All China Program Publications Journal Articles The China Journal 84

Modes of Governance in the Chinese Bureaucracy: A “Control Rights” Theory

July 1, 2020

Drawing on insights from recent economic theories of incomplete contracts, we develop a theoretical model on authority relationships in the Chinese bureaucracy by conceptualizing the allocation of control rights in goal setting, inspections, and provision of incentives among the principal, supervisor, and agents. Variations in the allocation of these control rights give rise to different modes of governance and entail distinct behavioral implications among the parties. The proposed model provides a unified framework and a set of analytical concepts to examine different governance structures, varying authority relationships, and the specific principal-agent problems entailed in a bureaucratic setting. We will illustrate this through a case study of authority relationships and ensuing behavioral patterns in the environmental protection arena over a five-year cycle of policy implementation.