Yet Again, Hukou System Not Abolished

A broken record on hukou reform

The Chinese government has announced, and media have reported, another round of hukou reform.

Here’s the first paragraph from the China Daily story:

Chinese migrant workers living in cities will gradually have full access to schools and hospitals where they work, a significant move to improve social equality between rural and urban residents.

Triumph! The end of discrimination and urban-rural apartheid! Citizens will be free to choose where they wish to live and have access to social services regardless of where they were born! Let’s read all about it.

The last two paragraphs of that story:

The guideline also said the expansion of the country’s megacities including Beijing and Shanghai will be limited.

Initially, Huang said, the country will take effective measures, such as a point system based on applicants’ living and employment conditions, to scientifically control the flow of its population to the major cities.

Oh.

Apologies for sounding like a skipping CD (or is even that too dated a reference?), this reform is far from groundbreaking or comprehensive. Tania Branigan’s story in the Guardian is excellent–focusing on the limited nature of the reforms:

But experts warned that the changes to the hukou, or household registration system, fell short of hopes for more comprehensive reform and would have limited impact.

Large cities will have exemptions, rules regarding land aren’t addressed, and cities will have abilities to shape reforms based on their own situations. China’s management of urbanization is an under-appreciated aspect of the Chinese Communist Party’s success, as I write in my recently published book, Cities and Stability: Urbanization, Redistribution, and Regime Survival in China, which is why hukou reform is often discussed but rarely implemented.

When I heard word in February and early March 2006 that serious reform was in the offing, I was excited by the prospects of observing how a changed policy would affect the growth of China’s cities. Yet in that year, as in every other that has come since, major reform at the national level has been left to the future. Long-range planning calls for the equalization of social services across the rural‒urban divide and the end of discrimination against rural migrants in cities, but the prospects of implementation remain hazy.

Kam Wing Chan and Will Buckingham published an article in the China Quarterly entitled “Is China Abolishing the Hukou System?” in 2008. Their answer was no. Yet they demonstrate that both the domestic and foreign media constantly talk about the end of the system as either already having happened or just around the corner.

In 2014 with a new more powerful center, it remains just around the corner.

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Institutional Reform or Purge? A Middle Way on China’s Anti-Corruption Campaign

A middle path

A middle path

Two contrasting takes on China’s continuing anti-corruption campaign have appeared in the past couple of days that show the radical differences among perspectives on the nature of the campaign and its likely consequences.

Li Chengyan, head of Peking University’s Research Center for Clean Government Construction, conducted an interview with Caixin (Chinese/English) where he argues that anti-corruption activities go hand in hand with market reforms.

The premier, Li Keqiang, has sent out inspection teams to supervise the implementation of reform measures passed at the third full meeting of the party’s 18th Central Committee. They found that local governments have put up quite a lot of resistance to the measures, reflecting some deep-rooted causes. My field trips have also shown that the CDIC’s reforms have not been implemented by many local authorities. Local party committees used to have all power to themselves without supervision. Now they are required to hand over supervision authority. They must be unhappy.

In other words, economic reforms that the center wants to happen are not being implemented by reticent (and corrupt) local officials who were previously unsupervised. The anti-corruption campaign essentially serves as additional monitoring and supervisory role to ensure that local officials follow the dictates of the party center. It is hard to read this as anything other than an increase in central power, which is why the final question and answer felt a bit off:

Do you think the fight against graft will lead to a viable path toward a redistribution of power with checks and balances inside the party?

Comprehensively deepening reform cannot move forward without adequately cracking down on corruption. The new central leadership has taken a two-fisted approach, deepening reform of governance on one hand by redefining the relationship between the government and the market, and on the other hand fighting corruption to remove obstacles to further reform. The two sides of the approach complement and reinforce each other and cannot be separated.

While China has moved forward with citizen participation in rule and law-making and offering comments to proposals, these pale in comparison with the strength of the anti-corruption campaign’s reshaping of day-to-day life in local governments. Checks on local performance have increased, but balance–if it ever existed–has moved strongly in favor of the center.

In the end, though, this is an optimistic take by an intellectual who believes that corruption by local officials represents a real danger to the Party as a whole and that the campaign has been and will continue to be very effective in reducing graft. It is also clearly not a temporary campaign that is being described but an institutional change where discipline inspection officials will exist at least partly outside the rule of their local bosses, and so better able to patrol and punish corruption in their own localities without fear of reprisals.

A very different perspective is provided by David Pilling in the Financial Times in a piece entitled Why China’s hunt for tigers and flies is bound to fail. Pilling’s answer comes only in the final two paragraphs:

First is the manner by which the battle is being fought. With no independent judiciary, the exercise amounts to trial by the Communist party, not trial by law. … However successful, ultimately the exercise can only be seen as arbitrary and politically driven.

The second problem is related. The campaign appears to have taken on the frightening characteristics of a Maoist purge, with ever more people, industries and government agencies sucked into its vortex. Yet one can almost be certain there are limits. Some people are immune. After all, allegations of unfathomable fortunes go right to the top. These point the finger of suspicion not only at the previous leadership, but also at the current one. So where does the whole thing stop? One presumes Mr Xi will at some stage have to call a halt. The unthinkable alternative would be that, as in 18th-century France, the revolution ends up devouring its own.

The first claim is that only rule of law can provide legitimacy to anti-corruption acts and avoid the taint of being arbitrary power politics. While there is likely some truth to the latter piece of that claim, effective acts that reduce corruption will earn the Party and the leadership credit with the population. Perhaps some theoretical anti-corruption crusade that operated through more normal legal channels instead of through the Party and was equally effective would provide even more benefits to the Party. However, giving away that powerful of a tool to an independent legal authority could be extremely dangerous, as noted in Pilling’s second claim, since there are limits as to who can be investigated.

Yet it remains the case that if the Central Commission for Discipline Inspection (CCDI) is effective in reducing the corruption that pervades the economy, then is it necessarily the case that because it is a fact that some remain untouchable that the whole act will be seen as invalid? I find this extremely dubious.

What does seem possibly dangerous is to point out how much corruption is present in the system. Rumors of corrupt deals become facts that the public is made aware of. How many anti-corruption investigations can take place before the populace decides that all officials–and not just all local officials–are corrupt? In this way, one could imagine that the whole game unravels or it devours its own.

In the end, these activities represent a dramatic centralization of power and a reduction–incomplete but important–in the dominance of corruption in China’s political economy.

A final thought that gets at Li’s perspective.

Governing a country is like fighting a battle. The first and foremost concern is destroying the enemy’s effective strength and then straightening out the internal structure.  管理一个国家就像守山头,战役打响了,第一个想到的是怎么把敌人的有生力量消灭掉,而后再用充分时间去理顺体制,重整旗鼓往前走。

I would say instead that for a single party, staying in power may be like fighting a battle, but governing a country could involve asking the population who and how they would like to rule them instead.

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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:

real-estate-2014-uli-report

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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