Highlights

No More Irrationality for China’s Education System

ZHANG Shuguang

Issues about China’s education come to the spotlight every year when the entrance examinations for elementary schools, middle schools, and universities take place. People say it takes ten years to grow a tree, and it takes a millennium to grow a man. Up till now, what are we talking about when we talk about reform of education? And how can we solve the problems related to education once and for all?

The Mistakes in Education Remain Worrying 3 Decades after the Reform and Opening-Up

DENG Xiaoping once said that the biggest mistake was the mistake of education. The educational system of China is the last barrier of the planned economy, which is also another casualty of the planned economy. For example, according to the Ministry of Education, in 2013, the number of students who have been abroad for studies exceeded 3.0586 million, among whom 72.83% have returned to China. Another example is, the range of education has expanded greatly with more than 9 million students registering for the national matriculation examination every year, and more than 7 million college graduates. Besides, the facilities of schools have been improved to a big extent, with some even taking it a little further to extravagance and luxury. However, the errors of education and education reforms are also obvious, even serious. This may be the consensus on issues concerning education at the moment. We can see the chaos and disorder in the area of education in newspapers and in everyday life with many astounding incidents and cases, such as follows:

－ In practice, there is a system of division for schools where students are only allowed to go to the nearest school of their residence. However, in matriculation, it takes money to get into a good school whatsoever. Depending on the reputation of schools, it can take as much as RMB 80,000 or RMB 10,000.

－Cheating in examinations happens from time to time, and it is difficult to eliminate . Some students, along with their parents and teachers even go on-line to make a profit out of this.

－The bonus points for national entrance examinations is also a big problem as it has made talents a privileges. Bonus for physical advantages are usually involved with payment to the referie and those who oversee the rules of the competitions, for example, in order to get the bonus points, people have to pay RMB40,000 in regards to advantage in playing football, or RMB80,000 in swimming. Besides, such competitions usually charge high just for registration, RMB 50,000 is just for the registration. Some students cheat in these competitions to get the bonus points. What they do is simply put on the uniform and get a group picture.

－In order to make a profit, many colleges and universties hold MBA and EMBA course which are meant to have a target group of those in the industrial and commercial world, but now “more than half from the politics.” A Mr. Yu from the enrollment office of Peking University said that “You have to pay a tuition of RMB 668,000, and you have to be above the level of leading roles of divisions or equivalents in the administrative structure.” Just to get in these courses. And for those above the bureau-level, the tuition skyrocketed to RMB 798,000. Another phenomenon is many government officials “entertain guests” while it is the businessmen who are “paying the bills”. Some training course have become the “vanity fair” and a “resource mine” for those who seek reputation and connections, where even the title of professor or even academician can be purchased.

－Fatal criminal cases have been seen more and more frequently in universities as many students suffer from the pressure of studies, relationships, and petty daily events.  Some even resort to selfsuicide and murder of others, let alone the crimes done by unversity students, such as YAO Jiaxin and MA Jiajue.

Anyhow, a crisis of education and of the society is right in front of us.

The Error of China’s Education Lies on the Conception of Educaiton

First of all, China’s education takes a very pragmatic and utilitarian approach. It can be said that China’s education system is full of utilitarianism, including the influence of state utilitarianism and individual utilitarianism. When MAO Zedong proposed the guideline of the development of education, “education should serve the proletarian politics, combining education with productivity”, in order to “nurture socialist laborers with round-up development of their moralities, intelligence, and physical advantages.” China’s education in the first place never focuses on cultivating individuals, individuals with healthy personality and physical health, with social responsibility and sympathy, but rather it aims to bring about human beings with enhanced training in physical skills and intelligence in order to work for the state and politics. In the sense of individuals and families, China’s education aims to a promising career with handsome salaries. It is all about money and profit. Up till today, this guideline has not been questioned or criticized, on the contrary, it is being implemented with more and more exquisiteness, publicity, and seriousness. And this is not enough, China’s education puts not only politics first, but also grades first. Education is still in tight grip of politics, and it is now also under the control of money.

Secondly, there is a popular despotism in China’s education system, which  is indicated by the fact that the national matriculation examination has resulted in the loss of interests and independent thinking of the students. It also further leads to the loss of independent personality, thinking, and the judgement of right and wrong. Consequently, the students have become parrots who just copy fashion whatever others do. In the meanwhile, the education of class struggle has also made students unable to sympathize and tolerate. They now laugh at others’ loss, the disasters of other countries. They not only dehumanize enemies, but also breed hatred towards their classmates, friends, elders and teachers, and even their own parents. Therefore, the despotism in the education system is also the education of slavery, dumbness, and toxicness. Now that students have become slaves to knowledge and examinations, even to their teachers and supplementary books and their publishers, and the teachers and parents also suffer from it.

Thirdly, what’s at issue also includes the  instrumentalization, technicalization, schematization, and the abuse of knowledge for education. The subject of education is individuals who are capable of thoughts and emotions. And education should be something of flexibility,emotional appeal, and rejoice. However, China’s educational system upholds a whole set of training, standard answers, and systematic rules, which makes the system itself an assembly line or a poultry house. What students of middle and high schools do on a daily basis is exercises, and what they are trained with is the skills to solve exam questions. Many college students not only study but also sign up for many extra curriculum activities for credit, which leave them no time to read, especially original works and classics. All the activities in education are measured and quantified by specific standards, and the lectures in class follow a certain set of procedures with certain period of time distributed to certain content. The amount of published papers, number of the papers, and the level of publishing journals are taken into account for teachers and lecturers to get certain titles. And there are also a set of standards to measure.  

The irrationality in the educational system must end.

Education matters. Therefore, education should follow the natural course of development which is incremental and progressive. However, for more than 6 decades, irrationality took over in China’s educational system. Even after the reform and opening-up when there was less radical movements in the political arena, the situation remained for education. Taking college education for an example, a simple glimpse of the transformation of the college education may reveal some interesting facts to us.

－The college and department adjustment in 1952 marked the beginning of radical movements in the educational system. The colleges and departments of the educaitonal bodies were adjusted according to the Soviet model which led to the survival of only a few universities, while many university colleges were cancelled and set up as colleges of various industries. The government took over and transformed 65 private colleges, and cancelled 24 colleges that were sponsored by the church, including St. John's University（Shanghai）,Yenching University(now Peking University), and Aurora University（Shanghai）. A tilt towards natural sciences instead of social sciences were witnessed when many humanity majors, such as political science and economics were canceled.This can be blamed for the lack of benign humanistic education for several generations in China.

－The Great Leap Forward for higher education in 1958 led to the great increase of colleges, from 229 colleges in 1957 to 23,500 colleges in 1958. As there was a lack of proper conditions, teachers, and students, the increase of the number of colleges simply means the deterioration of the quality of education.

－The “not suitable for admission”policy from 1958 to 1976. Since 1958, political examination had started for college students, which put them into four categories: those who were allowed for admission in secret majors; those in general majors; those downgraded for admission; and those not allowed to be admitted. This policy stipulated that those students who were born in families that were categorized as wealthy farmers or property owners, or the so-called “capitalist families”, and those whose parents were labeled “rightest”, with oversea connections, and with complicated social backgrounds, were not allowed to be admitted, or only allowed to be admitted but by a downgraded major by colleges and universities. This policy has legalized the inequality of the educational system in China.

－The ten-year Cultural Revolution. During this period, schools stopped taking in students. Schools were involved in  criticizing and denouncing teachers, and then in violent struggles between clans, some even with arms. A big amount of young men and women were transferred to the rural areas. And the higher education was damaged to a big extent. Many so-called “worker-peasant-soldier students” only had an educational background of the elementary school level.

－The Merging of Universities in the 1990s. After the reform and opening-up, the higher education in China got back to the normal. But with the slogan of establishing world-class universities, a new wave of merging of universities were seen. More than a thousand of higher education bodies and intermediate education bodies were forcefully merged into 412 universities and colleges. These universities and colleges were not only huge and redundant in staff, but they lack their historic characteristics and advantages in certain majors.

－The enrollment expansion of higher education and the construction of college towns. In order to mitigate the pressure of unemployment and to increase domestic demand, the enrollment expansion of higher education began in 1999. General colleges and universities expanded their enrollment by 42% over the previous year, and another 35% of enrollment increase was witnessed for 2000. There were 8 million registered college students in 2004, and this number doubled in a year’s time to 16 million in 2005. The expansion did not just involve enrollment of undergraduates, but also extended to the enrollment of graduates, which led to the big number of Master-degree holders and Doctor-degree holders now. Along with the expansion of enrollment was the construction of college towns all over China which took over farm lands and resulted in waste of resources.The colleges towns are mostly far from cities. Many professors live there. These towns lack a sense of academic tradition and the cultural environment of the cities. With just some new and empty buildings in the suburban areas, these college towns are not different than isolate islands, or ghost cities.

The fundamental reason of all this is that China’s education is not managed by educationists, but by government officials. Power has taken the place of the educational regularity, and the mission of maintaining stability has taken the place of cultivating people. Schools are not independent, and professors have no say. They cannot control their own destiny. Therefore, education reform is a big deal. It asks for the fundamental change of concept of education. Education is about individual human beings. It is about putting man first, the happiness, freedom, enlightenment of human nature, and the fulfillment of man.

Source: FT Chinese and China-Review

Professor ZHANG Shuguang
Chairman of Unirule Academic Committee

Current Events

Seminar on “The Framework of Principles for Land Law Institutions in China” Held in Beijing

 On the afternoon of July 28th, a seminar on The Framework of Principles for Land Law Institutions in China was held at Unirule office in Beijing.

 As Unirule has made temporary progress on the research project of The Framework of Principles for Land Law Institutions in China, in order to bring in more foreign experience, Unirule Institute of Economics invited Mr. Barun Mitra, Director of the Liberty Institute, and Professor Christopher Lingle, Visiting Professor of Economics Universidad Francisco Marroquín (Guatemala) to speak at this seminar. Professor SHENG Hong, team leader of this project hosted the seminar. Around 20 people participated in the seminar.

Mr. Barun Mitra spoke on “Reclaiming Land Rights: Legal, Social and Economic Implications of the Forest Rights Act in India”. In the speech, he introduced his opinions on poverty, property, prosperity, political participation, and the evolution of the concept of property rights. By introducing the making of India’s Forest Rights Act, he illustrated the use of new technology in defining the land rights, solving conflicts caused by land rights, and eradicating poverty. He also commented on the implementation of eminent domain in India. (To read more)

Seminar on Financial Regulations and Monetary Policies: Problems and Rules Held in Unirule Office

A seminar on Financial Regulations and Monetary Policies: Problems and Rules was held on July 29th, 2014.

Present at the meeting were Christopher Lingle, Visiting Professor of Economics Universidad Francisco Marroquín (Guatemala); Barun Mitra, Director of the Liberty Institute; Ken Schoolland, Director, Entrepreneurship Center, Hawaii Pacific University, Honolulu, Hawaii, USA; Wolf von Laer, PhD in Political Economy, King’s College London; WU Qing, Researcher at Development Research Center of the State Council; FENG Xingyuan, Deputy Director, Unirule Institute of Economics; ZHANG Shuguang, Chairman of Unirule Academic Committee; WANG Qijun, Outreach and Comms Associate, Blockchain, China; ZHOU Ziheng, Institute of Finance and Banking, CASS. MAO Shoulong, Professor, School of Public Administration and Policy, Renmin University of China; LIU Yan, Editor of Caijing Magazine; LIU Yejin, Professor at Capital University of Economics and Business; MO Zhihong, Associate Professor of Beijing University of Technology; ZHAO Nong, Vice Chairman of Unirule Academic Committee; and  Mr. XIONG Yue, Translator of the Babel Institute. There was an audience of around 60 people.

In the morning session, Professor ZHANG Shuguang opened the seminar by giving a speech to raise the public awareness of the existing problems and flaws of the financial sector home and abroad and of the natures and problems with the monetary policies.

In Session I, Prof. FENG Xingyuan led the discussion on sound money and the banking system with joint efforts of Prof. Christopher Lingle and Prof. Ken Schoolland. Prof. Lingle gave a vivid description of the idea of sound money and his concern over the current system where macroeconomic stability is the priority of all the governments in the world that sound money barely holds as a stable system. He also argued that US dollar was the most unstable currency in the world and that sound money could be the tool to defend individual property rights. Prof. Schoolland spoke on the moral hazards of the banking system. He argued that financial interference could bring about three types of moral hazards that were directly linked to governments wrong doings. (To read more)

Press Conference of Research on Endogenous and Sustainable Urbanization Held in Beijing

August 5th, 2013, Unirule Institute of Economics held the press conference of the research on “Endogenous and Sustainable Urbanization” in Beijing. Urbanization is the key subject of China’s development in the next several decades. Finding the right path for China’s urbanization in the context of China’s economic and social status will not only bring about theoretical innovation but also improve people’s livelihood. Recently, over 11 ministries and government departments, including National Development and Reform Commission(NDRC) and Ministry of Finance, are working on exploring for new forms and modes to set up “cities”, i.e. towns with a population over 100,000 residents will be set up as cities for experiment.

 Unirule has undertaken extensive research on the development of cities and towns, especially those with advantages in economic development, and completed a research report on “small cities and county level cities”. Unirule has laid the foundation for further research on the new forms and modes to set up cities. The research team leader was Professor YAO Zhongqiu(Qiufeng), President of Unirule Institute of Economics, and the team members include Professor LI Renqing, Researcher at Rural Development Institute of Chinese Academy of Social Sciences(CASS), and Mr. ZHANG Lin, Project Researcher at Unirule.(To read more)

Unirule Salon for Young Scholars(V) Held

Unirule Salon for Young Scholars(V) was held on the evening of July 28 at Unirule office in Beijing. This Salon was privileged to have Dr. Ilya Somin from George Mason University to speak on “The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain”. Unirule Deputy Director, Professor FENG Xingyuan, and American Political Philosophy scholar, Professor Jason Walker were present at the Salon and commented after the speech. There was an audience of more than 20 people. This Salon was organized by Mr. MA Junjie, Project Researcher of Unirule, and the host of the Salon was Mr. ZHANG Lin, Project Researcher of Unirule.

Professor Ilya Somin is an expert in eminent domain. He illustrate the causes, outcome, and implications of the Kelo case and he thought that it was not only unjust, but also inefficient to transfer the property rights of a person to another entity with government power. He also believed that the scrutinized discretion of the judges were critical when it came to the concept of public interest. It also asked for public participation in this case in order to carry out eminent domain properly. He also asked for thorough analysis to decide whether the eminent domain was for the public interest in reality. For this reason, in countries where property rights were protected properly, there are not so many property owners who refuse to move when the land is expropriated. Professor Somin thought China should take a lesson from Kelo case and improve the current situation for eminent domain.

Professor FENG Xingyuan thought Professor Ilya Somin’s judgment was reasonable and pointed out that it was not right to put the right to use before the right to own, as some scholars recently argued. He thought distortion of the use of resources and properties would occur without the strict protection of property rights. In that case, public power would also expand into a greedy hand. Professor Jason Walker started from a political philosophical point of view and argued that the limit of government power was the core of political science nowadays. Therefore, no matter for eminent domain or any other powers, the lack of limits of the government power was what worried people. Therefore, the rule of law was needed.

During the Q&A, the audience discussed around two questions, one was the definition of “public interest” and the problem-solving process by public procedures and public power; and the other was the rule of law in the context of China as the land were either state-owned or collectively-owned in China which was very different from the American system. Professor Somin answered the questions and reemphasized that only by protection of the property rights would China be able to bring about more economic development.(To read more)

The 10th UCERC Saloon Held in Beijing

August 31st, the 10th UCERC Saloon and the 2nd Seminar on “Business Ethics Declaration of Chinese Entrepreneurs” was held in Beijing.

 Joined in the seminar were Professor YAO Zhongqiu(Qiufeng), President of Unirule Institute of Economics; Professor GAO Chaoqun, Researcher of Chinese Academy of Social Sciences; Mr. MING Xu, Researcher at Institute for Advanced Humanistic Studies of Peking University; Professor FENG Xingyuan, Director of UCERC; Mr. TANG Dajie, Secretary General of Institute of Chinese Enterprises ; and Mr. NIU Zhengqian, Vice President of China Association of Pharmaceutical Commerce.

Professor YAO firstly introduced the goal, framework, content and a set of principles regarding the research on “Business Ethics Declaration of Chinese Entrepreneurs”. He pointed out that this Declaration aimed to speak on behalf of Chinese entrepreneurs and reveal the sense of ethics and principles of Chinese entrepreneurs that underpinned the rapid development of China’s economy for the last three decades. He explained that the Declaration set to summarize the rich content of ethics and its historical significance, and then propose a range of ethical rules for Chinese Junzi(gentleman) entrepreneurs. Professor YAO also emphasized the open form of drafting of this Declaration which encompassed the participation of entrepreneurs and the public. This form also facilitated the communication between the research team and the entrepreneurs.(To read more)

News

Unirule 10-D Spatial Simulation Planning Model (SSPM)

The Unirule 10-D Spatial Simulation Planning Model (SSPM) is a mathematical and computational model based on economics. It is developed by a Unirule research team led by Professor SHENG Hong. SSPM is designed to simulate the development scale, economic density, industry distribution, resource constraints, ecological preservation, institutional influence, policy effect, and the evolution process in the next ten to twenty years or even longer period for a region. SSPM provides reference for the regional economic development strategy making, which can be directly adopted in the planning on regional economic development, population, land use, industry development, townships, water and ecology.

So far, SSPM has been adopted in the industry planning of Qianhai Area, Shenzhen, and the economic development planning of Yangcheng County, Shanxi Province.

Learn more about the SSPM

China’s Economy Back to Stabilization with Increase of the Tertiary Industry and Correction of Dependence on Policy Still Needed - Analysis on Quarter 1 Macroeconomics 2014

July 22nd, Macroeconomic Analysis on Quarter 2, 2014 was released at Unirule office in Beijing. Professor ZHANG Shuguang, Chairman of Unirule Academic Committee hosted the meeting and took questions from the audience.

Here is the abstract of the Analysis.
China’s economy stabilized due to intensive stimulus policies. In the first half of 2014, the GDP growth was 7.4% with the industrial added value increasing by 8.8%. Economic indicators look more promising than in the first quarter with the weight of the tertiary industry increasing, which shows improvement in the economic structure. In the meantime, a dependence on policy comes into existence. Adjustment and control of the real estate industry and the monetary policy are faced with great difficulty, and efforts should be taken to manage the reserves against deposit. As there is opportunity cost for any policy and government conduct, the administration needs to judge and weigh the task of guaranteeing short and long term economic growth and the task of promoting reforms and restructuring.

Current Researches/ Consulting

Business Ethics Declaration of Chinese Entrepreneurs

Over the last three decades, China’s economy has been embracing rapid growth with entrepreneurs being a key drive. The biggest and most significant structural change is the rise of entrepreneurs who constitute the pillar of the society nowadays. Today, the biggest, and the youngest group of entrepreneurs are going international, bridging China and the world.

However, because of the abnormal political, social and ideological environment of China for the last five decades, Chinese entrepreneurs happen to be widely confused and for the last thirty years, the emerging group of entrepreneurs has been suffering from severe anxiety over identity:

Firstly, due to the long time anti-market ideological propaganda by the authorities, many entrepreneurs believe they have the “original sin”. They are led to believe that their profits are based on exploiting the workers, which further leads to their confusion and anxiety over the ethical justification of their fortune and profits.

Secondly, this anti-market ideology also affects the public; leading the public to envy the fortune of entrepreneurs while disrespect them since their deeds are “unethical” and “dishonest”. This public opinion, in return, affects entrepreneurs’ self-identity. They, therefore, can’t convince themselves of the contributions they make to the society, or identify themselves within the social hierarchy.

Thirdly, Chinese entrepreneurs, especially those whose enterprises have gone international, are bothered with this severe identification anxiety. Chinese people stand out in entrepreneurship, so do Chinese enterprises. But what are the driving forces behind? Thanks to the long time culture break-up from the traditions, and the anti-tradition propaganda, Chinese entrepreneurs find it hard to comprehend and identify their cultural and social roles. This leads to the chaotic and restless mental state of entrepreneurs. This also results in the lack of a cultural supportive pillar for enterprise management in China.

“Business Ethics Declaration of Chinese Entrepreneurs” aims to provide answers to the anxiety over identity for Chinese entrepreneurs, to re-identify them by providing authentic and orthodoxical conceptions, to help them mature their thoughts and corporate social responsibilities.

This research project is committed to establishing a value system for Chinese entrepreneurs. To confront the anxiety over identity for Chinese entrepreneurs, this project provides answers to the three questions below:

1.Do Chinese entrepreneurs have the “original sin”?
2.What do Chinese entrepreneurs contribute to the society?
3.How do Chinese entrepreneurs gain respect?

Improving Entrepreneurs' Survival Environment: Abolishing Death Penalties in Relation to Fund-Raising Cases in China

In recent years, environment for private enterprises has been taking a deteriorating turn, which attracts attention from the media and the academia. The causes are complex and multi-faceted, including: 1, the abuse of powers by government officials as the government powers expand; 2, “the private-owned deteriorating with the state-owned advancing”(guojin mintui) worsens the picture where the survival environment for private enterprises gets more and more squeezed; 3, external demands of enterprises decrease while internal cost increases; 4, financial suppression escalates with the industrial restructuring and updating lagging behind; and 5, the fluctuation of macroeconomic policies by the government poses uncertainty for production and investment. Moreover, many innocent entrepreneurs were labeled and persecuted for their “gangster behaviors” by the policy and law enforcements in Chongqing city, which was just a glimpse of similar occasional “gangster crashing” movements in the country. Many entrepreneurs are suppressed and sanctioned in the name of “illegal fund-raising”. According to active law, the court can sentence entrepreneurs to death penalty with this charge.

Unirule Institute of Economics is planning to undertake research on the problems of the crime of “illegal fund-raising” and specific method to abolish this charge.

It is fit for Unirule to carry out this research project. Unirule Institute of Economics is a non-profit, non-governmental organization, which focuses on institutional economics with expertise in economics, laws, and politics. It has been dedicated to independent research on China’s institutional reforms and public policies as well as the reform of private finance. In 2003, 2011, and 2013, Unirule held seminars on the cases of Mr. SUN Dawu, Ms. WU Ying, and Mr. ZENG Chengjie. These seminars have been very influential before and after the close of the cases.
Unirule Institute of Economics has undertaken research projects in corporate finance and private finance in recent years. Over the years, Professor FENG Xingyuan has been carrying out pioneering research on private finance and private enterprises. He has gained rich experience and published many publications and papers on relevant topics, including Report on the Freedom of China’s Corporate Capitals, Report on the Survival Environment of China’s Private Enterprises 2012, Research on the Risks of Private Finance, etc. In August 2013, Professor FENG Xingyuan and his research team completed and released the Report on Private Enterprise Fund-Raiding in West Hunan and the Case of Mr. ZENG Chengjie, which analyzed and assessed the process, nature, problems, and causes of a series of events and proposed policy recommendations concerning the fund-raising activities in West Hunan and the case of Mr. ZENG Chengjie. Besides, Professor MAO Yushi, Honorary President and celebrated economist of Unirule Institute of Economics, is also an expert in private finance as Professor FENG Xingyuan.

Theoretical Research and Reforming Solution on Opening the Markets of Crude Oil and Petroleum Products

The present system of petroleum industry in China generally has 3 characteristics —— it focuses on state-owned business, price control and restricted access. Thus China’s petroleum industry shows a highly administrative monopoly. A few enterprises have completely monopolized the supply lines from its exploration, mining, refining, wholesale and retail, even to its imports and exports. The research intends to break the administrative monopoly of petroleum industry, stating its objective for the reform and meanwhile figuring out feasible reforming solutions to further liberate the markets of crude oil and product oil.

Strategy of Developing Areas and Planning Studies on Urban Industrialization For Yangcheng County in Jincheng City of Shanxi Province

On the basis of rethinking the strategy of development, the transformation of urban functions and the adjustment to industrial structure for Yangcheng County, Unirule Institute of Economics has developed a unique space-institution mathematical economic model, which can reunite three-dimensional space-time of cities and regions, their industries and institutions, and their economic policy analysis. The Unirule Institute will put the strategy into practice. Meanwhile, such mathematical model will be used to simulate market mechanism, to predict the final size for the long-term developing balance of cities and regions, the space distribution of population density and other economic density, the development time and process of cities and regions, the industrial distribution and its development track, and to test the flexibility of economic systems and policies. Thus the model can be used for the spatial planning of urban and rural areas in Yangcheng County.

Fairness and Efficiency of Financial Resource Allocation

The first scale problem of the fairness and efficiency of financial resource allocation is whether the overall tax bearing standard falls within the optimal interval, whether the design of tax kinds and the mechanism will harm the development of the economy. The second scale problem is whether the expenditure structure of the existing financial resource allocation, especially transfer payment, obeys the principal of justice, and the efficiency of financial expenditure especially the general administrative costs.

Unirule Institute of Economics is going to undertake research on the fairness and efficiency of financial resource allocation with the emphasis on the second scale problem. In order to fulfill the ideal of justice in a society, the involvement of financial resource allocation is one of the methods, and a universal one. A state can promote justice by implying financial expenditure in two ways: the direct and the indirect way. When applying the direct way of implying financial expenditure measures to promote justice, financial expenditure is directly distributed to individuals to fill the gap of incomes between individuals.

Among the financial expenditure items of China are pensions and relief funds for social welfare, rural relief funds as well as social insurance funds. The indirect way is by governments' increase in expenditure used for supporting agriculture and villagers, construction of infrastructure, education and medical treatments. This research is on the justice of financial resource allocation and it deals mainly with whether the transfer payment of financial resources obeys the second rule of Rawls's theory of justice, which states that when violation to the first rule has to be made, resource allocation can be towards the poorest group of people. Besides the justice issue, efficiency is also involved in the financial resource allocation. The administrative costs of China have long been above the average standard of other countries in the world, therefore, a big amount of public financial resources are wasted (trillions of RMB per year as estimated). In regard with the efficiency issue of the financial resource allocation, this research deals mainly with the change of ratio of administrative costs by government agencies (in addition to other costs, such as medical treatments of government officials covered by public budgets, and housing subsidies) of financial income. The reform of the fiscal and taxation system is one of the core issues in China's on-going reforms. This research aims not at a comprehensive examination of the fiscal and taxation system, but a specific aspect which is the "fairness and efficiency of financial resource allocation", and evaluating the status quo of China's financial resource allocation.

Research on China's Urbanization on the Local Level

Urbanization is one of the most essential economic and social policies of the new administration. The emphasis of this policy is posed on medium and small cities as well as townships. As noticed, there are thousands of industrialized townships in China with their social governance lagging far behind their economic development.

Firstly, a big population is located in between the urban and rural level, which can't transform into citizens. Hundreds of millions of people have left their villages and moved to commercialized and industrialized towns. They are in industrial and commercial occupations and it is highly unlikely that they would go back to their villages. However, they are not entitled to local Hukou registration, which further leads to the deprivation of various rights, for example, the right of education.

Secondly, public governance in such industrialized and commercialized towns, in general, is at a rudimentary level. The number of officially budgeted posts is asymmetric with the population governed, which leads to the employment of a large number of unofficially budgeted staff and unjustified power to govern. There is a lack of financial resources for the local government to carry out infrastructure construction or to provide public goods sufficiently. Thirdly, the urbanization results in imbalanced development of the structure of society. Since the industrialized and commercialized townships are unable to complete urbanization, urbanization in China has basically become mega-urbanization which is dominated by administrative power. Local governments centralize periphery resources with administrative power and construct cities artificially, which impedes townships and villages from evolving into cities by spontaneous order. Fourthly, industry upgrading can't be undertaken in those industrialized and commercialized townships and the capacity for future economic development is greatly limited. The industry upgrading is, in essence, the upgrading of people. Enterprises ought to draw and maintain technicians, researchers, and investors, to meet their needs for living standards, which cannot be satisfied by townships. Similarly, the lagging urbanization reversely sets back the cultivation and development of the service industry, especially the medium and high-end services.

Unirule Institute of Economics is going to carry out research on urbanization of China on the local level, aiming at improving public governance of the industrialized townships, optimizing the urbanization methodologies, and improving the "citizenization" of migrant workers, therefore further pushing social governance towards self-governance and democracy.

Research on the Public Governance Index of Provincial Capitals

At the beginning of the year 2013, Unirule conducted field survey, including more than 10 thousands of households in 30 local capital cities. According to the field survey, the Public Governance Index was derived. The main conclusions of the PGI report as below:

Three statements summarize the status quo of public governance in provincial capitals. Firstly, public services have generally just gotten a pass. Secondly, protection to civil rights is disturbing. Finally, governance methodologies need improvements. These statements point out the solution: the structure of the society needs to be altered from that with a government monopoly to a civil society with diverse governance subjects. The ranking of provincial capitals in the public governance assessment from the top to the bottom is as follows: Hangzhou, Nanjing, Urumqi, Tianjin, Chengdu, Shanghai, Beijing, Nanchang, Xi'an, Xining, Shijiazhuang, Wuhan, Guangzhou, Yinchuan, Hohhot, Chongqing, Shenyang, Changsha, Jinan, Kunming, Nanning, Haikou, Fuzhou, Guiyang, Harbin, Hefei, Changchun, Zhengzhou, Taiyuan and Lanzhou.

Generally speaking, all provincial capitals are graded comparatively low in the three public governance assessments from 2008 to 2012. Even those that ranked the highest in performance have just barely passed the bar of 60 points. Few provincial capitals with poor public governance got over 50 points.

There is a certain amount of correlation between the changes of ranking and improvements in public governance in provincial capitals. In the short term, should the capital cities be willing to raise their rankings, they can achieve this by increasing transparency in government information and civil servants selection, encouraging local non-governmental organizations, or promoting wider participation in local affairs. There is but a weak correlation between public governance and the local GDP level. However, a strong correlation exists between the rankings and the equity of local fiscal transfer payment. That is to say, a region gets a higher ranking in public governance if subsidies to local social security, medical care, education and housing are distributed more to the poorest residents in that region. On the contrary, a region's ranking falls if such resources are distributed with prejudice to the groups with high incomes. This phenomenon shows that equity is of significance in the assessment of the government by the people.

When residents are not satisfied with medical care, elderly support system, water supply and electricity supply, the situation can be improved when they complain to the government. But when similar situations take place in public transportation, environment greening, heating systems, and garbage management, whether by collective actions or filing complaints to government agencies, residents can hardly be satisfied with what the government does.

According to the three public governance assessments carried out from 2008 to2012, we discovered that the Gini coefficient of residents in provincial capitals was decreasing and the income fluidity was improving. From 2010 to 2012, citizens' comments on protection of civil rights are deteriorating, especially in terms of property and personal security. The request for freedom of speech is also increasing. For the moment, citizens in provincial capitals have a low evaluation on the cleanness and honesty of local governments.

Research on Disclosure of Government Information

Room for reforms is getting narrower as the opening-up and reforms deepen. It also leads to a more stabilized vertical mobilization of the demographic structure with the conflicts in the distribution of interests exacerbating. A collaborative system centering the political and law system and involving close cooperation between the police, courts, petition offices, and the city guards (Chengguan) is developed to deal with social unrest. This system is operated by local governments and finalized as a system of maintaining stability (Weiwen). There have been Internet spats over the amount of Weiwen funds. It is unsustainable to maintain such a Weiwen system, and the disclosure of government information is the most significant approach for this end. The essence of public governance is to dissolute conflicts instead of hiding and neglecting them. And one way to achieve this is by sufficient communication. Public and transparent appraisement and supervision cannot be achieved without transparent government information, otherwise the result will be the exclusion of citizens from public governance.

Unirule Institute of Economics has been undertaking research on the disclosure of government information since 2011. This research is carried out not only from the perspective of the regulations for the disclosure of government information which evaluates whether governments of various levels are obeying the regulations and their performances, but also by examining information disclosure laws in developed countries while looking at the status quo in China. There are seven aspects where government information disclosure can be improved, namely, information disclosure of government officials, transparency of finance, transparency in the decision-making mechanism, transparency in administration, transparency in public services, transparency of enterprises owned by local governments, and transparency in civil rights protection.

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Biweekly Symposium No. 509: 12th September, 2014
Biweekly Symposium No. 510: 26th September, 2014

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Biweekly Symposium No. 506: Analysis of the Redline of 18 Million Acres Arable Land
Time: August 1st, 2014
Lecturer: Professor XU Dianqing
Host: Professor ZHANG Shuguang
Commentators: FENG Xingyuan, GAO Wangling, LI Zhou, MAO Yushi, MO Zhihong, TAN Shuhao, ZHAO Nong, ZHENG Zhenyuan

Professor XU Dianqing introduced the four stages of the changes in the area of China’s arable land and briefly analyzed the causes and techniques used in measuring the land. He also mentioned one of the difficulties in measuring the arable land, which is the residential land, or the household plots, which is not included in the statistics. He thought the most important thing when we study the amounts of arable land of China is to understand the demand of grains and to take into account the stable price for grains, the decrease of Engel Coefficient, and the fact that many of China’s grains are used for producing liquor. He thought the current grain supply could well meet the demand. He also explained the reason of the rapid increase of arable land, which includes cultivating new land, urbanization, and the approved new land. He illustrated the construction land, and pointed out the problems of warehouse land which is mostly not used. Professor XU analyzed the low efficiency of industrial land use in urban areas and the chaotic land use in rural areas. He thought there was a waste of land resources as there was a lack of supplementary facilities in rural areas. At last, Professor XU shed some light upon the problem of migrant workers. He thought the cost of migrating from rural areas to urban areas was not as high as the government thought. He believed as migrant workers move from rural areas to urban areas, less household plots would be needed, and arable land would increase. All in all, Professor XU thought the redline of the of 18 million acres arable land was not reasonable, but it would not do much harm either as it reminded people to protect land resources and stay aware of the food security issue.

Editor: MA Junjie
Revisor: Hannah Luftensteiner