State-building seems to be a never-ending task for the People’s Republic of China (PRC). Since its founding, the government has revamped its administrative system more than 10 times. Reform has sped up recently, with a goal to transform governmental functions and improve administrative efficiency. Notably, the new leaders in Beijing have promoted the modernization of its governance system and administrative capability as the fifth modernization along side of the goal of modernizing China’s agriculture, industry, science and technology, and military.
The Third Plenum of the Eighteenth Party Congress held in November 2013 called for accelerating China’s administrative reform by building a law-based and service-oriented government. More specifically, it demanded deepening reforms of the administrative system, innovating administrative methods and enhancing the credibility and execution of the government. In the upcoming fourth plenary session to be held in October 2014, the rule of law—including building a government ruled by law—will refine the direction of the administrative reform even further. A number of new trends in China’s administrative reform are worth noting: streamlining governmental administrative approval processes, curtailing the excessive administrative powers, promoting plural governance, and strengthening the administrative litigation system.
Background of the Administrative Reforms
China’s latest administrative reform is motivated by a number of key concerns. The existing system of public administration is still based on the command-and-control approach inherited from the era of the planned economy. It has distorted the political and legal environment for doing business in China in the new age of the market economy and is largely responsible for the widespread rent-seeking and corrupt behaviors of government officials. Administrative redundancy and bureaucratic red tape also have hindered China’s competitiveness and economic vitality.
Over-centralization of power is long-held as a major problem in China’s administrative system. Therefore, China’s administrative reform has focused on three main areas: the decentralization of power and delegation of rights, simplification and rationalization of administrative power, and building a government ruled by law. The reform involves three overlapping stages. The first one is to reorganize government institutions and decentralize administrative powers. The second stage is to change governmental functions in order to assist the transformation from a planned economy to a market one. The third stage is to transform the government’s administrative methods.
Seven rounds of institutional reform have been carried out since 1982. Government ministries and agencies have gone through sizable reorganization. Many industry-related ministries have been phrased out or converted into industry associations. The number of ministries in the central government has been cut in half and several new “super ministries” have been created to simplify administrative management. The regulatory power of the central government over the economy has been gradually shifted from micro-management to macro-management. A new civil service system has been in place since 1993.
The decentralization drive has caused major change in state-local relations. Although the latest anti-corruption campaign has led to some recentralization of judicial and party disciplinary power, fiscal decentralization has characterized the new central-local governmental relationship and produced de facto fiscal federalism. Starting in 1994, a new “separated tax system” scheme (分税制) was implemented and local governments have acquired significant amounts of taxation, fee collection, investment, and legislative powers.
Today, the government is again in the process of streamlining the tax revenue-sharing system. The main problem with the existing system is that the reforms carried out in the last two decades, such as the elimination of agricultural tax and the restriction on collecting local fees, have a negative impact on local revenues. At the same time, more unfunded mandates, such as new programs on education, public welfare, and social and income security, are handed down from the top. Unable to pay for these new mandates, local governments are increasingly relying on borrowed money and land sales. Land sales in particular have directly and indirectly contributed to an overheated housing market and skyrocketing housing prices, and led to rapid increases in the number of anti-land-grab protests staged by farmers.
Another major delegation of rights has taken place in the areas of community governance. The 1982 Constitution codified the concept of local self-rule. There are 588,000 rural village committees and 95,000 urban neighborhood communities in China. In 1987, the National People’s Congress (NPC) adopted two organic laws for these two types of grassroots organizations. Self-rule and direct election are all integrated elements. In recent years the number of homeowners associations also has grown rapidly and played an important role in community governance.
However, contrary to the development of community self-governance, we have seen the latest development of a “city grid management” model being promoted in many cities. It is an attempt by the government to extend its reach to local communities and enhance its capability of community control. This move may compromise the achievement of recent community governance reform and seriously restrict the space for more community autonomy.
Curtailing Administrative Powers
One of the most important administrative reforms is to curtail excessive administrative powers. This reform actually started as early as in September 2001 when the Leading Group for the Reform of the Administrative Examination and Approvals was established. In October 2002, 789 administrative approval requirements were appealed. In August 2003, the NPC adopted the Law of Administrative Licensing to standardize the administrative power and procedures over issuing administrative licensing. The law requires that government at the local level create administrative service centers to allow license applicants to get their applications approved in one central office without having to visit many government offices and go through a lengthy and complicated review process.
Starting from 2013, the priority of the administrative reform has been placed on eliminating and delegating administrative review and approval powers. The new consensus seems to be that any administrative approval requirement that is not authorized by law should be repealed and that business and social activities not clearly forbidden by law should be permitted. It appears that the direction of the reform is to create a new system of retroactive supervision, which will eventually replace most of the prospective review and inspection requirements. The Plan for the Institutional Restructuring of the State Council and Transformation of Functions, which was adopted by the NPC in 2013, further specifies that many requirements concerning investment, production, operations, licensing, and accreditation shall be canceled or delegated to lower-level governments. The Plan also specifies that administrative charges and government-funded items that are illegal and improper shall be repealed or delegated.
So far, seven rounds of elimination and delegations have been conducted and 463 items have been repealed at the national level since 2013. That involves about one-third of all items that needed central governmental approval. This was done on top of five similar reductions and simplifications between 2002 and 2012. The remaining approval items are expected to be further reduced in the years ahead. Government departments at all level are now required to publish a list of existing items that need administrative approval. In addition, the screening of the existing 369 national non-administrative approval items has begun. It is hoped that these items also will be gradually eliminated.
Similar administrative reforms are being carried out at the provincial and local levels, but the extent to which administrative simplification is implemented varies greatly. Zhejiang Province, for example, has eliminated 181 administrative approval items and 464 non-administrative approval items since 2013. But the reduction in the number of the administrative approval items represents only 11 percent of the 1,617 existing administrative approval items. In Dongguan, the city government eliminated 81 administrative approval items, and delegated 58 in June 2014. This was done after a 55.1 percent of reduction in administrative approval items in 2013 and the elimination or delegation of another 135 items in March 2014.
Promoting Plural Governance
Another trend in China’s administrative reform is a move toward plural governance. Since the Sixteenth Party Congress, China has been moving away from the traditional emphasis on social control and unitary governance. Hu Jintao embraced the notion of social management in 2011, which was still a state-centered approach. The Xi-Li administration, however, embraces the notion of social governance, which calls for shared governance with an intention to minimize the unitary role of the central government.
The current system of registration and approval of civic organizations is very much outdated and restrictive. The regulations require a non-governmental organization (NGO) to be managed by two government departments (a sponsoring department and the civil affairs department). Only one professional organization is allowed in each professional field, and no inter-provincial or cross-regional associations are permitted. Officially, 440,000 social organizations are registered, but according to one estimate, 1.5 million others cannot obtain official approval and operate on an unregistered basis. Many unregistered organizations advocate labor rights, women’s rights, farmers’ rights, and environmental action, reflecting the rapid growth of these types of organizations and concerns.
The new regulations will remove some of the unwanted barriers. The government wants to invite NGOs to participate in or perform some of the social management functions for the government. Government agencies are encouraged to purchase social services from these organizations. But it is unlikely that the state will reduce its control of political-oriented civic organizations and grant full freedom of association. According to the MCA, the reform will be restricted mostly to the registration of four types of NGOs: professional and business, science and technology, charity, and community services.
The reform has encountered several problems. The effectiveness of the reform seems to diminish as the policies move down the layers of bureaucracy. Many government departments or agencies refuse to give up important regulatory power. Premier Li Keqing openly voiced his frustration over the resistance to the administrative reform and blasted local officials for inertia in carrying out central government directives in a cabinet meeting in May 2014.
Strengthening the Law-Based System of Public Administration
Building a law-based public administration is another important area in which we have seen some progress. For years, the practice of China’s public administration could be characterized as “administration according to policy” and “administration according to party directives or documents.” In an effort to legitimize administrative decision-making power and procedures, the NPC has adopted some much needed-laws in the area of public administration.
A large number of administrative laws also were formulated by the State Council to regulate market, enterprise activities, market exchange, economic contracts, intellectual property rights, taxation etc. In order to comply with WTO requirements, the state made a swift cleanup of all the so-called “red-heading documents,” or government internal directives. Some 188,000 provincial and city level “red-heading documents” were invalidated. In March 2004, the State Council published the Opinion on Pushing Forward Implementation of Administration According to Law. It stressed the need to safeguard people’s procedural rights, enhance administrative accountability and responsibility, and develop a “sunshine” government.
The enactment of the Administrative Litigation Law was a high point in China’s legal history. Encouraged by the law, hundreds of thousands of people began to file lawsuits to challenge local government acts or decisions. Since the law’s inception in the late 1990s, the court has heard more than two million administrative litigation cases. Urban construction disputes such as land management, city planning, sales of land, and housing demolition now make up almost 20 percent of all cases. Despite the sheer number of the cases, a plaintiff may still find it difficult to have a case accepted in the first place, to win these cases, and to enforce court decisions. In 2005, the court heard more than 127,000 cases. Among them, 25,317 resulted in rescinding or changing official decisions; in 15,796 cases, official decisions were upheld. Overall the percentage of cases resulting the plaintiffs’ winning is only about seven percent. Another issue is that as many as 40 percent of administrative cases do not conclude with judicial rulings; plaintiffs simply withdraw their cases for various reasons.
The lack of true separation of courts from local governments is one of the main reasons for these difficulties. Judges sometimes must seek local government approval if a lawsuit is unfavorable to the government before accepting these cases. Local party organizations may order courts to avoid accepting cases involving “hot issues” or sensitive matters. The low acceptance rate of administrative litigation cases may also be linked to the lack of qualified judges. Increasing numbers of judges have resigned because of long working hours, mounting case loads, and poor salaries. Another factor to consider is that administrative litigation remains a costly and unpredictable option for many people. Many people still prefer the administrative petition system (“letter-writing and office visits”) to get grievances resolved.
To solve these issues, the NPC is in the process of revising the Administrative Litigation Law to improve its effectiveness. The proposed revisions include reducing administrative interference, enlarging the scope of administrative decisions subject to administrative litigation, restricting discretionary power of courts to reject cases, trying cases in unrelated cities or counties, introducing simplified procedures for less controversial cases, and making administrators legally liable for enforcing court orders. Some core issues, such as how to make local agencies or chief administrators appear in the court, still lack enforceable measures. The proposed revision already has gone through the public comment phase. The revision process has been slowed after the first reading at the NPC in December 2013. The revision process may not conclude until sometime in 2015.
Concluding Thoughts on China’s Administrative Reforms
In general, China’s administrative reforms are in line with similar reforms carried out in many other countries. Its goals are to use scientific management to improve efficiency, to wage war on wasteful spending, to standardize administrative procedures aimed at making them fair and open, and to structure and limit administrative power to prevent corruption and reduce bureaucratic red tape. Returning the power to the people and strengthening the governance by law are at the heart of the reform.
One of the familiar criticisms of China centers on the lack of progress in political reform. Although there is certainly some truth to the claim, there is no doubt that China’s political landscape, at least the system of state governance, has undergone major changes because of continued administrative reforms. The creation of an effective, efficient, limited and service-oriented administrative system may involve only low-risk political changes, but we have reason to believe that good governance is one of the crucial prerequisites of higher-level political reform, such as electoral reform.
China’s administrative reform is clearly moving in the right direction. With a leaner and more efficient government, a reduction in governmental regulatory powers, a new plural governance structure, and law-based administrative system, China is in a better position to manage an increasingly more complex society. By pursuing a strategy of good governance, the Chinese Communist Party (CCP) has managed to consolidate its political legitimacy.
*The author wish to express his thanks for the generous support of the East Asia Institute, Singapore National University for conducting this research, and for the helpful comments made by Yongnian Zheng, Lance Gore and He Li.
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 Chinese courts also handled more than 300 million cases filed by government departments or agencies against individuals or enterprises under the administrative litigation category in the same period. The government won more than 90 percent of these cases. See Ye Zhusheng, op cit.
 He Haibo, “Litigation without a Ruling: the Predicament of Administrative Law in China,” Tsinghua China Law Review, 3, no. 2 (Spring 2011), pp. 258–281.
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