Governance Beyond the Centre

Abstract

The relationship between the Centre and the localities has undergone significant changes with the reforms. This chapter outlines the organization of government away from the centre and then examines the role of the province in the political system. The reforms have also led to significant regional inequality that is providing a major challenge to governance. Finally, the chapter reviews the changing centre-locality relationship especially as it has been affected by fiscal reforms. While the Centre tries to exert political control over the localities through the system of party-sanctioned appointments of leading personnel — the Nomenklatura system — its fiscal capacity and its moral authority have declined. State revenues only amounted to 14.2 per cent of GDP in 1999, down from 36 per cent in 1978, and most localities increasingly have had to deal themselves with the serious problems that confront them. The revenues had dropped as low as 11 per cent. The decline in state revenues created pressures at all levels and in all Chinese government agencies to meet recurrent costs from locally-generated revenues. Increasingly, political outcomes are determined by local power structures and resource allocation. Within the same province and even in adjacent counties one can see radically different socio-political outcomes deriving from the reforms. What are the consequences of this for the nature of the local state and what are the consequences for governance and policy?