Public Sector Reform and the State: The Case of China

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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 the 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 the stated policy goals of the Chinese government, the net result of these changes has been to strengthen the state. Moreover, reform has left both the developmental and predatory natures of the Chinese state intact. There is some evidence, however, that the Chinese state is now seeking to become more "neutral" vis-a-vis society.


Spared by economic crises and informed by the 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 the size and role of the 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 the private sector and non-profit organizations under contract.

Globalization and the 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 the 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 the official Chinese slogan: "small government, large society."

The evidence now indicates, however, that in spite if years of reform both in China and overseas, the position of the state remains relatively strong. The statist orientation of public-sector reform is evident in the western democracies. In OECD countries, for example, although the size of the civil service has shrunk in many cases (including Australia, Canada, New Zealand, the UK, and the 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 society as a whole: health, education, research and development, criminal justice, and social security" (Ibid., 3).

In China, the case is even clearer. Not only has the size of the public sector, especially the government, been immune to years of attempted downsizing but also the position of the state as a result of public sector reform, especially the local state, remains as strong as ever. The goal of "small government, large society" has yet to be realized.


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 the population of many countries. Provinces are subdivided into prefectures (there were 110 such units by the 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 the government and the economy at each administrative level (Lieberthal, 1995). …