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China is not one big country. It has 31 different provinces, each with different practices, perspectives and laws. China 's Government, which is controlled by the Chinese Communist Party (CCP), operatives in administrative regions.
Contrary to what most Americans expect China 's government is very decentralised and its power fragmented. This means governmental policy, law and regulatory environments vary by region. More like Europe than the US.
The Chinese bureaucracy of today is arranged so as not to give a large amount of power to one man. This is to avoid the excesses experienced during the years of Mao Zedong, when Mao could do and undo whatever he wished without any government checks. The present system in effect forestalls any dictatorship but impedes swift reaction to virtually any emergency. The system is geared for stability: reaching a large consensus on any given policy. This makes it cumbersome, although stable and quasi-democratic, in the sense that any policy has a very wide support among the hierarchy. However, there are no clear limits to the power exercised by top leaders and there is no opposition to any given policy, as any voice in the one-party system will be accounted for and included in the decision process. The system then folds and buckles under sudden threats and pressures, and thus can't effectively withstand the challenges of the fast-moving globalised system.
Perhaps the most important outcome of decentralisation has been the formation of coalitions between entrepreneurs and local government officials, between local business and local government. There has been a massive entry of new business entities, which are either partially owned or supported enthusiastically by various governments, whose motivation for doing so comes from increasing tax revenues and enlarging local employment. Typically, the manager is one of the founding entrepreneurs who have contributed their own financial as well as human capital. Often, one of the founding entrepreneurs is a former government official. Most important, the manager shares substantial residual control rights with the sponsoring local government. Bureaucrats, providing information and connections, and entrepreneurs, providing business vision and managerial skills, thus jointly form an indispensable force for the success of new businesses in the half-reformed Chinese economy.
The development of these semiprivate businesses has had a substantial effect on the incentives and behaviour of Chinese bureaucrats. First, bureaucrats are now beginning to act like businessmen. This likens community enterprises of a local jurisdiction to a multidivisional corporation. Bureaucrats are now also less interested in pleasing their superiors, given the benefits they receive from the enterprises under their jurisdiction-better official cars, bigger budget revenues, and better office facilities. More important, officials have become de facto shareholders rather than short-termist bribe-takers. This new behaviour reduces the potential for local officials to adopt irrational decisions from the top to maximise their political interests, a bureaucratic pattern associated with the Great Leap Forward.
Bureaucrats have thus begun to lobby higher-level agencies for general deregulation on behalf of entrepreneurs. |
