Governance in China

The research described here is conducted by Prof. Dr. Thomas Heberer and his colleagues as part of the research network 'Governance in China'. The network is combining the expertise of leading german scholars in the field of China Studies and political science, funded by Germany's Federal Ministry of Education and Research. Thomas Heberer is, together with researchers of Tübingen University, responsible for a section examining 'Local Cadres as Strategic Groups'.

The project started out from the consideration that China's rapid development is hardly understandable without a local perspective. The principle research question is why the local level (cities, counties) is so rapidly and effectively developing. Our hypothesis is that the interaction between two "strategic groups" (local leading cadres/local private entrepreneurs) in the Chinese local developmental state induces effective economic development of a locality and thus state capacity. In the following I would like to present some preliminary findings of our field research in six counties in the years 2010-2013.

Local government agency and private sector development
Since the 1990s the interaction and cooperation between local governments and private entrepreneurs has become crucial for effective policy implementation. The private sector is a pivotal component of local economic policies. Our field research suggests that the local state strategically targets entrepreneurs to ensure smooth private sector development and thus facilitates effective policy implementation on the ground.

In terms of economic and private sector development local governments steer development by the following means: restructuring industries, supporting the upgrading of products and industries; land administration; helping enterprises to get access to credits and loans; providing tax subsidies for innovations and brand products of enterprises; implementing environmental standards; improving the infrastructure and providing public goods, controlling entrepreneurial associations; providing market information; and promoting the further training of workers and staff in private enterprises. As a matter of fact, local governments and private entrepreneurs are mutually dependent and have formed a symbiotic relationship. This symbiosis, however, is asymmetric as local governments dominate the private sector economy by their exclusive access to resources urgently needed by private entrepreneurs to survive in highly competitive domestic markets. We argue that both mutual dependency and the asymmetry in local state-business relations are beneficial to effective development policy implementation in contemporary China.

The interaction of local governments and private entrepreneurs 
The primary goal of local governments is to improve the capacity of enterprises to compete on domestic and global markets and to help them set up more effective business models. At the same time, entrepreneurs tie themselves closely to the party-state from which they expect political protection and support in return. Private entrepreneurs constitute a rather heterogeneous, even `atomized' social group, whose members interact with local governments foremost on an individual and informal level. The absence of autonomous business associations is certainly a major factor to explain this `atomization' of private entrepreneurs. Certainly enough, regional differences and development trajectories produce different state-business relations, and the more important the private sector for a given locality has become the greater the bargaining power of private entrepreneurs vis-à-vis local governments, both at individual and collective level.

To sum up, in all places we investigated, local governments exerted effective leadership and guidance of the private sector, suggesting the existence of a strong developmental state. The local state enjoys sufficient autonomy from the private sector, exclusively controls the access to land, funding, public projects, information and, though more circumspectly, credit, and thus can and does bring entrepreneurial interests  -  most notably, profit increase and firm expansion  -  into accordance with its specific goals to develop the local economy.

Leading local cadres and private entrepreneurs: Two strategic agencies
How can we explain that the interaction between local cadres and private entrepreneurs are conducive to local development spawning effective policy implementation. We argue that this can be explained by ascribing to them the character of "Strategic Groups" which act and behave in a specific developing way. The term "strategic group" (SG) refers to a group of persons connected through common interests in the maintenance or expansion of their shared opportunities of acquisition be it material goods or immaterial goods (such as power, career advancement, prestige, policy implementation, etc.). In previous publications Heberer and Schubert have argued that the term SG refers to groups having shared interests which they pursue strategically, that they maintain a mutual awareness and a collective identity, draw boundaries between themselves and other social constituencies and develop an esprit de corps, and, finally, possess a common habitus related to the similar positions of their members in a given social field. The strategic character of a SG is determined by the ability of the core group to coordinate and unify group behavior. The core group formulates collective aims, renders goal-oriented decisions, and implement these accordingly. Finally, "strategic" comprises the efforts of local cadres and private entrepreneurs to attain objectives attached to policy implementation or in the case of private entrepreneurs impacting on political decision-making.