In this issues

USEFUL LINKS
Unirule Institute of Economics
China-Review
CCPPP

SUBSCRIBE
To subscribe to Unirule's bi-monthly newsletter, please mail to
unirule@unirule.org.cn

Unirule

Unirule
The Unirule Institute of Economics (Unirule) is an independent, nonprofit, non governmental (NGO) think tank, which was jointly initiated in July of 1993 by five prominent economists, Prof. Mao Yushi, Prof. Zhang Shuguang, Prof. Sheng Hong, Prof. Fan Gang, and Prof. Tang Shouning. Unirule is dedicated to the open exchange of ideas in economics in general, with a particular focus on institutional economics, and maintains a highly prestigious status within academic circles.

Address: Zhengren Building,6th Floor, No. 9, Chong Wen Men Wai Street, Dongcheng District, Beijing 100062, China
Tel. 8610-52988127
Fax. 8610-52988127

Books


 

The Natural Law is the Gentlemen's Mission
By SHENG Hong


Rules and Prosperity
By FENG Xingyuan


 

A History of China
By YAO Zhongqiu

 


On Hayek
By YAO Zhongqiu


The Limits of Government ⅡI
By YAO Zhongqiu


Capital Freedom of China
2011 Annual Report

By FENG Xingyuan and
MAO Shoulong


Coase and China
Edit by ZHANG Shuguang and SHENG Hong

Where the Chinese Anxieties Come From
By MAO Yushi


Humanistic Economics
By MAO Yushi


Food Security and Farm Land Protection in China
By MAO Yushi ,ZHAO Nong and YANG Xiaojing


Report on the Living Enviroment of China's Private Enterprises
By FENG xingyuan and
HE Guangwen


Game: Subdivision, Implementation and Protection of Ownership of Land
By ZHANG Shuguang


The Nature, Performance and Reform of State-owned Enterprises
By Unirule Institute of Economics


Rediscovering Confucianism
By YAO Zhongqiu



Virtue, Gentleman and Custom
By YAO Zhongqiu


China's Path to Change
By YAO Zhongqiu




The Great Wall and the Coase Theorem
By SHENG Hong



Innovating at the Margin of Traditions
By SHENG Hong





Economics That I Understand
By MAO Yushi





Why Are There No Decent Enterprisers in China?
By ZHANG Shuguang



What Should China Rely On for Food Security?
By MAO Yushi and ZHAO Nong





Case Studies in China’s Institutional Change (Volume IV)





Unirule Working Paper (2011)

 

 

 

 

 

 

 

Highlights

 

What ZHOU Yongkang’s Case Told Us- Constitution or Violence?


ZHOU Yongkang was tried under the allegation of embezzlement, abuse of power, and disclosure of state secrets, and sentenced for life imprisonment. According to the Chinese laws, this is a light sentence after all. The reasons are as follows, the indictment of these illegal conducts upon one person who’s been in charge of the national armed police for years with the responsibility of security even for the core of the Party and the state should be amplified instead of understated. What this man was capable of in terms of taking bribes, disclosing state secrets, and abusing power cannot be put into comparison with any other ordinary man. Besides, powers differ from powers: the power to designate a project to a certain party varies from the power to sentence a certain person to death. Reportedly, ZHOU Yongkang and BO Xilai, the former Chongqing governor, plotted to “pull off a big program”, and apparently this program was not singing the Red Songs.
 
Emphasis on “Maintaining Stability” as the True Threat to the Social and Party Security
 
A more serious problem is that this trial does not show how sly ZHOU was, but rather how flawed the Chinese system is. This system ignores the Constitution as the social consensus, but resorts to violence and temptation in order to seek for stability from the weak party of the social conflict. Obviously this is illogical. From a political science point of view, violence and interest cannot be relied upon. Hannah Arendt pointed out that the main characteristics of violence was its “unpredictability”. It does not only refer to the extent of violence, but the direction of it. In terms of interest, the Book of History, an ancient Chinese book, pointed out “The citizens are changeable but only hold interest as constant.”(民心无常,惟惠是怀) . Temptation of interest is the critical flaw as there will never be stability without interest, and yet interest can be changeable just as citizens.
 
What more dangerous is the fact that “maintaining stability” requires violence, and therefore the department of armed forces. This then leads to the better conditions for them in order to tempt further compromises, which leads to potential threat. It does not mean these armed police departments are intrinsically violent and dangerous, but that when the limitation on those who hold violence is eradicated, they tend to mobilise the violence in their pursuit for interest. Such conduct have appeared once and again in the royal guards of the ancient emperors in China’s history.
 
In The History of the Decline and Fall of the Roman Empire, Edward Gibbon mentioned that a team of Praetorian Guard was kept in order to secure the emperors, threaten the senators, and eradicate the budding rebells. Such guards were revered with privileges and high salary. However, their power did not only threaten the civilians but also infuriated them.
 
On the other hand, the royal guards could also be lethal for the emperors. Living in a prosperous city with lavishing supplies, the guards with their enormous power have bred a sense of arrogance. They began to be self convinced that the life of the monarchy and other authorities including the senators were at their mercy, and the wealth and security of the state were in their control. In order not to let the guards stray, emperors had to apply a carrot and stick policy upon them in order to gain their loyalty and protection as well as control. The rewards were so high that people like Claudius had made it a rule to reward the royal guards when taking the throne. However, it did not prevent them guards from murdering the emperors and auctioning the throne.
 
In this sense, the constant emphasis on “maintaining stability” by using the armed police is a true threat to the social stability and the security of the decision-making authorities. It is especially so when these departments were entrusted with the power to “make a profit” as they are shortly funded, which led to harm upon the citizens. It was reported that in 2003, the financial budget for the police department in a county in Sichuan Province was only one fifth of the rational amount. The profit making amount equals RMB 20 fine for every single citizen of that county. However, to one’s disappointment, such systematic wrong doings were only partially corrected.
 
When ZHOU Yongkang was the member of the Politburo at the 16th Party Congress and the head of China's law-and-order , the Further Reinforce and Improve Police Work by Central Government(Document 13) was passed in 2003 which emphasised the importance of maintaining stability. It resulted in the promotion of the police department directors into the party and administration group, and the mismatch of the people’s courts and people’s procuratorate. As more and more staff was needed for maintaining stability, and more and more tasks emerged, there were more and more profit-making conducts with more serious and malignant means. Some of these staff were reported to have been hired by local governments to deal with the removal of resident houses and economic affairs which led to murders and conflict between the police and the citizens. 

On the other hand, the plot between ZHOU Yongkang and BO Xilai was obviously an attempt to overthrow the authorities, a deliberate attempt to alter the reform and opening up policy, and as former Premier WEN Jiabao said, a reverse to the “cultural revolution”. As we know, half of the police are in charge of the security of the central government and the Party’s central authorities. However, it is not the more the secure. This facilitated ZHOU Yongkang’s ambition in the first place. Once again, ZHOU Yongkang was not born a devil. He was a hardworking man when he was young. It was against the backdrop of the system and the “stability maintaining” policy that he became a “tiger”.

As we noticed, the year when “maintaining stability” was initiated in 2013, China embraced the rapidest economic development. The telecom market was in boom, automobiles were flourishing, and the real estate market began to boom. Resources prices were increasing steadily without sudden hikes; GDP grew by 10% while the consumer price index increased by 1.2%. 2013 was the year when this “maintaining stability” policy was least likely to be initiated. However, expenditure on implementing this policy has been increasing ever since. According to the National Bureau of Statistics, the public security expenditure increased from RMB348.6 billion in 2007 to RMB 778.6 billion, an annual growth of 14%, even higher than that of the GDP. However, the social security worsened. Come to think of it, has the society become more secure since 2003? The answer is clear as more and more malignant events took place in the last coupe of years involving murders by the police officers towards civilians.  
 
Among these events, many were due to the profit-making conduct of the police department which inflicted discontent and struggle from the civilians. In 2012, over 100,000 mass events took place, half of which concerned the expropriation of residents’ land. About 22.2% of these events involved conflict between police and citizens. Once there is an event like this, the possibility of negative handling by the government in the form of violence rose to 62.2%, including cover up of the news, violent dissipation  and arrest of the participants, which brought about new potential for disability. The more efforts put in maintaining stability resulted in more disability, and therefore, more power to the police departments. This is how ZHOU Yongkang and his fellows gained power.
 
Avoiding Risks from Violent Stability Maintaining by Upholding and Implementing the Constitution
 
Then, how does the ruling party “rule” without “maintaining stability” policy? As we know, theoretically China is a state where the sovereignty belongs to the people. This means the political power is built upon the consent of the people. The people consists of various walks and classes where conflict exists between them. The will of the people which indicate the interest and rights of the 1.3 billion people is showcased by the Constitution which stands for the consent of the people in a whole.

For the ruling party, the Constitution is the most important foundation of its rule. The Party disciplines aim to handle its internal affairs, while the Constitution links it with the society. By following the Constitution, the people are thusly convinced that the ruling party is just. This will work better in keeping the stability of the society than by violent means. Without the Constitution, what’s left in the hand of the authorities are violence and interests, which as know are not reliable.
 
Some might say that the people’s sovereignty over the state is not implemented nowadays, therefore, the ruling party needs not consider the people’s consent, i.e., the Constitution. This is wrong. As Hannah Arendt said, “James Madison's words “all government rests on opinion”  does not only describe democracies, but also other forms of monarchies.” She quoted Bertrand De Jouvenel and said that “emperors may appear like oligarchies, but he needs more popular support than any other form of government.” Therefore, the people’s consent is not only in text, or the regulation as the political structure, but also the core of politics, which cannot be easily denied.
 
In essence, China’s existing Constitution is not flawless, but it consists of the difficulties posed by China’s history, the cost of artificial tragedies in the past, and the efforts and wisdom to correct the wrongs of the past. The 1982 Constitution summarised the historical lessons of the Cultural Revolution and provided valuable principles for avoiding similar catastrophes in the future. A real statesman cannot miss the concrete good from the Constitution in perspective of the society, his party, and himself. Of course, this good is longterm and general. Implementing and executing the Constitution, and protecting the rights of the people given by the Constitution will do good to the society in the first place; And the prosperity and stability of the society will in turn enhance the legitimacy of the ruling party. Only those who consider the immediate interest over the long term interest of the party, and those who mistake the interest of the party for the interest of the society, will view the Constitution as some limits and bonds.
 
Therefore, the foundation for ruling in line with the principle of “benefiting others without harming oneself”, and “deciding without much effort” is the implementation of the Constitution. And upholding and protecting the Constitution is also the key measure to avoiding violent stability-maintaining. To protect the Constitution means to fight against any behaviour that attempts to violate and destruct the Constitution. The target should be firstly set on the political entities, that is the administrative departments. As the Fourth Plenary Session of the 18th CPC Central Committee stressed “rule of the Constitution”, and stated “any violation of the Constitution shall be held accountable and corrected”, certain actions were witnessed such as the internal disciplining of the administrative departments and the annulment of the administrative documents that are against upper laws and the Constitution. Some cases even involved the procuratorate. Even though similar actions were taken during former Premier ZHU Rongji’s time, this round of actions is linked to the safeguarding of the Constitution, and therefore, indicating that the ruling party knows clearly the strategic significance. Even though the actions were taken mainly on a self-examining note, the general path is unshakable.
  
Sorting Out the Constitution-Violating “Secrete” Documents
 
The main issue here is that some of the documents of the Party and the administration is not public, some even labeled “top secrets”. Should these documents be sorted out and annulled if they violate the Constitution? The answer is positive for sure. These documents can prove to be lethal to the Constitution.
 
Taking the GAO Yu case for instance. Regardless of the technical details, we’ll discuss it on the strategic sense. GAO Yu was sentenced 7 years of imprisonment for illegally providing state secrets to foreign media. These “state secretes” were “Concerning the Situation in the Ideological Sphere” (Document No. 9) issued by the General Office of the Communist Party of China in 2013, which promulgated the so-called “seven don't mentions”. It aims to regulate the seven areas that are prohibited to be discussed by universities. This is an obvious violation of Article 35 of the Constitution on freedom of expression. It seems easy to understand why before the Party emphasised rule of the Constitution there existed an inertia ignorance of the Constitution in the Party and administrative authorities as they drafted documents and policies.
 
The document was considered a “state secret” once it got disclosed and GAO Yu was punished for disclosure of it. However, the ruling party failed to recognise the mistake again, which turned to another blow to the reputation and credibility of the Party. The logic here is, once a government document is considered a “state secret” and it violates the Constitution, whoever discloses it gets punished, then people will begin to wonder if there are more similar “state secret” documents. If it is indeed a “state secret”, “disclosure” means a small portion of the secret get out. It can then be deducted that every article of the Constitution may hide a similar “state secret”, which will jeopardise the whole Constitution as it is made up of such “secrets.” It can be said that the GAO Yu case denied the whole Constitution. We now know that the Constitution is a public good and an instrument for governing. If it is abandoned, there is no other option but to use violence to solve all problems, which is extremely dangerous.
 
Obviously, after the ruling party stressed the importance of “rule of the Constitution”, those constant constitution violating departments are not so keen on changing. They even tend to challenge this strategic decision by the inertia of conduct. The “seven don’t mentions” is such a challenge. The General Office of the Communist Party of China is just an internal secretariat without legislative power or the power to decide strategic path, however, in order to hide their mistake, the whistleblower was sentenced to 7 years imprisonment.
 
As a result, in order to confirm a document by the Office, the Decision of the Fourth Plenary Session of the 18th CPC Central Committee was thusly overturned. This is a clear violation of any institution, including the organizational principles of the ruling party: the subordinates shall obey their superiors, and the secretariat shall obey the authorities. And the institutional outcome led to other copy-cat incidents. Constitutional violations can become a general phenomenon, which will eventually break the consent between the ruling party and the society, and the order and discipline of the party will eventually disappear.
 
Therefore, the case of the “seven don’t mentions” concerns the fundamental argument for the foundation of the public governance by constitution or violence. If stability is to be maintained by violence, then the Constitution will be violated, especially Article 35 of the Constitution. What’s at issue is whether you can violate people’s right while keeping them quiet. Executive measures are taken to keep people quiet. However, without the backing of the Constitution, the executive measures are no more than threats. As we know, this is also a dangerous path for the ruling party to take. Moreover, the government as the provider of public good should provide justice as a top priority, otherwise, the government will lose its legitimacy. By using revenging and threatening executive measures, the executive justice is denied, and the foundation for ruling by the ruling party is shaken.
 
Of course, it is not easy to implement and safeguarding the Constitution. Psychologically, when one puts himself in others’s shoes and becomes an impartial third party, he is qualified as a provider of justice. The governors are ordinary people as well. They also find it hard to keep impartial and just. They also get criticised. However, this is how they get information that’s not accessible to others. Therefore, the freedom of expression stipulated by the Constitution is not only good for common citizens but also for the ruling party. They may be weak and displeased to take in criticisms, but as one strives to become an outstanding statesman, taking hits is inevitable. As we know the second and third presidents of the US, President Adams and President Jefferson are political opponents. They both took serious criticisms, even personal accusations and curses, but they stood out as statesmen. Even during the feudal days of China, Emperor Renzong of Song Reign wanted to promote a relative of his favourite empress and got criticised by BAO Zheng, his prime minister. The emperor complained, “it felt like BAO Zheng came to face me and spit on my face. ” Therefore, it can be said that statesmen should be able to overcome human shortcomings, instead of amplifying them by using power.
 
Suppression of Criticism will Increase the Negative Asset of the Administration
 
Both the “seven don’t mentions” and the PU Zhiqiang case have a simple goal, that is to amplify the shortcoming of taking in criticisms by humans. The “seven don’t mentions” are all against the “socialist core values” of the Party. Nothing on PU Zhiqiang’s Weibo sounds harsher than what’s said between the two American presidents. Besides, some of PU’s comments were not even true. But even so, he should not have been convicted. There is no freedom of expression if there’s no freedom of saying something wrong, which is violating the Constitution. The governors tend to consider what they don’t like “wrong”, and suppress it with executive measures. By doing so, the governors will not be able to benefit from the freedom of expression. In the meanwhile, this is not a sign of strongness, but rather a sign of weakness.
 
It will also fail to hide the mistakes by suppressing criticisms. Like WEI Zheng said, prime minister of Tang Dynasty, “the emperor is the highest authority of the world. When he errs, every man sees it as if the error is eclipse.”  If the government does not keep justice, and make institutions and policies to the harm of the citizens, then, how can it expect not to be noticed? If the government prove itself right by distinguishing criticisms, then it is wrong. Even with historical errors.
 
The best thing to do is to recognise the error, correct it, instead of hiding it. It has been proved the people care most about the present. If the ruling party could apologise for its errors in the past, show its courage to correct the errors, then the people will support it. A recent example is the Kuomintang’s apology for the “228 Incident”. Suppression of criticism is a new error in itself. It is even worse than hiding the old errors.
 
Suppression of criticism itself is counter-productive. On the one hand, it increases the cost. When covering up for the errors of the predecessors, you are taking the blame, which adds to your negative political asset. A large staff is needed to suppress criticism on a large scale, and this staff also have its own interests: when ZHOU Yongkang and BO Xilai were still in office, they abused their power to suppress criticism towards themselves. Therefore, it can be said that the control over the internet in order to suppress the freedom of expression is a violation against the Constitution, and it is used as an excuse for criticism towards certain people. At last, hiding the errors of the past and suppressing criticism of the present have given a subject for those who abuse their powers in the name of “maintaining stability.” People may have well forgotten what happened twenty years ago if it was not because of what the policy department did recently. The reason why they have not let it go is that their addiction to power and money have come up. On the other hand, it is merely an illusion to think by controlling the Internet they get to control the flow of information. When has the flow of information been cut off since DENG Xiaoping’s directive for China?
 
All in all, in terms of the choice between the Constitution or violence, the political wisdom of ancient China has already concluded with a discussion between “persuasion by morality” or “persuasion by power”. According to Lv’s Commentary of History, ZHAO Xiangzi of Kingdom Zhao was very good at war. Once he conquered two cities in one morning’s time. People frequently found him sighing and asked him. He answered, “Even though the rivers are broad, but a flood won’t last over three days; Even a big storm won’t last over a morning’s time. Now I’ve conquered two cities in one morning, but I don’t have the moralities required. It must be an omen of my destruction.” Confucius heard about it and said, “ZHAO will prosper!” Sticking to the Constitution is persuasion by moralities, and maintaining stability with violence is persuasion by violence. If we are not moved by this story, then what can ZHOU Yongkang’s case serve for our interest?


July 10th, 2015

SHENG Hong, Director of Unirule Institute of Economics

 

Current Events

Unirule Master Thoughts Class(2015) 1st Session Held in Beijing

July 25th to 26th, the first session of Unirule Master Thoughts(2015) was held in Beijing. This session was joined by Professor SUN Liping from Tsinghua University, and Professor HE Weifang from Peking University.

July 25th, Professor SUN Liping spoke on “The Current Economic Dilemma and Social Transformation.” He touched upon two of the most concerned issues of the participants, i.e., China’s reform and China’s development.

On the morning of July 25th, Professor SUN Liping gave a systematic analysis of the political system of China before and after the reform and opening up, and analyzed multiple social phenomena, including trade-off between money and power, cronyism, and resource monopolies. He thought China was in a key period of transformation and social transition which required resolution to change the old system and break through the bonds that hindered reforms. Professor SUN also forecasted future reform paths. He thought it was of key importance to find the mutual grounds for all the interest groups.

In the afternoon, Professor SUN Liping shed light upon the development issue of China. He thought the notion of social progress should be applied to achieve political and social transformation. Professor SUN used the US as an example to show how the transformation should also be a social revolution, and how US advanced to the medium level of income by adopting various measures such as social safty net and workers’ wage programs. He pointed out that in the next 2 to 3 decades, China would have to uphold the rule of law and the market economy.

On the evening of July 25th, Mr. MAO Yushi, Honorary President of Unirule joined eight participants to tea. He introduced his experience with Unirule and his work during the era of reforms in the last several decades.

July 26th, Professor HE Weifang spoke on two topics, i.e., “The Birth of a Nation of Rule of Law” and “Chongqing Story and China’s Rule of Law.”

On the morning of July 26th, Professor HE focused on the features of a country of rule of law. He thought there were five main features: firstly, the country should draft constitution to limit the public power, and to manifest the form, procedures, purpose, and transparency of the government; secondly, laws must be published to the public explicitly; thirdly, certain level of stability of the law and regulations should be maintained; fourthly, everyone should have the equal status before the law; and lastly, legislative power and executive power should be kept independent from each other. Further explanation and illustration were given by Professor HE.

In the afternoon, Professor HE Weifang analyzed the shortfalls and damage the so-called “Chongqing Model” did to China. With vivid case analysis, Professor HE presented an in-depth analysis of the significance of rule of law for a country. (To read more)

 

 

 

Public Private Partnership(PPP) Training Held in Beijing

July 22nd, a training program on public private partnership was held jointly by Foshan Public Asset Management Office and Unirule Institute of Economics in Beijing. Present at the training were Professor SHENG Hong, Director of Unirule; Ms. QIAN Pu, Deputy Director of CCPPP; Mr. ZHAO Xu, Executive Director of Unirule Development Research Center Guangzhou(UDRC), and officials from Foshan municipal government. Lectures on theory and practices of public private partnership programs were given. There was also a Q&A session.

During the field training session, the participants visited Beijing MTR Corporation.

Unirule China Center for Public Private Partnership is dedicated to research on public private partnerships. It has undertaken multiple research and training programs over the years. (To read more)

 

Seminar on “Business Ethics Declaration of Chinese Entrepreneurs” Held in Beijing

The fifth seminar on “Business Ethics Declaration of Chinese Entrepreneurs” was held at Maan Café in Beijing on July 2nd. Over ten Chinese businessmen and reporters from the media attended this event.

The last four seminars on this topic have been held in various cities in China starting from 2014. Many entrepreneurs contributed to the content of this Declaration. Professor Qiufeng expressed his gratitude. He illustrated the significance of this venture and explained his thoughts on this topic. The original text of the Declaration consists of three parts for over 4000 words. Now it has been condensed to several concise paragraphs. Professor Qiufeng also integrated his observations from reality and the inspirations he obtained from classic writings to further enrich the Declaration.(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

 


Current Researches/ Consulting

Improving China’s Implimentation and Supervision Institution of the Constitution

At present, research on the implimentation and supervision institution of China’s constitution is insufficient. Multiple problems exist in the current studies, such as the lack of a cultural perspective, and empathetic understanding of China’s political tradition; a lack of authentic Chinese perspective and an indulgence of Westernized framework of analysis; and a lack of reflection of the reality and the existing political framework.

 

The research on China’s constitution review institution should put the protection of civil rights and constitutional construction first, with a reflection of China’s reality and take in the advantages of external researches. A plausible research approach is as follows: 1. This research ought to provide a right relief mechanism; 2. It should take into account that China is a vast country with imbalanced regional development realities which foster unique and differentiated conceptions of the law and politics in general; 3. It should be built upon the current constitutional structure and take into account the interactive system of the power of the party, the National People’s Congress, etc. in order to make it a progressive research, which can enable the elements of constitutionalism to supplement the current constitutional framework; 4. Scrupulous examination should be given to constitutional practices in other regions and cultures, especially those influenced by the Chinese culture or with a similar institutional set-up, such as Taiwan and France; 5. Observations should be made in regard to the traditional Chinese institutions, such as the institution of the expostulation system (“谏议制度”, or giving advice),  supervision system, and the institutions established in this light, e.g., Taiwan’s Control Yuan.

 

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 methods 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.

 

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?

 

An Economic Research of Chinese Urban Smog Management

The issue of smog has been on the spotlight in China that no matter government officials, ordinary citizens, or journalists and the press have expressed serious concern and anxiety towards it. Unirule Institute of Economics takes on this research topic and is conducting an economic research on China’s urban smog management.


The urban smog is attributed to multiple factors with many interest parties involved, which also makes it an economic issue. Unirule seeks to find a solution to the management of smog by the design of institutions from an economic point of view.

 

 

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.

 

Upcoming Events

Unirule Master Thoughts Class(2014)

Now Unirule Master Thoughts Class(2014) is open for application. In today’s world of information explosion, even though we are living in the “information ocean”, two problems emerge. The first problem is the insufficiency of useful information. Useless information is everywhere and it mislead people, while condensed, useful and objective information is very scarce. The second problem is as we step into the mobile computing era, people get used to superficial reading habits instead of in-depth reading and thinking. These two problems have severely influenced people’s ability to extract, digest, and innovate. This Class integrates the best minds in China in the academic world. Their thoughts and insights will benefit you in ways you cannot even imagine.

Masters: CHEN Zhiwu, HE Guanghu, HE Weifang, LEI Yi, MAO Yushi, QIN Hui, SHENG Hong, SUN Liping, ZHANG Shuguang, ZHANG Weiying, ZHOU Qiren, ZI Zhongyun
Modules: Economics, Social Transition, Legal Affairs, Inernational Affairs, History, Philosophy
Schedule: Semester(6 months) starts on November 8th, 2014,
Tuition:  RMB 35,000 per person

Mr. LI Yunzhe +86 137 1835 3757, liyunzhe@unirule.org.cn;
Ms.JIN Qianqian +86 186 0081 6278, jinqianqian@unirule.org.cn

 

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. 528: 3 rd July, 2015
Biweekly Symposium No. 529: 17th July, 2015

 

Previous Biweekly Symposiums

Biweekly Symposium No. 526: No Myth in the Republic: Stories of MA Yinchu


Lecturer: LIANG Zhongtang

Host: ZHAO Nong, Vice Chairman of Unirule Academic Committee

Commentators: HU Zhian, ZHANG Lifan, MU Guangzong, LI Jianxin, ZHANG Shuguang, SHENG Hong

Mr. LIANG Zhongtang introduced MA Yinchu, an economist, and his theory of family planning which influenced China's policy and society for decades. He shed light upon the "enchantment" process of MA Yinchu, his theories, political influence, and life. As a figure whose proposals influenced the development of China's natinal policy and population, MA Yinchu was partially responsible. However, Mr. LIANG Zhongtang also combed through the historical events and the circumstances of that time which in turn put him at a critical point of decision making.

 

 


Editor: MA Junjie
Revisor: Hannah Luftensteiner

 

Comments? Questions? Email us at unirule@unirule.org.cn

20141110


If you no longer wish to receive these emails, please reply to this message with "Unsubscribe" in the subject line

“天则”语出《诗经》“天生烝民,有物有则”,取意为“合乎天道自然之制度规则”,其中的“制度”既包括企业、市场等经济制度,也包括政治、文化制度。天则经济研究所是一个非营利、非政府和有着独立精神的民间智库。

北京天则所咨询有限公司,北京天则经济研究所(Unirule Institute of Economics)版权所有。
地址:北京市东城区崇文门外街道崇外大街9号正仁大厦6层  邮编:100062
电话:8610-52988126 Email:unirule@unirule.org.cn