lived among the cadres and villagers, the typical scenario during my visits was that the interview occurred at the village government office or the home of the party secretary or village head. They would invite other cadres and some villagers to attend, so the interview often proceeded like a seminar or even an extended VPB meeting, particularly in some villages where my visit was an “event.” This arrangement was not always what I preferred. Thus, at my request, I often talked with people on a one-on-one basis. On some contentious issues, such as those about village cadres’ authority, workload, and performance, I asked my local contacts to arrange visits to ordinary villagers’ homes. To keep track of the development of these villages, I collected the names, positions, and contact information of nearly all these cadres and some villagers. Type I Zhenggang village (Hubei) (December 2002) It had 308 households, 1,284 villagers, and twenty-one party members. Of its 597 laborers, 120 joined the floating population and worked outside of the village; others grew rice in the village. Per capita annual income was less than 1,600 yuan. The village had a debt of 700,000-plus yuan, 70 percent of which was owed to sixty-two households in the village. Luxi village (Anhui) (January 2006) It had 2,927 villagers, and 1,142 of them worked outside of the village more than six months each year. A number of families had migrated out. The village used to have three food-processing VOEs, which all shut down in the early 1990s because of their failure to compete with nearby private companies. The village had no collective funds, and its finance depended entirely on transfer payments whose amount (annual 30,000 yuan) was the same as the agricultural surtaxes (20 percent of agricultural taxes), which had vanished with the AAT. The village owed a debt of tens of thousands of yuan. Five cadres took salaries, with the party secretary, Wang, receiving the highest annual salary (nearly 5,000 yuan). Wang’s most important job at the time of the interview was birth control, which remained a serious problem in many of this province’s rural areas. Wang was also a private entrepreneur who owned an oil-squeezing machine, subcontracted some fellow villagers’ land, and fed 100 pigs.

Type II

307

Qiugang village (Anhui) (January 2006) Of 2,199 villagers, one-third worked outside of the village. The village had no collective assets. After the TFR, the number of village cadres dropped from eight to four. Village cadres complained that they had no power over fellow villagers because they had no money. Fengxi village (Anhui) (January 2006) It had 2,200-plus villagers. Among more than forty party members, more than thirty exceeded the age of sixty. Qiuliu village (N. Jiangsu) (December 2011–January 2012) The village was created by the merging of Qiulou and Liubei villages in 2001. It had more than 3,300 residents and 1,090 households. There were 103 party members whose average age was fifty. On average, two villagers were admitted into the party each year. Many of the party members refused to pay party membership fees or participate in party activities. According to the party secretary (Xue), party members often made more troubles for her than did ordinary villagers. The party secretary and her deputy were elected by the village’s party members from fields of two and three candidates, respectively. They had to win at least half of the votes to get elected. (Many party members did not show up to vote.) Xue had been concurrently the party secretary (already for three years) and village head (seven years). Her annual salary was 11,000 yuan. Many villagers grew rice and wheat. For farming each mu of land, the annual profit was 500 yuan, plus the state’s farming subsidies of 101 yuan. However, after deducting all the production costs, farming actually brought neither gain nor loss. (For more details, see Chapter 7, the section entitled “Comparing post-AAT village governments.”) Type II Chaigang village (Hubei) (December 2002) It had 240 households, 950 villagers, and twenty-six party members. Among 520 laborers, 100 worked outside the village. Other villagers lived on farming (growing rice); they were busy with farming for two months and led a life of leisure during the rest of the year. The village had a debt of 48,000 yuan, and per capita annual income was close to 1,600 yuan. For a child who attended local rural elementary school, the annual expenditure

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was 1,000 yuan; 2,000 and 4,000 yuan for attending junior and senior high school, respectively. For families with two children, 70 to 80 percent of the children financially could not afford to attend senior high school; the percentage was 50 for families with only one child. However, 90 percent of the children in the village attended junior high school. The family of Deng and Guo was typical. It had five members, including Deng’s father and two sons. Their yearly income came from farming on 12 mu of land (5,000–6,000 yuan) and odd jobs (4,000–5,000 yuan), such as helping others build private houses. Their yearly spending consisted of the costs of farming, mostly chemical fertilizer and seeds (12 mu × 180 yuan = 2,160 yuan); agricultural taxes (1,800 yuan); fees for electricity, water, and telephone (1,000 yuan); social etiquette fees (renqing fei; i.e., gifts for others’ marriages, funerals, etc.) (1,000– 2,000 yuan); and necessities of daily life (1,000–2,000 yuan). Each year, the family had 2,000 yuan surplus which was deposited in the bank. Shiniu village (Hubei) (December 2002) It had 325 households, 1,500 villagers, 670 laborers, and forty-two party members. (The village was well known for its large number of children attending college, which might partly explain why there were so few laborers.) About thirty-three (5 percent) laborers worked away from the village; others grew rice and saplings, bred fish and frogs, and fed chicken in the village. Annual income per household (on average two laborers) was 15,000 yuan. Each household annually paid 700 to 800 yuan for taxes and fees. Ten village cadres received salaries: the party secretary: 4,000 yuan (annual); the village head, 3800 yuan; the accountant, 3500 yuan; the birth-control cadre, 3,000 yuan; each of six villagers’ group leaders, 1,500 to 2,000 yuan. Before the TFR, cadre salaries were paid out of the village coffers, but the amount was determined by the township. After the TFR, cadre salaries were directly paid by the township. Taoyuan village (N. Jiangsu) (December 2004–January 2005) It had 915 households and a 3,200-plus population. There were no longer any collective assets. Villagers’ income had several sources. The first was the employment in the village’s eleven factories or companies producing medical instruments, all of which were former VOEs and now were owned by native villagers. They employed 300-plus workers and 141 supply and marketing personnel, all of whom were fellow villagers. The second source was the earnings from processing cotton goods for local exporting

Type II

309

companies; 300 to 400 women did this job, but not full time. Third, 400-plus villagers worked away from the village, and most of them were organized as construction teams. Others farmed in the village. Every family had someone working outside of the village. Very few families relied entirely on farming. After the TFR, annual fees per capita were reduced from 340 yuan to 170 yuan. A cadre claimed that the central leadership was obsessed with “learning from the West and practicing democracy and rule of law.” But the peasants’ quality was “too poor” to make it work. “Democratization is going too fast in rural areas and has eroded VPB authority. Now the VPB has no power at all; its authority only comes through serving fellow villagers.” Yeshu village (N. Jiangsu) (December 2004–January 2005) It had 3,500 villagers. The collective economy no longer existed. The only collective asset was a gas station, which had been contracted to an individual. The rent was used as the village fund for collective welfare. The party secretary, Guo, was the boss of a big private company producing trees and flowers for gardens. Some years before, as villagers lost money from farming, Guo subcontracted land from them. At that time, the earnings from farming per mu were less than 800 yuan, but Guo paid them 800 yuan. His private company occupied 10 percent of the village land. Among those who subcontracted their land to Guo, some went out to work, and some worked at Guo’s company; most, however, were engaged in marketing the company’s products. Guo contracted saplings to other village cadres to grow, who then sold the trees to Guo’s company. Elders stayed at home to farm, and many young and middle-aged women did needlework. One-third of males worked in the business of flowers and plants. Villagers often lodged complaints against the VPB. It was stipulated by the local government that if any villager applied for constructing private houses, the party secretary must approve within three months. Otherwise, the villager could sue him. The work the VPB did all day was to scrutinize housing applications, to handle birth control and conscription, to collect taxes and fees (still a few), and to provide disaster relief. Silong village (Chongqing) (December 2005–January 2006) It had 421 households and 1,342 villagers; 400-plus worked away from the village. The village had twenty-seven party members and thirteen cadres whose monthly salaries were as follows: the party secretary, 120 yuan; village head, 110 yuan; accountant (concurrently women’s association head), 140 yuan; birth-control cadre, 100 yuan; villagers’

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group leaders, each 35 yuan; secretary of the Communist Youth league, 15 yuan; militia leader, 15 yuan. The village had two small VOEs (rice and stone processing workshops). They had been contracted to individuals who paid contracting fees of 300 yuan and 200 yuan, respectively, to the village each year. The village had more than 20,000 yuan of collective funds, including state subsidies for emigration from the Three-Gorge Reservoir. There was no village debt. Decisions at the village were usually made by joint meetings of the VPB and the villagers’ committee; however, important issues had to be discussed and approved by the villagers’ assembly, which had thirty-nine members. As a recent practice, the candidates for VPB membership must win the support of the majority of the villagers’ assembly before election by party members. Party members elected three VPB members who in turn elected the party secretary according to the “suggestion” of the township party committee. The party secretary, Liu, managed a private shop. Yangshao village (Shandong) (June 2006) It had 990 villagers whose income per capita was more than 5,000 yuan – higher than previous years because of recent higher prices on the crops they grew, mainly garlic, onions, and cotton. (Prices were mostly determined by supply and demand in the market and were only indirectly related to the government.) None of the villages in this township (Yucheng), including Yangshao, had any private enterprises. Nearly all young villagers worked away from the village. After the AAT, village cadres’ work included: (1) dispensing farming subsidies (allegedly with no corruption, as the receipt must be signed off on by the villagers); (2) distributing some portions of village land among villagers who applied for building private houses (some of the land was taken by the village authorities because of demise of family members, and some was abandoned land); and (3) executing the new birth-control policy, which stipulated that if a family only had one child, the local government would offer 120 yuan reward annually to be delivered by village cadres. The reward would stop when the child reached the age of fourteen. Villagers did not prefer more children. About ten times per month, village leaders went to the township for meetings and political studies. They were supposed to convey fellow villagers’ concerns and opinions to the township leadership; however, few villagers actually asked them to do so. Villagers’ products were purchased by businesspeople from outside, having nothing to do with village cadres. The village had no collective funds. Transfer payments only reached the

Type II

311

township, which then took out only a little bit to be distributed among its villages. Xiezhuang village (Shandong) (June 2006) It had 487 villagers and four cadres (reduced from eight five years earlier). The township offered only 4,000 yuan transfer payment to the village (2005), including part of cadre salaries. Because the amount was far from sufficient for basic administrative spending (annually about 8,000 yuan), cadre salaries were often cut to make up the shortfall. The township allocated transfer payments among its villages according to the size of their land, not population. The village had five private enterprises that hired a total of thirty to forty of the village’s laborers. In general, half of villagers’ income came from farming. Village cadres now (after the AAT) had very little contact with the township leadership. Villagers had little for which to ask cadres to help, and cadres had little to ask the township to help with, either. The village government’s expenditures were cadre salaries (earmarked in transfer payment), subsidies for wu bao hu, routine office spending, streetlights, maintenance of electric appliances, and pensions for retired cadres. Chen’gao village (N. Jiangsu) (July 2005; first visit) It had more than 4,000 villagers. (In 1997, five villages merged into three, and three merged into one, that is, Chen’gao, in 2000.) The village government had annual revenue of 10,000 yuan, 30 percent of which came from leasing factory buildings, 60 percent from leasing land, and 10 percent from a fishing pond contracted to a fellow villager. The AAT started this year. For yishi yiyi, each villager paid less than 20 yuan annually. The party secretary (Zhu) received a basic annual salary of 5,800 yuan, plus a bonus of 6,200 yuan. Only elders and weak labor force farmed, whereas others worked in factories. VOEs were booming in the early 1990s. In 1995, the township forced VOEs to be privatized. Despite village cadres’ reluctance, VOEs were sold out to the incumbent managers and thereafter their profits allegedly soared. Chen’gao village (December 2008–January 2009; second visit) Peasant burdens had been heavy before the AAT. After the AAT, the government offered farming subsidies, which had now increased to 85 yuan per mu. Every household had an account in the county’s rural credit cooperative to which the subsidies were remitted. Villagers grew

312

Appendix A

rice and cotton. After the AAT, it was still hard to earn money by farming. It would be fortunate if each mu of farmland could generate 1,000 yuan net income. Only the elderly and women farmed. It was unlikely for a family to earn a living from farming alone. After the AAT, villagers treasured land a little bit more but still not much. The party secretary was still Zhu, who received the same salary as in 2005 and did not turn himself into an “entrepreneur cadre.” The village did have a number of “capitalists,” but they were allegedly not interested in managing village affairs. In the township (Juegang), many village party secretaries and leading cadres were big private entrepreneurs. (For more details, see Chapter 7, the section entitled “The commercialization of village government.”) Type II/III Buqiao village (Shandong) (June 2006) It had 960 villagers whose annual income per capita was 7,200 yuan, with the earnings from farming making up 40 percent. Not many villagers left the village in search for employment. The village had twelve cotton mills hiring fellow villagers. After the AAT, “peasant burdens” entirely vanished except electricity and water fees. The party secretary’s post-AAT work was as follows: (1) to “strengthen party organization” by recruiting one or two new party members each year (the village had twentysix party members, and the party secretary claimed that he was active in that regard because party membership would help the relevant villagers start and develop their private businesses); (2) to help villagers apply for bank loans or credit service to develop private businesses, for which his endorsement was allegedly important (among the 215 households, nearly 100 needed to apply for loans); and (3) to dispense farming subsidies. The village had no trouble with (private) house building, as most if not all households already had new houses of their own. Birth control was not a problem at all as villagers were “highly conscientious” in complying with the state policy. The village’s collective fund consisted mostly of transfer payment, which was allocated by the township. Its amount was very small. In 2005, the village obtained only 3,000 yuan of transfer payment, including the portion for cadre salaries. The village government relied on borrowing to provide public goods. The village borrowed 100,000 yuan from its own party secretary (Bu). Jiuchengli village (Shandong) (June 2006) It had 1,027 villagers, including 220 Muslims, and their annual per capita income was 4,000 yuan. About 100 villagers worked outside year-round.

Type III

313

Eighty percent of villagers’ income came from fish breeding or aquatic products and 20 percent from farming. The village had never had any VOEs. Among its forty-one party members, 70 percent were over fifty. The number of cadres dropped from eleven to six after the TFR and was to decrease further to four. Following the AAT, interactions between the township (Wangmiao) and village governments as well as the need for cooperation and mutual support decreased almost to zero, sharply contrasting with Yucheng township. After his appointment as the party secretary, Li went to the township party committee only once and to the township government four to five times each year. Major issues at the village were allegedly decided by the villagers’ assembly, which consisted of more than forty villagers’ representatives. Type III Yingjie village (Hubei) (December 2002) Its economic development was a bit above the average in the region. According to the data from 2000, the village had 285 households, 1,063 villagers, six villagers’ groups, 822 mu of farmland, and twentynine party members. Among 600 able-bodied laborers, 170 to 180, which increased beyond 200 in 2002, worked away from the village, including those who organized an urban construction team. Some villagers were engaged in fishery and transportation; some grew rice and vegetables; some did petty businesses, such as running barber shops and groceries; many more grew fruits and wheat. An average household’s annual income was between 10,000 and 20,000 yuan. Both the party secretary and village head were big private entrepreneurs who hired a large number of fellow villagers for their family businesses (see the first section of Chapter 9). The village had neither VOEs nor debts. The villagers’ assembly allegedly had the final say in decision making if the party secretary and village head were at odds. Party members met only once or twice every year. The VPB itself rarely met. Most of the meetings were joint ones of the VPB and the villagers’ committee. Yinbei village (S. Jiangsu) (December 2002–January 2003; first visit) It had 308 households, 820 villagers, 600 laborers, and thirty-eight party members whose average age was close to 50. Up to the previous year, 200 villagers had obtained urban hukou and thereafter left the village. The township determined the top cadres’ salaries. The annual salary of the

314

Appendix A

village party secretary (Ding) was 9,800 yuan (basic salary), plus 5,500 yuan (1 percent of the village government’s revenue), plus “contribution bonus” (0.5 percent of the taxes submitted to the township by VOEs). His total annual salary in 2001 was 23,000 yuan. The village head’s salary, which was determined by Ding, was 85 to 95 percent of Ding’s; the village accountant’s salary was 80 to 85 percent of Ding’s. The heads of the women’s association (fu lian) and the militia and each party branch member received subsidies – 2,000 yuan per year. The village did not owe any debts. It had sixteen private enterprises. The village government’s annual revenue exceeded 500,000 yuan, which came mostly from the rent paid by these enterprises. In addition to taxes, villagers should also have paid for paving the village road through yishi yiyi. Because the village government had abundant funds, this fee was exempted. After the TFR, 62.8 yuan was charged on each mu of farmland. On average a household farmed 3 mu and paid less than 200 yuan. The village had 1,600 mu of farmland altogether in 2001, which diminished to 1,000 mu in 2002 as the state expropriated 600 mu for the construction of a highway. Villagers preferred to grow rice rather than wheat, which caused monetary loss. Most of the households grew rice mainly for self-consumption. Only “big farmers” (zhongdi dahu) grew rice and vegetables for the market. Most of villagers’ income came from their employment in TVEs. The earnings from farming made up less than 5 percent. On average, each household’s annual income far exceeded 10,000 yuan (for many families, 30,000–50,000 yuan); per capita income was 6,000 yuan. A household whose income was below 1,800 yuan was defined as a “below-the-poverty-line” family (2–3 percent) and qualified for subsidies from the village government. No villagers joined the floating population. Thirty percent of villagers lived in “Western-style houses” (“yangfang”). Income from farming gradually decreased after 1995 as the prices of agricultural products dropped. Educational costs for children were the biggest expenditure for each household, but this made birth control easier to execute. Yinbei village (December 2008; second visit) The impact of the AAT was not great. In general, with the AAT and the state’s farming subsidies, peasants’ initiative for farming improved, but still little money could be made from farming. In 2004, Yinbei annexed Shabei village; more than 95 percent of the villagers were engaged in non-farming businesses. According to the local government’s plan of development, all the village land was going to be expropriated. The village had twenty-seven villagers’ groups. Four groups already had and five were

Type III

315

scheduled to have all of their land requisitioned under the “land-forsecurity” scheme, which meant that the villagers whose land was taken received compensation only for its unharvested crops. The township and village governments used the rest of the compensation fees to purchase lifelong security or insurance for them. More specifically, for households whose land was expropriated, family members under 16 each received 7,500 yuan (only once); between sixteen and thirty-five (female), and forty-five (male), two years’ allowance was given (monthly 180 yuan). The government bought social security for them, effective for fifteen years, which could be taken only over the age of sixty – equivalent to pension. Between the age of thirty-six and fifty (female) and forty-five and sixty (male), the family members each received the same amount of allowance as the preceding age group (monthly 180 yuan) but could enjoy it until the retirement age. After fifty (female) and sixty (male), the family members each would receive monthly 440 yuan from the local social security bureau. Among twenty villages of the township (Shaxi), most party secretaries were “capitalists”; five to six of them were “big” ones.

Baimi village (S. Jiangsu) (July 2005) This was a very large village. In 2004, two large villages were merged into Baimi village. Baimi had 7,800 villagers who belonged to seventyeight villagers’ groups. There were twelve salaried cadres and 208 party members. Businesspeople wanted to invest in the village, but only the township had the authority over the matter. The village government could not decide on the use of village land. The state compensated 12,000 yuan for each mu of expropriated land. Allegedly there were no complaints about land requisition fees among the villagers. Annual income per capita was 9,044 yuan. The party secretary was produced through “two recommendations and one election.” The year 1992 was the golden one for the VOEs, which started to go downhill in the mid-1990s. In 1996, the village had four or five VOEs that the government forced to be privatized. The village had more than 2 million yuan revenues, which mostly came from leasing collective land and factory buildings to private entrepreneurs. It now had a number of foreign-capital enterprises in which most fellow villagers were hired. The village authorities had no discretion to offer these enterprises any special favor. Instead, the discretion belonged to the township government, which coveted their profits. The village still had 4,100 mu of farmland. Villagers farmed for their own consumption and only a small amount was sold in the market. The party secretary’s daily work was to mediate

316

Appendix A

“four” disputes, namely disputes over farming, house building, housing renting, and in the neighborhood. Shuguang village (N. Jiangsu) (January 2005; first visit) It had 998 households, 3,400 villagers, and 1,700 laborers. Except those working away from the village, most villagers farmed, fed pigs, bred fish and poultry, and grew strawberries, flowers, and plants. The village had no VOEs but had six or seven private enterprises that hired 100 fellow villagers. It owned collective assets of 10,000 to 20,000 yuan; some collective land was leased to private entrepreneurs. The party secretary, Xu, had a lucrative “side occupation.” The village had a cooperative with which all collective funds were placed. This cooperative was responsible for the village’s economic activities, such as finding outlets for villagers’ strawberries and organizing marketing of other agricultural products. Xu headed the cooperative – a position that was a major source of his authority. A cadre complained that the central government carried out village elections “too fast” for peasants’ “democratic consciousness” to catch up. Villagers needed the VPB to help in (1) house building; (2) marriage (to issue a certificate of identity); (3) solving conflicts among fellow villagers; (4) handling some welfare matters; and (5) marketing their products. Shuguang village (January 2009; second visit) The party secretary was still Xu. For the details of the post-AAT change, see Chapter 7 (the section entitled “The commercialization of village government”). Yannei village (Fujian) (December 2008) It had nearly 4,000 villagers. One-third of them earned a living mostly from farming, and two-thirds had already had their land expropriated by the government. The government expropriated land at a price of 88,000 yuan per mu (38,000 yuan for unharvested crops; 30,000 yuan for relocating; 20,000 yuan for land compensation). (For how to share all these fees, see Chapter 3 [the section entitled “Land requisition and local government finance”]. For land requisition, government officials never dealt directly with the villagers but always did the job through the VPB. The government directly remitted land requisition fees into the bank account of the villagers’ group. Villagers did not treasure their land; they actually preferred their land to be expropriated because of its benefits in excess of what farming

Type IV

317

could deliver. Villagers had to accept unconditionally if their land was requisitioned for important state projects. Land expropriation did not trigger conflicts, as everything was transparent. The village had plenty of collective assets but no VOEs. There was no contest in village elections. The subsidies for wu bao hu were not given by the village government but directly by the government. The village did not have extensive farmland, so there were no heavy peasant burdens before the AAT. The impact of the AAT (on peasants) was therefore small. Villagers were typically a “heap of loose sand” and had little contact with one another in daily life. The only collective activity was the village-organized basketball game at the end of every year. Type IV Jinyi village (Zhejiang) (January 2005) It had 338 households and 1,425 villagers. The village used to have 1,000 mu of land, but now only 250 mu was left (for growing rice). The rest was expropriated by the municipal government. It had no VOEs, and much of its collective funds came from leasing the village’s “mobile” land (usually abandoned land unfit for farming). Landless villagers were engaged in the production of low-end and low-value-added electronics (or their parts), and nearly every family ran a small electronics workshop. The township (Tianhe), where the village was located, was allegedly the largest production base of civil electronics in eastern China. Some of its products were exported to the Middle East. Shatan/Longyan village (S. Jiangsu) (December 2002, first visit; July 2005, second visit) In 2002, it had 670 laborers, most of whom worked in the village’s private enterprises. On average, earnings from traditional farming made up only 2 to 5 percent of villagers’ income. Population growth was negative, as villagers did not want more children. Villagers farmed only for selfconsumption. Per capita annual income was 5,600 yuan. None of the villagers worked in cities or other provinces except those who ran private companies or were technicians. The government charged villagers agricultural taxes according to the standard of 55 yuan per mu; each villager on average farmed 0.5 mu of land. Before the TFR, per capita fees to be charged were about 40 yuan. The village owed no debt but was the creditor. Ninety-five percent of the households had a telephone. All of the households had TV and at least one mobile phone.

318

Appendix A

Shatan was a highly industrialized village for two reasons. First, it is located in a region that was one of the birthplaces of China’s industrialization in the early twentieth century and thus has a long and strong industrial tradition. Second, close geographical proximity to the industrial city of Wuxi and the renowned tourist attraction Taihu Lake gave the village a number of advantages in developing industry. The township government of Hudai placed the development of industry at the top of its list of criteria for evaluating village cadres’ performance. In 1994, Shatan created the first (rural) private industrial park in Wuxi. Before the sweeping ownership change in 1997, Shatan had twenty-nine private enterprises and six VOEs. When I visited the village once again in July 2005, it had merged with Xixi village (in August 2004) to become Longyan village. Before merging, Shatan possessed fifty-six industrial enterprises – all privately owned. By the time I paid my second visit, private enterprises had grown to 125 at Longyan village. A typical household’s expenditure (2004–05) was as follows: a child’s education fees (10,000 yuan [university], and 5,000 yuan [senior high school, including board and lodging]); a child’s marriage (50,000– 80,000 yuan); annual social etiquette fees (3,000–5,000 yuan); a funeral (15,000 yuan); annual electricity and water fees (1,000 yuan); and annual fees for the telephone (800 yuan) and motorcycle (2,000 yuan [500 yuan for oil and 1,500 yuan for insurance/maintenance]). Wujiadun village (Zhejiang) (July 2005) Of its 1,800 villagers, only 420 still retained rural hukou, whereas all others had registered as urban residents. The village had sixty-two party members. In 2004, average annual per capita income was 10,080 yuan. The village had only 800 mu of land left. Half was used for farming and half for (private) house building. There were three bodies of power at the village, namely the VPB, the villagers’ committee, and the industrialcommercial company (to a large extent controlled by the VPB). VOEs went through two ownership changes (i.e., shareholding and privatization). The first took place in 1994 when the collective took 42.2 percent of the share. In 2003, the collective share was quantified and allocated among fellow villagers and all VOEs were thereby completely privatized. Now, the village had more than 80 private enterprises whose rent made up 70 percent of village revenue. In 1995, the village replaced villagers’ land-use rights with “land share.” All the village land was reconcentrated for profit-making purposes by the village government, which quantified the share of the land to be allocated among villagers. In addition, the

Type V

319

village government paid each villager monthly 600 yuan for basic living costs (mainly to buy food). Profits from the use of the village land were distributed among villagers according to their shares. Villagers often requested cadres to help in seeking jobs. Some major decisions needed to be passed by the villagers’ assembly. Lijiazhuang village (N. Jiangsu) (December 2011–January 2012) It had 1,718 residents and 510 households. The annual salary of the party secretary (concurrently the deputy township head) was 18,000 yuan. The deputy village head was a 2009 university graduate. According to him, in recent years more and more university graduates took leadership posts in villages of the region just like him, mostly as assistants to village leaders (so-called daxuesheng cunguan). They either chose this job to avoid unemployment or intended to use it as a stepping-stone to a political career. (For more details, see Chapter 7, the section entitled “Comparing post-AAT village governments.”) Type V Jiangxiang village (S. Jiangsu) (December 2002–January 2003; first visit) This was a “model” village. It had 760 villagers plus 1,000-plus outsiders who were hired in VOEs. Among native villagers, there were more than forty party members whose average age was fifty. Among more than 300 laborers, 70 to 80 percent worked in VOEs, and the rest were mostly private company owners. Per capital income was more than 10,000 yuan, mostly coming from employment in VOEs. The village had once had 1,700 mu of farmland, which had diminished to several hundred mu to be contracted to fifteen “big farmers” to grow rice, so “economies of scale” could be achieved. The net profit from “mechanized” farming of the big farmers was 200 yuan per mu. However, the grain grown was sold only to fellow villagers and VOEs. “Bearing children against aging” (yang er fang lao) had been replaced by “insurance against aging” (yang lao bao xian). The village government paid the bulk of the insurance fees for fellow villagers. Jiangxiang village (January 2013; second visit) See Chapter 5 (the section entitled “Continued cadre domination with new collectivism”).

320

Appendix A

Huaxi village (S. Jiangsu) (December 2012) This is one of the best-known socialist villages in reform China. It is divided into two major parts, namely “old Huaxi” and “new Huaxi.” In contrast with the economy of “old Huaxi,” which is completely and exclusively collective or “socialist,” the economy of “new Huaxi” is dominated by the private sector or “capitalism.” In total, Huaxi has more than 200 private companies, nearly all of which are located in “new Huaxi.” The dichotomy of the Huaxi economy is not simply intended to demonstrate that Huaxi is not hostile to private enterprises but contains a hidden agenda, which “new Huaxi” villagers realized soon after they were tempted to agree to be incorporated into Huaxi. They contributed their land but were denied “old Huaxi” villagers’ welfare benefits under the pretext of different ownerships in new (private) and old (collective) Huaxi. This “discrimination” or a feeling of being deceived has sparked resentment among “new Huaxi” villagers. More details are available in Chapter 5.

Appendix B: Author’s surveys in China’s five provinces

I conducted surveys for this project in the following fifty-two villages of five provinces from November 2007 to January 2008. I selected these villages in the same way and according to the same principle as I did for my fieldwork (see Appendix A). A total of 1,200 copies of the survey questionnaire (see Appendix C), which was divided into three parts, were collected. The first part concerned the basic information about each village relating to village governance. At each village, a meeting was held to be attended by a few cadres and villagers, who filled out this part together. Nearly all my assistants were university students in social sciences who had been trained in conducting surveys and data analysis. Most had grown up in the respective villages and were therefore familiar with the cadres and villagers. The second part was addressed exclusively to leading village cadres, namely the party secretary, the village head, and/or the village accountant. To avoid selection or sampling bias for the third part, to be filled out by ordinary peasants, my surveys adopted random sampling to make sure that every household, except village cadres’, in each village had an equal chance of being selected. In the sampling frame I constructed, each household in the village, including those whose member(s) worked away from the village, was assigned a unique sequential number and the numbers (twenty to twenty-five households per village) were randomly chosen from the list. Then, one (adult) member of each chosen household was asked to fill out the questionnaire and to verbally answer some additional questions. (These questions were used to determine whether the respondents really understood the questionnaire or whether an explanation or clarification was needed.) Thus, the participants in the surveys came from, if not represented, different families. Whereas systematic sampling error was unlikely, selection bias could be minimized but not eliminated. For instance, some households selected refused to cooperate. In China’s rural social-political context, the refusal to participate, as I understand it, is suggestive. Depending on village 321

322

Appendix B

cadres’ power, performance, and popularity, their relations with selected villagers, and the selected villagers’ understanding of the purposes of the survey and the possible consequences of their choices, the sample in some villages might contain more or less bias either against or in favor of village cadres. The questionnaire was designed to test the key hypotheses of this study. Most of the data have been statistically processed. Some data were fragmentary or incomplete and thus did not fit well into the requirements of a quantitative analysis. Some questions were intended to solicit opinions from the survey respondents, which I used for two purposes. The first was to determine how thoughtful or credible the respondents’ choices were. The second was to compare their opinions with the results of my fieldwork. Province

City

County∗

Jiangsu

Yangzhou Yangzhou Wuxi Wuxi Wuxi Changzhou Changzhou Xuzhou Xuzhou Yancheng

Baoying Baoying Yixing Huishan Yixing Liyang Liyang Suining Suining Tinghu

Sichuan

Deyang Deyang Deyang Deyang Suining Suining Chengdu Chengdu Zigong

Zigong Shandong Jining Jining Jining Jining Jining Jining

Township

Anyi Anyi Xizhu Yanqiao Xizhu Tianmuhu Tianmuhu Shaji Shaji Nanyang Economic Development Area Mianzhu Xiaode Mianzhu Xiaode Mianzhu Xiaode Mianzhu Qingdao Chuanshan Longping Chuanshan Yongxing Pixian Anjing Pixian Anjing Huidong Jianshan bancang Ziliujing Hongqi Sishui Sihe Sishui Sishui Sishui Sishui Sishui

Jinzhuang Miaoguan Quanlin Miaoguan Jihe

Village

Population Type

Guozhuang Guangou Xizhu Hengyu Xixi Yangcun Guilin Heping Dagu Xinmin

2428 2784 5599 1560 2268 2283 1382 3370 3439 2500

II/III II/III IV IV/V IV/V III III II II III

Dacheng Wanyuan Changzhao Shejian Dazhuanwan Qishan Gaoqiao Yongdu Jianshan

756 1920 1700 2492 1737 2383 1760 3300 2768

I I I I I I II II I

Longshen Beiyugou qiancun Ningjialing Houzhai Xizegoupu Kongjiapu Xiwang

1650 1286

I III

198 864 456 960 800

II I/II II I/II III

Appendix B Province

Hubei

Zhejiang

∗

323

City

County∗

Township

Village

Population

Type

Jining Jining Jining Jining Jingmen Jingmen Jingmen Jingmen Jingmen Jingmen Huanggang Huanggang Huanggang Huanggang Wenzhou Wenzhou Jinhua Shaoxing

Sishui Sishui Sishui Sishui Shayang Shayang Shayang Shayang Dongbao Dongbao Yingshan Yingshan Yingshan Yingshan Rui’an Rui’an Yongkang Zhuji

Jinzhuang Sizhang Zhongce Quanlin Gaoyang Guandang Gaoyang Guandang Shiqiaoyi Shiqiaoyi Leijiadian Leijiadian Leijiadian Leijiadian Meiyu Meiyu Xixi Fengqiao

1779 2400 965 1211 2970 1024 1189 1302 1097 835 1800 1217 1481 1200 1214 720 1350 2325

II II II II II II II II III III II II II II IV IV III/IV III/IV

Shaoxing Shaoxing Shaoxing Jinhua Jinhua Jinhua Jinhua

Zhuji Yuecheng Yuecheng Dongyang Yiwu Pujiang Yiwu

Zhaojia Donghu Donghu Hengdian Fotang Xianhua Houzhai

Matoushan Zhongjiazhuang Xiaolibai Bianqiao ercun Guanqiao Xiaomiao Liubo Luoci Madian Xiangqiao Guolutan Caojiadian Yangjiafang Wanjiachong Mashang Gonghou Shangma Duhuang xincun Huamingquan Yongren Yongning Xiaxu Xiaowuxi Heshan Houfu

3651 1858 1850 380 300 960 821

III/IV IV IV III III III/IV III

This category includes “county-level cities” (xian ji shi) and “districts” (qu).

Appendix C: The survey questionnaire The questionnaire regarding the impact of the AAT on village governance

(English translation) (The survey to be conducted in 52 villages of Jiangsu, Sichuan, Zhejiang, Hubei, and Shandong from November 1, 2007, to January 30, 2008)

Part one The basic information of the village to be provided together by cadres and villagers 1. The name of the village (The original name if merged with another village; when it was merged). 2. The location: province, city, county, and township. 3. Population, households, and workforce. 4. The number of private enterprises; their total employment; percentage of fellow villagers among their employees. 5. When were agricultural taxes abolished? 6. How much collective economy does the village have? (5-point scale from 1 [none] to 5 [a great deal]). 7. The village’s economic structure is dominated by (a) traditional agriculture; (b) the sidelines of agriculture (such as fishery, forestry, livestock, fruits, etc.); (c) industry and commerce; (d) natural resources (such as mineral deposits or coal mines); (e) others (specify). 8. Per capita annual net income of the villagers before the TFR (eight choices from below 500 yuan to 6,000-plus yuan). 9. Per capita net income of the villagers after the AAT (same as no. 8). 10–1. The main source of villagers’ income (%): (a) farming; (b) agricultural sidelines; (c) non-farming businesses; (d) employment in the village’s private enterprises; (e) others (specify). 10–2. The general affluence of the county, township, and village (measured by the residents’ income levels): 324

Part one

325 Very rich

Rich

Medium

Poor

Very poor

The county The township The village

11. Finance of the township in which the village is located: 12. Finance of the village government: Very good

Good

Medium

Poor

Very poor

Before the TFR Between TFR and AAT After the AAT

This form is for both Questions 11 and 12. 13. The biggest source of village revenue between TFR and AAT (%): (a) agricultural surtaxes; (b) transfer payments; (c) the collective economy; (d) borrowing; and (e) others (specify). The total amount of annual revenue: 14. The biggest source of village revenue after the AAT (%): (a) transfer payments; (b) the collective economy; (c) borrowing; and (d) others (specify). The total amount of annual revenue: 15. The three largest expenditures of the village government between TFR and AAT (The total annual amount): 16. The three largest expenditures of the village government after the AAT (The total annual amount): (For Questions 15, 16) (a) village cadres’ salaries; (b) compensations for cadres’ extra workload (wu gong fei) and remunerations; (c) basic administration expenses; (d) debts and debt interests; (e) subsidies for the households under the poverty line; (f) running primary school (ban xue); (g) public goods provision; and (h) others (specify). 17. The numbers of the members of the village party branch and the villagers’ committee; non-party members in the villagers’ committee; the number of party members and % of the villagers; the numbers of businesspeople or private entrepreneurs, wu bao hu, those joining the floating population, and those hired by local enterprises (not beyond the township). 18. The joint appointment in the village party branch and the villagers’ committee (multiple choice):

326

19. 20. 21–1. 21–2. 22. 23.

24. 25. 26.

Appendix C

(a) the party secretary and concurrently head of the villagers’ committee (or village head); (b) the deputy party secretary and concurrently village head; (c) the deputy party secretary and concurrently deputy village head; (d) party branch member(s) and concurrently villagers’ committee member(s) (how many?); (e) the party secretary concurrently taking other leading position(s) (specify). Over the past decade, on average, how many villagers have been recruited into the party annually? Over the past decade, on average, how many villagers have applied for party membership annually? The numbers of salaried village cadres before and after the AAT. Before the TFR, the annual salary of the village party secretary: Between TFR and AAT, the annual salary of the village party secretary: After the AAT, the annual salary of the village party secretary: (For Questions 21–23) below 500 (yuan); 500–1,000; 1,000–2,000; 2,000–3,000; 3,000– 4,000; 4,000–5,000; 5,000–6,000; above 6,000. After the AAT, the annual salary of the village head (eight choices as above). After the AAT, the annual salary of other (leading) village cadres (eight choices as above; indicating the position). The source(s) of village cadres’ salaries: (a) village revenue (excluding transfer payment and subsidies from above, if any); (b) transfer payment; (c) township coffers; (d) others (specify). (If the choice is [b], indicate whether or not transfer payment is sent to the village earmarked for “cadre salary”.)

Part two To be filled out by the village party secretary and the village head. (If either of them is unavailable, please ask the village accountant to answer instead and then mark it.) 27–1. The name of the village; the province it is located in; your position, age, gender, and education.

Part two

327

27–2. Per capita annual income of your family (eight choices from below 500 yuan to 6,000-plus yuan): 28. The main source(s) of your income except cadre salary: (a) farming on your leased land (zeren tian) under the HRS; (b) contracting village-owned land (for building orchards, mechanized farming, cultivating forestry, etc.); (c) your private enterprises; (d) doing businesses (zuo shengyi); (e) big contractors (bao gong tou) (who subcontract the land or public projects to others); and (f) others (specify). 29. If you are a private entrepreneur, indicate your enterprise’s capital (zichan), products, and the number of employees (% of fellow villagers). If you are a contractor (of village-owned land), indicate its size (mu), uses, and how many fellow villagers you hire. If you are a big contractor, how many fellow villagers work for you? 30. Rate your family’s economic status (i.e., the degree of affluence and amount of wealth) compared with other households in the village (5-point scale from 1 [the poorest] to 5 [the richest]). 31. Over the past decade, have you been in the same leadership position in the village? (yes or no). 32. If yes, (a) What was your primary responsibility before and after the TFR? (b) What change took place after the AAT? 33. How frequently do fellow villagers request you to help (in your cadre’s capacity)? Frequent

Sometimes

Seldom

Never

Before the TFR Between TFR and AAT After the AAT

34. As cadres, to what degree are you able to help fellow villagers solve their problems? Very high

High

Low

Very low

Before the TFR Between TFR and AAT After the AAT

35. What kind of service can the village government provide for fellow villagers (multiple choice)?

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Help sell Construct agricultural roads and bridges Irrigation Education products

Offer market information

Deal with the government on their behalf Others

Before the TFR Between TFR and AAT After the AAT

36. How much authority does the village government have over the villagers? (Explain “authority” (quan wei). It means: Do fellow villagers [how many] listen and follow [how actively] when you ask them to cooperate in implementing state policy and managing village affairs or more precisely to do what they are otherwise unwilling to do?) A very great deal

Much

Some

Little

None

Before the TFR Between TFR and AAT After the AAT

37. What is your annual salary as a village cadre? Before the TFR; after the TFR; after the AAT. 38. What specific changes has the AAT brought to village cadres? Increased Increased Decreased Decreased No a lot a little a little a lot change Difficulty of work Workload Social status in the village Salary and welfare benefits Initiative and passion for performing duties Respect by fellow villagers Pressure from the township The township’s satisfaction with their work performance

39. To what extent do you desire to continue as village cadres?

Part three

329

Part three To be filled out by ordinary villagers. The name of the village: The province it is located in: Your age, gender, and education: Party membership: yes/no Your occupation: Your annual income: 40. Rate your family’s economic status (i.e., the degree of affluence and amount of wealth) in the village (5-point scale from 1 [the poorest] to 5 [the richest]). Section 1: Village Cadres’ Economic Power (Redistributive Capacity)∗ 41. Village cadres’ power over land reallocation; 42. Village cadres’ power in allocating collective-owned resources among fellow villagers; 43. The influence of village cadres over fellow villagers’ (agricultural) productive activities, livelihood, doing businesses, moneymaking, etc.; 44. The role of village cadres in providing public goods and services (such as roads, bridges, schooling [for children], tap water, and electricity). Very great

Great

Medium

Small

Zero

Before the TFR Between TFR and AAT After the AAT ∗ The

form is for Questions 41–44.

Section 2 Village Cadres’ Performance and Image among Fellow Villagers 45. Village cadres’ image, prestige, reputation, and the extent to which they are respected among fellow villagers: Excellent Before the TFR Between TFR and AAT After the AAT

Good

Medium

Poor

Notorious

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46. Indicate the reasons for your choice for Question 45. If possible, please give some examples. 47. Rate the economic status (i.e., the degree of affluence and amount of wealth) of the village party secretary or the village head or both (5-point scale from 1 [the poorest] to 5 [the richest]). 48. If village cadres are competent in “leading fellow villagers toward common affluence,” how have they done it (multiple choice)? (a) to strive for more resources from the government; (b) to attract investment; (c) to provide non-farming job opportunities; (d) to offer villagers technological assistance and/or to teach them skills of doing business and making money; and (e) others (specify). 49. Rate village cadres’ or the village party branch’s general work performance:

Very good

Good

Medium

Poor

Very poor

Before the TFR Between TFR and AAT After the AAT

50. What do you think of the “leadership position” (lingdao diwei) of the village party branch? Very strong

Strong

Weak

Very weak

Paralyzed

Before the TFR Between TFR and AAT After the AAT

51. If the village party branch is very weak or paralyzed, explain why? 52. If the village party branch is very weak or paralyzed, who really govern in the village? (a) the villagers’ committee; (b) clan leaders; (c) owners of the village’s private enterprises; (d) villagers with great market power; (e) nobody; (f) others (specify). 53. If the de facto leaders in your village are not party cadres, are they party members? Section 3 Village Cadres’ Authority over Fellow Villagers 54. How frequently do village cadres contact you in their capacity as cadres (excluding contacts on private matters)?

Part three

331 No much Very little No contact at all contact Frequent Sometimes contact

Before the TFR Between TFR and AAT After the AAT

55. On what matters do you usually ask village cadres to help? (a) to mediate between you and fellow villagers in case of conflict; (b) to deal with the (township) government; (c) to apply for subsidies (to alleviate poverty); (d) for funeral, marriage, private irrigation, etc. (specify); (e) to sell your products and/or obtain market information; and (f) others (specify). 56. How much do you rely on village cadres’ help? Very much

Much

Some

Little

Not at all

Before the TFR Between TFR and AAT After the AAT

57. Rate village cadres’ ability or capacity to help you. Very helpful

Can offer some help

More or less help

Little help

None

Before the TFR Between TFR and AAT After the AAT

58. When village cadres speak, do fellow villagers listen and obey?∗ All listen and obey

Most or many

Only some

Very few

Nobody

Before the TFR Between TFR and AAT After the AAT ∗

This question, which is designed to measure the authority of village cadres, should be explained and made more specific to the respondents. “Will you and fellow villagers do it if the village party secretary asks you to do what you do not like to do, such as paying taxes and fees (in the past), complying with the township’s ‘instructions’ for growing specified crops, donating to collective projects, and not exposing the village leadership’s problems to higher authorities?”

59. Offer a detailed explanation for your choice for Question 58.

332

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60. The village party secretary is concurrently (multiple choice): (a) private entrepreneur; (b) village land contractor; (c) big contractor; (d) businessman; (e) average farmer; (f) others (specify). 61. Is the village party secretary the most authoritative and prestigious man in the village? (yes/no) 62. If yes, it is because he/she is (multiple choice): (a) the village’s legitimate top leader representing the party-state; (b) he/she wields great power over fellow villagers; (c) many villagers are his/her (private) employees; (d) he/she can help villagers buy agricultural means or sell their products; (e) he/she can provide useful market information; (f) villagers can borrow money from him/her; (g) he/she can deal with the government on behalf of villagers; (h) others (specify). 63. What do village cadres do now all day long (multiple choice)? (a) to be preoccupied with their family businesses; (b) to accomplish the tasks assigned by the government (what tasks?); (c) to serve villagers or manage village affairs; (d) to do nothing; (e) I don’t know. 64. To what extent do village cadres care about fellow villagers? Very much

Much

A little bit

Very little

Not at all

Before the TFR Between TFR and AAT After the AAT

65. How has the relationship between village cadres and fellow villagers changed since the AAT? (a) more amicable and friendly; (b) no change; (c) more distant; (d) more hostile or tense 66. On how many issues or tasks do village cadres need the help of fellow villagers? Many

Some

Few

Very few

None

Before the TFR Between TFR and AAT After the AAT

67. If village cadres do request villagers to help, for what (multiple choice)?

Part three

333

Fulfilling cadres’ official Tax/fee collection responsibilities

Raising funds for Support in village public goods elections

Others (specify)

Before the TFR Between TFR and AAT After the AAT

68. How have village cadres’ prestige and authority changed since the AAT? (a) increased a lot; (b) increased a little; (c) no change; (d) decreased a little, (e) decreased a lot. 69. If village cadres have no authority or prestige, how do they govern the village effectively? 70. According to your observation, how hard do village cadres work to accomplish the tasks or responsibilities assigned from the (township) government? (a) very hard; (b) fairly hard; (c) perfunctorily; (d) ignore; (e) I don’t know. Section 4 Other Issues Relating to Village Governance 71. If you are involved in conflicts with fellow villagers, whom do you usually rely on to mediate or solve the conflicts (multiple choice)? (a) the village party branch; (b) the villagers’ committee; (c) the villager council; (d) the clan council; (e) the village’s most prestigious people; (f) police or the government; (g) “social forces” (mostly gangsters); (h) self-handling; (i) relatives and friends; (j) neighbors; (k) others (specify). 72. When you encounter economic difficulties and need help, whom do you usually ask for help (multiple choice)? (a) the village party branch; (b) the villagers’ committee; (c) the villager council; (d) the clan council; (e) wealthy villagers; (f) the government; (g) social networks; (h) self-solving; (i) relatives and friends; (j) neighbors; (k) others (specify). 73. In your village, who has/have the greatest authority or prestige? Or whom are you and fellow villagers most obedient to? (a) the village party secretary; (b) the village head; (c) retired cadres; (d) clan leaders; (e) the villagers with the strongest moneymaking ability or market power (such as entrepreneurs and businesspeople); (f) the villagers with the highest moral standards; (g) strongmen (not in the economic sense); (h) others (specify); (i) I don’t know.

334

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74. Explain your choice for Question 73. Offer a detailed description of this/these person(s). Why is/are he/she/they most authoritative or prestigious? Where does his/her/their authority or prestige come from? 75. What kind of clash exists between village cadres and fellow villagers? 76. Rate the influence of clans (or big families) over village affairs in your village. (5-point scale from 1 [none] to 5 [dominant]) 77. Rate the influence of the church in your village. (5-point scale from 1 [none] to 5 [very strong]) 78. Aside from the village party branch, the clan, and/or the church, are there other forces or people who can influence village governance or village elections? 79. If you need money to purchase the means of production, to invest in your business or for whatever purposes, whom do you usually borrow from (multiple choice)? (a) relatives; (b) friends; (c) neighbors; (d) underground banks (dixia qianzhuang); (e) non-government associations; (f) credit cooperative; (g) others (specify). 80. In your view, which method (or body) is effective in supervising village cadres (multiple choice)? (a) the clan council; (b) the villagers’ assembly; (c) village elections; (d) to appoint the party secretary according to opinion poll; (e) public opinion or “rumors”; (f) to lodge complaints to higher authorities; (g) beating up cadres for their wrongdoings; (h) fellow villagers working away from the village; (i) others (specify); (j) I don’t know. 81. Do village cadres still charge any taxes or fees (whatever they are) on you? (5-point scale from 1 [none] to 5 [much]) 82. How useful and important are village elections in your village? (5-point scale from 1 [completely useless] to 5 [very useful]) 83. How much influence can ordinary villagers exert upon the village’s decision-making? (5-point scale from 1 [none] to 5 [decisive]) 84. How frequently do you deal with the (township) government? (3-point scale from 1 [never] to 3 [often]) 85. Rate the ability of the (township) government to help peasants (5-point scale: 1 [I don’t know], 2 [none], 3 [weak], 4 [strong], 5 [very strong]) (If your choice is 4 or 5, indicate the aspects in which the government can help peasants.) 86. Rate the role of the (township) government in the governance of your village. (6-point scale: 1 [I don’t know], 2 [none], 3 [weak], 4 [strong], 5 [very strong], 6 [direct and dominant])

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Index

AAT, see abolition of agricultural taxes abolition of agricultural taxes (AAT), 1, 17, 23 benefits for entrepreneur cadres, 275 benefits for peasants, 257 benefits for village cadres, 198 change in township officials’ work, 119, 203 changing cadre-villager relations, 221, 247 consequences of, 115, 123, 125, 169, 257, 288 impact on township finance, 112, 116, 118 impact on township functions, 124, 252 impact on village finance, 192, 195, 209 post-AAT state subsidies, 204 reduction of cadres’ workload, 119, 195, 202, 209–11 reduction of village cadres, 195 symbolism of, 259 transformation of village administration, 204, 209 village cadres’ reactions to, 201, 203 abstract principles, 123 accumulation funds (gong ji jin), 175 adaptive strategy: for rural governance, 260, 292 ad-hoc purposes, 123 administration expenses, 224 administrative charges and fines, 61 administrative districts, 35 administrative elite, 7, 271 administrative equivalents of township, 38 administrative hierarchy, 59, 67 “administrative management”, 168 administrative team (xingzheng zu), 36 adult education, 101 “advanced productive forces”: in countryside, 278 agricultural commercialization, 18, 48

374

agricultural infrastructure investments, 98 agricultural land: micromanagement of, 97 agricultural modernization, 143 agricultural product tax, 84 agricultural services, 181–2 agricultural structure: adjustment of, 172, 179, 181 agricultural surtax, 162 agricultural technology, 179 Ahlers, Anna L., 213 alliance: between township and village leaders, 252, 259 all-inclusive commercial services, 237 allocated seeds and saplings, 165 allocation mechanisms: transformation of, 286 all-township integrated corporation, 98 ancestor cult: revival of, 240 ancestral hall, 234 ancient rural governance, 32 Anhui province, 25, 66, 74, 77, 78, 85 consequences of 1994 tax reform, 66 dependence of provincial revenue on agricultural taxes, 112 one-child policy, 208 peasant party members, 186 post-AAT number of village cadres, 196 provision of public goods, 183 reduction of township personnel, 125 reduction of village cadres, 203 salaries of county officials, 69 TFR, 163 village cadre salaries, 173 village debts, 166 village deductions, 88 animal husbandry, 145 “anti-pollution” fees, 161 “anti-reform” cadres, 153 anti-system forces, 21, 136, 243, 289 arrears of social welfare payments, 70 associations of sports or calligraphy, 245 asymmetrical relations, 250

Index atomization of peasants, 17, 236, 237, 244, 256, 284 attracting investment, 6, 115, 230 advantages for, 226 disadvantages for, 224 impact on cadre-villager relations, 228 post-AAT efforts for, 220, 222 transformation of township-village relations, 252 villagers’ attitudes toward, 229 authoritarianism, 33 “autocracy”, 250 autonomous organization, 15 balance of power: between state and society, 285 banking reforms, 53 baogan (contractual fiscal balance), 75–80, 106, 116 baojia system, 34 bargaining skills, 83 baseline for tax collection, 75 Bazhong (Sichuan), 131 bearing children against aging (yang er fang lao), 207, 319 begging (for) finance, 123 Beijing, 1 dependence of revenue on agricultural taxes, 112 reduction of township personnel, 125 belief crisis, 238 below-the-poverty-line family, 225, 314 Bernstein, Thomas P., 2, 59, 104, 130 Bian, Yanjie, 10 bianzhiwai (“outside formal quotas”) staff, 102 Bible study, 239 “big farmers” (zhongtian dahu), 155, 314, 319 big specialized households (zhuanye dahu), 202 bills for phone calls and transport, 173 Binhu (Wuxi, Jiangsu), 77, 80 bird flu, 202, 209, 236 birth certificate, 224 birth control, 18, 84, 119, 207–8, 223; see also one-child policy fertility preferences of peasants, 207 office of, 202 regional differences, 208 birth of healthier babies (you sheng), 120 bloated government payrolls, 70 borrowing for education, 168 patterns of, 168

375 purposes of, 166 for remittance, 169 structure of, 168 vicious cycle of, 169 virtuous circle, 167 boss-via-cadre model, 157, 238, 283 bottom-up feedback channels, 256 brainwashing campaigns, 35 brigade cadres, 97 British system, 299 broadcast station, 101 brokers, 33, 81, 107, 219, 250, 274 brokerage mode, 32 Brown, Colin, 17 Buddhism, 239 Budget Law, 118 budget priorities, 164 budgetary revenue, 62, 63, 70, 74, 81 buffer zone: between state and peasant, 294 “building a new socialist countryside”, 17, 96, 122, 213 funding, 125 building of Party organizations, 222 building of spiritual civilization, 179, 222 Buqiao village (Shandong), 194 bureaucratic authoritarian regimes, 258 bureaucratic elite, 9 bureaucratic jargon, 107 bureaucratic power: commodification of, 7 bureaucratic streamlining (fenliu) reform, 203 bureaucratism, 105, 107 business risks for peasants, 244 business tax on construction, 71 on land transfer, 71 on real estate, 71 on tertiary industries, 60 butchering tax, 84, 110 buying votes: in village elections, 268 buzzword, 122, 217 cable TV, 156, 224, 225 “cadre addiction” (guan yin), 269 cadre entrepreneurs, 272 cadre evaluation system, 22, 179 performance indicators, 166 quantified performance, 212, 222 cadre-gentry analogy, 40, 283 cadre-peasant disengagement, 250, 259 cadres-turned-entrepreneurs, 14 cadre-villager contacts: frequency of, 247–8 capital construction, 65

376

Index

capital goods: purchase of, 164 capital of human affection, 146 capitalism, 98 political logic of, 285 capitalist-authoritarian regimes, 4 capital-labor relations, 120 career development, 171 catalyst for peasant rebellion, 150, 226 Catholics, 239 CCP, see Chinese Communist Party ceiling for expenditure: in township finance, 75, 81 center-owned enterprises, 60 center’s fiscal self-protectionism, 67 Central Committee, 130, 216, 278 central decision-making process, 65 central subsidies: breakdown of, 65 centralized redistributive system, 175 centralizing institutional power, 41 central-local relations, 96, 105 central tax bureau, 77 centuries-long patterns of cooperation, 236 Chaigang village (Hubei), 145, 186 Chang, Chung-li, 283 Chang Desheng, 242 changing local tax resources, 79 charismatic domination, 146 chemical fertilizer, 48, 182, 204, 216, 257, 308 Chen’gao village (northern Jiangsu), 54 post-AAT village governance, 218–19 Chengdu (Sichuan), 195 Chiang Kai-shek, 30 childbearing women, 121 China’s “richest village”, 154 China’s vertical fiscal system, 59 Chinese Academy of Social Sciences (CASS), 239 Chinese Communist Party (CCP), 34, 35, 187, 257, 281 constitution of, 132 Department of Organization of, 134, 302 Chinese People’s Political Consultative Conference, 103 Chinese political philosophy, 30 Chongqing, 25, 53 entrepreneur cadres in villages, 277 provision of public goods, 183 Christian villages, 239, 240 Christianity, 239; see also churches churches, 239–40 civil servants, 39, 69, 114, 124, 171, 187 civil society, 285 Civil War, 35

clan lineage: hierarchy of, 240 clans, 2, 33, 240–3 class conflicts: in urban China, 285 class struggle, 3, 40, 240 classroom size: in countryside, 180 clergymen, 240 coercive power: use of, 221 “cohabitation”, 243 cohesive villages, 147 collective accounting, 47 collective action, 181, 236 collective funds: diversified sources of, 216 collectivism: antithesis of, 17 collectivist superiority, 154 combined county-township debts, 115 commercial interest group, 221 commission of discipline inspection, 103 “common affluence”, 140, 263, 266, 292 commune, 15, 21, 38, 41, 97 cadre salaries, 171 dismantling of, 176 management committee, 98, 99, 175 party committee, 98, 99 provision of public goods and services, 175 structure of, 105 three organizational tiers of, 38 communist ideology, 145, 240 compassionate (cishan) assistance, 224 complex bureaucratic web, 109 compensation for public service (wugong buti), 164 competitive election, 295 composition of local finances, 61 comprehensive subsidy, 204 Compulsory Education Law, 82 compulsory education spending, 81 compulsory payment of fees, 161 compulsory purchase of shares, 154 concept of “partial reform”, 10 conflict of interest: between cadres and villagers, 173 Confucian beliefs, 33 Confucian family ethics, 237 conscripts, 31, 34 conservative leaders, 98 constitution, 35, 36, 49, 130 constructing highways and railways, 73 consumerism, 207 consumption tax, 60, 63, 68, 77 context of marketization, 11, 151 contract for land use, 16, 287 contract payments for land, 164 contracting out administrative duties, 31 contractual terms: under HRS, 177

Index contracts tax, 70 “co-opted” entrepreneurs, 264, 266, 278 co-optive strategy: by corrupt cadres, 149–50 corporate management committee, 98 Corporation of Agriculture, Industry, and Commerce, 103 corruption, 1, 16, 102, 104, 148, 229, 292 diffusion of, 149 in birth control, 247 cost of market transactions, 52 cost-saving measure, 195 costs of agricultural production, 257 counter-decollectivization, 49 “counter-equalizing” effects, 66 counter-trend, 96 county branch, 110, 119, 294, 296 “county-first” (bao xian jin xiang) strategy, 74 county-level cities, 67, 305 county magistrates, 33, 283 county’s management of township finance, 74, 115 county-organized training sessions, 165 county tax bureau, 77 county-township tax-sharing pattern, 85 courts, 1, 109, 123 credit cooperative, 36, 109 credit for increasing village revenue, 229 credit ratings, 170 creditors, 170, 174 criminal charges, 151 criminal gangs, 237, 245 crisis management, 209 crisscrossing jurisdictions, 297 cronyism, 142 crop watching, 234 cross-departmental appointments, 100 cross-holding posts, 136 cross-regional water conservancy, 61 cross-regional irrigation works, 174 Cultural Revolution, 21, 99, 102, 148, 240 cultural tradition, 238 cumulative reciprocity, 276 cun zhang xiang guan, 89 dance, drama or opera troupes, 245 Dancheng (Henan), 114 Daoism, 239 de-alignment and re-alignment, 6, 233 decentralization, 93, 96, 178, 254, 288 decimal systems, 34 decollectivization, 5, 12, 17, 41, 100 early phase of, 44, 47, 48, 171, 246 for rural public goods provision, 176

377 decommunization, 38, 97, 98 defending legitimate rights (wei quan), 258 deficit of legitimacy, 134 deficit spending, 166, 167 de jure independent producers, 100 demobilized soldiers, 185 democratic administration, 216 democratic assessment: candidates for party posts, 135 democratic-capitalist society, 157 democratic principles, 110 democratic progress, 134 democratic transition, 285 Deng Xiaoping, 21, 98, 286 department of people’s armed forces, 103 depoliticizing trend, 258, 291 despotic state power, 31 destitute villages, 144 “development zones” (kaifa qu), 70 “developmental” pattern, 13 Dickson, Bruce, 264 diesel oil: purchase of, 204 differences between xiang (township) and zhen (town), 95 differentiation of responsibilities, 105 “difficult households” (kunnan hu), 121 disability certificate, 224 disguised private companies, 50 district bureau (qu gong suo), 36 district government, 36 district magistrate, 31 dividends, 143, 154, 156 dividing expenditure responsibilities, 94 Dongbao (Hubei), 77, 80 Dongguan (Zhejiang), 152 doing legwork (pao tui) for government, 254, 255 do-nothingism, 32, 256 double-checking system, 117 double-edged sword, 117, 256 drought, 121, 209 “dualistic” approach, 218 Duara, Prasenjit, 31, 107, 243 Eastern Europe, 7, 12, 14, 18, 285 eating finance, 83, 123 eating from one kitchen, 105 ecological villages: development of, 222 economic equality: socialist ideals of, 269 economies of scale: in farming, 319 egalitarianism, 21 Ekiert, Grzegorz, 14 elderly party members, 184 elders’ associations, 244, 269

378

Index

electability of rich people: in village elections, 277 electoral mandate, 134 elementary agricultural producers’ cooperative, 37 elite status: in villages, 244, 269 emergency measure, 145 emperor, 32 encroachment on peasants’ livelihoods, 41 enterprise tax, 60, 68, 113, 117 enterprise-villager relations, 225 entertaining inspection teams, 165 entrepreneur cadres, 6, 12, 16, 23, 289 as gentry-like intermediaries, 283 as idealists, 269 backtracking on promises, 278 case studies, 265–80 categories of, 265 co-opted, 264, 278 differences with other rural power elites, 284 double identities of, 14, 283, 293 emergence of, 13 government policy toward, 278, 280–3 incentives of, 270–80 income advantages of, 275–80 party membership of, 281 peasants’ perceptions of, 278–80 role of, 279, 292 sources of authority of, 280 entrepreneur households, 273 entrusted services (daili fuwu), 224–5, 229 environmental protection, 161, 222, 298, 300 equalizing local fiscal balances, 66 estrangement: among villagers, 236 “excess materialism”, 233 excessive specialization, 105 exemplary villages, 140 exemption from taxes and fees, 192 expenditure burdens: top-down imposition of, 59 expenditures on public relations, 164 expense for basic rural education, 112 export-oriented sectors, 152 ex-servicemen, 185 external management services, 52 extra-budgetary revenues, 60, 62, 70, 72, 74, 76, 81, 86 extra-system revenues, 62 factory director responsibility system, 8 fair trade tax, 79 Fairbank, John King, 30, 240 fake products, 149

fake receipts for reimbursement, 89 Falungong, 239 family-based power, 158 family farming, 21, 42, 56, 97, 155, 176 family lineage, 214 farm implements, 180 farming for self-consumption, 314 farming-specialized households, 46; see also “big farmers” favoritism, 157 Fei, Hsiao-Tung, 30, 31, 32 Fengjie (Chongqing), 195 fertility preferences, 207 festivals of technology, culture, and artistic performances, 120 fighting fortress (zhandou baolei): in villages, 22 filial devotion to parents, 208, 237 final solution for debts, 194 financial self-sufficiency at county level, 70 financial symbiosis, 191 fine strain (liang zhong) subsidy, 204 fiscal autarky: local governments, 290 fiscal responsibility for rural education, 164 fiscal subsidies from higher authorities, 192 “fiscal-subsidy” (caizheng buzhu) category, 67 fish-breeding association, 203 fishponds, 138 five-year plan (2006–10), 216 floating population, 10, 44, 147, 177, 180, 292; see also migrant peasants floating salary, 172–3 flood control, 174 food safety, 71, 209 food voucher, 154 forced grain-oil purchase, 200 foreign-capital enterprises, 315 forest fires, 209 forestation, 154, 218 forests: protection of, 179 formal state power: extension of, 35 former brigade/team leaders, 42 formula of governance, 160 fortune-makers (zhifu nengshou), 278 “four-no” principle, 266 fragmentary authority, 263 fragmented authoritarianism, 109 free riders, 182, 233, 236 Friedrich, Carl, 237 Fujian province, 24 salaries of county officials, 69 sharing land compensation fees, 74 full-fledged form of authority, 35

Index funds for compulsory education, 81 funeral, 139, 237, 308, 318 gambling, 148, 149 Ganzhou (Jiangxi), 195 general (yi ban xing) transfer payment, 66, 81, 112 generational alienation, 237 gentry, 6, 17, 30, 31, 32, 40 comparison with cadres, 241, 262 relations with local officials, 33 traits of, 20, 174, 283 glory to ancestors (guang zong yao zu), 270 ¨ Gobel, Christian, 96 government’s “protective umbrella”, 9 grain markets: liberalization of, 118, 287 grain processing, 147 grain subsidy, 204 gratitude fee, 228 gratuitous services, 233 “gray” income, 51, 228, 251 Great Leap Forward, 152 Greenhalgh, Susan, 207 groups of fashion lovers, 245 Guangdong province, 1, 24, 278 AAT and county finance, 113 central subsidies, 66 post-AAT surveys, 257 reduction of peasant burdens, 111 village debts, 166 VPB domination, 130 Guanghan (Sichuan), 38, 98 Guangxi province, 68, 111 guanxi, 114, 273 Guizhou province, 63 dependence of provincial revenue on agricultural taxes, 112 peasant party members, 185 Guo, Zhenglin, 130 Gurr, Ted Robert, 3 Hainan province dependence of provincial revenue on agricultural taxes, 112 Hangzhou, 53 hard and soft targets, 178, 207 hard-target responsibilities, 217 harmonious villages, 140 harmonizing rural society, 23 harvest seasons, 169 He Xuefeng, 196, 233, 236 health-care privatized, 207 providers of, 180 system, 205

379 heap of loose sand, 236 heavily indebted villages, 194 heavily intervening state, 42 Hebei province, 66 abolition of agricultural taxes, 112 county-township relations, 296 reduction of peasant burdens, 111 rural public goods provision, 177 surveys, 180 village finance, 162 hegemonic political order, 232 hegemonic stability, 17 Heilmann, Sebastian, 218 Heilongjiang province, 297 “experience”, 104 rural public goods provision, 177 village finance, 162 “help-poor” (fu pin) loans, 224 Henan, 24, 66, 77, 117, 253 AAT and county finance, 113 changing number of township personnel, 125 consequences of 1994 tax reform, 63 county-township fiscal relations, 82 educational attainment of village cadres, 186 post-AAT number of village cadres, 195, 196 reduction of peasant burdens, 111 salaries of county officials, 69 state subsidies for peasants, 204 VPB authority, 143 Hengshan (Hunan), 37, 192 Hengyang (Hunan), 123 Herschler, Stephen, 61 hidden superiority complex, 203 hierarchical budgetary process, 105 high labor-demand areas, 43 higher-status jobs, 43 Hillman, Ben, 254 hinterland, 24, 50, 67, 72, 264, 292 Hinton, William, 236 historical continuity, 152 Hobbes, Thomas, 260 home-grown officials, 84 Hong (Anhui), 85 Hongguang (Heilongjiang), 152 honorary titles, 270 horizontal jurisdiction (kuai kuai), 108 horizontally integrated companies, 98 horticulture, 101 house-building: license, 224 standards, 218 household-based project, 236 household “diversification” strategy, 46

380

Index

household registration, 41, 43, 77, 190, 287, 298 household responsibility system (HRS), 4, 38, 41, 49, 51, 97 HRS, see household responsibility system Huagang (northern Jiangsu), 226 Huang, Shu-min, 131 Huaxi (southern Jiangsu), 152, 155–7, 158 Hubei province, 24, 43, 66, 78, 79, 85, 294 AAT and county finance, 113 AAT-generated gains and losses for peasants, 257 educational attainment of village cadres, 186 entrepreneur cadres in villages, 264 old baogan system, 75 one-child policy, 207, 208 peasant party members, 185 pensions to village cadres, 196 reduction of peasant burdens, 111 salaries of county officials, 69 surveys, 137 township finance, 79 transfer payments for villages, 163 two surtaxes, 162, 164 village cadre salaries, 173 village debts, 166 village elections, 145 village finances, 193 Hudai (southern Jiangsu), 83 hukou, see household registration “human affections” (renqing), 139 human capital, 12 Hunan province, 24, 46, 66, 115, 117, 123 clan organizations, 242 county’s management system, 117 post-AAT surveys, 257 power structure in villages, 133 reduction of peasant burdens, 111 township deficits, 115 VPB domination, 133 Hungary, 8, 14 hybrid state-manipulated markets, 287 hypothetical tasks, 225 identity card, 224 ideological dilemma, 98 ideological straitjacket, 171 image-building efforts, 140 “image projects” (xingxiang gongcheng), 180 imbalance of gains and losses: for cadres, 192 imperfect market institutions, 50 imperial China, 6, 17, 20, 32, 33, 234, 299

gentry-official relations, 283 village governance, 20 impersonal market relationships, 236 implicit alliance: between leaders and peasants, 256 income from leasing land (tudi churang jin), 71 income uncertainty, 42, 100 individualism, 207, 233, 236, 285 individualistic market relationships, 256 industrial collectivization, 98 industrial-commercial regulations, 109 industrial park, 218, 219 industrial production: restructuring of, 226 industrial provinces: category of, 24 informal privatization, 52 inheritance tax, 68 Inner Mongolia, 66, 111 insider privatization, 8 institutional overlapping, 108 institutionalized bias, 93 institutionalized subsidies, 75 “insurance against aging” (yang lao bao xian), 319 insurance for pension and subsistence, 224 intangible resources: at cadres’ discretion, 211 inter-departmental bickering, 104 inter-county inequality, 67 interest tax, 66 inter-governmental expenditure assignments, 69 interlocking social institutions, 235 international evangelical conferences, 239 Internet, 114, 156 inter-village cooperation, 122, 181 fighting over water, 122 intra-village clashes, 237 “involutionary mode of state expansion”, 107 IOUs, 44, 47, 48 irrigation projects, 122, 179, 181, 213, 224, 236 Japan, 221 Jiang Zemin, 278 Jiangduo (northern Jiangsu), 223 Jiangnan (Jilin), 102 Jiangsu province, 25, 43, 79, 86 central subsidies, 66 Christians, 239 merging villages, 195 reduction of peasant burdens, 111

Index rural public goods provision, 177 surveys, 137, 180, 299 Jiangsu Changsheng Corporation, 155 Jiangxi province, 2, 24, 66, 68 appointment of village party secretaries, 135 cadre corruption, 149 clan organizations of, 242 criminal gangs of, 245 dependence of provincial revenue on agricultural taxes, 112 kinship ties, 241 new countryside programs, 213 peasant party members, 183 performance of village cadres, 146 Protestants of, 239 reduction of peasant burdens, 111 surveys on village cadres, 276 Jiangxi Soviet, 37 Jiangxiang (southern Jiangsu), 156–7 Jianshi (Hubei), 144, 208 Jilin province surveys, 180 village elections, 131, 145 Jingmen (Hubei), 78, 131, 184 cadre corruption, 216 Jiuchengli village (Shandong), 203 joint and foreign ventures, 53 joint production fees, 88 joint taxes, 60 joint-stock companies, 154, 156 judicial affairs, 101, 109, 298 Kaijiang (Sichuan), 195 “keeping to the socialist road”, 49 Kennedy, John James, 83, 130 kickbacks from collective projects, 192 Kingdom, John, 299 kinship system, 16, 240 kinship-based gentry rule, 33 KMT, see Kuomintang Kostello, Eric, 9 Kuomintang (KMT), 34, 35, 102, 126 laboratories: in rural schools, 180 labor-service tax, 32 Laiwu experience, 296 Land Administration Law, 71, 73 land and asset sales, 164 land circulation, 121 land compensation fees, 70, 73, 74, 142, 194, 209 land concentration, 235 land contracting fees, 194 land cultivation fees, 229

381 “land-for-security” scheme, 315 Land Management Bureau, 72 land reallocation: in villages, 44, 45, 189 land reform, 35, 37 land requisition, 70–4, 228 fees, 227; see also land compensation fees negotiation with peasants, 209, 228 peasants’ reactions to, 219 state revenue from, 70–3 tax, 70 types of, 71 land resources: management of, 172 land revenue: importance to local finances, 72 land seizures, 1, 259 landlords, 42, 235, 280 Landry, Pierre F., 96, 187 land-use rights, 44, 72, 287 land value added tax, 68 large spending responsibilities, 212 Lasswell, Harold, 238 Latham, Richard, 102 Law on Land Contract in Rural Areas, 44 lawsuits, 208 about debts, 123 against cadres, 42 among villagers, 295 leadership paralysis, 145 “leadership relations” (lingdao guanxi), 109 legal-institutional control, 301 legal-rational basis: in administrative power, 189 legitimate authority, 240, 262 legitimate businesses, 61 legitimate income advantages, 147 letters and visits, 101 Li, Lianjiang, 134 Li, Linda Chelan, 8, 20, 96 Li Bingwen, 247 Liaoning province, 1, 113 consequences of land requisition, 70 post-AAT surveys, 257 libraries: in rural schools, 180 license of salt sale, 224 Lieberthal, Kenneth, 107 Lijiazhuang village (northern Jiangsu) post-AAT governance, 226–9 lineage-based communities, 234 lineage-based succession, 158 Linz, Juan, 40 Liuminying village (Beijing), 152 Liuxia village (Jiangxi), 163 Liuzhuang village (Shandong), 152 livestock epidemics, 182

382

Index

livestock trade tax, 79 local celebrities, 157, 273 local government surtaxes, 61 local informal financial organizations, 114 local informal solutions: for conflicts, 190 local legislation, 120 local market socialism, 50 local notables, 34 local officialdom culture, 84 local state corporatism, 50 local strongmen, 33, 241 local taxes, 60, 81 lodging complaints to higher authorities (shangfang), 223 Logan, John R., 10 logic of market economy, 258 long-enduring value system, 171 Longworth, John, 17 low-end, low-tech, and low-value-added products, 54 lowered barriers to migration, 43 lower-interest loans, 167 lowest-income households, 150 low morale among party members, 184 low-value added industries, 226 lucrative non-farming businesses, 180 Lunar New Year holidays, 158 Luxi village (Anhui), 193, 202 macropolitical considerations, 188 Madsen, Richard, 148, 240 mahjong, 203 maintaining stability (wei wen), 217, 226, 252, 256 maintaining village cohesion, 174 managerial contracting, 53 mandatory production quotas, 98 Mao regime, 17, 30, 37, 40, 48, 141, 269; see also Maoist state Maoist state, 4, 171, 187, 240 basic organizing mechanism in rural society, 38 market fluctuations, 42 market liberalization: acceleration of, 52 market transition theory, 7, 11, 16, 23, 271 market-driven agricultural structural adjustments, 181 marketized social setting, 261, 289 marriage, 139, 235, 237, 308, 318 massive retrenchment, 196 material rewards, 59, 157, 171, 172 “matrix muddle”, 107 means of agricultural production, 182 mechanized farming, 265

mediating intra-village conflicts, 202 medical insurance for enterprise employees, 120 medical insurance for peasants, 121, 156, 165, 291, 298; see also New Rural Co-operative Medical System Meihekou (Jilin), 186 “membership tax”, 174 Mengjia village (Jilin), 266 merging of villages, 195–6 Mertha, Andrew, 109, 298 meteorological projects, 61 Michelson, Ethan, 190 middle class, 285 Middle East, 317 middlemen: between state and peasant, 293, 294 mid-Qing period, 32 militia training, 164, 193 mineral resources, 138, 150, 274 Ministry of Agriculture, 52, 170 Ministry of Civil Administration, 144 Ministry of Finance, 69, 74, 79, 115 Ministry of Health, 207 missionary work, 239 misuse of collective funds, 178 mixed taxation system, 81 mobilizing labor for public works, 178 model villages, 213 modern-style conglomerates, 151 modes of market transactions, 244 monarchical power, 33 monetized rural society, 268 monopolistic enterprises, 68 monopoly over scarce resources, 48 moral authority, 174, 276 moral degeneration, 149 moral economy view, 235 multiple forms of ownership, 53 multiplied administrative units, 98 municipal jurisdiction, 131 Murphy, Rachel, 177 mutual-aid associations, 244 mutual-aid teams, 36, 37 mutual dependence, 247 mutuality: in rural social relationships, 2 Nanjie village (Henan), 152 natural disasters, 209 natural gas pipelines, 154 Nee, Victor, 7, 10, 13, 271 neo-institutionalist theory, 22 nepotism, 142 new agricultural technology, 213 “new agriculture”, 122

Index new collectivism, 151–8, 205, 282, 292 category of, 152 new corporate bourgeoisie, 9 new countryside council, 213 New Rural Co-operative Medical System, 179, 202, 204, 205–7 inpatient treatment, 205 new standard for social status, 183 new tax-sharing system, 78 newspaper subscription, 156 Niancheng (Anhui), 195 Ningxia province, 66, 69 salaries of county officials, 69 Niskanen, William, 105 nomenklatura, 9, 14, 93 no-pay-no-service mind-set, 222 non-agricultural population, 95 non-agricultural revenues, 116 non-agricultural sectors: income-generating capacity of, 161 non-cadre “elites”, 221 non-cadre entrepreneurs, 244, 272 “non-designated” state enterprises, 48 non-dualistic argument, 217 non-establishment elites, 238 non-farm employment: expansion of, 43 non-farm jobs, 43, 46, 287 non-party entrepreneurs, 281 non-profitable productive activities, 168 non-tax revenue (NTR), 61–3 normative socialist morality, 235 north China, 2, 31, 107, 234 North Korea, 158 northern Jiangsu province, 24, 146, 219 cadre corruption of, 216 peasant party members, 184 post-AAT village governments, 222–9 provision of public goods, 183 village debts, 166, 194 village elections, 130 NTR, see non-tax revenue O’Brien, Kevin, 2, 246 Odend’hal, Stewart, 131 Oi, Jean, 41, 42, 106 old examination system, 33 old-fashioned reciprocity, 250 old-fashioned “sticks”, 171 old revolutionary areas, 36 old tax-sharing rules, 19 Olsen, Mancur, 181, 233 one-child policy, 83, 118, 218; see also birth control one-issue-one-discussion, 181, 202, 215, 225

383 one-party system, 14 one-vote veto, 84, 223, 252 Ong, Lynette, 70, 114 “open recommendation, open selection”, 299 opinion polls: post-AAT, 257 opportunities to embezzle collective funds, 131 Organic Law for Villagers’ Committees, 88, 132, 251 Organic Regulations for Villagers’ Committees (draft), 129 organized agricultural trade, 48 Oriental religions, 239 orphanages, 174 Ouyang Jing, 84 ownership reform: on VOEs, 53, 149, 265; see also village-owned enterprises paid services, 61, 62 paid use of state land, 68 paradox: in market transition, 289–90 parallel party and state apparatus, 35 pariahs, 35, 269 party-building, 179, 186 party congress: in 1997, 273 party disciplinary action, 173, 183 party-government separation, 39, 99, 103 party hegemony, 2 party member activities, 193 party member recruitment, 185–6 party mouthpiece, 186 party newspapers and journals, 146 party propaganda machine, 260 “party spirit” (dang xing), 183 paternalistic leadership, 152 path dependence, 18, 21 patron-client ties, 11, 235 patterns of social organizations, 244 patterns of village governance, 128, 143–50, 237 peasant associations (nongmin xiehui), 36, 37, 244, 300 peasant burdens, 1, 45, 81, 149, 161, 288 in township finance, 86, 87 in village finance, 173 peasant co-operativization, 142 peasant income, 1, 45, 47, 111 deterioration of, 76, 177 real (after-tax), 46 structure of, 119 peasant-land relationships, 46 peasant livelihood: historical patterns of, 45

384

Index

peasant migrants, 43, 123, 179, 287 job training of, 120; see also floating population peasant party members, 183, 186 requirements for, 185 peasants’ unions, 245 Peng, Yusheng, 51 Pengxing (Hubei), 120 pensions (nong bao), 225, 282 people’s congress, 99, 246, 270 per capita size of farmland, 163 periodic land redistribution, 45 personal income tax, 60, 68, 113 physical mobility, 41 planned trade: contraction of, 287 plant diseases and pests: control of, 180–2 plastic-film cover, 257 pluralistic structure of authority, 234 Poland, 8 “policy subsidies”, 65 Politburo, 93, 278 political appointments, 96, 146, 240, 262, 263, 281, 283, 289 political authority: top-down transmission of, 18, 188 political campaigns, 3, 97 political capitalism, 8, 12 political immorality, 148 political-institutional hierarchy, 37 political logic of market reform, 290 political opposition, 289, 291 political suicide, 270 political terror: lingering memory of, 42 pollution, 222, 225, 268 “poor peasant associations”, 36 Popkin, Samuel, 236 popular participation, 299 positive inducements, 157 positive-sum game, 275, 282, 284 post-AAT institutional environment, 139 post-decollectivization revenues, 162 post-1949 revolutionary changes, 34 post-Mao institutional expansion, 100 post service, 109 post-socialist economies, 9 post-TFR equivalent, 164 post-TFR spending, 165 post-TFR village revenue, 163 potential rebel leaders, 148 poultry farms, 152 poverty relief, 123, 163, 165 power conversion hypothesis, 8, 9, 12, 13, 14 power persistence hypothesis, 10 power relations: reversal of, 221

power-sharing mechanisms, 134 power transmission belt, 5, 160 power void, 144, 146 pre-baogan period, 116 pre-capitalist corporate villages, 235 predatory bureaucratic behavior, 181, 298 various forms of, 265 pre-reform non-agricultural collective economy, 49 pressure groups, 245 pre-TFR village deduction, 162–4 previous fiscal contract system, 60 private clinics, 180 private companies: registration of, 224 private irrigation fee, 229 private property, 41 private wealth: primitive accumulation of, 12 privileges: with cadre position, 138 procuratorial work, 109 production brigade/team, 39, 41 leaders of, 97 production safety, 120, 222 “professional relations” (yewu guanxi), 109 progressive maturity of markets, 181 pro-peasant reforms, 96 property rights, 7, 9, 50, 52, 143, 298 Protestantism, 239 province-owned enterprises, 68 psychological inertia, 42 public cemeteries, 174 public goods, 20, 174, 223 donors, 214 history of, 176, 211 importance to cadres, 178 new mechanisms for provision of, 211–15 under-supply of, 257 sources of funds for, 176 public health, 97, 101, 108, 300 “public recommendation, direct election”, 299 public reprimand, 173 public security deterioration of, 149 expenditures for, 3–4 public services, 181, 211 public welfare funds (gong yi jin), 175 Qiangtou (Zhejiang), 119 Qing dynasty, 34 Qinghai province, 66, 111 Qipan (Hubei), 46

Index Qiuliu village (northern Jiangsu) post-AAT governance of, 223–6 quasi-elites, 244 raising “high-quality” children, 207 Rapley, Timothy, 303 ratio of salaried officials to common people, 102 rational-legal system, 14, 95 rationed commodities, 41 rationed agricultural input, 190, 287 real estate tax, 68 re-atomizing trend, 238 recentralization, 93 reconfiguration of power, 233 recruiting party members, 133 red-eye disease, 230 red-hat private enterprises, 53 red tape, 104, 208 redistribution of burdens, 177 redistribution of power, 134 redistributive and administrative powers: interlocking relationship of, 17 redistributive injustice, 149, 159, 292 redundant personnel, 103, 107 reform regime’s hidden agenda, 17 regime agents, 157, 161, 243, 246, 263, 283, 291 regime legitimacy, 188, 232, 259, 290 regional commercial hub, 222 regional economic inequalities, 66 registration, change, or cancellation of house ownership, 224 Regulations for the Work of Rural Grass-roots [CCP] Organizations, 133 “relational transactions”, 244 relief works, 174 religion, see churches religious associations, 238 remittance: from villages, 92, 164 remitting in lieu of unpaid taxes and fees, 168 remonstrators, 246 renting collective land, 161 Republican period, 34; see also Kuomintang (KMT) resettlement fees, 73 resources tax, 68 responsibility contract (zeren zhuang), 115 “restore-things-to-order” (boluan fanzheng), 102 restructuring rural society and politics, 17 retail trade, 147 revenue-generating ability, 217

385 revolutionary committee, 99 “reward-and-punishment system of village management responsibility”, 179 rice and pork traders, 221 rightful resistance, 2 rights over revenues, 98 risk insurance, 234, 235 Riskin, Carl, 38, 42 ritual life stereotypes of, 237 traditional, 235 roads connecting villages, 215 ´ ´ Rona-Tas, Akos, 9, 14 routine village administration, 195 royal grain, 176 rubber stamp, 99, 253 rule by law, 95 rule of law, 285 rules for standardizing tax revenues, 79 running water and electricity, 139, 165, 181 Rural Credit Cooperative, 218 rural district office, 107 rural fairs and periodic markets, 48, 287 rural Gini coefficient, 67 rural governance, pre-1949 mode of, 256 rural grassroots party organizations, 36 rural industrialization, 167, 169 rural labor markets: liberalization of, 43 rural medical resources, 179 rural purchasing power, 43 rural residence registration, 245 rural school teachers, 114 rural social heterogeneity, 259 rural socialist redistributive system, 51 rural state-run (gong ban) schools, 82 rural turmoil, 110 rural-urban migration, 287 rural version of tax reform, 76 Russia, 8 sale of medicine, 224 sales (transaction) tax, 53 sampling frame, 321 Sanjiazi village (Liaoning), 266 santi wutong, 84, 110, 115, 176 collection of, 178 meaning of, 84 provision of public goods, 176 Sanyuanzhu village (Shandong), 152 Schubert, Gunter, 222 Scott, James C., 4, 234 secondary education: resources for, 180 self-assigned responsibilities, 123, 250 self-organized associations, 245

386

Index

self-proclaimed Marxist party, 281 self-raised funds, 62, 70, 74, 76, 81, 86 self-reinforcing process: in rural reform, 22, 286 self-surveillance, 34 selling collective properties, 161 sent-down village cadres, 208 service-oriented village government, 224 severe acute respiratory syndrome (SARS), 209 setting up offices to accommodate people, 104 Sha village (Hunan), 150 Shaanxi province, 1, 125 educational attainment of village cadres, 186 new countryside programs, 213 surveys, 180, 257 Shandong province, 24 abolition of agricultural taxes, 112 peasant party members, 184 reduction of peasant burdens, 111 state subsidies to peasants, 204 surveys, 137 village cadre salaries, 173, 196 village debts, 166 village elections, 131 Shanghai, 53, 187 central subsidies, 66 dependence of revenue on agricultural taxes, 112 reduction of peasant burdens, 111 Shantou (Guangdong), 54 Shanxi province, 114 appointment of village party secretaries, 135 dependence of revenue on agricultural taxes, 112 kinship ties, 241 merging villages, 196 shareholding collective economy, 142 shareholding cooperatives, 53 shareholding reform, 143, 151 sharing township taxes: with different ratios, 80 Shayang (Hubei), 77, 84, 173 Sheyang (northern Jiangsu), 281 Shi, Tianjian, 131 Shijiazhuang (Hebei), 185 Shiniu village (Hubei), 145, 186 shortcut to collective affluence, 155 Shue, Vivienne, 15, 40, 98, 170 Shuguang village (northern Jiangsu) post-AAT village governance of, 220–2 Sichuan province, 1, 25, 66

consequences of 1994 tax reform, 68 rural public goods provision, 179 surveys, 137, 180 township revenues, 114 Sicular, Terry, 48 Silong village (Chongqing), 201 Siu, Helen, 33 Smelser, Neil, 3 Smith, Graeme, 121, 122, 208, 223 snowball effect, 273 social affiliations: interlocking nature of, 33 social by-product of marketization, 118 social capital, 146, 244, 292 social disincentives, 190, 234 social etiquette fees, 308, 318 social mobility, 207, 236 social morality: “degeneration” of, 236 social pluralism, 238, 285 social policy, 179 social-political “anarchy”, 247 social security as state responsibility, 298 funds of, 74 subsidies for, 65 social stratification, 8, 263, 285 social transformation, 96 social welfare projects, 122 socialist cadres, 10 socialist discourse, 183, 295 “socialist democracy”, 134 “socialist landlords”, 42 socialist villages, 11, 141, 153, 157, 320 social-political “anarchy”, 247 society-centered view, 7 SOE, see state-owned enterprises soft opposition strategies, 16 soft power, 146, 148, 157, 276 soft weapons, 247 Solinger, Dorothy, 96 Song dynasty, 34 South China, 2, 234, 235 Southeast Asia, 234 southeastern provinces, 239 southern Jiangsu, 24, 90, 236 consequences of AAT, 116 peasants’ sense of collectiveness, 235 role of clans, 242 village debts, 166 village-owned enterprises, 51, 161, 272 Soviet kolkhoz and sovkhoz, 38 special fruits: production of, 152 special (zhuan xiang) transfer payments, 65 “special product” lines, 85 special product surtax, 162 special product tax, 78, 84, 85

Index specialized administrative units, 100 specialized cooperatives: multiple forms of, 142 spending agenda of village authorities, 178 spending on agriculture (caizheng zhinong), 61 spending responsibilities: re-division of, 19 spillover effect, 245 “spirit of collectivism”, 155 spiritual void, 238 “spot transactions”, 244 stable sources of revenue, 117 Stalinist model, 17, 291 stamp tax, 68, 70 standard fiscal statistics, 60 standardized management of village affairs, 208 Staniszkis, Jadwiga, 11 state-building efforts, 37 state-centered analysis, 8, 12, 271 state-controlled examination system, 283 State Council, 71, 74 state-employed agricultural laborers, 41 state grain purchasers, 48 state-monopolized resources, 262, 263, 276 “state of nature”, 260 state-owned enterprises (SOE), 8, 15, 61, 69 state-peasant relations: arising from AAT, 259 state-peasant tensions, 6 state penetration: rollback of, 39, 291 state power: formal withdrawal of, 136 state-sanctioned power, 17, 189, 241, 262 state socialism, 6, 9, 13, 14, 15 State Statistical Bureau, 1, 114 state-stipulated subsistence level, 220 state subsidies: for ex-servicemen, 225 station of grain purchase, 47 statistical work, 223 stock exchange tax, 68 stocks, 143 stratified social order: pre-1949, 240 structural crisis, 143 structural dilemma, 95 structure of subsidies, 112 subcontractors, 46 subnational party-state hierarchy, 72 sub-province governments, 67 subsidiary industrial and commercial companies, 151–2 subsidies for retired cadres, 193 subsidized housing, 156 subsistence ethic, 4

387 substance-free duties, 218 substitute for labor, 178 sub-village units, 39, 47 Sun Yat-sen, 30 superstition, 239 supply and marketing cooperative, 36 surcharges and surtax: levying of, 119 “surest way” to earn promotion, 122 surtax rebate from agricultural taxes, 164 “survive or perish on its own” (zisheng zimi), 214 swollen bureaucracy, 83, 99–105 symbol of higher status, 183 symbolic state-building, 36 system of clientelist politics, 41 Szel´enyi, Iv´an, 9 taboo: in political discourse, 264 Taicang (southern Jiangsu), 77, 281 Taihe (Jiangxi), 64 Taihu Lake, 318 tainted altruism, 140 Taizhou (northern Jiangsu), 226 taking legal action (da guansi), 190 tangible sources of power, 146 tariffs, 60 Tarrow, Sidney, 3 tax-and-fee quota, 173 tax breaks, 64, 120 taxes on cigarettes and alcohol, 63 tax-for-fee reform (TFR), 1 changing cadre-villager relations, 247 consequences to village finances, 169, 288 funds for public goods and services, 183, 211 impact on township finance, 111, 112, 118 impact on township functions, 124 reduction of cadres’ workload, 191 reduction of peasant burdens, 110, 277 tax minimization games, 83 tax rebates, 65, 66, 112 tax-related riots, 6 tax-related salaried personnel, 103 tax resources: scarcity of, 76 tax revenues: upward flow of, 59, 67 tax-sharing bargaining, 93 tax-sharing system, 59, 60, 77, 288 team-owned workshops, 49 technocratic continuity approach, 7 technocratic elites, 9 “technological upgrading”, 228 tensions over resource allocation, 177 TFR, see tax-for-fee reform

388

Index

theory of “three represents”, 278 theory of group solidarity, 174 theory of Oriental society, 31 Third Plenum, 102 Thøgersen, Stig, 129, 171, 299 three-cornered conflict of interest, 275 Three-Gorge Reservoir, 310 three parallel organs of political power, 99 three tax-collecting agencies: coexistence of, 77 three tiers of rural administration: before 1958, 36 three types of fees, 62 Tianjin, 7 central subsidies, 66 dependence of revenue on agricultural taxes, 112 tiaokuai guanxi, 107, 296, 298 Tibet, 66, 187 dependence of revenue on agricultural taxes, 112 tobacco sales, 109 top-down party organizational channel, 88 total local fiscal revenues, 68 total subnational budgetary expenditure, 69 totalitarian parties, 40 totalitarianism, 30, 33, 41, 284 tourism, 153, 155 township, 19, 26, 34 administrative reform of, 255 bureaucratic expansion of, 105–7; see also swollen bureaucracy bureaucratic interests, 254 debt problem, 115 deficit, 81, 177 dismantling of, 295 downsizing of, 125, 296 educational budget, 82 election of officials, 295, 299 finances, 74, 83, 87, 92, 106, 107–15 government as arbiter, 122 as profit-making institution, 105 as “trouble-maker”, 107 in the 1950s, 36, 37, 107 laid-off officials, 297 lawsuits about debts, 123 merging of, 38, 112, 125, 297 middle-of-the-road option, 301 officials appointed as village cadres, 254 officials’ incentive structure, 106 pension for village cadres, 224

post-AAT administration of, 107–23, 126 post-AAT finance of, 116 post-AAT salaries of officials, 123 prospects of, 107, 302 resurrection of, 97–107 “seven stations and eight agencies” (qizhan basuo), 195, 302 types of, 79, 117 under KMT regime, 34 with entrepreneur cadres, 275 with county, 80, 107–18, 293, 295 with village cadres, 88, 107, 171, 202, 254 withholding transfer payments, 163, 164 township-and-village enterprises (TVE), 50 profitability of, 87 income tax paid by, 79; see also village-owned enterprises township and village governments: convergence of functions, 231 township enterprises, 51, 52; see also township-and-village enterprises trade-off: between cadre power and market reform, 256 traditional moral framework, 148 traditional relationships between neighbors, 34 traditional rural society, 20 transfer of rights, 100 transfer payments, 12, 19, 22, 70 after AAT, 193 at regional level, 112 at township level, 81, 113, 116 at village level, 10, 163 earmarked, 253 from central government, 66, 163 transient “elites”, 244 transitional economies, 9, 11 transportation networks, 174, 181 transportation projects, 215 tripartite confrontation, 243 trivializing of cadres’ work, 210 Tsai, Lily, 178 tug-of-war: between central and local state, 99 tussle for authority: between cadres and clan leaders, 242 TVE, see township-and-village enterprises two-committee meeting, 131 two recommendations and one election, 134, 315

Index two surtaxes, 19, 162, 193 two-vote system, 134, 135 types of villages, 10–11, 304 tyrannical state power, 32 unbalanced development strategy, 65 “underclass”, 269 “underground” leading force, 243 underlying social contract, 6 Unger, Jonathan, 40, 235 unharvested crops (qingmiao), 73 “unified party leadership”, 99 university graduates: as village cadres, 187, 319 unattainable socioeconomic goals, 115 unorthodox market economy, 273 unregistered house churches, 239 unwarranted fees, charges, and surtaxes, 251 unwieldy bureaucracy, 284 upper-level budget allocation, 106 urban economy, 286 urban educational surtax (UES), 80 urban employment, 187, 121, 227, 287, 295 urban fees: non-compulsory nature of, 63 urban land use tax, 68 urban maintenance and construction tax, 70 urban social security system, 69, 217 urbanization, 70, 142, 194, 300 urbanized lifestyle, 236 urban-rural income gap, 42, 43 USSR, 7, 8, 14, 18, 285 usurious loans, 170 value added tax (VAT), 60, 63, 68, 77 VAT, see value added tax vehicle-and-ship use tax, 70 vehicle repair, 147 veneer of “social stability”, 120 vertical administrative system, 15 vertical interference, 107 vertical party organizational control, 58, 95 vertically integrated companies, 98 veterinary clinic, 101, 108 veterinary surgeons, 182 Vietnam, 9 village administration: vacuum of, 201 “village administrative management” expenditure, 164 village cadres accounting power of, 48 as cash-making machine, 254

389 autonomy, 231 bargaining power, 254 categories of, 11, 13 categories of sources of work, 247 cost-effectiveness of, 256 double identities of, 262, 263 “get-rich” skills, 281 incentive structure, 171, 191 intangible benefits for, 200 marginal status of, 271 muddling-along caretakers, 145 old-fashioned mindset of, 276 personal income advantages of, 13, 58, 288 private gain seekers (sungong feisi), 147 remunerations for, 178, 196, 253, 276 salaries: delinking from village finance, 253 floating component of, 172 increments of, 200 structure of, 172 self-perceived authority, 279 self-rated economic status, 267, 280 tangible benefits for, 200, 274 top priorities for, 223 triple identities of, 240, 241 village debts, 131, 166–70, 174 final solution of, 194 structure of, 168 village deductions, 19, 88, 162 village elections, 39, 129, 130, 187 competition in, 268 development of, 129 elected private entrepreneurs, 264 empowering effects of, 134 impact on VPB authority, 132, 136 influence of clans over, 242 party-controlled, 285 results of, 130 secret ballots in, 134 villagers’ perceptions of, 148 village government bureaucratization of, 254 commercialization of, 13, 216–18, 291 village leadership, downsizing of, 255 village-organized affairs, 193 village-owned conglomerate, 155 village-owned enterprises (VOE), 16, 42, 49, 52, 142, 148; see also township-and-village enterprises decay of, 52–5, 106, 194, 287 employment of, 157 managers of, 272 privatization of, 16, 53, 54, 272, 273

390

Index

village-owned enterprises (VOE) (cont.) profits and assets: embezzlement of, 51 rise of, 51 cadre income from, 172 village party branch (VPB), 15, 30, 36, 39 as “core of leadership”, 132, 133, 288 authority of, 37, 143–9, 288 centrality of, 132 check and balance for, 133 clanization of, 186 composition of, 131 in the 1950s, 41 “legitimacy” of, 135–44 party member recruitment, 185, 186 potential challenge to, 243 power relations with villagers’ committees, 134–44 relations with churches, 239 types of domination, 130 village party posts: shrinking pool of candidates for, 186 village’s highest decision-making body, 131 village’s “mobile” (jidong) land, 55 villager autonomy, 89, 231, 258; see also villagers’ self-government villagers’ assembly, 45, 132, 202, 213, 313 villagers’ group, 39, 47, 74, 219 villagers’ job opportunities, 43 villagers’ self-government, 15, 40, 251 villagers-turned-workers, 220, 227 village-run schools, 192 villages’ miscellaneous expenses, 165 villages’ revenue-generating potential, 193 VIP standing: in villages, 244 Virgin Mary, 240 VOE, see village-owned enterprises voluntary principle, 142 vote of confidence: in elections of village party secretaries, 135 VPB, see village party branch Walder, Andrew, 7, 10, 13, 271 Waldron, Scott, 17 Wang Hongbin, 152 Wangmiao (Shandong), 79, 203 warranty of business credibility, 262 water association, 214 water fees, 202, 214, 308, 318 water resource (shui ziyuan) fee, 253 water supply, 108 Watt, John, 283 wealth-based authority: model of, 277 weather forecast, 109 Weber, Max, 14, 146 wei quan (defending legitimate rights), 258

Wen Jiabao, 112, 113 Wenzhou (Zhejiang), 196 Western culture, 239 Western states, 299 whipping-the-quicker-ox policy, 76 who-controls-whom, 247 Winckler, Edwin A., 207 women of child-bearing age, 208 women’s association (fu lian), 314 Wong, Christine, 85 work points, 41, 97, 171, 175 World Bank, 61, 69, 70 wu bao hu, 163 Wu Licai, 119 Wu Renbao, 152, 158 Wu Yi, 274 Wujiadun village (Zhejiang), 189 Wukan: rebellion at, 4 Wuli (Hubei), 145 Wuxi (Jiangsu), 78, 318 Xianfeng (Hubei), 69 Xiangtan (Hunan), 38 Xiangyang (Hubei), 64 Xiao Tangbiao, 264 Xinjiang, 66 Xudong village (Hubei), 152 Yang, Dali L., 65, 103 Yangshao village (Shandong), 200 Yangtze, 25, 122 Yanling (Henan), 64 Yingjie village (Hubei), 186, 265 Yiwu (Zhejiang), 264 “yiyuan village”, 152 Yonglian village (Jiangsu), 152 Yubei (Chongqing), 264 Yunnan province, 111, 112 dependence of provincial revenue on agricultural taxes, 112 salaries of county officials, 69 Yutai (Shandong), 77, 78, 203 Zeng Qinghong, 278 zero-sum game, 61, 67, 73, 297 Zhang, Hong, 207 Zhangdian (northern Jiangsu), 122 Zhanghuang (Shandong), 79 Zhangjiakou (Hebei), 131 Zhejiang province, 24, 85, 236 AAT and county finance, 113 abolition of agricultural taxes, 112 central subsidies, 66 consequences of AAT, 116 entrepreneur cadres of, 264, 277, 282

Index new countryside programs, 213 privatization of VOEs, 272 reduction of peasant burdens, 111 role of clans, 242 salaries of county officials, 69 surveys, 137 village elections, 268

391 Zhenggang village (Hubei), 145, 186 Zhou, Xueguang, 227, 244 Zhou Feizhou, 72 Zhu Rongji, 93 Zhulin village (Henan), 152 Zunyi (Guizhou), 50