China's Trapped Transition_ The Limits of Developmental Autocracy - Minxin Pei [8]
Erosion of State Capacity
The erosion of state capacity in China is epitomized by the Chinese government’s deteriorating performance in maintaining several critical functions that are generally considered central to the effectiveness of a state: the extraction of revenues, the provision of key public goods, the collection of information, and the enforcement of laws and rules.56 To some extent, the decline of state capacity in China is captured by the paradox of power and ineffectiveness. Although the Chinese state appears to be institutionally unconstrained, centralized, and omnipresent, its ability to implement policy and enforce rules is severely limited by its incoherence, internal tensions, and weaknesses. The phenomenon of zhengling buchang—or ineffectual government directives—is widely reported in the Chinese press. It includes the defiance of central government laws and policies by local authorities, the willful violation of laws and regulations by government officials, and the practice of local protectionism that has plagued the enforcement of contracts, court judgments, and national laws.57 This unique characteristic of Chinese politics is appropriately labeled fragmented authoritarianism.58
To be sure, market and regime transitions unleash forces that contribute to the erosion of state capacity, as experiences from other countries in transition show. Since a reversion to the status quo ante is not feasible, the rejuvenation of the state is likely only through institutional reforms designed to adapt the organizational structure and functions of the state to meet the new economic and political challenges. Thus, the erosion of state capacity most likely results from a failure to reform the political system. China’s runaway official corruption is an apt example. The ruling elite’s unwillingness to reform flawed state institutions creates conditions for systemic corruption, which in turn further undermine the effectiveness of the state.
Factors other than corruption are also at work in explaining the erosion, however. The most important is the distortion, uncertainty, and instability built into three sets of relationships that define the nature and boundary of the authority of the state: party-state, central-local, and state-market. The indeterminacy of these critical relationships directly compromises the effectiveness of the state. The supremacy of the ruling party over the state, for example, weakens the authority of the state apparatus at all levels and limits its capacity for performing routine administrative functions. The fluidity in central-local relations creates enormous commitment, information, and coordination problems within the state as the central and local state agencies constantly engage in opportunistic behavior because no credible institutions exist to reward cooperation and punish cheating. The net effect is the concurrent excessive provision of private goods that benefit favored jurisdictions and sectors and the inadequate provision of public goods, such as public health, education, and research and development. Similarly, the poorly defined boundaries between the state and the market create an environment in which the state is incapable of effectively performing its basic functions—such as enforcing contracts, protecting property rights, and policing the marketplace—while simultancously overreaching into areas it does not belong, such as investing in and operating businesses, and selling its administrative services under different guises.
Growing Imbalances in Society and Polity
The idea that severe structural imbalances have accumulated in China’s society and political system has gained currency within China.59 Specifically, such imbalances refer to the rising inequality (socioeconomic,