Public Sector Reform and the State: The Case of China

ABSTRACT Administrative reform in China has followed a different path from reform in OECD countries. Because of its different point of departure (relatively underdeveloped, centrally planned economy, and one party monopoly) reform in China has included establishing a market economy, strengthening market regulations, and institutionalizing civil service. There are some similarities between China and OECD countries, however. Both China and developed capitalist democracies have tried to downsize their public sectors, corporatize some government departments, and decentralize administration. Contrary to stated policy goals of Chinese government, net result of these changes has been to strengthen state. Moreover, reform has left both developmental and predatory natures of Chinese state intact. There is some evidence, however, that Chinese state is now seeking to become more neutral vis-a-vis INTRODUCTION Spared by economic crises and informed by New Right, public-sector reform in developed capitalist democracies has involved decentralization, deregulation, privatization, and marketization (Lane, 1997:1; Rainey, 1998: 19; Hood, 1991). The implication of these changes was that size and role of state would shrink. According to this scenario, a lean core state would remain to manage most activities indirectly. Most public goods and services would be provided by business-like executive agencies or by private sector and non-profit organizations under contract. Globalization and need to compete in an increasingly integrated market have had an impact on developing countries as well and they, too, have been encouraged to reform their public sectors. Because China has come to public sector reform from a radically different starting point from developed capitalist democracies (relatively underdeveloped, centrally planned, and ruled by a one-party monopoly), reform in world's most populous country has taken its own path. Still, reform in China has also sought a smaller, less intrusive state. This goal is neatly captured in official Chinese slogan: small government, large society. The evidence now indicates, however, that in spite if years of reform both in China and overseas, position of state remains relatively strong. The statist orientation of public-sector reform is evident in western democracies. In OECD countries, for example, although size of civil service has shrunk in many cases (including Australia, Canada, New Zealand, UK, and USA), public expenditure as a percentage of gross national product has remained remarkably stable (Ferlie et al. 1996:2-3) because the public sector continues to finance and deliver core goods and services that are of major significance to as a whole: health, education, research and development, criminal justice, and social security (Ibid., 3). In China, case is even clearer. Not only has size of public sector, especially government, been immune to years of attempted downsizing but also position of state as a result of public sector reform, especially local state, remains as strong as ever. The goal of small government, large society has yet to be realized. CONTEXT China is divided into 30 provinces or provincial-level units ranging in population from 2 million (Tibet) to over 110 million (Sichuan) people. Average provincial population is 30 to 40 million, larger than population of many countries. Provinces are subdivided into prefectures (there were 110 such units by end of 1997) or prefectural cities (22 in 1997). Prefectures in turn are subdivided into counties (1,693 in 1997) or county-level cities (442). Cities are further divided into 727 districts (State Statistical Bureau, 1998:3). Territorially based party committees, each with its own bureaucracy, manage government and economy at each administrative level (Lieberthal, 1995). …

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