Factions and Spoils: Examining Political Behavior within the Local State in China
Hillman, Ben, The China Journal
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While students of Chinese politics have long been interested in the impact of fiscal and administrative decentralization on patterns of governance in China, few have examined the impact of decentralization on political dynamics within the local state. Focusing on the county - the level of government primarily responsible for delivering public services, managing local state-owned enterprises, and coordinating the economy - this article explains how the pressures and incentives associated with decentralization have changed the "rules of the game" at the local level. It argues, in an in-depth study of a rural county, that local politics is driven largely by a competition over spoils and that competition over spoils is organized around a relatively stable system of factionalism. The first part of the article examines the emergence of local factions in County X and their relationship to the formal institutions of Party and government. The second part examines the resilience of local state factionalism and its implications for central government control and one-Party rule.
Studying the Local State in China
From the late 1970s, decentralization has heralded a fundamental shift in the way China is governed. Local governments were made directly responsible for governing the local economy, delivering public services and for raising revenues. By the 1990s China had become one of the most decentralized states in the world as measured by sub-national governments' share of public expenditure.1 Case studies from different regions taught us that China's "local states" responded to the challenges of decentralization in different ways.2 In the more industrialized regions, some local states were able to capitalize on extant infrastructure to support further rapid industrialization. In these regions local governments could fund their mandates from the profits of state-owned enterprises or from taxes paid by new private firms. In the rural hinterland, however, cash-strapped local governments resorted to increasing taxes and fees on farmers - a phenomenon that became known as the "peasant burden".3
Not surprisingly, the first studies of China's local states focused on changing relations between state and society. A typology emerged in which local states were characterized as either "developmental",4 "entrepreneurial",5 "predatory"6 or "involuted".7 By focusing on changing state-society relations, however, the literature tended to overlook an important consequence of decentralization - namely, its impact on political behavior within the local state. In fact, a key weakness of the literature on local governance in China has been its tendency to treat the local state as monolithic, in contradistinction with society below or the central state above. Such approaches, particularly when unsupported by first-hand observations, have often been blind to the complexity of interests within the local state and the nature of contestation between such interests.
Fiscal decentralization placed new pressures on local adniimstration, but it also placed new "prizes" in the local political arena. With the assets and regulatory powers of the state at their disposal, local officials were given wide latitude to pursue economic growth and collect revenue. In fact, it became the primary task of local governments to make money. Profiteering was tolerated, even encouraged, and large amounts of revenues could be moved off-budget to be used at the discretion of local officials - a trend that continues despite central government efforts to tighten fiscal discipline. Offbudget revenues often amounted to half or more of total local government revenues.8
While allowing local governments to "make money" (zhengqian J^H) relieved the fiscal burden on the center, it also led to rent-seeking on a scale unprecedented in contemporary China. The pressure and opportunities to raise revenue in an environment in which financial accountability and transparency mechanisms were weak led to an explosion of official corruption. …