The state of the field for governance and policy innovation in China

On 31 October 2019 the CCP’s fourth plenum concluded with some reflections on governance (innovation) and the role of the Party in the PRC’s ongoing reform and modernization process. The final communique stressed the need for modernizing the national governance system and for increasing its governance capacities. The document also addressed long-pending reforms and aggravating developmental challenges, highlighting persisting socio-economic inequalities and reconfirming the need for further expanding the Chinese market economy. While, in the 1980s, Deng Xiaping had once promoted the separation of the Party and the State, the reform path taken under the fifth generation indicates a strong leadership role of the Party over the state apparatus and the national economic sector. Deng’s reform initiative of the early 1980s included attempts to abolish Party groups inside the state institutions as well as within companies. These attempts had been abandoned at the end of the 1980s, and the 2019 communique clearly signals a formal reconfirmation of the role of the Party as initiator, moderator, and supervising authority of the reforms launched with China’s proclaimed entrance into the era of ‘new normal.’

Prior to the 2019 plenary session, in 2018, a reform plan had set the integration of Party bodies and state institutions (dangzheng ronghe) and the empowering of small Party groups (dangzu) at all levels of state administration as the ultimate goal. Feasibility studies for a nation-wide reform of institutions and Party-state relations date back to the year 2015;¹ elements of a first internal consensus on reforming the economic sector and related institutions were included in the third plenum’s 2013 60-points reform package. With the amendments to the state constitution in March 2018, for the first time in the PRC’s post-Mao history the hierarchy and organizational framework of state institutions were addressed. The National People’s Congress passed these amendments that included the creation of a National Supervisory Commission–which is said to closely cooperate with the Party’s Central Discipline and Inspection Committee, thus expanding the anti-corruption campaign to all units of the state apparatus. The oscillation between periods of centralization and decentralization, between the close integration and the separation of Party organs and state institutions is not a novel phenomenon of Chinese politics. Both the Party as well as the PRC’s state institutions are adapting to changing domestic socio-economic constellations, and the hierarchy and patterns of interactions between the Party and the state are (re-)modeled accordingly. While transformation theories did once predict the worldwide spread of liberal multi-party democracy, the current global trend is a reversed one. Instead of operating with a black-and-white (or blue-and-green) cartography that divides the world in (liberal) democracies and authoritarian regimes, an in-depth understanding of the latter is needed in order to decrypt their internal governance patterns and evolving features of state-society-economy interactions.

Governance innovation is a good lens with which to understand these changes. Often cited as the key to ‘authoritarian resilience’ allowing for a process of change and adaptation to varying conditions, policy experimentation has played a large role in policy and governance change, including the process of market reform.² As the articles in this special issue illustrate, this process of governance innovation is changing. The authors in this issue find that classic analyses of the process of policy experimentation³ need to be updated in two ways. First, that this process is now more interactive than before, with society actors learning how to maximize individual benefits and thus challenge and change policy experiments. This finding corresponds with the emerging trend of understanding Chinese governance as an evolutionary or interactive process, and not merely one of policy-makers and policy-takers.⁴ Second, that Party-state-society separation through the ‘small state-big society’ reforms (小政府-大社会) and Deng’s Party-state division have resulted in the Party trying to claw back power that was given to the state apparatus and to society throughout the 1990s and 2000s. We can clearly observe this process in the area of governance innovation, where the Party tries to balance achieving good governance with Party control in a familiar reform-retreat pattern.⁵

The contributing authors clearly show that policy experimentation is continuing to be an important mechanism of policy change in China; however, that this process is becoming more interactive with greater numbers of participants, such as civil society. The articles by Cai, Si, and Ting use case studies to trace the interactions among actors with various policy experiments. Additionally, as these experimental policies engender more society and local government participation, the Party often feels that it is losing control and steps in to slow down the process. The articles by Snape and Wang, Balla and Xie, Zhen Wang, and Noesselt examine how the Party balances between competing goals of improving governance and retaining political control. In some cases, this halts improvements in governance as Balla and Xie find, but in others might provide a necessary corrective as Noesselt argues. We briefly summarize these research findings below before suggesting ways how these should inform future research.

Increasingly interactive nature of policy innovation

Policy innovation and experimentation is supported in all fields and sectors, where socio-economic tensions have visibly increased and threaten to trigger mass contestation. The Party-state seems to have developed steering mechanisms that allow coordination and control over the local levels of the state administration as well as over local cadres. The rising rural-urban divide and country-wide labor migration waves are, however, partly informal developments that are not as easy to channel and regulate.

Meina Cai argues that land commodification has changed the dynamics of hukou policy innovations in China. The increasing demand of local governments for land to fuel industrialization and urbanization creates appreciating land values, which in turn lead villagers to update their belief about the value associated with their rural hukou. Cai demonstrates how land commodification shapes local hukou policy innovations. Based on survey and case-study evidence, Cai finds that in areas where the economy is more developed and land is more valuable, the hukou pilot programs are not successful in persuading rural residents to give up land for an urban hukou. This lack of success suggests local governments use the urban hukou as an instrument with which to facilitate land takings, rather than reduce the urban-rural inequality gap. First, Cai’s findings illustrate how rural residents have learned about the value of land over time, and are increasingly challenging policy innovations related to land taking. Second, this article shows the gap between the Party’s focus on poverty alleviation (urbanization as a solution) and the need for local governments to raise revenue via land sales. In this case, innovation is not successful because of local government interests clashing with those of residents, versus Party fears of mobilization or instability.

Similarly, Yutong Si employs a detailed case study to show how implementation of the targeted poverty alleviation policies are changing or being challenged as they move from the central government to different cascading levels of local government, down to the village cadres and residents. Competing interests and asymmetric power and information create a more interactive process of government than normally applied to China’s hierarchal structure.

As with rural areas, China’s urban communities have undergone rapid transformation, catalyzing the formation of local interest groups pushing for policy reform. By analyzing Chinese homeowner associations, Ting, Guo, and Liao are able to detect new modes of rights-protecting actions and local (urban) residents’ self-organization. Based on survey data and case studies, they argue that legal uncertainty creates an ‘incomplete (property) contract’ situation, and catalyzes Chinese homeowner associations’ political action and strategic positioning. However, as with the failure of the land-for-hukou initiative evidences, solutions proposed by the central government often spark local counter-actions or even opposition movements. The partial but incomplete transfer of property rights in the urban context creates structural challenges to the performance and efficiency of community governance experiments. As Ting et al. outline, the current situation is characterized by a complex power struggle between neighborhood committees, homeowner associations, and municipal government, as well as the Chinese real estate industry. Nation-wide regulations would be needed to balance the interests of these three actor groups and to secure a stable and sustainable solution.

These empirical findings demonstrate the complexity of governance innovation, with the introduction of many new actors who learn how best to advocate for their interests, levels of government with differing interests (principal-agent problems), and the interactions among these actors leading to unintended and difficult to predict outcomes.

Balancing improved governance and political control

The article by Snape and Wang delves below the surface of the widely used term of the Chinese ‘Party-state’ and reflects on its historic evolution. Instead of taking the Party-state as a monolith, they add to the ‘fragmented authoritarianism’ model as identified and classified by Lieberthal⁶ by proposing a multi-layered model of analysis of Party-state-society relations. A multi-layer analysis should, as they convincingly outline, include both formal as well as informal institutions, the level of ideas/ideology and discourse, as well as the multiplicity and diversity of actors involved. The focus of this approach lies on the procedural level, hence highlighting the dynamic evolution of Party-state-society relations instead of operating with formal labels that operate with (sometimes outdated) presumptions that do not allow any mapping or explanation of observable changes and adaptations. This article provides evidence to show that in the instances where state functions have become more separate, ‘the Party has a feeling of having been stripped of power, and along comes the return to Party-state oneness.’ This corresponds to the dynamic the other authors in this issue note, where innovation triggers a feeling of separation between Party and State, or Party and society, which encourages the Party to halt the innovation in any meaningful way.

The Party’s efforts to modernize the PRC’s state apparatus and to increase the system’s efficiency, transparency, as well as responsiveness are further examined in the article by Zhen Wang. Wang assesses the Party’s policy experimentation efforts with a focus on personnel management (PES). While policy experimentation, policy learning, as well as innovation strategies have been widely analyzed with regard to the state administration and local governments, Wang turns to policy experimentation within the Party itself, a so far rather underexplored area. Given that the Party reportedly seeks to have absolute control over the personnel management of cadres, one could be tempted to assume that policy experimentation is restricted to areas outside the Party pillar. Having followed the evolution and modifications of the Party’s Performance Evaluation System over years, Wang is able to open the black box of inner-Party policy experimentation and to outline the tensions between the Party’s efforts to speed-up policy innovation and to maximize the Party-state’s overall performance on the one hand and the Party’s concern to prevent any erosion of its power and authority on the other hand. In particular, the case study of PES innovations represents an important case because this is such a sensitive issue, and thus reveals the true preferences of the Party: what do they want more, innovation or control? Wang finds that although Xi Jinping has tried to quantify and standardize PES, there are still incentives for experimentation under the ‘leadership’ category in the evaluation system that is assessed locally. This evidence supports the article’s argument that the Party wants both innovation and control, and that the incentive for innovation is not explicit (as in a certain number of points) but rather indirect and showing up in ‘leadership’ assessments. That allows the Party to have the best of both worlds, local officials trying to solve governance challenges, but also a way to discourage innovations they do not like without having to directly address the innovation topic itself.

Policy learning and policy innovation does not only occur by local policy experimentation, but can also reflect best practices of other political systems. One such interesting question when looking at policy innovation in China is whether political systems facing similar development challenges will choose similar policy solutions. Comparing new modes of public participation in policymaking in China and the United States, Balla and Xie examine consultation processes as initiated and coordinated by the Chinese Ministry of Commerce (MOC) and the United States’ Environmental Protection Agency (EPA). Coding draft regulations and related documented consultation rounds from 2002 to 2016, they identify both similarities as well as divergent practices. While both bureaucratic state apparatuses operate with public feedback to increase their efficiency and legitimacy, Balla and Xie argue that the level of transparency is much higher in the case of EPA consultations. Nonetheless, their findings demonstrate that consultation as part of the current governance innovation process is a feature independent from regime-type classifications. The evidence that MOC is trying to standardize the administration of the notice and comment process is encouraging; however, challenges with both transparency and broad participation suggest that consultation is limited as an instrument for enhancing accountability, legitimacy, and public trust in contemporary China. This corresponds with Zhen Wang’s finding that the Party-state grapples with a common dilemma–that of balancing giving enough discretion for agencies/local government to solve governance problems but of being able to halt these innovations if considered destabilizing. This common dilemma raises an empirical question of whether fears of destabilization neuter governance innovation, making it destined to fail (or at least less likely to succeed)?

Using a novel case study of AI development, Nele Noesselt examines the Party-state’s initiative to pursue a ‘new type of urbanization’ path. This has led to the Party-state seeking innovative answers to the developmental challenges deriving from China’s high-speed economic growth strategy of the past forty years, including a turn to ‘smart,’ artificial intelligence-based (urban) governance solutions. The government’s support for AI innovation has, as Noesselt argues, catalyzed a Manchester economy-style mushrooming of the ‘platform economy.’ People’s concern over data privacy and data security as well as reports about the precarious working conditions in the platform economy sector illustrate the need for unified, nation-wide regulations. Local smart city initiatives are essential to boost the country’s AI innovation capacities, and a plurality of simultaneously launched test runs is needed to find the ‘best’ solution. Top-down regulatory interventions, i.e. the passing of related laws and regulations, by the central level authorities do not seek to stop these experimentations–they should rather be read as a response to bottom-up reform pressure, including demands for (ethical) standardization of the AI sector. In this way, Noesselt provides a different answer to the question raised by Balla and Xie. She argues that central intervention should not be read simply as a way to control policy experimentation by local governments, but rather as an attempt to address concerns of citizens and other non-government stakeholders.

These authors all explore how the Party balances desire for innovative solutions to governance problems with a concern about maintaining political control. These analyses do not treat the Party as a monolith, but instead seek to understand competing interests throughout the Party-state structure that impact if and when local policy experiments are successful.

Concluding discussion

In summary, the authors in this special issue find that the process of policy and governance innovation needs to be updated to include a more interactive ontology and to highlight the tradeoffs between better governance and political control.

Future research should reflect these findings and include an evolutionary ontology focused on interactions among increasingly diverse actors. Additionally, scholars should pay attention to how these innovations challenge political control and thereby trigger Party retrenchment. These findings open up exciting new avenues for analysis, including both interaction with new actors previously left out of studies of policy experimentation and with strategies to avoid challenging political control in such a way to trigger retrenchment. In this new governance era, what are the ways in which policy entrepreneurs might pursue new policies while avoiding Party intervention? The empirical evidence presented by the authors in this special issue demonstrates the changing nature of governance innovation in China, and help other scholars to consider the actors and interests that must be included in analyses of policy experimentation and local governance.

Jessica C. Teets
Political Science Department, Middlebury College, Middlebury, VT, USA
[email protected]

Nele Noesselt
Institute of Political Science and in-EAST, University of Duisburg-Essen, Duisburg, Germany
[email protected]

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Jessica C. Teets

Jessica C. Teets, Associate Professor, Political Science Department, Middlebury College, President, Association of Chinese Political Studies (ACPS), Associate Editor-in-Chief, Journal of Chinese Political Science (JCPS), Non-Resident Senior Fellow, China Policy Institute, 107 Voter Hall, Middlebury VT 05753.

Nele Noesselt

Nele Noesselt, Professor, Institute of Political Science and IN-EAST, University of Duisburg-Essen, Institute of Political Science and IN-EAST, Forsthausweg 2, 47057 Duisburg, Germany.

Notes

1 Renmin Ribao, “Xi Jinping’s Statement on the Final Draft of the Decision on Institutional Reform and the Implementation Plan.”

2 Florini, Lai, and Tan, China Experiments.

3 Heilmann, “Policy Experimentation in China’s Economic Rise.”

4 Lewis and Steinmo, “How Institutions Evolve: Evolutionary Theory and Institutional Change”; Shue and Thornton, To Govern China; Ang, How China Escaped the Poverty Trap.

5 Teets and Hurst, Local Governance Innovation in China.

6 Lieberthal, K. G. “Introduction: The ‘Fragmented Authoritarianism’ Model and Its Limitations.”