Governance

China’s urban governance model in transformation

Huang and Zhou (2019) argue that due to the shift in urban local government's policy imperatives from economic growth to social policy and social governance, the performance assessment of local officials has refocused itself on impression-based results. This translates itself into the emergence of a new competition mechanism - paired competition - between pairs of local governments and state agencies.

Reviewing Huang and Zhou’s (2019) study on the transformation of China’s urban local governance model

“Paired Competition”: A New Mechanism for the Innovation of Urban Local Governance

by Huang Xiaochun 黄晓春 and Zhou Li´an 周黎安

Authors

Huang Xiaochun 黄晓春 is the vice-president of the School of Sociology and Political Science at the Shanghai University 上海大学社会学院. His research focuses on the transformation of China’s local governance. (University of Shanghai)

Zhou Li’an 周黎安 is the vice-president of the Guanghua School of Management at the Peking University 北京大学光华管理学院. His areas of research include China’s political economy, industrial organization, as well as economic transformation and development. According to China’s leading academic database, cnki.com 中国知网, he is the most cited scholar in the category ‘Humanities & Social-sciences’ for the period 2006-2018 (Guanghua School of Management).  (Peking University)

Summary

The focus of China’s urban local government has recently undergone a fundamental shift from economic growth to the provision of public goods and services. As policy goals associated to with the latter are less-quantifiable, the performance assessment of local officials has to rely on impression-based results – i.e the impression superior authority gain from their subordinate’s work through qualitative reports. In this context, governance innovation projects represent an important medium for lower-level official to ‘impress’ their superior. So as to ensure the success of their innovation project, leaders of both local governments and state agencies are incentivized to form partnerships. Huang and Zhou (2019) call the ensuing contest between different pairs of local government and state agency paired competition.

In-depth analysis

In recent years, China’s local governance model in first-tier cities, such as Beijing and Shanghai, has been undergoing a profound institutional transformation. One the one hand, local governments (Kuai-institutions) have shifted their focus away from generating economic growth to a multi-objective approach with a particular emphasis on the provision of public goods and services as well as the reinforcement of ‘social governance 社会治理’ [1]. This transformation has been driven by the retraction from urban subdistricts 街道 of the authority to attract investment 招商引资权 and the refocusing of their governmental function on social governance – i.e away from economic management. On the other hand, the authority and organizational resources of lower-level state agencies (Tiao-institutions) have been expanded to ensure that local governments fulfill their obligations. (Huang and Zhou, 2019, p.2-3)


Tiao-Kuai relations

The concept of Tiao-Kuai relations 条块关系 [2] refers to the relationship between the two parallel sets of administrative structures, which co-exist under China’s political center. On the one hand, the state agencies of the central government (中央职能部门) as well as their local branches form the vertical Tiao structure. On the other hand, the Kuai structure is built around the local governments of the different administrative divisions (provincial, prefectural, etc.).

For an in-depth analysis of emergence of the Tiao-Kuai relations notably see : Cao and Wang, 2020


In the context of Tiao-Kuai relations, this means that, while on the subdistrict level the horizontal Kuai-governance structure, i.e local governments, has lost parts of its economic functions, the vertical Tiao-governance structure has been strengthened. (Huang and Zhou, 2019, p.4)

From performance-based promotion tournaments to impression-based assessment

The above-mentioned restructuring translates itself into a fundamental transformation of China’s governance model in-force since Deng Xiaoping’s reforms. In particular, Zhou Li’an’s theory of promotion tournament 晋升锦标赛 (Zhou, 2004), also sometimes referred to as political tournament 政治锦标赛 (Zhou, 2017, p. 161-173), seems to be challenged by these changes.


Zhou Li’an: The Theory of Promotion Tournament or Political Tournament

Chinese local government officials of the same administrative level (provincial 省, municipal 市, county 县 or township乡镇) are competing for promotions. Since the adoption of the PRC’s fourth constitution in 1982, every government level holds the authority over the personnel appointment of the next subordinate level (central over provincial over prefecture over county over township). Moreover, with the Reform and Opening 改革开放 process initiated under Deng Xiaoping in the 1980s the assessment criteria shifted from political loyalty to economic performance (Zhou, 2017, p.166). Indeed, the likelihood of a local leader being promoted appears to be closely correlated to the economic performance of his or her constituency (Zhou, 2005). According to Zhou (2007), this shift represents an important cause of China’s economic rise.

As on every administrative level only a small minority of officials is promoted, this promotion tournament takes the form of a zero-sum competition. Under these circumstances local government have little incentive to cooperate. At the same time, local governments are likely to conduct unproductive investments to inflate the economic indicators of their district and thereby increase their chance of being promoted. Zhou (2004) explains the phenomenon of local protectionism 地方保护主义 and duplicative investments 重复建设 through the promotion incentives 晋升激励 of local government leaders.

The prerequisites for the political tournament or promotion tournament are: First, upper-level government – the judges of the tournament – should not only hold the authority to appoint personnel, but also be able to decide independently the assessment criteria and rules of the tournament. Second, the competition indicators should be objectively quantifiable. Third, upper-level government should abide by their own previously set rules. Fourth, the object of competition (i.e economic performance) should be separable, identifiable and comparable. Fifth, lower-level governments – participants of the tournament – should be able to control and influence through their own effort the assessed object. Sixth, lower-level governments should not be able to collude with each other. (Zhou, 2017, p.169-170)


First, the revocation of local government’s economic functions results in the reduction of their financial independence and flexibility. This in turn implies that these are increasingly dependent on the financial support of higher-level state agencies – vertical Tiao-institutions. Second, the shift from economic to social policy and social governance objectives raises the problem of performance assessment. Local governments were previously assessed on the basis of a complex set of primarily economic performance indicators 政绩指标. These have the advantage of being relatively objective and measurable. However, tasks associated to social governance are much less quantifiable. Upper-level local governments are, hence, unable to directly assess the performance of lower-level governments [3] and have to rely on accounts from the relevant state agency [4], i.e vertical Tiao-institutions. Zhou Li’an (2019, p.5) explains that this indirect performance evaluation is centred on impression-based result 印象政绩 – impression-based assessment seems also an appropriate term. In that sense, upper-level government have to base their performance assessment of subordinate officials on the impression they have gained through reports from state agencies. Furthermore, this implies also that in implementing a specifc policy lower-level local government officials are incentivized to ‘impress’ the relevant state agency, so as to figure prominently in the latter reports and indirectly gain the attention of their direct superiors (upper-level government officials). (Huang and Zhou, 2019, p.4-5)

This shift towards social policy and social governance related performance criteria implies a fundamental change from Zhou’s theory of political tournament. First and foremost, as these criteria are hardly objectively quantifiable the performance assessment relies on the subjective judgment of upper-level governments (impression-based assessment). Furthermore, upper-level governments are not able anymore to control the assessment process, as they have to rely on the accounts of state agencies.

Moreover, the strengthening of low-level vertical Tiao-institutions or state agencies leads to the increasing importance of competition between same-level Tiao-institutions. The Civil Affairs Bureau 民政局 of Jing’an city district 静安区 in the municipality of Shanghai 上海市 is not only competing with other state agencies in its own district but also with the other district level Civil Affairs Bureaus in Shanghai. (Huang and Zhou, 2019, p.13)

Governance innovation as a carrier of impression-based assessment

Due to the shift towards less objectively quantifiable policy objectives, both competition between local governments (horizontal Kuai-institutions) as well as between local state agencies (vertical Tiao-institutions) revolves around leaving a ‘good’ impression with upper-level local governments. Building upon Chen and Wang’s (2013) insight that local government innovation 地方政府创新 is mainly driven by performance competition, Huang and Zhou (2019) explain that governance innovation 治理创新 represent an important mechanism through which officials can ‘impress’ their superiors. Under the system of impression-based assessment, local governments (horizontal Kuai-institutions) as well as state agencies (vertical Tiao-institutions) will adopt innovation strategies and implement innovation projects, which best serve their primary goal of leaving an impression with their superiors. (Huang and Zhou, 2019, p.12-13)

The horizontal competition between lower-level local governments is characterized by their effort both to differentiate their innovation from competitors (same-level government reporting to the same superior upper-level government) and to gain the support of the relevant upper-level state agencies, i.e vertical Tiao-institutions. This support includes the state agency’s public endorsing the local government’s innovation project – lending the latter a certain degree authority -, providing financial assistance, as well as most importantly actively reporting to upper-level government of the lower-level government’s achievements.

In the context of competition between vertical Tiao-institutions (state agencies), Huang and Zhou (2019, p.13-14) distinguish between the innovation strategies state agencies adopt against, on the one hand, state agencies in their own administrative zones and on the other hand their counterparts in other zones. When competing within their own zone, state agencies are expected to be both be seeking the support of lower-level local governments, which are responsible for the concrete implementation, as well as be mentioning the effectivity of their innovation in their reports to upper-level local governments, i.e improve their own impression-based result. Within their own district, different state agencies are hence competing for the attention and commitment of lower-level governments. In the case of competition with other districts, state agencies seek to differentiate their innovation from those of their counterparts in different administrative zones. This implies that state agencies will tend to not imitate the experiences of their peers in other administrative zones. Hence, the generalisation of a given governance innovation is problematic. To describe this phenomenon Huang and Zhou (2019, p.15) use the metaphor of bonsai 盆景. This is in stark contrast to the previous system of performance-based promotion tournament centred on GDP indicators, in which local governments had a strong incentive to learn from and imitate the strategy of successful competitors.

Paired Competition

Under the pressure of producing impression-based results both lower-level local governments and upper-level state agencies have an interest in joining forces and supporting each other. This is especially true in the context of implementing a governance innovation project. According to Huang and Zhou (2019), an upper-level state agency and a local government will form a pair (partnership) to ensure the success of their governance innovation. Once several such pairs are formed within an administrative district, they will compete for their superior attention and approval. Huang and Zhou (2019) have termed this new competition mechanism – paired competition 结对竞赛.

Figure 1. The Map of Tiao-Kuai ‘Paired Competition [transl. by author]. From Huang and Zhou, 2019, p.15. English translation and colours added by author.

Description: Squares represent local governments (Kuai-institutions), while ovals stand for state agencies (Tiao-institutions). Local government, which are reporting to the same upper-level authority, are in competition (symbolized by red lines). Similarly, state agencies are competing against other state agencies within the same district (symbolized by green lines). In addition, state agencies are also in contest with their counterpart in other districts (symbolized by dashed green squares). In particular due to the shift towards less quantifiable performance criteria, the above-mentioned contests have transformed from tournaments centered on economic results to impression-based results. The ensuing partnership formed around an upper-level state agency and a lower-level is represented by yellow arrows. (Huang and Zhou, 2019, p.14-15)

The authors illustrate their new concept of paired competition through a case study of the development and subsequent implementation of a governance innovation project in Shanghai’s Jing’an district 静安区. (Huang and Zhou, 2019, p.22-33)

On a broader level, Shanghai’s leadership started in 2014 a reform process of its subordinate local government structure. Sub-district level governments – street offices街道办事处 – were notably stripped of their economic functions and assigned as primary task the provision of public services 公共服务, public administration 公共管理 and public safety 公共安全. In reaction, several districts began to develop governance innovation projects to attract the attention of the superiors. In particular the district of Baoshan 宝山区 [4] launched an interactive platform on Wechat enabling residents to express their views and grassroot governments (neighbourhood committees 居民委员会) to conduct surveys. This confirms Huang and Zhou (2019) argument that the initiation of governance innovation projects is linked to the shift towards an impression-based assessment.

Faced with the innovation projects launched by other districts and the performance pressure arising from these, the leaders of Jing’an district’s Civil Affairs Bureau 静安区民政局 sought to develop their own platform with the ambition to surpass previous initiatives. It subsequently jointly created with the sub-district office of Tianmu West Road 天目西路街道 a ‘Community Analysis Tool’ 社区分析工具 to survey residents. The Jing’an district Civil Affairs Bureau – upper-level state agency or Tiao-institutions – showed its support by providing additional resources and mentioning the sub-district office in its reports. In return, the sub-district office – lower-level local government or Kuai -institution – actively worked towards the successful implementation of their mutual innovation project by notably hiring a professional research team.

“In this kind of ‘paired competition’, in which Kuai and Tiao are partners, the attainment of impression-based results necessitates the support of their counterpart. Therefore, both parties will treat their partner preferentially.” (translated by author)

Huang and Zhou, 2019, p.14

After having successfully drawn the attention of the district’s leadership (i.e upper-level local government), Jing’an’s Civil Affairs Bureau proceeded in 2019 to spread the innovation project to all of its subordinate sub-districts by adding it to their work requirements. However, while the innovation project, which at this stage seemed already associated with Tianmu West Road, was only rejected by a minority of other sub-districts, the majority of the sub-district in Jing’an district executed the requirements only to a minimum and without enthusiasm. As Huang and Zhou (2019, p.30-31) explain, other local government have little incentive to proactively adopt an innovation project, which has already been associated with a competitor, as it does not offer any opportunities to ‘impress’ their superiors. The authors state that to resolve this problem upper-level state agencies should give lower-level governments a certain degree of liberty in the concrete implementation of the innovation project. In this way, the latter would be able to brand the innovation project as their own by differentiating it from their competitors and thereby produce impression-based results (Huang and Zhou, 2019, p.31).

“[…] When a governance innovation, which is pushed forward by a Tiao-department, makes use of the paired competition model, it needs to leave local-level Kuai [i.e lower-level governments] space to freely explore and label it as their own. Otherwise the innovation will face the predicament of being difficult to spread.” (transl. by author)

Huang and Zhou, 2019, p.31

Paired competition currently limited to local governance structure of first-tier cities

The emergence of Huang and Zhou’s (2019) Paired Competition mechanism is dependent on two condition: first, the transition towards less quantifiable assessment criteria and the subsequent importance of impression-based result; second, the simultaneous weakening of Kuai-institutions through the repeal of local government’s economic function and the strengthening of Tiao-institutions, i.e state agencies. Until now these transformations have only occurred within the local governance structure of urban areas – mostly in first-tier cities. In higher administrative levels (prefecture- and provincial-levels), as well as in rural and less-developed urban areas, economic indicators remain the principle performance criteria. Moreover, local governments, i.e Kuai-institutions, still represent the dominant authority. (Huang and Zhou, p. 33-36).


[1] The concept of social governance 社会治理 is officially used to describe the steering by the government of individual’s and social organization’s participation in social affairs (see. China Policy Research Network). In the Western academic debate it has been associated with social control rather than public social policy. This concords also with Huang and Zhou (2019) differentiation between public services and social governance “公共服务与社会治理” (Huang and Zhou, 2019, p.1).

[2] In English publications, the concept of ‘条块’ is commonly denoted by its direct Chinese translation: branch for 条 (Tíao) and block for 块 (Kuài). This article will, however, make use of the phonetic transcription Tiao and Kuai.

[2] The Chinese state is organized along six administrative level: central, provincial, prefecture, county, township and village. The terms ‘upper-level’ and ‘lower-level’ refer to relationship between two juxtaposed administrative levels. For instance, a given county-level government is simultaneous the lower-level authority in regard to their prefecture-level superior, and the upper-level authority in relation to its township-level subordinates.

[3] The performance of a county-level government in specific policy fields will be reported to its prefecture-level superior by specialized prefecture-level state agencies . In the case of health policy, the relevant state agency is thus the Municipal Health Commission 卫生健康委员会.

[4] The authors do not mention the names of specific districts in their analysis. However, upon research, certain localities, such as Baoshan district, Jing’an district and Tianmu West Road, have been identified.

The Paper

Huang, Xiaochun & Zhou, Li’an (2019), “Paired Competition”: A New Mechanism for the Innovation of Urban Local Governance [English Title], Chinese Journal of Sociology, vol.39 (5), p.1-38.

黄晓春, 周黎安. (2019). “结对竞赛”:城市基层治理创新的一种新机制. 社会39(5): p.1-37. Chinese version available here.

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Huang, Xiaochun & Zhou, Li’an (2019), “Paired Competition”: A New Mechanism for the Innovation of Urban Local Governance [English Title], Chinese Journal of Sociology, vol.39 (5), p.1-38. 黄晓春, 周黎安. (2019). “结对竞赛”:城市基层治理创新的一种新机制. 社会39(5): p.1-37. Chinese version available here.

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