Lecture 8The Chinese Road toward Collaborative Governance

Why collaborative governance for China? China has become a complex and open society with all social and economic problems faced by western societies. Issues like ageing, environmental degradation, domestic

migration, social and economic polarization are unprecedented due to China’s size.

Rise of market and civil society provide both pressures and incentives of cross-sector collaboration in response to new governance problems. External learning is also a partial explanation for developing

countries like China.

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China’s change on photos ： The east side of Bund (外滩 ) in the 1980s

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In 2009

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Collaborative governance: Definition Collaborative governance (CG) highlights widely distributed and coordinated power across public, private and nonprofit sectors in public decision making and implementation.

CG responds to not just the capacity limit of governments, but also a demand for more and better democracy. A combination of instrumental and political rationale.

CG vs. Good governance CG focuses on sharing of power among plural actors. Good governance is more inclusive of values like

transparency, accountability, responsiveness, participation, etc.

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A contrast between contracting and CG Service contracting CG

Functions Service delivery Public governanceTargeted capacities through cooperation

Operational Governing

Goal setting Decided by contractees Agreed and coproducedRelation between actors Principal-agent

(hierarchical)Collaborators (horizontal)

Type of shared discretion Managerial AdministrativeAccountability Managerial, specified

by contractsRelational and political, negotiated and consensus-based

State actor obligations on nonpublic actor

Less More

Philosophical foundation New Public Management

New Public Governance

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General Chinese Context for CG 1. Historical and cultural tradition Ancient governing system integrated political, administrative, military,

and even religious powers. Government-oriented culture ( 官本位 ). Centralized empire and united system ( 中央帝国和大一统秩序）

Confucian philosophy supported hierarchically designed political and social power system through its moral principles. There is only one sun in the sky; and one master of the people. ( 天无二

日 , 民无二主 ). Political factions are not allowed. Harmony( 和） is achieved through hierarchically designed social roles

with a focus on compliance. ( 君君臣臣父父子子） . Rule of the game: Power struggle tends to be handled by centralizing

powers. A winner-take-all system offering no institutional protection to competing parties.

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2. Governance between 1949 and 1978 PRC in its early stage had an unprecedentedly unified

power system. Integration between government and enterprises ( 政企合一 ) Between party and government ( 党政合一 ) Between government and social organizations ( 政社合一 )

State’s role (service and control) was further expanded due to modern technology, industrialization, and ideological control. It effectively reached the bottom of society.

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3. Governance since 1978 A trend of disintegration happened in all above areas

Economic marketization and reform of SOEs In 2013, non-state sector economy accounted for 82% of enterprises,

60% of national GDP, 69% fiscal revenues, and 80% of urban employment.

Major rounds of administrative reforms From separation to division of labor

Giving up omnipotent social control As well as social welfare. For example, household registration.

Reintegration happened subsequently. PPP, BOT, service contracting, franchising…

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The 2008 Olympic Game’s Main Stadium: A PPP project.

Bridges on and tunnels below the Huangpu River in Shanghai (The BUND).

Mascot: Haibao

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Fudan Crowne Plaza Hotel: A BOT project

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Aggregate level of service outsourcing in China 2001-2004

10%

15%

20%

25%

30%

2001 2002 2003 2004

Lev

el o

f o

uts

ourc

ing

Lower Li mi t Upper Li mi t

Jing (2008)

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Collaboration in social programs Venture Philanthropy (VP) program in Shanghai

Nonprofit Incubator (NPI), a nonprofit hub, works with Shanghai Municipal government to Design VP program of RMB 10 million (in 2009). Shanghai

Municipal government offered money. Operate the program Select nonprofit applicants Deliver services to selected nonprofits Monitor their capacity building activities Evaluate their performance

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The path toward collaborative governance (CG) 1. Incremental

China’s reform has been characterized by gradual trial-and-error processes.

Slow power shift makes elite transformation possible and minimizes resistance to reforms. Incremental change may cumulate confidence, information,

experience, legitimacy, and thus support for further change. Even if radical reform is adopted, it tends to be made

incremental in its implementation. One step further, half step back ( 进一步，退半步 ).

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Incremental social service contracting in China 1 ） Informal contracting has been widespread since the

1980s. 2 ） Formal contracting emerged in the 1990s.

In 1995, the Social Development Bureau of Pudong New District contracted the operation of its Luoshan Service Center to the Shanghai Young Men's Christian Association.

3 ） Competitive contracting emerged in 2005. In 2005, the China Foundation for Poverty Alleviation selected,

through competitive bidding, six nonprofit contractors to

implement poverty alleviation programs. In 2009, Shanghai started its competitive contracting program.

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2. State leadership Political, legal, and organizational foundations of equal

partnership are still weak. Governments are dominant political forces and decision makers Governments’ regulatory functions are hardly constrained Organizational boundaries between governments and other

organizations may be vague. Market and social organizations depend on the state for

critical resources. Such dependence invites state’s penetration and control. External organizations do their best to create and maintain a strong

relation with the state. State may find an increasing conflict between its demands

for efficiency and for control. Pursuit of efficiency will induce changes in the control system.

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State-owned enterprises as a portion in China’s top 500 enterprises in 2004 and 2012

50%

60%

70%

80%

90%

100%

No. offi rms

Revenues Assets Profi ts

20042012

In 2012, the largest private enterprise was ranked 44 in the top 500. The no. 1 SOE was 9 times larger in its sales revenues.

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Top private entrepreneurs are being coopted The net worth of the 70 richest delegates in China's

National People's Congress rose to RMB 565.8 billion ($85 billion) in 2011, a gain of $11.5 billion from 2010 (Hurun Report 2011).

That compares to the $7.5 billion net worth of all 660 top officials in the three branches of the U.S. government.

Note: Legislators in National People’s Congress are not employed by the state. They have their own jobs, and meet once a year in Beijing.

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Is the state committed to CG? A conditional “YES” In 2006, the sixteen-word guidelines of social management of

China (party leadership, government responsibility, social collaboration, and citizen participation ，党委领导、政府负责、社会协同、公众参与）

In 2013, General Office of the State Council (Circular 2013, No. 96) A major principle of this circular: Entrust social forces do whatever they

can do well, in order to effectively improve public service provision, quality, and efficiency.

In the economic sector, recent years’ expansion of the state sector 国进民退 (state forwards, private back offs) Quick expansion of the SOEs in the market. Quick expansion of fiscal revenues and expenditures.

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Fortune 2013, Top 10 list

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3. From economic to social areas Marketization preceded social liberalization and

deregulation. Consequently, collaboration first emerged in economic

areas. Economic capital, economic mechanisms and economic

incentives have penetrated Chinese governments. Entry of social capital/mechanisms/incentives into

public management is the next step.

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Growth of registered nonprofits in China

0

100000

200000

300000

400000

50000019

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Sum

Soci al Group

Nonprofi tEnterpr i seFoundat i on

Most are very small, young, unprofessional, and highly dependent on governments.

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4. Innovation and diffusion China has a highly decentralized government system Local competition and learning as a major incentive of CG

innovation and diffusion Wealthy coastal governments are leading innovators

Shanghai, Zhejiang and Guangdong innovation

Mimetic, normative and coercive forces all play a role. Spontaneous learning, professional promotion, and top-down

requirement.

Innovations often violate law but receive green lights from the central government.

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5. From service contracting to CG Governments are unanimously pragmatic and risk-

averse Service capacities of nonprofits are always the starting

point of government-nonprofit cooperation. Unintendedly, service contracting may create

foundation of CG.

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Spontaneous micro-mechanisms that link service contracting to collaborative governance.

1. Induced power sharing Incomplete contracts and implementer discretion Induced demands for decision making Derived delegation of regulatory functions in bundled or

discrete ways

2. Trust Acquired trust of contractor capacities and intention Acquired trust (self-confidence) of government’s capacity to

manage collaboration Growth of formal and informal accountability systems that

maintain trust

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3. Community embeddedness Information of and access to local residents Entering community governance network

4. Organizational empowerment Nonprofit growth Internal governance capacities of nonprofits External governance capacities of nonprofits

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