Centralization and Mega-Beijing

Bill Bishop’s Sinocism today links to a nice SCMP story on a proposed “Beijing-Hebei-Tianjin integration.” I think that the piece gets at what is principally driving these discussions–centralization of power and control:

China is readying an assault on the “fortress economies” of local governments by creating a super region around Beijing, with proposals that sources suggest will be more aggressive than have been publicly revealed. …

They [experts] say China’s “every region for itself” approach to economic growth is a cause of a wide variety of problems, including overinvestment, pollution and corruption.

“Right now, every official will think of his own region first – from the construction of projects to investment,” said Zhang Gui, deputy director at the Centre of Beijing-Hebei-Tianjin Development Research at Hebei Technology University.

That is, the goal of the mega-city plans is not building an open city that can compete with others on creativity but rather to empower the center and other higher level officials over those at local governments.

As I explore in my new book, Cities and Stability: Urbanization, Redistribution, and Regime Survival in China, China’s urbanization is relatively spread out across dozens and hundreds of cities rather than dominated by a few clusters. I argue that this aided the Chinese Communist Party (CCP), particularly in the reform era. Countries with high levels of urban concentration tend to have governments collapse at much higher rates and survive for much shorter durations than do countries with lower levels of urban concentration. Since before Xi Jinping and his generation came to power, there has been discussion about the desire to encourage urbanization and relax China’s household registration (hukou) system in ways to allow individuals more freedom to reside where they wish without discrimination.

I think that rather than presaging a new era of urban policy and free migration within the country, the mega-city plans of Beijing, Shanghai, and Guangzhou fit into the Xi Era’s centralization of power. The PRC has been relatively decentralized in its day-to-day operations with local officials flouting central dictates, often to line their own pockets and those of their friends. It appears as if breaking up such local power centers–through investigations coming from the CCDI or the creation of new mega-regions governed by higher level appointees–is at the top of the new leaders’ agenda.

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Snowpiercer’s Underclass

Bong Joon-ho’s Snowpiercer is a visually impressive and thought-provoking film. While many of the thoughts that it provokes are of plot holes, political themes are evident throughout. As Alyssa Rosenberg writes,

Snowpiercer,” the dystopian adaptation of a French graphic novel about the residents of a train that houses the last people alive on earth, has been tagged as a liberal movie by many critics and commentators. To a certain extent, the concerns of the movie align with the progressive-conservative alignment at the moment. The movie about a savage struggle between a small group of hyper-privileged people who live at the front of the train and a large number of desperately poor ones, lead by a young rebel named Curtis (Chris Evans), who live at the back. But while Bong Joon-ho’s movie is certainly political, in that it is concerned with policy decisions and their outcomes as well as power and bureaucracy, I am not sure that it is in any way straightforwardly progressive. Rather, it draws ideas from many traditions and current controversies. If there is a real enemy here, it is the mindless worship of a preexisting order.

Symbolically, the film’s principal action revolves on a revolution against the class system and its machinery of oppression. It makes a point along the lines of the Matrix Reloaded (as pointed out in Grantland) that some revolutionary energy can actually be stabilizing or at least used for the purpose of maintaining overall stability. In the film, it’s a way to kill of individuals so that the train isn’t overcrowded while maintaining everyone’s sense of purpose–both before the revolution, during, and afterwards. Without such events, the choice would be–one supposes–killing without explanation, overcrowding, or the rear of the train (that is the bottom of society) being so frustrated with their station that they at a moment’s notice move against the order of the train.

One issue–again, among many–here is that the people in the back of the train don’t seem to provide much to the overall operation of the train. This is the opposite of the real world situation where the hard physical labor of the bottom rungs of society allow for the wealth accumulation of those at the top–or, rather, provide the labor to service those at the top of the societal hierarchy. They harvest the crops, transport them to market, cook and serve them, clean the toilets, and operate the sanitation facilities. For all kinds of goods, they are the labor. They are the masseuse, the waiter, the barista, the food truck operator, the dry cleaner, and the caterer.

In that sense, despite the revolution, the film’s imagery is something like a conservative would conjure: the people in the back of the train aren’t producing anything of value and are “moochers” surviving because of the benevolence of the conductor and others of the train’s hierarchy.

Why not have a factory car just ahead of the tail? With those passengers producing goods of value, then they actually would be critical to the operation of the train rather than a drain to it. Further, it would heighten contradictions as the factory workers would be producing goods that they never use themselves. In the end, it seems like a lost opportunity. The film provokes some thoughts but could have resonated more outside of the theater if a bit more care was taken to have its world resemble our own. If it’s goal was to critique not simply an abstract “mindless worship of a preexisting order” but the mindless worship of our world’s governing order, then the oppression of workers at the bottom of that order needs to be shown.

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The CCP’s Third Act?

What would it take for conventional wisdom to accept that we are presently witnessing the beginning of the PRC’s third act: the Xi Era?

Currently, analysts look at post-1949 Chinese domestic politics as falling into two distinct periods: a Mao Period from 1949 until the Chairman’s death in 1976 and a Reform Era after Deng comes to power in December 1978 (Hua Guofeng‘s interregnum is usually omitted). China under Mao is dominated by the eponymous man and his whims. Of particular note, the Chinese Communist Party under Mao saw substantial number of dismissals of high level officials, usually for arguing with Mao (e.g., Peng Dehuai) or conspiring independent of him/beyond his wishes (e.g. Gao Gang & Rao Shushi; Lin Biao), while the Reform Era has seen relative stability among the upper echelons of the party elite until the past few years.

However, Xi’s anti-corruption work–led by Wang Qishan and the Central Commission for Discipline Inspection (CCDI)–are weeding out flies (bit players) and tigers (key leaders). Both Caixin and ChinaFile had great visualizations of important players being removed from office and expelled from the party.

Wang Qishan’s CCDI itself as an institution is growing as well, as the often stealthy organization noted in a press release last week. This wave of forced turnovers shows no sign of abating. Even absent radically different propaganda or policies–both of which have changed with Xi, to be sure–the personnel changes alone imply a serious break with the past.

What would it take to establish this as a third act in PRC history? Twice the number of removals of high and elite officials than in previous transitions? Three or ten times? The Mao era lasted for 27 years. If we believe it continues, then the Reform era is going 35, 36 years. Perhaps it is time.


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Chinese Real Estate, or Cities and Stability

Caricatures of the Chinese real estate market fall into two camps: bears view it as a remarkable bubble that is going to burst, while bulls believe that it is part of an economic engine that has every reason to keep humming along. Bears talk about ghost cities and empty apartment complexes and costs well beyond standard income:price ratios. Bulls talk about hundreds of millions of people still in the countryside, the low quality of the existing housing stock, and the government’s desire to avoid a calamitous drop in prices. The Economist’s recent special report (which I wrote about here) on China’s urbanization touches on these debates.

First, it is important to remember the scale of the development and construction that we are talking about across China’s cities. Suzhou, a second tier city in China, is expected to have 21.5 million square feet (two million square meters) of new office space open up in the next two years, according to this Urban Land Institute report. For comparison, New York City is expected to have added nine million square feet from 2013-2015, a rate that is the fastest growth there since 1990. Suzhou is already suffering from an oversupply of empty offices:

Suzhou, about an hour’s drive west of Shanghai, is suffering from oversupply in office buildings, especially in the Suzhou Industrial Park, said the report.

The report cited an investor’s experience on a recent work visit to the Suzhou Industrial Park. “Our host joked that we were welcome to use office space in the same office building for free if we set up a company in Suzhou. There are so many empty office units in the building.”

Yet despite this Suzhou is ranked #7 out of 36 large cities in real estate investment outlook by the institute. Vacancy rates in tier two cities can be staggeringly high:


How can there be any confidence that either (1) prices won’t collapse or (2) the units will remain empty? The answer is that policies–particularly related to China’s hukou (household registration) system–place significant restrictions and limits on the property market, and the prices reflect a belief in the level of demand in the absence of these limits. Restrictions still exist that make it difficult for rural born Chinese to permanently relocate to urban environments and enjoy the social service benefits of cities. Those interested in purchasing multiple units face difficulties.

Shh! As the country’s property market starts to deflate, China’s cities may be relaxing their property curbs. But it doesn’t mean they want too many people to know about it.

The latest example comes from the northeast city of Shenyang, where the glare of media attention after it was reported that the government was easing property curbs prompted some real estate types to dive for cover.

Larger Chinese cities like Shenyang are relaxing their property policies, but want to do so quietly. Officials are loath to publicize their efforts to ease curbs for fear it would seem a tacit acknowledgement that the local economy has hit the rocks.

China has managed its urbanization, spreading development around the country in order to maintain economic and especially political stability. My new book, Cities and Stability, shows how and why these actions worked.

Moving forward, however, there are real questions. The CCP leadership continues to be interested in encouraging the development of smaller cities with policy preferences and restrictions, but as the real estate sector grows in size and importance, individuals and corporations are placing billion dollar bets about the nature of these distortions and future policy changes. The property sector could absolutely slow down or indeed reverse China’s rapid GDP growth, the bedrock of economic and political confidence in the country. Biasing policies towards those born in cities while keeping out or discriminating against those born in the countryside has been a successful set of policies for the Chinese leadership for decades. Today, it encourages excess development in both lower and top tier cities. Lower tier cities focus on their recent rapid growth and upward trajectories–that are the result of policy favoritism–in attracting future investment based on extrapolation. Higher tier cities point to the restrictions that have limited growth in the recent past and encourage developers and investors to consider what would happen if the shackles came off.

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Dreaded Perspectives

Jeffrey Isaac was one of my favorite instructors during my undergraduate days at Indiana University long ago. He does an excellent job editing the APSA journal Perspectives on Politics. Along with interesting articles, Perspectives contains book reviews. Lots of them. Every quarter my RSS feed is filled with links to reviews of a large number of books that I have to read. I suppose that I should not blame the messenger; indeed, it is a good thing that there are publishers interested in publishing books by political scientists in areas related to my research. I will be contributing to this list soon enough, after all. Here are some from the most recent issue:

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Returning to China’s Urbanization

Thanks to Bill Bishop and others, my post on China’s urbanization and democracy, Urbanization Won’t Drive Chinese Democracy, has had something of a second life. I wanted to take the opportunity then to connect that piece and my other arguments to the recent and excellent special report from The Economist on China’s urbanization.

Getting cities right will help China to keep growing fast for years to come. Getting them wrong would be disastrous, bringing worsening inequality (which the World Bank says has approached “Latin American levels”, although Chinese officials insist it has recently been improving), the spread of slums, the acceleration of global climate change (cities consume three-quarters of China’s energy, which comes mainly from coal) and increasing social unrest.

After more than a decade of spectacular growth in China, much of it in double digits, doubts are setting in both at home and abroad about the sustainability of the “Chinese model”. Growth is slowing. Lavish spending by local governments has piled up huge debts. …

At a plenum of the Central Committee in November the party declared that market forces must play a “decisive role”, the strongest support it has ever expressed for the market. This seems all the more stirring after years of vacillation under Mr Xi’s predecessor, Hu Jintao, who retreated from reform in the face of powerful resistance by vested interests, above all local governments, huge state-owned enterprises and, ironically, the new middle class, which would rather not share the fruits of growth with rural migrants.

The piece is well researched and presents a sophisticated picture of what is happening on the ground in and around China’s cities. What I think is missing or problematic is the overall frame. Most nondemocratic regimes are replaced not by revolution and democracy but by other dictators.

Most nondemocratic regimes lose power to other nondemocracies, not to democracy.

Large cities can exacerbate tensions within the elites of nondemocratic regimes in ways that are detrimental to regime survival. As I have written elsewhere:

The threats that cities pose to nondemocratic regimes manifest themselves through different channels. Large cities bring together huge numbers of people in a shared space. This makes effective collective action more likely and reduces the ability of the regime to understand, observe, and govern the population. These mechanisms connect large cities with the collapse of nondemocratic regimes.

Protests and the potential of protests can push a regime to violence, split elites, spark coups, and, yes, foment revolution. Massive cities are difficult to govern and make failures public rather than private affairs, but failure and regime change do not necessarily imply democratization.

For this reason, the Chinese regime’s hukou system is “sharpest of all in China’s ‘first-tier’ megacities,” as the report rightly notes. For decades now, the regime has encouraged the development of the West and the country’s interior in an effort to spread urbanization, growth, and wealth outside of a few coastal megacities. I argue that these efforts are in part attempts to separate the perception of China with the perception of Beijing or Shanghai. Developing Xi’an and Kunming and Chongqing and Wuhan provides ballast for the regime should Shenzhen or Shanghai descend into violence. It can point to other successes rather than rely on the first-tier cities serving as the sole symbols for China’s dream.

Two final thoughts to conclude. First, the report notes that the interests of incumbent urban hukou holders conflict with those of the vast migrant populations who remain without access to the full range of social services that cities provide. One of the last chunks to be cut from Cities and Stability touched on these topics:

Consider the following potential scenario. The regime attempts to lock in the support of the urban rich by claiming that without the CCP and its hukou policies, the rich urbanites will be overrun by the rural peasants. As such, the rich would have no choice but to support the dictatorship. However, with incentive-based policies that are compatible with democracy—in fact, that are progressive and support the majority poor at the expense of the minority rich and are fundamentally similar to what one might expect under democratic rule—the regime is losing that potential argument and ability to lock in the support of the urban rich.

This pattern is not something that is limited to the situation of China and hukou policy. Whenever a nondemocratic regime engages in good policy-making that is consistent with democratic rule and replaces policies that were incompatible with it, then the survival dynamics are unclear. Presumably, good policies improve general support for the regime through greater outcomes and beliefs about its competence, leading to increased assessments of duration. On the other hand, by replacing policies that require dictatorship with policies that do not, the regime might be making democracy and democratization more likely through the back door. Of course, since nondemocratic regimes most often collapse through transitions to other, different dictatorships, perhaps this risk adjustment is not that disconcerting for the regime. The question becomes does the regime believe that it alone possesses the unique ability to provide for stability of this territory while at the same time enacting policies that look more in line with those in democratic regimes. By improving its governance, the current Chinese regime may be biasing China’s future towards democratic rather than authoritarian rule.

The general sense, then, that the Chinese regime is likely to end by transition to democracy could be supported not simply by a vague remembrance of modernization theory (where everything good goes up the escalator together, as Stephen Krasner put it recently) but by the very quality and type of policies that the regime is putting forward.

Second, the section of the report on “The urban voice” ends with this rather ominous statement:

The possibility of revolution still appears remote, but the risk of larger-scale social unrest in urban areas is growing. To divert attention from trouble at home, China’s leaders may be tempted to flex their muscles abroad.

As it happens, Jessica Weiss of Yale University and I have written a paper (that I have teased before) on subnational variation in anti-Japanese protests during the 2012 crisis. Consistent with my general argument, larger cities are more likely to see such protests even after controlling for a number of other factors. What is also intriguing is that cities with larger migrant populations also were more likely to have protests. One of the big questions in China going forward is the extent to which the regime can address the divisions within society–urban/migrant, rich/poor–while simultaneously stoking anti-other sentiment in its foreign relations.

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Meanings of Means

Social scientists tend to propose and test hypotheses of the following type:

Hypothesis: As [our explanatory variable] increases, [our outcome variable] also increases, all else equal.

The way that hypotheses of this sort are tested is by compiling a large data set and examining if in a multivariate framework there exists a positive coefficient on the explanatory variable. If so, then the hypothesis is confirmed (well, the null hypothesis is rejected) and all is right with the world.

Those conducting survey or field experiments operate similarly, although there is less concern in those situations about the interaction of other potentially confounding factors as the treatment has been administered randomly to a sample that resembles the non-treated sample (i.e. it is balanced).

This is fine. Obviously there are numerous questions where we are trying to establish the direction and magnitude of causal effects of one factor on an outcome of interest, and this methodology tends to produce compelling evidence in support of these kinds of hypotheses.

What I would like to suggest, however, is that we do not limit the work of social science to the investigation of average treatment effects. Those interested in pushing randomized controlled trials as the only acceptable methodology appear less concerned on this point. A positive mean effect can result from a consistent positive treatment effect across all individuals or a bimodal treatment effect with a larger share of individuals being effected in one direction than in the other (for a ludicrously outsized example, see the Pax in Serenity).

Politics is a complicated domain (as Einstein said) with creative and independent thinking actors that can change over time and respond to similar stimuli in wildly different directions.

The singular focus on means can cause us to ignore the variety of responses inside of the distribution from which the mean emerges. For example, Dean Baker has a great post on his Beat the Press blog about the reality of a very low–but positive–inflation rate.

Expressing concern over deflation (i.e. the inflation rate turning negative) is the way in which people tell you that they have no clue about economics and just repeat what they heard others say. The inflation indexes we use are an aggregation of millions of different price changes. There is a substantial amount of dispersion around the overall inflation number. This means that when the inflation rate is near zero, there are many goods and services whose prices are already falling.

The almost total focus on the mean number ignores that in order to produce a number so close to zero implies a broad set of goods where deflation is already in progress. If deflation is terrifying, then a very low overall inflation rate implies not that deflation is not occurring but that the share of the economy in deflation is relatively large.

Focusing solely on the meaning of the mean effect can lead us astray when the real story is elsewhere.

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