Highlights

Let Market Participate in the Amendment of Food Safety Law

ZHAO Xu

The reason why it only took five years for the Food Safety Law to be amended has a lot to do with the imprudence when the law was passed. The Food Safety Law (Revised Draft) was passed by the Standing Committee of the National People's Congress in early July, and now the NPC Law Committee is collecting suggestions on this draft. However, this draft still has many problems. Hence, I would like to share my opinions on the draft.

The first thing I’d like to take about is the concept of food safety management, whether it is the market, or the government that should play a leading role in supervising the food safety. In the whole industrial chain of food production, management, and sales, four players are involved, namely, the food producer and manager, consumers, third-party providers of market place(including on-line market place), and the government. The former three players are of equal status before law, and they are equal market subjects. Therefore, a stimuli mechanism for food safety can be formed by market mechanism among the former three players, i.e., by the awards of the market (high sales volume or high price) as their products or services are recognized by the market, and by the punishment of the market(low sale volume or low price) as their products or services are not safe.

The logic of the market is that consumers tend to pay higher prices for the food that is considered more safe.(The indicators of food safety may be that the information of food is disclosed more thoroughly and complete, more traceable, with more credible supply chain.) In order to meet the consumers’ needs, retailers tend to procure food with safety guarantees from wholesalers. As it goes, every downstream player will impose requirements on their upstream provider, and this goes to the producers. As for the third party provider of market place, rules can be made (mainly food information disclosure regulations) in order to constrain the behaviors of them; or, standards of food information disclosure can be set up in order to cater to the needs of different food retailers in markets of different levels with different food safety requirements(for example, some food does not meet certain standards not because it’s not safe, therefore, it can be sold in a different market). The reason to have this arrangement is that it provides enough food safety information for the downstream retailers and consumers, but it leaves the right to choose to them at the same time. The relation between the three players and the government is between the governor and the governed, i.e., the government punishes any violation of the Food Safety Law. Apparently, no matter how big the government and the supervisory bodies get, it is impossible to oversee every single process of the transaction of food.

Recently, the central government proposed the fifth modernization which is the modernization of the concept of state governance, and it is a huge progress from “governance” to “management”. In regards with food safety, “governance” means all the interests of the players are encompassed- the interests of the government, supervisory bodies, food producers and sellers, consumers, market place, and various service entities, including associations and guilds which not only cooperate in order to guarantee the safety of food, but also compete and interact to form a whole ecosystem. As mentioned above, the interaction between these players can only be achieved by market mechanism except the relation between the government and the market subject. Therefore, market should be put in the first place in order to effectively manage the food safety issue. Market should play a leading role, while the government a supplementary one. However, the Food Safety Law (Revised Draft) still takes after the thinking of conventional food safety governance which does not emphasize the function of the market at all.

The second point I’d like to make is about how to let the market play the leading role in the food safety governance. There are two difficulties at the moment, one is that the producers are too dispersed and scattered, the other the information asymmetry. The latter is what the government supervision should deal with. As the food producers are dispersed and scattered of small scales, the market finds them hard to recognize, that’s why some producers are able to sell food of bad quality and then escape the punishment. Long term credibility cannot be established in this environment.

In recent years, as the land transfers are allowed, agricultural productivity is getting developed and of big scale, which has solved the first problem to some extent. At the same time, the government should encourage food producers to form associations and guilds in order to undertake self-discipline and self-governance, and to turn individual credibility into collective credibility. These associations and guilds can be vertical(such as guilds for fruits, including the producers, wholesalers and retailers of fruits) or horizontal(such as cooperatives, association of wholesalers, and association of retailers). These self-governing bodies can also bring in external experts, consumers organizations, and other third-party representatives to build up credibility on the basis of full and complete food safety information disclosure.

The third problem is how the government should supervise food safety. The suppression is two-fold, to supervise and to manage. To supervise is to collect information concerning food safety, and to manage is to make the decisions of prize or punishment according to the information collected. The problem of the current system is that the government “manages” too much, and the “supervision” is too weak, while he Food Safety Law (Revised Draft) aims to further stress the “management” part instead of the “supervision” part. The over-regulation by the government will take the place of the market which further leads to the misallocation of the responsibilities in regards to food safety. The market subject relinquishes its responsibility and relies on the government, while the government is not capable of undertaking effective supervision and shouldering responsibilities when accidents take place. The weak supervision makes it impossible to collect food safety information in time and accurately, and furthermore, this will on the one hand endanger the basis for “management”, and on the other hand makes it hard for market subjects to reach rational choices. Without the constraints of the upstream players by the downstream players, it is very difficult for the market to function well in regards to food safety.

Therefore, the amendment of the Food Safety Law should be strategic. More emphasis should be made to more “supervision” and less “management”. In order to enhance suppression, compulsory requirements for food safety information disclosure should be stipulated in the amendment that makes it specific on the subject of the disclosure, detailed requirements and procedures, and the accountability.

What’s worth noting is that the government should not monopolize the collection (including the examination and accreditation) and the disclosure of the food safety information. The reason is, on the one hand, such information is very important for the market, and on the other hand, the government has a strong intent in hiding such information from the public against the current backdrop in order to maintain the stability of the society, gain a good political record, or escape from being held accountable. Therefore, it is not appropriate that Article 118 of the Food Safety Law (Revised Draft) stipulates “no food safety information shall be disclosed without the approval of the food and drug administrative departments”.

In order to decrease the “management” by the government, the government should focus more on making the rules, oversee disclosure of information and determine punishment for wrongdoings, instead of directly getting involved in examination and accreditation of food safety, or undertaking massive examination movements. The government should allow the market to make its own choices on the basis of full information disclosure, while it maintains the role of a supervisor or a referee. Even in the supervision and management, these two acts can be divided. “Management” requires specific authorization by law and can only be undertaken by the government, while the process of “supervision” is a process of information collection, which can be outsourced to accredited third-party organizations. By doing so, the lack of professionalism of the government can be fixed, and as there is checks and balances, the monopoly and concealment of food safety information by the government can be solved.

Last but not least, I’d like to take about the misallocation of food safety obligations and the mismatch of power and obligations. The Food Safety Law (Revised Draft) does not clearly distinguish the obligations of all the relevant parties in regards to food safety. Let’s take a look at the obligations of the third-party provider of the market place.

Article 72 stipulates that “Certificates shall be issued and examined for the provider of the market place, the lessor of counters, and the organizer of trade fairs. Food safety obligations shall be clarified for the food venders, and routine periodical examinations shall be undertaken in regard to the business environment and conditions. Any violation of this Article shall be restrained in time and reported to the local food and drug administrations.”  Here in this Article, the obligations of the providers of the market place, lessor of counters, and organizers of trade fairs are almost infinite, and the powers of them are merely the power to report to the “local food and drug administration”. There is a ridiculous mismatch of infinite obligations and very limited power.

If the mangers of the market place must take responsibilities, at least these responsibilities should be more clarified, such as more specific stipulation on the exact period of the “routine periodical examination”, the means of the examination, whether the managers are obligated to cooperate in the examination, and the consequences of noncooperation,  and the proper recognition of compliance. As a Draft of the Food Safety Law, a change of conception and procedure is needed. Firstly, the role of the government in the governance of food safety needs to be defined, and the fundamental role of the market in the governance should be upheld.

That is to say, the amendment of the law should not only be based on the current system and from the single angle of the government regulations, but also take into account the possibility of systematic reforms. As the food safety governance is immature at the moment, systematic reforms in this regard should be encouraged by local governments. When their experience is collected and analyzed, it is time to amend this law, which will avoid the “periodical” amendment of basic laws. Besides, more experts, food industry professionals, consumers and third-party accreditation organizations should be brought in.  The amendment of the law should not be for the political record, for escaping accountability, or for department interests.

ZHAO Xu, Researcher, Unirule Development Research Center Guangzhou(UDRC)

Source: FT Chinese and China-Review

Current Events

Unirule Scholars Attended the Tenth Chinese Hayek (Hayek) Society Annual Meeting

 August 28-29, the Tenth Chinese Hayek (Hayek) Society Annual Meeting was held in Taiwan Feng Chia University. The meeting was about Hayek’s legacy, liberalism and economic development, and entrepreneurship. A small entrepreneur seminar was also held on the last day of the annual meeting for entrepreneurs from mainland and Taiwan. Professor MAO Yushi, Honorary President of Unirule, Professor YAO Zhongqiu(Qiufeng), President of Unirule, Professor ZHANG Shuguang, Chairman of Unirule Academic Committee, along with another 17 mainland entrepreneurs attended the meeting. During the meeting, Unirule scholars also hosted, spoke, and commented in various sessions.(To read more)

Unirule Saloon for Young Scholars(VI) Held in Beijing

Unirule Saloon for Young Scholars (VI) was held on the evening of September 14th in at Unirule Office in Beijing. This session was proud to present Mr. Yaron Brook, Executive Director of the Ayn Rand Institute, and his new book Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government. This saloon was also joined by Professor FENG Xingyuan, Deputy Director of Unirule, and Ms. LIU Yan, Editor of Caijing Magazine. This saloon was hosted by Mr. ZHANG Lin, Project Researcher of Unirule.

Mr. Brook spoke on the idea of “selfishness as a virtue”. He pointed out that individuals had to be responsible for themselves, and the idea of altruism would bring about disasters. He also mentioned that transactions were the source of wealth creation. Therefore, we need to change people’s mind and advocate for the idea of free market in order to fundamentally eradicate the damage of economic freedom by state power. (To read more)

Seminar on “Distinction between and Value Standards of the Oriental Cultures” Held in Beijing

“Xintian Lunheng” forum held by Unirule Institute of Economics, China-Review.com, and Sina Blog was held on the afternoon of September 11th, 2014. The topic of this seminar was “Distinction between and Value Standards of the Oriental Cultures”.

Present at the seminar were Professor SHENG Hong, Director of Unirule; Professor ZHANG Shuguang, Chairman of Unirule Academic Committee; Professor SHANG Huipeng from School of International Studies of Peking Univeristy; Mr.Yoshida Mitsuyuki, Second Secretary from Japanese Embassy to China; Dr. TANG Yongliang, Associate Researcher from Institute of Japanese Studies of CASS; Professor FANG Zhaohui from School of History of Peking University; Professor YAO Zhongqiu(Qiufeng), President of Unirule; Professor CHEN Fenglin from China Foreign Affairs University; Associate Professor MA Ming from China Foreign Affairs University, and Mr. ZHANG Xiang from Sina Blog.(To read more)

Press Conference of “Improving Transparency in Local Governments” Held in Beijing

August 29th, 2014, Unirule Institute of Economics held a press conference in Beijing to release the latest report on “government information openness 2014”. Among a series of institutional arrangements, government information openness should be one of the key institutional arrangements. No matter the disclosure of government budget, or the disclosure of the information of government officials, this arrangement will not only guarantee the public participation and its right of supervision, but also greatly lower the possibility for government wrongdoings and the corruption of government officials. Unirule Institute of Economics has been keeping a close eye and acting on promoting government information openness for ages. A research report on Improving Transparency in Local Governments was completed and released in order to push forward the reform in this area and reforms in the general political and legal reforms.

Joining this seminar were Mr. ZHENG Zhenyuan, former Office Head of Ministry of Land and Resources of the PRC, Professor XU Xin from Law School of Beiing Institute of Technology; Professor ZHAO Nong from CASS; Dr. YANG Junfeng from Chinese People’s Public Security University; Professor BI Honghai from Beihang University; Mr. JIANG Su, Editor of China-review.com; Mr. KONG Kai from Liaison Office of Guangzhou Province, and Dr. LIU Gang from Peking University. Also present at the meeting were journalist from China Finance, The Economic Observer, Reforms(Internal Review), Global Times, and Economy and Society. Mr. ZHANG Lin, Project Researcher of Unirule, reported the finding in the seminar.

To begin the press conference, Mr. ZHANG Lin introduced the background and significance of the report on Improving Transparency in Local Governments. He thought that government, as representative elected by the public, was entrusted with the obligations to handle public affairs and provide public goods. Therefore, it is necessary for the government to disclose relevant information to the public. We can take government information openness as a starting point for further reforms. And by doing so, the public is overlooking the government, which could also institutionalize the anti-corruption acts. In the meantime, the openness of government information is helpful for the administration of government as it provides critical information for decision-making. (To read more)

2014 Unirule “Lexiang Youxue” Study Trip to Taiwan Completed

Unirule “Lexiang Youxue” Study Trip to Taiwan, and the Tenth Chinese Hayek (Hayek) Society Annual Meeting, was organized by Unirule China Entrepreneur Research Center (UCERC). The study trip started from August 27th and ended on September 3rd. Joining this study trip were Professor MAO Yushi, Honorary President of Unirule; Professor ZHANG Shuguang, Chairman of Unirule Academic Committee; Professor YAO Zhongqiu(Qiufeng), President of Unirule; Professor MAO Shoulong from Academy of Public Policy of Remin University of China, and 17 mainland entrepreneurs. This group travelled to Taiwan and explored on the study trip the core elements of “industrial and commercial culture”, namely, equality, cooperation, professionalism, credibility, innovation, and responsibility. They also shared their experience regarding the development of Taiwan’s economy.(To read more)

Seminar on “DENG Xiaoping and China” Held in Beijing

September 23rd, seminar on “DENG Xiaoping and China” organized by Unirule Institute of Economics/ China-Review.com, and Yanhuang Chunqiu magazine was held in Beijing.

Present at the meeting were Professor MAO Yushi, Honorary President of Unirule; Mr. LEI Yi, Researcher from CASS; Mr. LI Shengping, Executive of HU Yaobang Historic Archive Website; Professor SHENG Hong, Director of Unirule; Mr. WU Wei, Historian; Mr. ZHANG Lifan, Columnist; Mr. WANG Zhanyang, Researcher of Minsheng Institute; Mr. WU Si, Editor-in-Chief of Yanhuang Chunqiu magazine; Professor ZHANG Shuguang, Chairman of Unirule Academic Committee, and journalists from the press. (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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Unirule Master Thoughts Class(2014)

Unirule Biweekly Symposiums

Unirule's Biweekly Symposiums are known in China and throughout the world for their long history of open and in-depth discussions and exchanges of ideas in economics and other social sciences. Over 380 sessions have been held and over 15,000 scholars, policy makers, and students, as well as countless readers on the web, have directly and indirectly, and participated in the Biweekly Symposium for close to 20 years.

Biweekly Symposiums begin at 2 p.m. every other Friday and are free and open to the public.

Schedule

Biweekly Symposium No. 511: 10th October, 2014
Biweekly Symposium No. 512: 24th October, 2014

Previous Biweekly Symposiums

Biweekly Symposium No. 507: The Legal Source of Conservatism
Time: August 15th, 2014
Lecturer: Professor FENG Keli
Host: Professor ZHANG Shuguang
Commentators: GAO Quanxi, WANG Yan, JI Naili, WANG Ruichang, FENG Xingyuan, SHENG Hong, LI Yunzhe

Professor FENG Keli thought the conservatism of Edmund Burke had something to do with the legal education he received when he was young, i.e., the knowledge of British common law. He pointed out that Burke employed common law in the observation and comments of the affairs he witnessed in his time. He used Burke’s speeches and works to prove this point. By introducing some important figures and their opinions that were related to the historicism in common law, Professor FENG thought Burke had kept in mind the Magna Carta of the UK. He also compared their similarities.

By considering the relation between Burke and the common law tradition of Britain, Professor FENG thought Burke was a unique conservatism who inherited the same tradition of the historical school of law. By analyzing the statements of Burke on the French Revolution and the two wars concerning the new continent, Professor FENG thought Burke was heavily influenced by the traditions of the historical school of law and its repercussion on the form of Britain’s legal system. By analysis, Professor FENG also believed that what Burke really concerned was not only the credibility of law itself and the form of authority, but also how to sustain a modern civil society where there was freedom.

Editor: MA Junjie
Revisor: Hannah Luftensteiner