[MUSIC] In this section, I want to talk about the way that the localities responded. The unintended consequences, way things could turn out differently than the center really thought they might, and the possibility of some kind of policy adjustment. Now, the local response and the dilemmas of monitoring compliance were really quite serious in China largely because of the size of the country. And so there are many expressions in China, in the policy arena about the difficulties of monitoring policy. For example, one of the famous expressions in Chinese but I just have it translated for you in English, is that the mountain is high and the emperor is far away. The idea being that Beijing or the capital is very, very far away. And they really don't come down very much to see what's going on. And therefore, you can get away with what you want. A second example is that the upper level has its policies, while we have our counter policies. In other words, the center may put out a directive, may put out a policy but can find ways to tinker with it. We can find ways to counter it in certain ways and these kinds of expressions are quite common. If we go back to some of the earlier literature and political science about bureaucracy. A fellow named Anthony Downs wrote a book called Inside Bureaucracy, and in it he refers to this concept of the leakage of authority. And so you can imagine as the policy comes down the level of the system, down the level of the bureaucracy, the authority of each level to be able to insist on appropriate correct implementation would get weaker and weaker. So you can think of it as sort of water flowing out this kind of authority as a kind of water leaking out. Leading to much greater difficulty for the government to really impose its will. In the early days of the 1950s and 1960s, when China tried to implement some of its policies as a poor society, the only thing they could do was really have telephone conferences. It was already pretty special if in the 1950s, some locations at the county level or below actually had a telephone and you would get these big nationwide telephone conferences where the center would ask about what was going on in the locality in terms of the level of compliance? But it actually was quite easy for local officials to lie because they would assume that nobody would come down and take a look. Now, because of that local officials really have a lot of room. Except for mass campaigns, they really have a lot of room to kind of mold the policy, make sure that it matches their interests, certainly doesn't hurt their interests. And policies are often implemented in a format, in a way that's really not anticipated by the central leader as the local officials twist the policy to match their own needs. A good example of this is, we've talked a little bit about this before, is the 1997 call for diversifying the forms of ownership. In 1997, Jung So Min said that they should diversify the forms of ownership, really trying to find new ways to make factories more efficient, the state owned enterprises more efficient. And what immediately happened all over the country was that the small and medium enterprises were bought out, there was this massive manager buy out an MBO by the summer of 1998. And so in fact, what happened was the content of the policy actually changed. And local officials could report that they were diversifying the form of ownership of the firm even as they took over the firm or in some cases they simply stripped the factories of all the equipment and sold it off and then closed up the enterprise. Now, the impact could also be based on local characteristics and in that sense, a kind of rational response by people at the locality to a policy. So for example, the decision to divide up land in the households. The speed of it, the format in which it was done, the size of the fields, all these things could vary based on local conditions. And in my own research it became very clear that the poor areas that had weak collective economies were very quick when the word came down, when they heard that places nearby were dividing up the land, the poor areas were very quick to divide up the land. While the wealthy suburban areas with strong collectives, maybe mechanized agriculture irrigation systems. They would try not to carry out the policies. Also depending upon the strength of the leader himself, the local leader. A strong leader would be able to impose his decision or impose the implementation on the locality while a weak leader may have to listen to the families and the village, to the elders in the village and listen to them to decide in fact, whether or not to do the policy and how to do the policies. The types of crops mattered as well. It was easier to decollectivize in places where you grew rice because rice is an individual action of placing the seedlings in the field whereas wheat can be harvested by large tractors. So you may not want to divide up the land, same thing with land labor ratios. What percentage? How intense the sort of populated, deeply populated an area is whether there were strong irrigation systems? All of these things could have an impact on whether or not a locality was willing to divide up the land. So let me just give you a puzzle. Think about how local conditions such as the level of mechanization, crop type the density of the population, how all of these could make a difference as to whether or not a locality may want to divide up a land among the families? Now, another thing that was used by the party as a way to try and ensure compliance was to give out quantitative measures or quotas to demonstrate compliance. For example, if there were a large field construction project then each locality may be told that they had to dig up 20,000 cubic feet of Earth. Now this would make it much harder to evade the policy 20,000 feet. You got to do it. They can count it, they can see it but it also could mean you could falsify compliance by maybe digging up 10,000 feet and then putting another 10,000 feet back into the hole. And so really making no influence, having no influence on the local water conservation work but you still fulfill the quota. A good example of this kind of fake compliance twisting of the policies, happened in 2009 when the Communist Party decided that all cities in China should recruit overseas talent. They should go out and get people from abroad and bring them back to help modernize the local science and technology. And many cities who could not afford or couldn't find people overseas or who just were lazy. They decided that they would count people who had already returned and include them in the new numbers of people that they had brought back under the program. So they could prove that they had complied with the party's demands. Now when you use quotas, I think I mentioned this before, when you use quotas in political campaigns such as the Anti-Rightist Campaign. Leaders could include people who have not really done anything wrong because you need it to fulfill your 5% of people. And also this gave local officials a chance to arrest people who were their opponents rather than arrest people who were actually guilty of some kind of misbehavior. And that these policies with heavy political content were really hard to oppose. Once the pressure came down to mobilize support for a policy, it was very difficult to challenge that policy or to let the real information reach back up to the leadership. So in that sense, the leadership may not really have known what was going on. There's a great story written by a guy named Liu Binyan, he's now passed away. But he used to be a newspaper reporter for the People's Daily, and he himself was labeled the rightist in the Anti-Rightist Campaign in 1957. But he wrote a story about the 1959 Anti-Rightist Campaign in the countryside, and he talked about a village leader who knew that the policy was wrong, who disliked the policy. But he also knew that if he spoke out against it, he would get into really big trouble. So to protect himself, he just stopped talking for 20 years. Now this is a kind of apocryphal story, it may not have necessarily have been real. But the point being that when you're a local official and there's real pressure coming down on you to tell the truth, but telling the truth is going to get you into big trouble, you just shut up. So this guy shut up for 20 years and then when the reforms began in 1978, 79, suddenly he found his voice again. And you can see that kind of thing going on in China today. There's a kind of bombastic nationalism, very strong nationalism online and among young people. And so it becomes very difficult if you don't like what the Chinese government is doing in terms of fighting with Japan or building up bases in South China sea, you really can't speak out against that because you're going to get yourself into big trouble. And I think that's very true today with anti-corruption campaign. You really cannot speak out very much on these issues. One of the interesting things about policy and policy implementation and the impact to policy is that under a planned economy, a policy change in one realm, in one area may affect related policies. And this would force some readjustment in the first policy. Central leaders could ignore the rational calculations of local officials when they push a new policy and put local leaders under pressure to implement the policy, and they could deny that there's any interconnectiveness of these policies. I really had this kind of experience in the spring of 1981, when I was working in the countryside. And I was watching decollectivization, watching the land be divided up and I had my own view about what the impact would be of decollectivization on birth control. China was trying very hard to limit the excessive births. And I felt very strongly that decollectivization would complicate that policy. Because dividing land among families based on the size of household, the larger your household the more land you got, that that really created an incentive for people to have more not less children. And in fact, what happened was that after decollectivization there was a huge boom in population growth in 1982 and 1983. So that by 1983, the party had to carry out a very draconian policy to control the population. And in fact, it was very interesting. I told a local official back then that these two policies were competing and he said no, no, no, no, there's no competition. And there was no competition because he had commands to do both and he couldn't say to me yes, yes, there is a real problem here, I have to make my choice about which is the right policy. And in fact, the birth control failed and the population grew dramatically. Another outcome at the local level that happens in China, partly because of the sort of the mix of planned and market to the continuing role of regulation and administrative control is what I call policy fevers. That this is a major outcome that happens in many aspects of the policy implementation. And the reason is that there became a kind of cyclical nature to policy during the reform era. The reformers would call for a liberalization and a deregulation. And during that period, people could carry out the policy but then after maybe six months or a year, if too many people did it or the speed was too fast, there would be retrenchment. The reregulation, a new introduction of controls. And local officials then learned that when there was a liberalization, they better go really fast. Because if they didn't carry out the new policy, if they didn't take advantage of the new opportunity, like building a new zone or establishing joint ventures, or policies like that, that once they got closed down again, they'd never have that opportunity. While other locations would have other done it and would have moved much farther ahead. So it really was the continuing role of administrative controls that could reregulate the sector or the policy and limit the liberal policy before these localities are implemented that made people move really, really fast. And so when the opportunity came they would go excessively fast in these kind of fevers. Laggards to new policies, they might not benefit at all from the new opportunities, compared to people who moved really quickly. So when we look at new policies, like the establishment of export processing zones or joint ventures or the question that state on enterprise privatization or even people wanting to go overseas. When the policy was announced and it was a kind of opening up with regulations being taken away. People went really, really fast and tried to do it. And particularly places in the coast would try to do the policy as fast as they can. And other areas they moved slowly. By the time they moved, the door may have come back down again, and then they lost out. A really good example of this was also in 1992, 93, in land confiscation largely for the creation of development zones. Back in 1988, 89, local governments had been planning to build new zones. There had been several periods when the central government had liberalized land policy and said, go out take land, create a zone. And in 1889, many people, many localities had planned to make bigger zones. But then Tiananmen came along, the crack down followed. And so those policies were put on hold. But by 1992, after Jung makes his southern trip and the reforms begin again many of these localities really expand the size of their zone as fast as they can and create a zone fever which eventually, the party will have to interfere and try and stop that and slow down that process.