China's Trapped Transition_ The Limits of Developmental Autocracy - Minxin Pei [86]
Key officials—usually municipal and county CCP secretaries, or yihashous—have become critical nodes of information regarding the conduct of subordinate agents. This situation effectively creates local political monopolies under the control of CCP officials who arc poorly supervised by their superiors. Further compounding this principal-agent problem is the repression of the media and civil society and weak horizontal accountability; the local judiciary and legislatures provide little counterbalancing power. As a result, local officials face no resistance when they adopt predatory policies within their jurisdictions. However, given the diversity in local conditions across China, the decentralization of administration has not produced uniform public policies and government practices at the local level. In some areas, mostly along the coast, this development appears not to have led to unrestrained local predation and may have contributed to more flexible and experimental reform policies that such decentralization was initially designed to encourage. In many other, and mostly inland, areas, the decentralized supervision of cadres has been responsible for a variety of misconduct by local officials, especially the illicit sale of government offices, widespread nepotism, and collusion with criminal gangs.
The practice of “selling official appointments” (maiguan) deserves special attention. It normally involves an underling who gives a bribe to his superior in exchange for a promotion or an appointment to a more desirable government office. Such practice was rare in the 1980s, but became prevalent in the 1990s. The spread of maiguan fits the logic of a decentralized predatory state well. In such a system, local strongmen become independent monopolists who can subcontract the monopoly to those who are willing to pay for a share of the spoils. Press reports of corrupt officials, usually yibashous,confirm this observation. In early 2004, the CCP’s COD issued a public circular on four such cases. One involved Li Tiecheng, a party secretary in a county in Jilin province who took 1.43 million yuan in bribes from 110 individuals in exchange for appointments and promotions in the late 1990s. The price of each appointment averaged 13,000 yuan. Another case featured a county party boss in Liaoning province who appointed and promoted thirty officials after receiving bribes totaling 600,000 yuan (averaging 20,000 yuan per position) in the late 1990s. In the third case, a county party boss in Anhui sold appointments to fifteen individuals for an av erage of 20,000 yuan each in the late 1990s. The last example was a county party secretary in Hainan who sold appointments to thirteen people for an average of 49,000 yuan each.39
What is notable about these cases, as well as other examples of maiguan, is that local officials seemed to have a sophisticated understanding of the economics of decentralized predation and apparently decided to take advantage of it. By making an upfront investment in the form of a bribe, which equals to about one-year salary for an average county-level official, they can expect to recoup the investment quickly through their appointments to government positions that will allow them to extract bribes as well. In most cases, such an investment was, indeed, lucrative to these individuals, but enormously costly to the state and public.
Everyday economic decisiorc making
Another important feature of China’s economic reform is the decentralization of decision making in everyday economic activities. Such decision-making power includes that of granting business licenses, project approvals, government contracts, and land leases; allocating scarce resources (especially capital); regulating commercial activities; as well as decision-making power over the discretionary use of public funds and price control. In truth, there is nothing routine about everyday economic decision making in an