Highlights
China’s Unique Economic Development Pattern
by MAO Yushi, Honorary President, Unirule Institute of Economics
Translated by MA Junjie, Researcher, Unirule Institute of Economics
China’s economic success is one of the most important events in the last century. Only a few countries in the world have lifted themselves out of poverty, while many are still suffering from it. China’s rise to higher levels of income in per capita GDP during the last 30 years has really established a “new China.” This astounding phenomenon, therefore, raises the question that many are concerned with, that is whether the Chinese model is applicable to other countries as well. As I see it, the Chinese model came about in a certain historic period and under special circumstances. China took a unique path that does not apply generally to other countries. It is left uncertain whether this path will lead China to become a developed country or not.
In 1978, the Third Plenary Session of the Eleventh Central Committee that called for the elimination of superstitions and false beliefs marked the beginning of China’s development, followed by Deng Xiaoping’s Southern tour speeches on deepening reforms in 1992. The way for massive reforms was paved. Before that, China underwent the Cultural Revolution, a sociopolitical catastrophe that lasted for ten years. Without the Cultural Revolution, perhaps the Chinese people would never have come to the realisation that false beliefs and seclusion would lead to disasters. Looking at it in retrospective, the three decades following the reform and opening-up policy were the only period of peace and construction since the first Opium War in 1840. In the past, China was either bullied by foreign countries, or led to chaos by its own people. The enthusiasm for constructing a new country grew in this period, and morale was high. This period is rare in China’s history, as well as in world history. Therefore, it is not likely to for other countries to copy the Chinese way of development.
A series of accidental factors contributed to the rapid development of China over the last three decades, which also makes it impossible for other countries to copy its model. China is a highly centralised state where the government holds massive resources. If the leaders misuse such resources, disasters will occur. On the contrary, if the leaders of China act in a rational way, these resources can be put into good use in order to promote economic growth. This condition is rarely seen in other market economies. Taking the construction of infrastructures for instance, the market is capable of conducting it over time, but it can take very long. If we compare the achievements in generating electricity and constructing transportation infrastructures in China and India, the conclusion can be drawn easily. Electricity and transportation are the most critical infrastructures. There has been a lack of electricity and transportation in India (as well as in Egypt, the Philippines, Pakistan, etc.) for decades. Even today, luxurious hotels in New Delhi still need auto-generators for power backup, whereas China has never suffered from power shortages or transportation shortages.
What differentiates the countries is the subject of construction, whether it is the state or the individuals of the market that conduct the construction. Infrastructures involve high transaction costs from beginning to completion, concerning matters such as the acquisition of land and the various fees. It has become a habit for the Indian people not to pay for electricity and train rides. It takes huge amounts of transaction costs to persuade them to pay. The market is hand tied. In democracies like India, the fate of the government lies in the hands of the citizens, which makes the government unwilling to push its citizens. However, in China, people have to pay for their electricity and train rides. China is also leading in the construction of roads. China has accomplished a total of 120,000 km of highways by the end of 2014, while India only has a total of several hundred kilometres of highways. If large supermarkets and shopping malls are counted as infrastructures, then India lags far behind, as there are only street vendors and small shops. There are countless shops and stores in China’s cities, even in towns and villages. Supermarkets are built on credit, with fixed prices and no bargaining possibilities. As buyers are sure not to be tricked, supermarkets facilitate transactions and save transaction costs. The emergence of supermarkets has changed the image of traditional businesses. However, India is still learning in this regard.
Why is the Chinese government able to carry out large-scale construction projects of infrastructure while other countries aren’t? The answer is simple, the Chinese government is rich. Normally, democratic countries are poor, some are even under heavy debt. They lack the power to undertake costly construction of electricity and transportation infrastructures. Where does the money of the Chinese government come from, then? We have to take a look at the distribution of the national income. We learn from economics that the gross domestic product created by the people of the country is distributed among the factors labour, capital, and resources (primarily land, also mines). The labour income is the salary, or wage, which goes to individuals. The gain of the capital refers to interest and profits. In China, there is state-owned capital (state-owned enterprises, SOEs), and private capital (private enterprises). The gain of the state-owned capital goes to the state. In other private ownership based countries, the proceeds of assets go to the citizens. Therefore, most of the profit on assets is possessed by the state in China. This is the reason why the Chinese government has so much wealth at disposal.
The fact that the Chinese government has a lot of money and the citizens get a comparatively smaller share of the profit on assets determines many features of China’s economy. The first feature is the high savings rate, or the very low consumption rate. Most of the citizens’ income goes to consumption. If the income of citizens is low, then the consumption rate should be low as well. Most of the government’s income goes to investment (deriving from savings). And if the government’s income is high, that means there is high investment. Now that China’s savings account for almost half of its GDP, China is never short of funds during its economic takeoff. Construction sites are seen everywhere, which showcases the power that drives China’s growth. In other developing countries, there is usually a lack of funds, whereas China is an exception. What underpins this is public ownership. High investment is plausible in the early period of development. However, when a country steps into a middle-income level, problems such as overcapacity will come about as a consequence of high investment and low consumption. It has been a feature of China’s economic conundrum that the products resulting from investment are not consumed properly by the consumers.
Public ownership is best shown in the large SOEs in China. These SOEs occupy critical sectors of the economy with administrative power to form monopolies, such as in the financial sector, in electricity, oil, telecommunications, and transportation. These SOEs are generally less efficient than private enterprises due to a lack of competition, but they make huge profits thanks to their monopolistic status. In addition, the huge profits are seldom turned over to the state, sometimes 10%, and it is said that they should fork up 30% of their profit to the state by 2030. As the most profiting sectors are mainly dominated by SOEs where private assets are not permitted to enter, the vast private assets flow to the comparatively open housing market due to lacking investment opportunities. This has led to massive unoccupied houses all around China. These houses are not constructed to meet the demand of consumers, but to be a method of investment and value keeping. As a result, a terrifying housing bubble has emerged.
The housing prices in China’s large cities are 50% higher than in high-income countries. The cost of houses consists of land, construction, and human labour. If these factors are sufficiently supplied, especially land, then it is possible to suppress the rapidly increasing housing prices. Due to the distortion in the market for land, the price of land is high. There’s only auction in China’s land market, that is the competition from the demand side, and no bidding, that is competition from the supply side. That is because there is only one provider of land in China that is the government as the owner of land. Thanks to the incomplete land market, the use of land is irrational. For example, there are big sections of farmland in flourishing cities, shabby and plighted residential blocks among extravagant commercial buildings, and there are skyscrapers far away from the city centre without elementary commercial and living facilities. These are so commonly seen in China that people got used to them. Premier Li Keqiang determined to activate the land market but to no avail due to the barrier set by the public ownership of land.
Thanks to the monopolies of state ownership, China’s financial market is also uncompetitive and inefficient. Chinese banks own public capital while private capital is forbidden to enter. In addition, the financial sector set favourable measures for SOEs, which limits the rational use of capital. This in particular has led to the coexistence of high-interest loans and low-interest loans. The interest rate for unofficial loans amounts to 30% and beyond (annual interest rate), whereas the interest rate in banks is only 8%. However, these low interest loans are only lent to SOEs and quality borrowers. It is impossible for ordinary citizens to obtain such loans. What they can do is borrow from underground financial markets. As the liberalisation of interest rate has been promoted for years, it is critical to correct this inappropriate fund distribution. The fundamental solution is to open the financial market to the common citizens in order to promote fair competition. Now that Premier Li Keqiang has set out to solve the entry problem of private capital and permitted a few private banks, the development is slow.
The utilisation efficiency of the three main factors, labour, capital, and resource, is high in China. What led to this is a lack of powerful labour unions and of a complete social welfare system in China. The Chinese market is quite liberalised. Due to the public ownership, the utilisation of other capital and resources in China differs largely in comparison to Western countries. There are, however, advantages and disadvantages to the public ownership in China. In the early stages of construction, sustained and sufficient investment by the state can avoid the bottleneck of insufficient infrastructures in order to guarantee rapid economic growth. However, the side effect is the overcapacity in the middle and later stages of development where the large investments do not benefit the citizens and raise the consumption, which leads to a self-repeating circle of investment. Such an economic structure fails to lead China to a high-income country, which is worrying.
Therefore, it is urgent for China’s economy to undertake structural reforms in order to adapt to the new situations in the long term. This economic restructuring should start with the distribution of GDP to direct more of the wealth created by the people to the common citizens instead of the government. This will also help to promote consumption and decrease investment to avoid overcapacity. Only when the ratio of investment and consumption in the national income is shifted will the economic structure be shifted to a pattern that encourages consumption.
Mar. 10th, 2016. |
Current Events
First Session of Unirule Western Classics Reading Club 2016 Held
The 1st session of Unirule Western Classics Reading Club 2016 was held in a new form at Unirule Beijing Office on Mar. 12th. The topic was “Supply Side, Demand Side, and the Policy Making of Austrian School of Economics.” Present at the session were Mr. MAO Yushi, Honorary President of Unirule; Professor ZHANG Shuguang, Chairman of Unirule Academic Committee; Professor CAO Yuanzheng, Chief Economist of People’s Bank of China; and Professor FENG Xingyuan, Deputy Director of Unirule. (To read more)
Seminar on “Completing Regulation of Online Finance” Held in Beijing
March 12th, a joint seminar on “Completing Regulation of Online Finance” was held in Beijing. Present at the seminar include Professor SHENG Hong, Director of Unirule; Professor MAO Shoulong from Renda University; Mr. LIU Xingcheng, from Zhongyong Law Firm; and Mr. JIANG Hao, Director of Unirule Law and Public Governance Centre. Mr. XIANG Jun from Shenzhen Online Finance Chamber of Commerce sent his written speech.(To read more)
The Fifth UCERC Salon Held in Beijing
The fifth Unirule China Entrepreneur Research Center(UCERC) Salon was held on March 29th in Beijing. This salon gathered some of the UCERC members of the board with former editor-in-chief of Reading, Mr. WANG Yan, and Mr. Ningyue, independent researcher to discuss the current affairs. This event was concluded in friendly and heated atmosphere. (To read more)
Unirule Policy Watch I on “New Path and Pattern for China’s Poverty Relief” Held in Beijing
On the afternoon of March 29th, Unirule Policy Watch I on “New Path and Pattern for China’s Poverty Relief” was held at Unirule Beijing Office. This seminar was jointly held by Unirule Institute of Economics and Phoenix Academics. Present at the event including Mr. LI Xiaoyun, founder of The China International Development Research Network(CIDRN); Mr. MAO Yushi, Honorary President of Unirule; Mr. TANG Min, advisor to the state council; Professor YU Jianrong, Director of Centre for Studies on Social Conflicts of CASS; and Professor ZHANG Shuguang, Chairman of Unirule Academic Committee.
There were three sessions. In the first session, the experts expressed their understanding on China’s poverty relief policies.
Mr. LI Xiaoyun thought the poverty issue as were spoken of today was in fact an issue of reproduction and reformation of the society. As the economy develops, the standard of poverty line is raised accordingly, which leads to the changing of the population in poverty from year to year, which does not indicate that poverty relief was not undertaken effectively. The second issue with poverty relief is that we should acknowledge the government’s efforts in this regard as there is less ideological barriers and concerns for political incorrectness in China, and the room for improvement is well exploited. The government-led poverty relief has indeed led to impressive achievements. The current poverty issue is a result of the rapid development that is imbalanced and incoherent over the last two decades. Regarding the economic endeavours in poverty relief, Mr. LI Xiaoyun thought the critical task should be using the current social and political institutions to promote the asset management of the poor in order to avoid massive bankruptcy, instead of fixating on whether to privatise or not to.
Mr. MAO Yushi considered 1993 an important turning point in China’s poverty relief efforts. One year before, DENG Xiaoping made a historical tour in South China that emancipated people’s thoughts and consolidated market-oriented measures and poverty relief measures. Against such a backdrop, innovation and creation were, therefore, made possible. Mr. MAO Yushi thought there had never been a lack of benevolent souls in the society. However, what really matters is how to allocate the money donated by these concerned citizens to those in need from an economic point of view. It is essential to locate those in desperate need and transfer the resources of those concerned citizens to these poor people and include them in economic activities. If China allows the establishment of hospitals and supermarkets for the poor, just like India, then entrepreneurs could make money by providing for the poor and improve their livelihood, which in a sense is the accurate poverty relief measures that is also innovation in this regard.
Professor YU Jianrong thought the current poverty relief pattern features compensating the poor with public social resources, which breed severe issues of corruption. What the government need to do urgently is to set up a common social safety net that ensures basic services and guarantees for the poor. In addition, when we talk about poverty relief, it is also relevant and important to address the problem of the inter-generation poverty. More efforts need to be taken to change the social status of the second generation of the poor people. Education may be a very good approach. Regarding the social safety net, Professor YU thought the good intensions of the concerned citizens and the responsibilities of the government should be distinguished: the government should set out to eradicate poverty, while the concerned citizens aim to help those in need. (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 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. 545: 25th Mar., 2016
Biweekly Symposium No. 546: 8th Apr., 2016
Previous Biweekly Symposiums
Biweekly Symposium No. 542: History and The Status Quo of Urban Land Ownership since 1949.
Lecturer: HUA Xinmin
Host: ZHAO Nong, Vice Chairman, Unirule Academic Committee
Commentators: ZHANG Lifan, LI Weiguang, ZHANG Qingyong, HAN Chaohua, WU Si, ZHANG Shuguang, SHENG Hong
Ms. HUA Xinmin started with introducing that most of the private homestead and houses in mainland China have been held privately and legally by individuals throughout history. By showcasing some of the mappings plans and pleas for land registration, confirmation certificates for privately held urban land after 1949, Certificates of Land Property Rights and Certificates of Property Ownership after 1951 in multiple provinces, and certificates for property tax after 1953, all of which served as evidence for the recognition and protection of land and property in China.
She explained that the so called public owned land in the socialist China is a big misunderstanding. Multiple evidence proved the long existing private property rights in China. In addition, the rhetorics in various laws concerning the land institution in China are ambiguous, which allows differentiated and conflicting interpretations. She also proposed to amend the Land Administration Law in order to restate protection of private property rights in China.
Biweekly Symposium No. 543: Constitutional Moment between the Centre-Left and Centre-Right: 1910-1916.
Lecturer: Dr. DONG Yanbin
Host: ZHANG Shuguang, Chairman of Unirule Academic Committee
Commentators: GAO Quanxi, GUO Xianghong, JIANG Su
For all the nation states in the world, there has always been a process of drafting a constitution even though some does not necessarily lead to a written constitution. Dr. DONG Yanbin introduced the three stages of China’s process of constitution drafting in the modern times. He illustrated the conflicts between various political forces in the Minguo Period. He divided China’s history into three periods, the period of the establishment of the state, that of the cult, and that of the constitution. As he sees it, the first half of the 20th century is the period of the establishment of the constitution. By referring to a very detailed depiction of the period in his latest book, Dr. DONG Yanbin showcased how his research bore a certain academic value as it iterated the history, the milestones, and the outcomes of those who fought to establish China’s constitution.
Editor: MA Junjie
Revisor: Hannah Luftensteiner
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