The size of a problem matters

Dominique Fong at The Wall Street Journal has checked in on Ordos, Inner Mongolia, and found that China’s most famous ghost town–the new district of Kangbashi–is still, well, pretty ghostly:

Local officials had hoped to attract a million people to the new area, nearly matching the size of the old city 20 miles away. Architectural showpieces—a museum in the form of a giant metallic bean bag, a library resembling a shelf of books, a sports stadium reminiscent of a modern Coliseum—were built as attractions. Officials have since reduced their population goal to 300,000, and they are just halfway there. An early resident, Hu Richa, has been waiting seven years for more neighbors. Still, he says, “There’s barely anyone living here.”

The city has spent 14 years planning, erecting and maintaining Kangbashi, which has the distinction of being one of China’s best-known “ghost towns”—gleaming but sparsely populated new urban centers adjacent to older metropolises. Built by the dozen across the country, the new areas reflect—and were meant to accelerate—China’s economic boom. As the country’s growth has slowed, many of them have become serious liabilities, deep in debt, with little prospect of full occupancy anytime soon. …

According to a study by Lu Ming, a professor at Shanghai Jiao Tong University, 272 new districts across China have been built with borrowed funds near existing cities. Other researchers, using different definitions for ghost towns, find smaller numbers, but all agree that there is a serious problem.

While I don’t really disagree with anything in this piece (in which one of my colleagues is quoted), I have to say that I find the limited analysis a little frustrating. The ghost town phenomenon has been extensively reported for several years now, and yet the Chinese property market strangely refuses to collapse in the way that these reports always suggest it should. Construction starts have been growing pretty consistently for the past two and half years, and have actually accelerated some this year.

At this point in the China story I feel like saying “there is a serious problem” and stopping there is not really sufficient. It is of course not wrong to point out that China has lots of capital misallocation and has been heavily reliant on expanding debt to drive growth. But many people have correctly identified problems in the Chinese economy, and yet they have not been correct about the trajectory the economy would take.

In my view, outside observers of China have not been so good about understanding 1) the actual size of problems, 2) the constraints on policymakers’ ability to address problems. It is easy to suggest that problems are extremely large or cannot be easily solved, but it would be better to put more effort into identifying just how big problems are and how they might be addressed.

The ghost town phenomenon is a good example where the relative size matters a lot. Both anecdotal and statistical evidence suggests these huge clumps of unused housing are concentrated in northern China, in areas more reliant on resoure extraction and heavy industry. The property markets in these areas are certainly troubled, but they are also a relatively small part of the national total. The construction and sales recovery of the last few years has been driven mostly by southern and central China, where populations are growing and inventories are in fact quite low.


On reading ‘Alive in the Bitter Sea’

Fox Butterfield’s China: Alive in the Bitter Sea is the original China journalist’s book of the modern, post-Cultural Revolution era, and it holds up quite well today. Published in 1982, it captures China at a remarkable and delicate turning point: a time when the old system had lost all credibility thanks to the exhausting turmoil of the Cultural Revolution, but it was not yet clear what new system would come to replace it.

By his own admission, Butterfield completely missed the economic renaissance that was beginning to unfold during his time in China, possibly because he was prevented from traveling to the rural areas where the most dramatic changes were taking place. But for me this adds rather than subtracts to the book’s value, because it is not shaped by the false confidence of hindsight, and reflects all the doubts and uncertainties of the time. Given all the China-model triumphalism that is going around today, it is useful to recall that in 1980 no one knew that an economic miracle was about to unfold in China, least of all the Chinese.

But Butterfield was a good enough reporter that there are plenty of hints of what was to come in his interviews. One of many excellent anecdotes in the book is the following:

By lucky chance, on the night before I left China, a friend arranged for me to have dinner with a member of Mao’s family. My friend specified we could meet only if I agreed not to divulge the man’s identity–he lived a precarious existence–and I assented.

He turned out to be a dignified, reserved middle-aged man with a high forehead and swept-back hair reminiscent of Mao. Whenever he mentioned Mao, it was always as “the Chairman.” He wanted to talk with me, he said, because he felt there was misunderstanding about Mao. Mao was not a conservative, he insisted, he was always open-minded. He loved to read books–when he went on tours of the provinces, the one thing he took with him were cartons of books, and his bed was always half covered with unread volumes. …

When dinner was finished, Mao’s relative wanted to ask me a question. Why, he pondered, was China so backward compared to Japan? One hundred years ago they had been at the same level. “Is it because socialism is not as good as capitalism?” he asked.

It was an awkward situation. I felt embarrassed to evaluate China’s adoption of communism in front of a member of Mao’s family. But then he answered for me.

“In theory, socialism is excellent,” he said. “It provides for economic as well as political democracy. But in practice, it has shown weaknesses. We let the state and the bureaucracy grow too strong and prevented the development of individual initiative. China needs to find some way to combine the two systems.”

Would the Chairman feel the that way? I asked.

“The Chairman was always prepared to learn,” he answered.

Thanks to Lucy Hornby for recommending this book to me.



A Weberian analysis of Xi Jinping’s power

A  long essay by Chinese constitutional scholar Jiang Shigong has been making the rounds of China-watching circles, thanks to an impressive full translation by David Ownby (Don Clarke has made some interesting comments on it already). It’s a fascinating document in a kind of court philosopher mode, with Jiang interpreting the Communist Party’s current political priorities and leadership into an intellectual framework using both Chinese history and Western philosophy.

One part that I found particularly surprising and interesting was Jiang’s analysis of Xi Jinping’s consolidation of power in terms of Max Weber’s tripartite classification of authority:

In terms of Weberian theory, General Secretary Xi Jinping’s position as the core of the Party center, the core of the entire Party, his authoritative position as leader, arises not only from the ‘legal authority’ obtained by virtue of his legally defined positions as Party Secretary, National Chairman, Chairman of the Central Military Committee and not even from the ‘traditional authority’ born of the Party’s historical tradition.

More important is the fact that Xi Jinping, at a particular moment in history, courageously took up the political responsibility of the historical mission, and in the face of an era of historical transformation of the entire world, demonstrated the capacity to construct the great theory facilitating China’s development path, as well as the capacity to control complicated domestic and international events, thus consolidating the hearts and minds of the entire Party and the people of the entire country, hence becoming the core leader praised by the entire Party, the entire army and the entire country, possessing a special ‘charismatic authority’.

One of the interesting things about this passage is that it comes remarkably close to admitting that there is in fact a cult of personality around Xi Jinping: “charismatic authority” in Weber’s formulation is based on people’s personal devotion to the leader and their belief in his special qualities. Perhaps this Weberian terminology is a useful way for his supporters to recognize that Xi Jinping has in fact shifted toward personalized rule without evoking the more problematic Communist precedents of Mao and Stalin.

But I think Jiang’s framework is not just interesting as propaganda: it is significant, I think, that he argues that Xi possess all three forms of Weberian legitimate authority: traditional, legal, and charismatic. This analysis in my view is correct, and actually helps us understand how Xi differs from his predecessors.

Xi is more powerful than Hu Jintao because he has a charismatic authority that Hu never managed. But Xi’s charismatic authority is a complement to his traditional and legal authority, not a replacement for it. This is the major way he differs from Mao Zedong, who tried to use his personal charisma to overthrow tradition and law. Xi is an organization man as well as a charismatic figure, who has put lots of effort into clarifying bureaucratic reporting lines and emphasizing traditional morality–things that Mao never had much time for.

Chinese population controls before the one-child policy

Here is an interesting paper on a lesser-studied period in China’s family planning policy. The starting point is the simple observation that fertility in China declined more in the decade before the introduction of the one-child policy in 1979 than it did in the decade after it: the total fertility rate dropped from 5.7 children per woman in 1969 to 2.7 in 1978, and then declined marginally to 2.5 in 1988.


So what happened in the 1970s? That is the subject of the paper, “The Power of the Government: China’s Family Planning Leading. Group and the Fertility Decline since 1970”; here is an excerpt with some history:

China’s family planning policy has a much longer history than that of the One-Child Policy. The history of China’s family planning dates back to December 1962, with the release of the No. 698 document. In 1964, the State Family Planning Commission was established, after which commissions at the province, city, and county levels were gradually set up across the country. However, the outbreak of the Cultural Revolution negatively affected these family planning institutions, most of which ceased to function in 1966.

In early 1970, Premier Enlai Zhou emphasized that the implementation of a family planning policy should not stop. In 1971, the State Council released document No. 51, “Report on Better Implementing Family Planning Policy,” signaling the recovery of family planning from the Cultural Revolution. The document required provinces to set up a Family Planning Leading Group to organize and lead family planning work. A pilot run was initiated in 1970, and, by 1975, all provinces had set up a leading group. The leading group is an important and high-level provincial institution. In most cases, its leader is also the main leader of the provincial party committee.

The primary duty of the provincial Family Planning Leading Group is to promote the implementation of family planning policy under the guidance of the central government. By 1960, the slogan “Later, Longer, Fewer” (wan, xi, shao) had already appeared, although no real action was enforced until the formation of the Family Planning Leading Group. “Later” means marriage at a later age–23 years for women and 25 years for men. “Longer” means a birth planning rule of waiting for more than three years between births. “Fewer” means that one couple could have two children at most. Concrete examples of rewards and punishments include paid vacations after a sterilization operation, priority in housing arrangements, and no subsidies for workers facing difficulties as a result of unplanned childbirth.

Although there is narrative evidence suggesting that the campaign had several coercive elements, overall, the policy enforcement was much more lenient during this period compared to that of the One-Child Policy period, when an above-quota birth could result in huge fines and even the loss of one’s job.

The authors, Chen Yi and Huang Yingfei, use the different dates on which family planning leading groups were established in different provinces to estimate the effect of the policy; their model suggests about half of the total decline in fertility in the 1970s can be attributed to the “later, longer, fewer” policy.


What changed most dramatically after the introduction of the one-child policy was not total fertility, but the sex ratio at birth: the ratio of male to female children surged in the 1980s and 1990s due to selective abortions of female children. The authors suggest two reasons for this change. First, the family planning policies in the 1970s were less coercive than the one-child policy, so couples who had a preference for sons could more easily exercise that preference by just having another child. Second, ultrasound technology did not become widely available in China until the late 1980s, so in the 1970s it was generally not technically possible to determine the sex of an unborn child.

Reading the Communist Manifesto with Xi Jinping

Last week, Xi Jinping led the Politburo of the Chinese Communist Party in a “group study session” of the Communist Manifesto of Marx and Engels–170 years after its first publication. This event seems destined to have a special place in histories of socialism and its reinterpretation: in what other study of this document would class struggle and the public ownership of the means of production not even rate a mention? At least, those terms did not appear in the Xinhua dispatch issued after the session (Chinese original here); Xi’s no doubt lengthy speech to the meeting has not yet been published in full.

Such evasions are one reason why there is a tendency for outsiders to see these kind of events as a kind of playacting that has no meaningful content and is disconnected from the realities of the country. But I think they can be quite informative about how those running China think. In my reading, I saw three key terms that dominated Xi’s discussion, which together can help us piece together his vision:

Scientific. This word was used a lot: according to Xi, the Communist Manifesto is “a classic work of scientific insight into the laws of the development of human society.” And the passage of time has not made it at all irrelevant. “The current trends of a multipolar world, economic globalization, use of information technology, cultural diversity, unprecedented interconnection and interdependence among countries–these completely validate the scientific forecasts made by Marx and Engels in the Communist Manifesto.”

Xi does not dwell on what the scientific laws of development are exactly. But I have no doubt that he firmly believes that there are such laws. I think the emphasis on being “scientific” reflects a quite 19th-century view that human societies and economies can be understood and managed fairly easily. This is really an expression of confidence: that whatever challenges and problems the government encounters can in fact be dealt with. It is not quite an endorsement of central planning. But such confidence is certainly the polar opposite of the libertarian or Austrian view that the economy is an incredibly complex system that cannot be easily understood and so should be left largely to its own devices.

Development. The Communist Manifesto “provides powerful ideological weapons for us to understand the world and change the world,” Xi says. Again, there is absolute confidence that the world (or at least China) should be changed, that he knows how to do it, and that the Communist Party has the ability to do it. And the Manifesto also makes clear, he says, that the point of changing the world is to “promote the overall development of people and the overall progress of society.”

The lineage of this idea runs all the way back to Lenin’s 1920 statement that “Communism is Soviet power plus the electrification of the whole country” and Deng Xiaoping’s line in 1980 that “The purpose of socialism is to make the country rich and strong.” Since the late 1970s, China’s version of socialism has been more about the pursuit of national development than the implementation of a specific ideological arrangement of society. These days Xi is de-emphasizing purely economic measures of development in favor of a broader concept, but the message is ultimately the same.

Leadership. While the concept of development these days is much more flexible than the old ideas of a classless society and a heavy industry-led economy, there are some things for which flexibility is not permissible. Chief among them, of course, is the leadership role of the Communist Party. “The Party will lead the people in advancing a great revolution of society and in achieving the great rejuvenation of the nation,” Xi says. The Party “will always be the backbone of the Chinese people and the Chinese nation,” and it is the Communist Manifesto that laid the “theoretical foundation” for this idea.

In this interpretation of the Communist Manifesto we can thus see the fundamentals of what Chinese-style socialism is: the Communist Party pursuing the social and economic development of the Chinese nation, on behalf of the nation. It is clear that this social and economic development should not arise spontaneously from the free interactions of individuals, but should be directed and managed “scientifically” by the Party.

Whether these ideas can actually be found in the Communist Manifesto itself, or are just retrospective projections, is a question for another day.


The new form of hybrid institutions

One of the more interesting aspects of the current redrawing of the Chinese government’s organization chart on is the combination of Communist Party and state institutions. For instance, the government agencies regulating print and broadcast media are being folded into the Party’s Department of Propaganda, while agencies for religious and ethnic affairs are being absorbed by the Party’s United Front Work Department (historically, the agency in charge of making strategic alliances with non-Party elements in society).

The move that perhaps most symbolically captures what is going on is the merger of the Central Party School (mainly a venue for mid-career training of Party cadres) and the National School of Administration (for civil servants) into a single organization called the Central Party School (National School of Administration). Who gets to be outside the parenthesis and who has to be inside the parenthesis tells you what is going on. (The People’s Daily has a helpful Chinese-language infographic that summarizes the changes.) I’m going to call these combinations of party and state organizations “hybrid institutions,” stealing the term from Timothy Snyder, who used it in a somewhat different context.


In the recent post in which I tried to pull together my thoughts on the Party-state restructuring, I generally argued that the changes aim at making explicit what has always been true: that the Communist Party is in charge of the country. But it would also be wrong right to imply that these changes were somehow inevitable and widely expected. They very much were not.

One reason why is that the general drift of organizational changes in China had for a while been in the opposite direction: they de-emphasized the Party in favor of the government. I recently came across an excellent example of this in Barry Naughton’s 2003 account of the creation of SASAC, the agency supervising the large state-owned enterprises controlled by the central government. Before its creation, such supervision had been done by a secretive Party body known as the Central Enterprise Work Group. So at the time, SASAC was also a kind of hybrid institutions, as it absorbed and replaced this Party body:

The composition of the SASAC must represent a balancing act between Chinese Communist Party and State Council interests, just as the Central Enterprise Work Group before it represented such a compromise. Indeed, we find ample evidence that this expectation holds true. The SASAC has eight full commission members. It is possible to identify four as coming primarily from the State Council system and four as coming primarily from the Chinese Communist Party system.

Interestingly, the head of the SASAC, Li Rongrong, is not the party secretary of this body. Instead, this job is held by Li Yizhong, who is first vice chairman of the SASAC. But the SASAC web site is unusually specific about the responsibilities and duties of commission members. It specifically says that Li Rongrong is the boss: he “assumes the main responsibility of SASAC and he is the first person of responsibility in SASAC. He will take charge of the SASAC party committee’s work when Mr. Li Yizhong is out of Beijing for business.” Li Yizhong, in turn, takes over the main responsibility when Li Rongrong is out of town. Thus, the web site in effect says, “even though Li Rongrong isn’t the party secretary, he’s still the boss.” It is stretching things only a little to say that the SASAC is a joint venture of the State Council and the Chinese Communist Party, with the State Council having 50 percent plus one share.

What’s interesting is that SASAC was originally a hybrid institution in which the Party was fairly explicitly subordinate to the state. In the hybrid institutions being created in 2018, the state is fairly explicitly subordinate to the Party. That shift encapsulates how Xi Jinping has changed Chinese politics.

What is changing about the rule of the Chinese Communist Party?

The past six months have been an extraordinary period for Chinese politics, with a steady series of high-level events and major changes unprecedented in recent history. The two themes running through all of this, in both the propaganda and the substance, have been the primacy of Xi Jinping personally and the Chinese Communist Party institutionally. Here is a sample of what this sounds like, taken from the recent organizational reform plan that aims to expand the Party’s role in decision-making and management.

The leadership of the Communist Party of China is the most essential feature of socialism with Chinese characteristics. Party, government, military, civilian and academic; east, west, south, north, center, the Party leads everything. … We must improve the Party’s ability to set the direction, plan for the big picture, determine policies and promote reforms; we must ensure that Party leadership is comprehensive, and we must ensure that Party leadership is stronger.

This is not simply a rhetorical change: the whole organization chart of the Chinese government is being redrawn. In my bailiwick of economics, a new Party economic and finance committee has taken over the setting of policy priorities, a task that in previous administrations had been considered the main responsibility of the State Council (essentially the executive branch of the Chinese government). The first meeting of this committee this week sent an important signal that “the centralized and unified leadership of the Party Center in economic work is being strengthened,” according to the official Xinhua News Agency.

But what does “strengthening“ Party leadership really mean? It’s not as if anyone was in doubt that the Communist Party is in charge of China, and has been for six decades now. The Party and the government may be separate institutions, but they meet at the top: Xi Jinping is both the head of the Party and the head of state, and so was Hu Jintao before him, and so was Jiang Zemin before him. Almost every person making any political or administrative decision of any import in China is a Party member.

The truth is that the Communist Party’s role is both obvious and rather difficult to explain. It is in charge, but how exactly it is in charge, and how exactly it exercises its leadership, are not well understood by outsiders. It is difficult to draw an organization chart that includes both the Party and government bodies and clearly explain the relationship between them (the official organization charts you do find usually keep the Party and the government separate). If we want to understand what is changing about Party leadership in China now, we need to start from how it functioned before.

The best short explanation of the Party’s role in China that I have found recently is from Frank Pieke’s Knowing China: A Twenty-First Century Guide (a book I have previously praised):

The CCP is not an electoral machine or vehicle of competition with other political parties. It is also not a platform for political cooperation and competition between like-minded people. The Party is not even an institution, as commonly understood, but only exists in symbiosis with other institutions: the organs of the state, representative government, judiciary and the army, service organizations (hospitals, schools), enterprises, mass organizations, collectives, non-governmental organizations and even other political parties. This symbiosis is always unequal. The CCP acts as the superego of society that guides, inspires, evaluates, coordinates, directs and decides; other institutions will have to follow. …

The Communist Party does not govern. Instead, it leads, controls and inspires all institutions of government and governance. The Party’s continued control over the people who lead and administer the institutions of governance continues to be the most vital feature of China’s uniquely socialist mode of governance. Known as cadres in China and other socialist societies, these people should not be thought of simply as bureaucrats or, alternatively, politicians, officials or managers: the concept of cadre includes all of these. … The recruitment, training and deployment of cadres are the most important ways in which the Party inserts itself directly into all institutions of state and society and guides and directs the project of socialist transformation.

Pieke’s description is I think very accurate, and captures the reality that the Party and the government are parallel and closely intertwined organizations. The Party’s key roles are to set ideological direction and to control the appointment of personnel to governing institutions, rather than to govern directly. But Pieke may have captured the essence of the Party role just as it is changing into something else (his book came out in 2016).

I think what Xi is doing is turning the Party into a proper institution, and changing the Party’s role into something you could draw on an organization chart. Rather than have the Party exist in parallel with other institutions, Xi wants to have the Party be clearly in charge of those institutions. In the new organization chart, the Party does not overlap with over bodies, or hide in the background appointing key personnel: it is plainly and obviously on top. The Party is moving from a background role of political inspiration to a foreground role of political decision-making. In a way, this shift just makes more explicit what has always been true: the Party is ultimately in charge (the illustration below is from a 2013 CRS report by Susan Lawrence).


This comes out fairly clearly in the public explanations and defenses of the recent changes, which are not at all shy. A good example is this op-ed by Eric X. Li, possibly the Party’s most effective apologist writing in English:

Since the founding of the People’s Republic in 1949, the leadership of the party has been central to China’s political DNA. However, institutionally the system has gone through significant growing pains. At first, China adopted the Soviet system that separated, at least on the institutional level, the party and government. The top organs — the party central committee, the National People’s Congress and the State Council were parallel. But in reality, the party led everything. …

The party has now stepped forward to the front and center of Chinese governance. … While the party’s leadership has always been politically paramount, the administrative separation of party and government has produced institutional contradictions and confusion. [The new arrangement] lifts the veil of pretense that, somehow, the party and state governance are not one, which is untrue and wholly unnecessary and counterproductive at this stage of China’s development.

The tendency of the Western media has been to conflate the trend toward the strengthening of the Party’s role with Xi Jinping’s grabbing power for himself. So all these developments are made to serve one undifferentiated narrative of China becoming more authoritarian.

But there is also clearly a sense in which what Xi is doing is fundamentally rationalization: he is taking a confusing structure inherited from history, and redrafting it in a more straightforward way. If the Communist Party is ruling China, which no one has ever doubted, then why should its rule be indirect and its role hidden? If you were going to have an authoritarian developmental state, would you really have arranged things this way? Wouldn’t it just be simpler to have an organization chart where all the lines meet at the top?

Much of the writing about recent political changes emphasizes how Xi is breaking with “norms” and upending established practices. But it would be wrong to see Xi as some kind of interloper who is recklessly destroying carefully balanced institutional arrangements with a long history. (This recent piece by Francesco Sisci captures well how the political institutions of the past were unstable compromises set up to address issues of the moment.) Xi is a believer in China’s system, and he takes its logic seriously. He is not overthrowing the fundamental principles of Chinese politics, but trying to apply them more systematically.