China's Regulatory State: A New Strategy for Globalization. By Roselyn Hsueh. Ithaca, NY: Cornell University Press, 2011. 303p. $75.00 cloth, $35.00 paper.
From Iron Rice Bowl to Informalization: Markets, Workers, and the State in a Changing China. Edited by Sarosh Kuruvilla, Ching Kwan Lee, and Mary E. Gallagher. Ithaca, NY: ILR Press, Cornell University Press, 2011. 233p. $39.95.
Economic Openness and Territorial Politics in China. By Yumin Sheng. New York: Cambridge University Press, 2010. 292p. $95.00.
Introduction
China's contemporary political economy is among the most exciting and demanding frontiers of research in comparative politics. The country's sheer size and internal diversity offer a natural laboratory for examining topics at multiple levels and units of analysis, and in varied regional environments. China's salience in the international media and business community also presents scholars with the added opportunity (and even responsibility) for clarifying popular misconceptions through original empirical research. An abundance of research possibilities is accompanied by a ready audience of nonacademic consumers.
Meanwhile, with the decline of area studies in social science, China scholars earn the respect of their disciplinary colleagues by making analytic, not just descriptive, claims. Students of Chinese politics are expected to translate their findings into concepts and paradigms derived from familiar cases of development—or more ambitiously, to generate novel theoretical insights that contribute to the broader discipline of political science. Interpreting Chinese politics through conventional categories is an exercise in showing what political science can do for China studies, while proposing new analytic terms demonstrates what the case of China can do for political science. Both approaches have merits insofar as they generate compelling research questions, meaning those that are nontrivial, do not have obvious answers, and, therefore, have potential to contribute to our understanding of Chinese politics and general political processes.
Each of the three books under consideration is organized around such questions. They also demonstrate the value of cross-fertilization between area studies and disciplinary frameworks. But ultimately, the most inspiring parts of these books are the sections where the respective authors show what China can do for political science, both empirically and analytically. When the case of China deviates from the expectations of conventional frameworks, it presents an opportunity for China scholars to introduce alternative explanatory possibilities and concepts. Examples of a few notable efforts are discussed at the end of this essay.Footnote 1 But unfortunately, most in the field remain reluctant to generalize from the case of China, which limits the readership of research monographs to area specialists.
Political scientists with expertise in China should learn from the intellectual insularity of American exceptionalism in the study of American politics. As Alfred Stepan and Juan Linz have advised in this journal, the study of both American politics and comparative politics would benefit from treating the United States as a country that is conceptually comparable to others. Scott Kennedy similarly calls for China scholars to break out of the “Middle Kingdom complex” in China studies.Footnote 2 Like their counterparts in American politics, most China scholars do not view the case of China as a site for broader conceptual innovation. Large, complex countries such as China and the United States are more likely to be studied for their unique qualities, but framing their developmental attributes in comparative context would enrich our understanding of politics more generally.
Research Questions Framed by Globalization
The three books reviewed here are organized around research questions that probe the implications of globalization for China's domestic political economy. In so doing, they show that China's domestic politics cannot be understood in autarkic terms.
Yumin Sheng's Economic Openness and Territorial Politics in China asks how the Chinese Communist Party (CCP) has remained in power and preserved the country's territorial integrity despite centrifugal pressures associated with economic globalization. The longevity of China's uninterrupted communist rule amid other examples of communist collapse and national fragmentation is not only a research puzzle but also an issue that concerns leaders in Beijing.
A related and equally pressing topic is how China's workers—the former beneficiaries of state socialism—have fared in an era of marketization and a shift to flexible production strategies. The volume coedited by Sarosh Kuruvilla, Ching Kwan Lee, and Mary E. Gallagher, From Iron Rice Bowl to Informalization, explores how the party-state created and then responded to the sharp rise of informal labor—and how workers themselves are reacting to the end of cradle-to-grave protections. The volume's nuanced and empirically grounded contributions show that the boundary between state and society is simultaneously fluid and real in contemporary China. Such fluidity and political (re)negotiation is to be expected in a transitional socialist environment.
China's reform era, however, has already entered its fourth decade, while the Mao era lasted barely three decades (1949–76). Notwithstanding the historical question of whether socialist legacies can outlast time in transition and reform, both area specialists and comparativists continue to wrestle with the irresistible question concerning how to classify China's reform-era political economy. China's liberalization of foreign direct investment (FDI) is virtually unprecedented in the developing world. Yet some economic sectors remain firmly under state control. Is China a developmental state like its regional neighbors or an example of some other form of capitalism? Roselyn Hsueh's China's Regulatory State tackles this taxonomical issue through case studies of industrial strategy in comparative perspective.
In answering these questions, the books vary in the extent to which they rely on preexisting theoretical frameworks. They also employ different methodological tools. Sheng's study is executed parsimoniously and tests various hypotheses and subhypotheses through quantitative analysis. The contributions to the edited volume are inductive and empirically driven, as they concern a phenomenon—informal employment—that is inherently challenging to measure. Since the individual authors address different aspects of labor's informalization, the overarching volume provides a multidimensional narrative, in contrast to Sheng's more linear and deductive causal argument. Hsueh's book deploys a wealth of original field research in analyzing the patterns of state control across various industrial sectors, and over different phases of the reform era.
What Political Science Can Do for China
Economic Openness and Territorial Politics in China treats reform-era China as a test case for theories that predict rising secessionism in countries exposed to global markets. This expectation derives from political economists who have examined the impact of globalization on political integration.Footnote 3 According to this interest-based logic, variation in the geographic distribution of factor endowments such as land, labor, and capital means that some subnational units have a comparative advantage over others in international trade.Footnote 4 Openness to the global economy benefits subnational units differentially. Some win, others lose. Winners recognize the advantages of international economic integration over political integration with domestic territorial units that are less favorably endowed. Losers experience deteriorating welfare and demand fiscal assistance from the central government. To compensate loser regions, the center needs to expand its fiscal capacity to extract more revenue from winners. To avoid the center's redistributive project and loss of local revenues, winner regions will demand political autonomy. Economic openness thus increases the likelihood of political decomposition.
Does it really? Sheng concurs that globalization creates winners and losers with competing interests, but questions the endpoint of these models (i.e., more smaller states). For one, factors other than globalization contributed to the end of the Cold War and the creation of about 20 successor states to the Soviet Union in the early 1990s.Footnote 5 For another, Sheng's own cross-national analysis finds limited evidence for national political disintegration with increasing economic globalization.Footnote 6 And then there is China, which remains both whole and enormous.Footnote 7 The author agrees that openness to world markets has introduced politically destabilizing income inequalities and heightened tensions between wealthier and poorer provinces. The question is how Beijing has managed to “stave off the domestic territorial menace posed by economic globalization” (p. 4). Sheng argues that the central government copes with this threat by exerting greater political control over winner regions. The Chinese Communist Party has kept itself in power by “installing trustworthy, pro-center agents into the top government leadership of the rich but unruly winner regions” (p. 43).
Such centralized control has negative externalities, however. The “fundamental political dilemma of an economic system,” as Barry Weingast has noted, is that “a government strong enough to protect property rights and enforce contracts is also strong enough to confiscate the wealth of its citizens.”Footnote 8 In the absence of institutional constraints on the central government, such robust central authority runs the risk of fiscal predation and dampening incentives for economic growth in precisely the regions that have the most potential for development. Weingast and other architects of the concept of “market-preserving federalism” believe that such institutional constraints were in place in England after the Glorious Revolution and in the antebellum United States, which incentivized growth-promoting competition among subnational units. The notion of market-preserving federalism (MPF) has also been applied to reform-era China. But Sheng disputes its applicability because China's fiscal arrangements have not proved to be “politically durable.”Footnote 9 To the contrary, Beijing has engaged in arbitrary and opportunistic fiscal behavior. Hence, Sheng predicts that tighter political control of winner regions will adversely impact provincial growth. These hypotheses are tested through statistical models using official data spanning 1978 to 2005.
This book should be commended (and read) for its theoretical elegance and clarity. Concepts are well defined, variables are operationalized and measured transparently, and the author attends to potential concerns regarding the quantitative analyses (e.g., in addressing endogeneity, multicollinearity, etc.). The methodological appendices at the end of the empirical chapters are particularly instructive for researchers seeking to replicate or build on this study.
Reality Checks
Since Economic Openness and Territorial Politics in China uses data that goes only to 2005, however, readers are bound to wonder whether Sheng would expect the empirical data to hold up through the global economic crisis and beyond. The most economically integrated provinces along the coastal South were those hardest hit by the downturn in global demand. Meanwhile, Beijing launched a 4 trillion RMB ($586 million) stimulus package at the end of 2008, most of which went to investment in infrastructure and social services. The center simultaneously commanded monetary expansion in the form of bank lending, which was directed primarily to state-owned enterprises. What does the model lead us to expect during a global recession when the central government prioritizes Keynesian-style stimulus spending? The logic suggests that when the terms of trade turn against export-oriented regions, the central government would relax its political control over appointments because the impetus for political autonomy in those provinces would diminish. One would also expect a decline in regional redistribution through fiscal channels. Did that occur after 2009?
These are real questions. If other scholars wish to pursue the research agenda that Sheng has outlined, conducting field interviews or analyzing case studies of particular provinces/municipalities may yield more insight than running additional logit models with marginal refinements. Since the tested theory predicts pressure for national disintegration with increasing global engagement, a basic question to ask is whether citizens in the provinces most connected to international markets have shown any sign of clamoring for political autonomy, or whether there is evidence that Beijing's political elite is especially concerned about secession by wealthier provinces. In recent decades, Tibet and Xinjiang—border provinces with higher percentages of ethnic minorities—seem to pose a higher risk for breaking away from the People's Republic of China (PRC).Footnote 10 Although Sheng's model shows that the center has indeed exerted tighter political control over autonomous regions with ethnic minorities, it is not because they have higher levels of international trade. To the contrary, they are among the least economically integrated with world markets. The center's concern for political control stems from ongoing ethnic unrest and direct expression of demands for political autonomy.
Engagement with the historical literature on China's macroregions and more contemporary analyses of economic regionalism would also provide valuable broader context on central–local relations and regional developmental patterns over time.Footnote 11 The lower Yangtze River delta in Southern Jiangsu (Sunan), a macroregion that includes Shanghai and Nanjing, is endowed with arable land and was the most prosperous part of the country long before the PRC's establishment. By the same token, post-1978 is not the first time that the southern coastal provinces of Fujian and Guangdong have been more externally engaged than their inland counterparts. The linguistic, cultural, and commercial ties between southern Fujian and Taiwan, between Guangdong and Hong Kong, and between both provinces and overseas Chinese in Southeast Asia date back several centuries. Meanwhile, governing the coastal South all the way from Beijing and other northern capitols has been challenging historically. During the second half of the seventeenth century, for example, three generals from Fujian, Guangdong, and Guangxi jointly launched a rebellion against the Manchu rulers of the early Qing dynasty.Footnote 12 This “Revolt of the Three Feudatories,” however, was not about declaring provincial independence but, rather, an attempt to oust the Manchus and restore Ming rule.
Economic Openness and Territorial Politics in China effectively demonstrates why and how the center assigns its most loyal agents to regions perceived to be at risk for excessive localism. The logic of the particular provincial interests that need to be protected, however, is less convincingly accommodated by the deductive framework of globalization motivating regional winners to seek political separation. Threats to the territorial integrity of China extend beyond fiscal greed. Similarly, the most high-profile dismissals of provincial-level officials (i.e., Chen Xitong in Beijing, Chen Liangyu in Shanghai, and Bo Xilai in Chongqing) have been those of Politburo members who were involved in more complicated elite politics.
What China Can Do for Political Science
Whereas Sheng worries about the impact of economic winners on regime stability, Kuruvilla, Lee, and Gallagher's volume looks at the real losers of globalization and reform—not the leaders of impoverished provinces but informal workers throughout China. A key message is that various types of workers have been differentially affected by China's reform process. Just as economic reform has contributed to regional disparities, it has also introduced a host of inequities among China's workers. It is not just a matter of making some workers wealthier and impoverishing others, however. The winners–losers dichotomy is too blunt for capturing the shifting categories of employment and underemployment. Certain types of managers and business owners have benefited from state-sector restructuring, while new hierarchies of workers have been created. What it means to be a worker in China is no longer the privileged Mao-era category of being employed in a state-owned enterprise (SOE) with cradle-to-grave protections. The volume reveals how national labor laws have both stimulated and attempted to ameliorate the rise of informal employment, meaning “employment that is not stable or secure, that lacks a written agreement or contract, and that does not provide social insurance or benefits” (p. 2). Based on original research and analysis, the individual chapters provide a textured account of the strategies that local governments, employers, unions, nongovernmental organizations (NGOs), and workers have pursued in the face of new regulations and modes of production.
The sources and expression of informal employment have evolved over the course of the reform era. During the initial phase, agricultural decollectivization released tens of millions of workers from the countryside who turned to self-employment in the petty private sector and/or migrated to urban areas. Informal work was generally concentrated in the nonstate sector during this period, though underemployed state employees also moonlighted on the side. By legalizing the use of short-term employment contracts, however, the 1995 National Labor Law represented a turning point in China's employment regime. On the one hand, the 1995 law was intended to curb exploitative practices in the nonstate sector. On the other hand, the law effectively ended the “iron rice bowl” system of lifelong employment security in the state sector. Indeed, informal employment rose sharply, especially after 1997 when state-sector restructuring deepened. Albert Park and Fang Cai (Chap. 2) estimate that informal workers increased by 24% annually from 1995 onward, reaching 39% of all workers by 2002. Informal employment in the state sector now takes a variety of forms, including rehiring laid-off or retired workers, and the use of temporary agency workers.
Comparative Opportunities
Despite the absence of a unifying model or theory, From Iron Rice Bowl to Informalization merits attention for presenting original research on a critical component of China's political economy that is difficult to research. Informalization of labor is every bit as relevant as private entrepreneurship or foreign investment to the Chinese economy, and, in fact, the latter have contributed to informalization. While the editors wisely refrain from making speculative prognostications, they highlight a number of themes that could contribute to comparative analysis.
Above all, the contributors agree that informal employment in China is not likely to wane. As studies in other contexts have shown, informalization is not necessarily a transitional phenomenon that naturally expands and then contracts in the course of industrialization or market reforms. Earlier modernization and Marxist literature regarded the informal economy as a residual “reserve army” of surplus rural labor that had not been absorbed into the (formal) modern industrial sector.Footnote 13 More recent scholarship recognizes that informality may be generated by neoliberal economic strategies that rely on flexible production.Footnote 14 The gendered impact of globalization on the industrial division of labor in export-oriented manufacturing has also been well documented. And certain sectors are prone to informality, such as self-employed peddling, domestic services, childcare, and prostitution. China's experience seems consistent with these observations, as seen in Sarah Swider's chapter on the emergence of “permanent temporariness” in the construction industry. Yet the case of China presents an opportunity for undertaking comparative analysis and deriving policy lessons. Why, for example, have informalization and income inequality increased in China during the 1990s and 2000s, while they have declined in Brazil—another large and rapidly growing economy—during the same period?
The contrast with Brazil is potentially quite puzzling, given that China's party-state attempted to stem informalization with more legislative assertiveness than did other governments. The 2008 Labor Contract law was intended to quell labor protests, yet ironically, the highly public process of debating the draft law emboldened workers to defend their rights. Indeed, labor militancy has increased across the board during China's fourth decade of reform. To explain this, Lu Zhang (Chap. 6) draws on Beverly Silver's (Reference Silver2003) research on labor force dualism in comparative-historical perspective. Silver points out that the first generation of migrant workers has shouldered exploitative working conditions in a quiescent manner, but the second generation of migrants has become “the backbone of militant struggles.” Temporary workers are no longer solely illiterate migrants from the countryside. Rural youth, urban-educated graduates, and even formal workers are becoming more activist. Thus, even under conditions of labor dualism, employers have become more responsive to workers' demands. Mark Frazier's (Chap. 4) analysis of public-opinion surveys underscores the growing sense of rights consciousness among urban workers. They expect the government to provide social services, especially pensions, and of particular note, they have faith in the government's ability to deliver such benefits. The regime's anxiety about social stability may have empowered labor.
In the end, however, the editors are guarded in their assessment of labor's potential to affect politics in a substantive manner. No one is talking about a growing underclass of temporary workers leading a counterrevolution that overthrows the Chinese Communist Party. Going forward, scholars might wish to consider how informalization in China compares with reforming or former socialist economies, East Asian neighbors during periods of manufacturing-led growth, or other large developing countries. Informalization is not unique to China, though the state's response may well be distinctive. It is hard to know without some comparative framing. What is China a case of?
China as a Case unto Itself
In China's Regulatory State, Hsueh seeks to explain the nature of China's developmental model, which is “radically different from any we have seen before” (p. 2). This departure raises questions about the logic underlying its particular path: “Why has China adopted a more open strategy toward foreign capital, fundamentally breaking from the developmental state model and from its own Communist past? How do we reconcile extensive market liberalization and decentralization of economic decision making with regulatory centralization and enhanced state control?” (p. 2). The short answer: China is a case unto itself.
Hsueh contends that the regime has pursued a bifurcated strategy of “liberalization two-step.” The first step entails macro-level liberalization, including far more openness to FDI than in Japan, South Korea, or Taiwan. The second step involves selective reregulation of particular industrial sectors. Over the course of the reform era, these two steps have formed an iterative cycle of liberalization followed by reregulation.Footnote 15 Readers acquainted with China's reform policies may wonder why legalization of private enterprise (1988) and the opening of fourteen coastal cities and Hainan to FDI (1988) both occurred during one of the reregulatory, rather than liberalizing, phases. But the apparent incongruity lies in the definition of “reregulation” itself, which represents “the reformulation of old rules and the creation of new ones to achieve state goals” (p. 22). Following Steven Vogel's (Reference Vogel1996) observation that market reforms entail institution building, Hsueh explains that “liberalization entails explicit actions taken by the state, often requiring reregulation, to undermine the role of the state and enhance markets.”Footnote 16
Hence, the core of Hsueh's analytic framework is organized around the concept of reregulation rather than liberalization per se. She identifies four patterns of state control: expansionary reregulation, strategic reregulation, delegated reregulation, and decentralized reregulation. These patterns have differing implications for the extent of central oversight and are applied selectively to industrial sectors depending on their strategic value to the center.
“Strategic sectors” are industries that are important to national security (including domestic stability) and to the country's technological and infrastructural base. Although this sounds intuitive, differentiating state policy by sector sheds light on common misconceptions of China's political economy. The fact that China attracts more FDI than any other country, for example, does not mean that it also has the most liberalized economy. By the same token, just because a sector is subject to extensive central regulation does not preclude openness to FDI. FDI in telecommunications, for example, expanded in tandem with the growing density of central regulations.
Not a Developmental State
Even after the Asian financial crisis of the late 1990s, the developmental state model remains the dominant reference point in the study of East Asian political economy. Scholars have reflected on the way in which the developmental state has adapted to new domestic and global realities, and others have discussed the notion of the “postdevelopmental state.”Footnote 17 Meanwhile, various scholars have described reform-era China as a developmental state, given certain similarities with its regional neighbors: land reform, single-party regime, strong state, planning bureaucracies, industrial policy, export-oriented industrialization, and high growth rates.Footnote 18 One of the objectives of China's Regulatory State, as implied by its title, is to distinguish China's political economy from the East Asian developmental state model. Others have similarly objected to classifying China as a developmental state.Footnote 19 But Hsueh's monograph takes on the task more methodically, by industrial sector and subsector, including shadow comparisons with Japan, South Korea, and Taiwan at the end of each empirical chapter. In China, patterns of state regulation in different sectors are tied to the strategic value framework, rather than a statist impulse to limit foreign capital and pursue industrial policy across the board.
Consider how the strategic value argument is evident even within subsectors of telecommunications. The provision of basic services in telecommunications has significant strategic value to the regime because it involves the country's communications infrastructure. Thus, basic services were subject to strategic reregulation before China's accession to the World Trade Organization in 2001, followed by expansionary reregulation (post-WTO) that highly restricts market entry, ownership structure, and business scope. Telecommunications networking equipment is less sensitive because communications networks are not operated by equipment producers, though access to foreign technology is important to China in this area. Delegated reregulation (i.e., liberalization) during the pre-WTO period facilitated modernization of China's network infrastructure by encouraging competition among state, private, and foreign producers. But after WTO accession, the state reinterpreted WTO provisions and reasserted its authority by controlling technical standards, limiting licensing and certification, maximizing transfers of foreign technology, and providing fiscal and infrastructural incentives to public enterprises.
Does this not sound similar to what a developmental state would do? Not exactly. Hsueh argues that the East Asian developmental states promoted their respective telecommunications sector through “a strikingly different approach.” While China allowed FDI and competition in the service of a national objective (foreign technology transfer), Japan, South Korea, and Taiwan strictly regulated FDI and limited competition, focusing instead on supporting private domestic manufacturers, for example, by investing in research and development facilities. By contrast, China developed its own networking standard through SOEs and foreign technology transfer. What distinguishes China from these developmental states, then, are the methods of state control, and not necessarily the degree of state intervention. Like its East Asian neighbors, China sought to develop its telecommunications sector, but pursued a different strategy that engages foreign and state firms rather than private ones.
In contrast to telecommunications, textiles lie at the other end of the strategic value spectrum. Market entry was rapidly liberalized in the 1980s, as private entrepreneurs took over distressed assets in the state and collective sector and established new textile factories. Local governments offered foreign investors various fiscal and infrastructural incentives, which succeeded in attracting large volumes of FDI, especially by investors from Hong Kong, Taiwan, Macao, and Southeast Asia. As in telecommunications, Hsueh finds, China's approach to textiles contrasts with industrial policy in the East Asian developmental states. During the import-substitution phases of their development, Japan, South Korea, and Taiwan shielded the domestic textile industry from foreign competition and extended preferential loans and tax exemptions to domestic producers. Such support continued into the export-oriented phase of development. While textiles represented “the leading sector” for the East Asian newly-industrializing countries (NICs) during the 1950s and 1960s, it has not been a strategic sector for China. Hsueh points out that the Chinese government intentionally “sacrificed the textile industry during trade negotiations in favor of more strategic industries, such as telecommunications” (p. 184).
Does the differential strategic valuation of industries mean that China is therefore not a developmental state? Hsueh's own richly detailed discussion of China's treatment of textile manufacturing versus trade and distribution of textiles, before and after accession to the WTO and in different subsectors, is actually consistent with a broader developmental state logic in at least two ways. First, the central government has maintained centralized regulation and subsidized R&D in the industrial and technical textile subsectors that contribute to important areas of the economy, such as construction, aviation, high-technology industries, and those with military applications. It has also retained centralized regulation of apparel exports, since they affect the general economy and China's foreign economic relations, and subsidized raw material inputs for the technical sectors. Second, even though the center decentralized regulatory authority in licensing and quota distribution to provincial entities, some local governments have pursued tools that mirror those of the developmental state. They have collaborated with business associations to promote technological upgrading, provided research grants, offered fiscal incentives, and extended special treatment to local businesses in quality inspections and export licenses. Arguably, in certain sectors, the center has facilitated the rise of local developmental states.Footnote 20 But Hsueh maintains a persistently sectoral lens in her analysis, and does not consider how regional models of political economy within China might affect the state's regulatory efforts. Such a task would be an appropriate next step for others in this research agenda.Footnote 21
Conceptual Issues in the Study of Chinese Politics
Each of the books under review frames the case of contemporary China in terms that seem to challenge conventional expectations. Why is China so open to foreign capital? Why does China remain whole? Why are labor laws leading to informalization? The answers to these questions have implications for core issues in the study of China's domestic politics, and allude to areas where further research and conceptual innovation would be valuable. Two explanatory problematics stand out in particular. First, assessing the extent of state capacity is complicated by corruption, local protectionism, and societal unrest. Second, these complicating realities may be harnessed to help us understand the dynamics of institutional change in China's political economy.
Making Sense of State Capacity
At the most fundamental level, all three books address China's state capacity amid the bimodal pressures of domestic reforms and global economic engagement. Recall Theda Skocpol's definition of state capacity as the ability to “implement official goals, especially over the actual or potential opposition of powerful social groups or in the face of recalcitrant socioeconomic circumstances.”Footnote 22 In Sheng and Hsueh's accounts, China has a high level of state capacity. The party-state is strong and strategic. The center forestalls centrifugal tendencies by appointing its most loyal, “bureaucratically integrated” officials to provinces that pose the greatest risk for breaking away (Sheng). It defines and implements the desired degree of foreign, state, and private-sector participation in each industrial sector to achieve its political and economic goals (Hsueh). The PRC party-state is generally in control and effective, even as it looks the other way or decentralizes authority more formally.Footnote 23 This is the type of state that makes other countries nervous about China.
Yet one does not have to look far—or beyond the books under review—to identify limits to state capacity in multiple arenas, including the ones studied by Sheng and Hsueh. First, although the CCP's nomenklatura powers can motivate officials to comply with the center, the pervasiveness of official corruption suggests that the threat of dismissal (or execution, as in the cases of Beijing's former mayor and former head of the State Food and Drug Administration, respectively) is insufficient to deter venality. Even officials who simultaneously hold national and provincial leadership positions (“concurrent centralists”) are prone to corrupt behavior. Moreover, anticorruption campaigns have the perverse effect of increasing the intensity of corruption.Footnote 24 What Hsueh calls a regulatory state, other China scholars have called a “decentralized predatory state [with] local mafia states” and “booty socialism.”Footnote 25 Certain forms of corruption can lubricate a transitional economy by lowering transaction costs, but exporting embezzled funds for personal use compromises regime legitimacy, if not state capacity.
Second and relatedly, state capacity relies on compliance from lower levels of government and bureaucratic agencies. Even though China has a unitary political system, Beijing faces the types of challenges in governance and policy implementation that one finds in other large countries with subnational governments. Sheng focuses on central efforts to keep the wealthiest, most globally integrated provinces in line, as well as the restive lower-income western provinces with ethnic minorities. But typically, the most egregious violations of national rules and regulations occur at the subprovincial level. The center holds the authority to rotate provincial officials, but city/county, district, township, and village cadres exercise discretion by interpreting central mandates in locally advantageous ways—or by simply ignoring them.
During the late 1990s, for example, overcapacity in cotton processing was squeezing the profit margins of fabric manufacturers. Hsueh recounts how local governments turned deaf ears to the Bureau of Textiles' (BOT) national call to cut spindles. Determined to recalibrate textile production prior to WTO accession, Beijing dismantled BOT and established a new central agency, the State Administration of Textile Industry (SATI), whose bureaucrats were dispatched to factory floors to watch as spindles were destroyed.Footnote 26 After the spindle-cutting campaign was over, local governments resumed their disregard of textile policies. My own research demonstrates that similar efforts to crack down on informal finance are ineffectual over time because local governments protect underground bankers who serve the local private economy.Footnote 27 When a particular area is urgently prioritized, the state has the capacity to reign in local transgression with concentrated coercive attention. But during normal times, the balance of central–local relations in China leans toward localities engaging in opportunistic behavior.
The third qualification to Sheng's and Hsueh's sanguine view of state capacity derives implicitly from their own arguments: State capacity is uneven and exerted unevenly across regions and industrial sectors because different interests are at stake. From Iron Rice Bowl to Informalization provides a more direct and contextualized reminder of why state capacity cannot be understood in a political or social vacuum. By the late 1990s and early 2000s, high-profile instances of worker activism in both the formal and informal sectors prompted state efforts to enact stronger legal protections for labor. As detailed by Mary Gallagher and Baohua Dong (Chap. 3), the 2008 Labor Contract Law represented the culmination of two years of heated international and domestic debate over how to accommodate the competing interests that had emerged in reform-era China. On the one hand, the All-China Federation of Trade Unions (ACFTU), international NGOs, and domestic legal scholars on the Left (the “Northern School”) pushed for more robust protections for labor. On the other hand, Western business associations, including the American Chamber of Commerce, the European Union Chamber of Commerce, and domestic neoliberal intellectuals (the “Southern School”) argued for market regulation of labor to maintain China's global economic competitiveness. SOEs, labor subcontracting companies, domestic entrepreneurs, and business leaders in Taiwan and Hong Kong also weighed in through relevant official channels. The resulting 2008 Labor Contract Law limited fixed-term contracts to two terms, after which employers would be required to switch to open-ended contracts.
If fully implemented and enforced, the 2008 law could have represented a milestone for labor rights. But it went into effect on the eve of the global financial crisis, which immediately hit labor-intensive, export-oriented industries the hardest. Official media reported that 20 million migrant workers had already lost their jobs by the end of 2008. Scrambling to stem the tide of bankruptcies, local governments and courts interpreted the new law in a manner that blunted the intended protections. Ironically, because the legal debate had been so public, workers lodged complaints against their employers in record numbers, and the volume of arbitrated cases doubled within the first year of the new law. While local governments have been reluctant to enforce the law, workers themselves now constitute a force for “bottom-up enforcement” by filing disputes through available legal channels.
Endogenous Institutional Change and Authoritarian Resilience
The contrasting portraits of state capacity in China in the three books reflect how broadly the respective authors define interests in the political economy. Both Sheng and Hsueh focus on a narrow slice of central state interests and assume the existence of elite consensus. Above all, the center seeks to remain in power and avoid territorial dissolution (Sheng). In terms of industrial development, the central government seeks to attract foreign technology through FDI and to retain regulatory authority over sectors with high strategic value. When “incomplete centralization has occurred,” Hsueh explains, it is “because the government has deliberately planned it that way for economic or politically strategic reasons” (p. 29). The PRC state has demonstrated its ability to pursue these core interests by rewriting the rules of the game, dismantling and creating new institutions as needed. This sounds straightforward.
Kuruvilla, Lee, and Gallagher's volume shows, however, that the landscape of politically relevant interests extends well beyond regime durability and national security. When a wider range of interests is added to the mix, the assumption of internal consensus among China's leaders becomes more tenuous and politically charged. The national debate between the Northern and the Southern Schools surrounding the 2008 Labor Contract Law is a case in point. Indeed, students of China's elite politics have identified various factional divisions throughout the reform era—conservatives versus reformers, generalists versus technocrats, elitists versus populists—which are associated with divided policy preferences and oscillating policy cycles.Footnote 28
Given such political tensions, it is remarkable that the regime has managed to implement reforms that have fundamentally restructured China's political economy. Examples of such changes include the legalization of private enterprise (1988), the 1995 Labor Law, and the admission of capitalists into the CCP (2001). Each of these reforms completely reversed the party-state's prior ideological and political commitments. Why and how did this occur? Gallagher and Dong might emphasize the public debates over draft laws and proposals; they explain that because “law is one of the critical institutions that connects politics to the economy, it is exactly in the lawmaking process that we see the internal contradictions of the Chinese political system most clearly” (From Iron Rice Bowl, p. 37). Sheng would point to the CCP's pragmatic approach to reform, as China's national leaders are “primarily animated by the desire to stay in power, much like their counterparts elsewhere, democratically elected or otherwise” (Economic Openness, p. 17). Hsueh might respond that such institutional reforms were strategically important, but she dissociates sectoral patterns of liberalization and reregulation from elite politics: “[T]he rise and fall of conservative hardliners within the Chinese Communist Party does not adequately account for the calibrated nature of liberalization across the political economy” (China's Regulatory State, p. 28).Footnote 29 The party-state seems unencumbered by political or bureaucratic obstacles in Sheng and Hsueh.
Ultimately, we lack a convincing conceptual framework for explaining the causal mechanisms underlying major institutional transformations in the domestic political economy, especially in the absence of regime change, revolution, war, external occupation, and so on. What explains the party-state's capacity for endogenous institutional change? In earlier research, I proposed the concept of “adaptive informal institutions” to serve as an analytic bridge between formal institutions and informal behaviors in general theories of endogenous institutional change from historical institutionalism.Footnote 30 Empirically, adaptive informal institutions refer to widely practiced strategies that arise in response to the constraints and possibilities of formal institutions. Analytically, they represent potential sources of institutional innovation that are typically overlooked in explanations of gradual institutional change.Footnote 31 In a causal sequence of endogenous institutional change, adaptive informal institutions represent intervening variables when they are present: Initial (formal) institutional conditions can trigger the development of adaptive informal institutions, which, in turn, facilitate reforms of the original institutional environment.
Reform-era China is replete with examples of local economic and political actors who evade or redeploy formal rules to achieve their objectives. The spread of agricultural decollectivization, private entrepreneurship, foreign direct investment, and informal employment can all be matched with specific policy pronouncements or legislation sanctioning these novel practices. But the enactment of these new policies was typically preceded by routine reliance on adaptive informal institutions at the local level, which signaled to reformers that formalizing the informal practices would promote economic growth.Footnote 32 All of the books under review offer evidence that the center is aware of informal (and sometimes, technically illegal) practices. This is not to say that grassroots actors have been the architects of reforms. Instead, the popularity and effectiveness of certain adaptive informal institutions have enabled reform-oriented elites to overcome political opposition by conservative colleagues. In so doing, the party-state appears more sensitive to local and societal pressure than one might expect in an authoritarian regime. In the edited volume, Lu Zhang observes similar attentiveness to lobbying and public protests: “Ironically, because of the lack of electoral legitimacy, the authoritarian regime has to be more responsive and adaptive to grievances and demands from below in fear of ungovernability” (p. 136).
In this spirit, other scholars have examined the regime's experiments with “deliberative institutions,” “consultative authoritarianism,” “consultative Leninism,” and “deliberative authoritarianism.”Footnote 33 These explanations for China's adaptive capacity relate to the broader issue of how to explain authoritarian resilience.Footnote 34 But with the exception of Baogang He and Mark Warren (2011), the authors do not cast their explanations in terms that might engage political scientists interested in authoritarian resilience in general.Footnote 35
Conclusion
In his 1984 critique of the “second generation” of scholarship on Chinese politics, Harry Harding bemoaned that “concepts from comparative politics have been used to understand China, but China has not yet been used to help expand our understanding of comparative politics.”Footnote 36 Nearly three decades later, Harding's observation still holds. Footnote 37 We have accumulated scholarship that demonstrates how China is approaching or straying from conventional models of political economy. The developmental state model is a logical touchstone for such efforts. But Hsueh's meticulous contribution suggests the limits of what another book, article, or comprehensive exam essay could offer about how China is (or is not) a developmental state in a globalizing economy. China is not (exactly) an East Asian developmental state.
Meanwhile, there is a nascent cottage industry of studies applying the “varieties of capitalism” framework to the case of China. Some have concluded that China is itself a distinct model.Footnote 38 “Market socialism with Chinese characteristics,” “market-preserving federalism—Chinese style,” “Sino-capitalism,” and “capitalism with Chinese characteristics” are by nomenclature sui generis given the adjective “Chinese.” But what would happen analytically if we took “Chinese” or “Sino” away from the analysis? Contextualizing “Chinese characteristics” at a higher ladder of generality, to borrow a metaphor from Giovanni Satori, would be constructive for area, disciplinary, and even policy audiences.Footnote 39 Given the wealth of materials and puzzles generated through original field research by China scholars, political scientists should challenge themselves to harness it in the service of concept formation and theory building. Ask what China can tell us about political science. A handful of noteworthy examples are emerging along these lines.
Coined by Kevin O'Brien and Lianjiang Li (2006), “rightful resistance” refers to a mode of popular contention whereby aggrieved citizens cite the law and its normative principles in making their claims. Unlike protesters who express discontent with the system, rightful resisters make moral appeals to the government to uphold the rights that they have been promised. They seek justice within the legal parameters of the state. Rural citizens might appeal to a higher level of government, for example, because village officials are violating national laws to the detriment of the local population. Although O'Brien and Li developed the notion of rightful resistance based on field observations in rural China, they have contributed to concept formation in the study of contentious politics; and their book, Rightful Resistance in Rural China, has found its way onto general comparative politics syllabi.
A multi-authored effort at comparison is Scott Kennedy's (Reference Kennedy and Kennedy2011) edited volume, Beyond the Middle Kingdom: Comparative Perspectives on China's Capitalist Transformation, which includes multiple examples of how to situate China's social policies, economic performance, and state–society relations comparatively and more symmetrically (i.e., going beyond the use of non-China shadow cases). Further contributions in this vein would be constructive. With the rapid rise in social inequality, for example, it became fashionable to decry the “Latin Americanization of China” (zhongguo de lanmei hua), both within and outside of China.Footnote 40 It is interesting to note that this trope has inspired more discussion among nonacademics than among comparativists—probably because most China specialists lack the language skills and networks to conduct research in Latin America, and Latin Americanists face similar obstacles when thinking about China.Footnote 41 Comparisons with India have inspired more direct efforts, yet the influence of truly comparative academic products remains nascent.Footnote 42 Partnering between the respective area specialists could ameliorate this hesitation.
A genuine comparative contribution by a China scholar is Dorothy Solinger's States' Gains, Labor's Losses: China, France and Mexico Choose Global Liaisons (2009). Among the seminal texts in comparative politics that include China as a case, none has been written by a China scholar—consider, for example, Barrington Moore's Social Origins of Dictatorship and Democracy (1966) and Theda Skocpol's States and Social Revolutions (1979). In States' Gains, Labor's Losses, Solinger devotes equal space to China, France, and Mexico in explaining how, in the wake of economic crisis, all three countries managed to reverse earlier revolutionary political commitments to the protection of labor, and to bind themselves to supranational organizations with liberal economic principles (i.e., GATT/WTO, EU, and NAFTA, respectively). The nuanced explanation invokes historical contingency, but is cast in distinctly comparative, puzzle-solving terms. Solinger traces the counterintuitive variation in state responses to labor unrest to the differing “terms of attachment” among workers, unions, and the state in each country. Although unions are the weakest in China relative to those in France and Mexico, Chinese labor emerges as being the most militant, and the Chinese state ends up providing the most generous level of mediating social protections for labor. The renegotiation of state-labor relations can be understood, not on the basis of conventional variables such as regime type or union strength, but by examining historically-rooted institutions and political alignments.
Finally, when generalizations about large, internally diverse countries seem inappropriate, given the nature of the research question, comparisons of subnational units represent another fruitful direction for researchers who wish to zone in on a phenomenon that is more prevalent in some localities.Footnote 43 Brazil, Russia, India, South Africa, Indonesia, and China all have areas that receive more FDI, more transfers from the center, more outmigration, more natural resources, or greater involvement of domestic or international NGOs than other parts of the country. Ultimately, comparative research involving subnational cases may help to identify dynamics that appear unique to a particular country—and therefore, culturally distinctive—but that in fact travel cross-nationally when viewed in light of other apparently exceptional localities in other countries.
