Engaging with China about public administration reform

As some politicians and commentators call for containment of China, it is time to put forward the case for engagement instead. It can only assist with our understanding of China’s huge challenges, and maybe  help encourages continuing reform.

My first visit to China was an unforgettable one in 1994 with the then Deputy Prime Minister, Brian Howe. Our meeting with the then Vice Premier, Zhu Rongji, opened my eyes to the scale of what was happening in China. Zhu, a former mayor of Shanghai (and later Premier of the PRC), spoke of Shanghai again becoming the financial capital of Asia as it had been in the 1930s, of the shift he expected in the proportion of people in urban areas over the following 25 years from 20% to 60% (over 500 million people, a shift that has now taken place), of the change in the role of government as the market economy took hold, of his tax reforms implemented that year to help the national government to guide public policy and to redistribute revenues to the poorer provinces in the west.

Since leaving the public service in 2005, I have engaged with scholars across China (and Taiwan) about public administration practice and reforms both here and there. I helped to establish the Greater China Australia Dialogue on Public Administration, a collaboration amongst senior academics from Sun Yat Sen University in Guangzhou, City University Hong Kong, the National Taiwan University in Taipei and the Australian National University, and involving scholars from many other universities across Australia, China and Taiwan, and some practitioners. The Dialogue has held annual workshops since 2011 on a range of issues of common interest, allowing an increasingly deep understanding of practice and developments in the different jurisdictions.

Amongst the general lessons I have learned are:

  • Like everything in China, the reform agenda is huge: it is being pursued, unavoidably, in a somewhat messy process with swings and roundabouts, and a mixture of (disputed) ideology and pragmatism.
  • It is much easier to describe where China has come from than where it is now or where it might be in 5, 10 or 20 years;
  • The contradictions in China’s ‘socialist market economy’ are growing, as the individualism and aspirations fostered by markets come up against the controls of China’s authoritarian Party–State;
  • Market reforms do not necessarily lead to Western-style democratic government, but they have led to significant political reforms in China, increasing transparency and facilitating wider public engagement;
  • Despite Xi Jinping’s firmer authoritarianism, there is a degree of pluralism amongst China’s elite, across government, business, academia and civil society, that never existed in the pre-Deng era, including amongst the CCP’s 90 million members.

More specifically, I have learned a lot about how public administration is evolving in China, though the more I have learned the more I realise I do not know.

Accountability. Despite the lack of elections and associated democratic accountability, there have been significant improvements in public information about public finance and performance over the last two decades in particular. Jun Ma, one of the original Dialogue principals, wrote about ‘social accountability’ in an article in the Australian Journal of Public Administration in 2009 provocatively titled ‘The Dilemma of Developing Financial Accountability without Election’. In it, he acknowledged that full accountability did require democratic elections, but explained that increased transparency was facilitating social pressures on Chinese governments (‘social accountability’) to improve performance and better address community concerns.

Disentangling the market from the government has been a huge task that is not yet complete. China has avoided the chaos experienced in Russia but at the expense of continued authoritarian control: what might have been the best course is arguable, but that China has done it better than Russia is hard to dispute. The phasing out of collectives and the initial commercialisation reforms of state owned enterprises (SOEs) occurred some time ago, followed by the introduction of more standard budget information, but modern budgeting and financial management systems such as the introduction of accrual accounting and the creation of forward estimates are still underway. Capacity to implement such reforms is a serious challenge, remembering that China has five levels of government that includes over 40,000 village level governments, and that local governments bear heavier expenditure commitments and have access to more limited ongoing revenues.

Part of the reform agenda is to strengthen the capacity of the legislature (the Peoples Congresses) to oversee the budget and become more than just a rubber stamp of the executive and the Party. This has a long way to go, but moves are being taken to increase their capacity by the use of modern technology. Interestingly, academic experts are being employed to assist.

Delivering Public Services. The market based reforms that removed the role collectives played in providing social support have required the government to establish, essentially from scratch, health and social security programs that most OECD countries have had for well over half a century (many built upon much older schemes). China’s ‘harmonious society’ agenda is aimed not only at providing appropriate social supports but also at addressing the environmental challenges associated with such rapid economic development, and at meeting the concerns and preferences of citizens. ‘Citizens-centred services’ is now part of the lexicon in China, drawing from Western experience but applied without a Western democratic overlay.

Associated with these reforms has been relaxation of tight controls on non-government organisations that has led to the creation of a civil society with millions of such organisations, some of which are being engaged to deliver public services. There is a very long way to go before this civil society will be of the scale that we are used to, and before it plays the extensive and increasing role in delivering public programs that we are pursuing to improve responsiveness and to offer choice. Indeed, under Xi, there have been moves to strengthen CCP controls by requiring NGOs to have a Party branch inside, which may well slow the development of a genuine civil society sector.

One of the challenges for designing social security (and other social programs) in China is to overcome the constraints of China’s household registration (‘hukou’) system. Everyone is registered geographically, and legal responsibility for delivering social services lies with the local government where a person is registered. But millions have migrated to cities; their own local governments cannot deliver services to them and their inherited local governments are reluctant to take responsibility. As a result, distinct programs have been developed for city registered people, migrant workers and their families living in cities, and rural residents. Movement within China was closely controlled in the past via the hukou system but is now essentially unrestricted (though monitored); however, full removal of the hukou system while often advocated is not easily implemented. There are also moves to align the social policies for the three groups but that too is not easy.

Inter-governmental Relations. China has a unitary system with five levels of administration. While not a federal system, China’s faces many similar challenges to ours. The 1994 reforms had a huge impact on shares of revenues, increasing the national government share from 22% to 52%; the colossal increase in total revenues over the subsequent 25 years with China’s economic growth still involves the national government receiving nearly 50% of all revenues. Over the same period, the sub-national governments’ share of expenditures has increased from 72% to 85%. These shifts have allowed some redistribution from rich to poor provinces, but still leave many local governments overly dependent on non-tax revenues such as land sales and disguised loan schemes. They also leave wide differences in the capacity of governments in different locations to provide public services.

While this means there remains a significant reform agenda over financial relations and respective roles and responsibilities (and interest in the experience of countries like Australia), China has been far more deliberate than Australia in using its system to experiment and trial different approaches to public policies, using these to inform the setting of national policies. There is also a strong sense of competition focusing mostly on economic growth but increasingly on ‘harmonious society’ objectives including health, welfare and the environment.

Public Sector HRM. It is important to understand that there is no separation of politics from administration in China, so its concept of ‘merit’ is fundamentally different from that in the civil services of Western democracies. Yet China has millennia of experience in applying merit through examinations.

In recent years, the CCP has taken a number of measures to increase ‘talent’ in China, including to improve professional administration. While the cadre system involves a ‘rank in person’ classification based on each person’s standing in the Party, rather than a system of defined positions to which people may be appointed or promoted, what is emerging is two types of cadre – ordinary and leading cadres. The personnel management system for leading cadres is theoretically tasked with the accomplishment of political accountability and is managed by the Party’s ‘organisation’ departments. Cadre personnel management for ordinary cadres is targeted more at the fulfillment of organizational and program objectives, or ‘social accountability’, and is managed by the State’s ‘civil service divisions’. Particularly under Xi, it is of course the leading cadres who exercise overall control reflecting the supremacy of politics and the Party. And there are ‘leading cadres’ at every level of government.

Performance management as applied in China is also a mixture of politics/ideology and social accountability. ‘Mission-based’ targets are set for the latter and ‘non-mission-based’ targets for the former encompassing for example anti-corruption targets, ‘social solidarity’ targets (eg family planning targets, low levels of protests) and explicit CCP political targets (eg indoctrination study courses).

Conclusion

One way or another, Australia must deal with China. However we choose to do so requires us to understand the country, how it works and what its own agenda is. Engaging with those in China studying its own practices and developments can only assist our understanding; better still if we can also engage with those in government who are addressing the country’s huge challenges. Even better still, if our engagement encourages continuing reform.

There is reason for concern about some of the measures being taken under Xi Jinping’s leadership, but it is not in Australia’s interest, nor in the interest of the Chinese people, for us to disengage. And as we engage, we need to be careful not to preach, but to explain the context as well as the strengths and weaknesses of our approaches, allowing Chinese scholars and practitioners to adapt any approaches they see as relevant and useful.

(The latest Dialogue publication has just been released by ANU Press. It focuses on the design of government structures for performance and accountability and is available at http://doi.org/10.22459/DGSPA.2020; a podcast launching the book can be accessed at  https://pod.link/democracysausage/episode/NDU3NTIwOWYtMGI4YS00NzZhLThmZDgtYjhmMmU0NjlhY2Zk).)

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Andrew Stuart Podger, AO is a retired Australian senior public servant. He is currently Professor of Public Policy at the Australian National University.

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