Understanding China, One Blog at a Time

An American in China

On China’s Government

Posted by w_thames_the_d on March 1, 2011

Stanley Lubman

Even before reform, China had not been so authoritarian that orders issued from the center or from higher levels were obeyed without question. Since the onset of reform, local powers have grown; existing regional differences have been further accentuated by the fact that sophistication and experience vary widely around the country. The practical implications of this disorder understandably cause discomfort among close observers of FDI: the opacity and the regulatory tangle of China’s market grow more serious by the day and are not likely to abate at any time soon. This is largely due to China’s loose political organization. As soon as economic reforms are announced, some regions use them as an excuse to engage in on-the-edge experiments that never receive the full sanction of the local government. Other regions respond by initiating power grabs for local bureaucrats. Each reform, then, leads to accretion of confusing and sometimes contradictory local interpretations. A plain statement by an Australian business consultant identifies the local financial pressures at work: “Officials use their discretionary local power to advantage their income-gathering, even though their actions may be at odds with central government policies and laws.” Some examples follow. B. Violation of Law by Local Officials In Chinese governance, lack of transparency converges with the extremely broad discretion that has been given to officials to interpret and apply laws. As a result, official action is veiled not only from the public, but very frequently from other units of government, including higherlevel organizations that theoretically ought to be cognizant of activities below them. Local officials’ arbitrary exercise of discretion has been a major source of investor anxiety and resentment since foreign investors , in which he writes, “The state has become a flexible, dynamic, and growth-oriented political machine whose core incentives for officials at all levels are such that the national leadership now tries every year with only limited success to slow GDP growth. Many localities routinely circumvent national-level orders.”

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