In 2004, when Stanford sociologist Xueguang Zhou deliberated on his next research project, he realized he had grown out of touch with China as radical reforms were enacted and massive economic growth transformed the nation. So he immersed himself in fieldwork in a northern Chinese rural township to see the changes firsthand.

That fieldwork led Zhou to delve into the workings of China’s massive bureaucracy in an attempt to answer the question: How is China governed? The empirically-informed theoretical framework Zhou developed to address this question is the subject of his new book, The Logic of Governance in China: An Organizational Approach (Cambridge University Press). We spoke with Zhou, the Kwoh-Ting Li Professor in Economic Development, a senior fellow at the Freeman Spogli Institute for International Studies, and APARC faculty, about the book and some of the insights it offers into the institutions and mechanisms in the governance of China. Watch the conversation:

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How does policy formulated in Beijing translate to and get executed at local levels? The problem of how to govern China from a centralized seat of power has been, as Zhou says, “a fundamental tension” for thousands of years. Beijing tends to move “decision rights and resources” to the center, although these are exactly what is needed for effective governance at the local level.

Through his years of fieldwork, Zhou was able to develop a “bottom-up kind of approach to understanding how China has been governed by macro policies [...]  implemented through local bureaucrats.” This approach, he says, is largely missing from studies of contemporary Chinese society, which tend to focus on Beijing’s top-down decision-making. Zhou’s framework explains how — given the fundamental tension between Beijing’s “all-encompassing role” and local governance — domestic policy gets effectively carried out at the municipal or even village levels.

A Paved Road to Every Village

One phenomenon through which Zhou looks at how national policy translates to the local level is the case of the “Paved Road to Every Village” (PREV) project. When this project was launched by the provincial government in 2004, there were ample large highways in the region, but villagers were still forced to traverse rutted dirt roads that were prone to flooding in the rainy season, a clear obstacle to growing the agricultural economy. 

Project funding, however, was complicated. Beijing was supplying 70,000 renminbi (RMB) per kilometer of road, but the actual cost was RMB 240,000/km, so villages had to come up with the rest (for context, the average per capita annual income in the region was 3,000 RMB). Facing such a deficit, many villages simply refused to take part in PREV. Zhou’s fascinating case study looks at two village leaders — one entrepreneurial, one reluctant — who decided to take up the challenge.

To explain how projects like this get funded in China, Zhou expands on Hungarian economist Janos Kornai’s concept of “soft budget constraints.” Kornai saw that in a socialist economy, state ownership of enterprise meant that factories or companies experiencing financial difficulties had to be rescued by the state. As Zhou explains, the “concept is upward, demanding new resources” from the state. In the Chinese context, however, local authorities move downward to, for example, the companies in their region. That’s why Zhou calls the phenomenon inverted soft budget constraints: at the local level, officials attempt to enlist private enterprises to underwrite government projects. Why would they be willing to do that? Businesses understand that if they do fund such projects, then the officials will later provide “privileged access” to the resources for other government projects.

This reliance on local enterprises to accomplish national programs illustrates another important lesson for Zhou, who says that the growth and energy of the Chinese economy have not been a result of direct government activity, but rather the government has made use of “private entrepreneurs [...] to participate in this kind of public project, financing, and development.”

This process, however, does not always work as expected. Officials can end up compelled to rely on informal social ties to purchase required items like cement, sand, and equipment on credit, which can incur huge collective debts that the village is unable to repay. In the end, these debts can do great harm to the financial viability of small villages. This sort of ad hoc funding is problematic, Zhou observes, because both entrepreneurs and villagers “want to live in a more certain environment,” where necessary projects are well-financed, rather than resorting to a desperate attempt to gather resources by any means possible.

The Distribution of Authority in the Bureaucratic State

In another case study, one that looks at environmental regulation, a doctoral student Zhou had been directing was embedded in a municipal environmental protection bureau during the implementation of a five-year plan by the central government’s Ministry of Environmental Protection (MEP) to control sulfur dioxide and chemical oxygen demand (an indicator of water pollution level). 

Such plans translate to thousands of projects nationwide, making the task load impossibly large for the central government to handle alone. To explain how authority rights are distributed among levels of government Zhou developed a “control rights” theory. In this case, that means the central government (principal) would retain the right to set pollution goals, the provincial bureau (supervisor) might retain the right of inspection, while the local governments (agents) might have the right to performance appraisal and incentive provision. Zhou holds that these control rights are distributed according to the different modes of Chinese governance, ranging from “tightly controlled,” where the central government retains all rights, to a federalism mode, where all rights are given away to the supervisor level.

Bargaining and Collusion

Zhou uses this and ancillary models to understand bureaucratic coping behaviors. One of those is bargaining. He offers examples of how municipal or county officials reacted to poor pollution inspections by bargaining with the provincial levels and redirecting blame to others, often successfully changing report results in their favor. 

Another strategy is collusion, which he argues “has become an informal but highly institutionalized practice,” one that is “common knowledge.” This was witnessed, for example, during provincial family-planning inspections. To prevent possible fraud or manipulation of data, provincial inspectors would have teams conduct unannounced “sudden attack” inspections. But local officials used “guerrilla tactics” to surveil and disrupt the provincial team’s efforts. Upon discovering that a provincial inspection team has arrived, local officials might record the team’s license plate numbers and share those with other officials elsewhere, and then begin shadowing them, providing mobile phone updates on their routes and possible next destinations.

Other collusive strategies might include the manipulation of data, or even ranking counties with good performance at the bottom of a list so that they are more likely to be the ones inspected, with the result being a glowing report

Zhou’s goal is not to expose these behaviors but to understand them. If we look closely at apparently contradictory bureaucratic patterns and cases, he says, then “we can theorize about the rationales behind why they behave this way, and under different circumstances, they behave differently.”

Protest in the Chinese Context

In the last part of his book, Zhou looks at how individuals and social groups respond to authoritarian rule. How can large-scale collective action arise in China, where organizing outside of state-sponsored collective actions is forbidden? Zhou answers that the state — by imposing similar conditions across the country and reducing the majority of Chinese citizens to the same level — fosters the cultivation of similar grievances. At some point, this erupts into open protests, or alternatively, what Zhou calls “collective inaction,” like noncompliance with official campaigns. 

The recent protests in China against COVID measures are a perfect example of this phenomenon. After years under the strict zero-COVID policy, masses of Chinese citizens have similar grievances, leading to open protests. Zhou observes that “China’s zero-COVID policy is an example of campaign-style mobilization, a political instrument that Beijing has routinely deployed to achieve policy objectives and to reassert control at the local level.” But with this approach, there is a danger that local officials can become overzealous. In the case of the COVID pandemic, officials have been highly motivated to avoid responsibility for outbreaks.

A Threat to China’s Charismatic Leaders

Another idea in Zhou’s book is that of charismatic leadership, which he asserts is “essential to the legitimacy of the Chinese state.” The Chinese Communist Party must continue to persuade citizens that they must “put all [their] power into the hands of one person or one ruling party.” As the deification of Xi Jinping in recent years shows, this is accomplished by depicting the leader and party as all-knowing and possessing “a mighty power to do all the right things.”

​​"Every bureaucracy seeks to increase the superiority of the professionally informed by keeping their knowledge and intentions secret," political economist and sociologist Max Weber wrote in his treatise Economy and Society. The 'official secret' is the source of power and the specific invention of bureaucracy, he said, “and nothing is so fanatically defended by the bureaucracy as this attitude.”

Zhou’s empirically-informed findings and unified theory, however, shed light precisely on the secretive workings of the Chinese bureaucracy. This may explain why the original Chinese version of Zhou’s book, published in 2017, was “unshelved” after its initial print run, a euphemism for withdrawing a book from circulation and essentially making it disappear. When asked what he thought was the reason for the book’s disappearance from the Chinese market, Zhou invokes Weber’s idea of disenchantment, and suggests that by revealing the logic behind China’s governance, his book was “probably a threat to China’s charismatic leaders, and also to the Leninist party, the very foundation of that party governance.”

On October 6, 2021, the APARC China Program hosted the panel program, "Engaging China: Fifty Years of Sino-American Relations." In honor of her recently released book of the same title, Director of the Grassroots China Initiative Anne Thurston was joined by contributors Mary Bullock, President Emerita of Agnes Scott College; Thomas Fingar, Shorenstein APARC Fellow; and David M. Lampton, Professor Emeritus at Johns Hopkins School of Advanced International Studies (SAIS). Thomas Fingar also moderated the panel.

Recent years have seen the U.S.-China relationship rapidly deteriorate. Engaging China brings together leading China specialists—ranging from academics to NGO leaders to former government officials—to analyze the past, present, and future of U.S.-China relations.

During their panel, Bullock, Fingar, Lampton, and Thurston reflected upon the complex and multifaceted nature of American engagement with China since the waning days of Mao’s rule. What initially motivated U.S.’ rapprochement with China? Until recent years, what logic and processes have underpinned the U.S. foreign policy posture towards China? What were the gains and the missteps made during five decades of America’s engagement policy toward China? What is the significance of our rapidly deteriorating bilateral relations today? Watch now: 

For more information about Engaging China or to purchase a copy, please click here.

On May 5, 2021, the APARC China Program hosted Professor Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan for her program, "The Role of Corruption in China's Speedy, Risky Boom." Based on her recently published book, China's Gilded Age, Ang explored the impact of corruption on China's economy and how it compares to other countries around the world, including the United States during the late 1800s. Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

While corrupt countries are usually poor, China appears to be an exception. President Xi Jinping acknowledges that corruption in the country has reached crisis proportions. If this is true, Ang asks, why has China nevertheless sustained 40 years of economic growth and deep transformation?

In fact, Ang argues, China is not as anomalous as it seems; its experience is strikingly similar to America’s Gilded Age during the 19^th century. Ang unbundles corruption into four different types that each harms the economy in a different way. Similar to America’s Gilded Age, reform-era China has steadily evolved toward a particular type of corruption: access money (elite exchanges of power and wealth). Simultaneously, beginning in the 2000s, the central government effectively curbed directly growth-damaging types of corruption such as embezzlement and bureaucratic extortion. Access money fueled commerce by rewarding politicians for aggressively promoting growth and connected capitalists for building more and taking on more risky ventures. But such corruption also produced systemic risks, distortions, and inequality—problems that define China's Gilded Age under Xi's leadership. As a result, China today is a high-growth but risky and imbalanced economy.

Despite popular perceptions that China and the United States are two polar opposites, Ang argues, contemporary China and 19th century America share more similarities than we normally think. Their divergent political systems, however, drove contrasting responses to the excesses of capitalism. Watch now:

On April 21, 2021, the APARC China Program hosted Professor Erin Baggott Carter, Assistant Professor in the Department of Political Science and International Relations, University of Southern California, and Visiting Scholar at the Stanford Center on Democracy, Development and the Rule of Law. Her program, "When Beijing Goes to Washington: Autocratic Lobbying Influence in Democracies," explored how lobbying from China and China-based companies can affect policy in the United States. Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

Professor Baggot Carter based her talk on a dataset drawn from the public records of the US Foreign Agents Registration Act, which includes over 10,000 lobbying activities undertaken by the Chinese government between 2005 and 2019. According to Baggot Carter, the evidence suggests that Chinese government lobbying makes legislators at least twice as likely to sponsor legislation that is favorable to Chinese interests. Moreover, US media outlets that participated in Chinese-government sponsored trips subsequently covered China as less threatening. Coverage pivoted away from US-China military rivalry and the CCP’s persecution of religious minorities and toward US-China economic cooperation. These results suggest that autocratic lobbying poses an important challenge to democratic integrity. Watch now: 

This op-ed by Donald K. Emmerson first appeared in The Jakarta Post.

Above all, Trump wanted to be a winner. History granted his wish. He is the first president in the 245-year life of his country to have been impeached twice. By that standard, he won the title of America’s Worst President (AWP)—worse than any of the 44 presidents who preceded him.

AWP rhymes with 'gawp,' and that’s what he also wanted: to be stared at, talked about, catered to, the center of fawning attention, unforgettably present, dominating the news, astride the world in which the news is made. He wanted applause. His ravenous insecurity—narcissism—inflated his ego to continental size. In effect, in his authoritarian imagination, the “extremely stable genius” that he called himself deserved to be the indispensable “me” in “America,” without which the country’s name and the country itself would crumble.

The roars and chants of Trump’s crowds slaked his thirst for veneration. But they imprisoned him in his “base.” By satisfying his craving to be idolized, they gave him no reason to convince the unimpressed. How much more gratifying it must have been for him to bask in mass flattery at rallies than to engage in the difficult business of persuading the uncommitted. That would have taken assets he lacked: empathy, knowledge, intelligence, and a willingness not to lie.

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So how could Americans have elected such a demagogue? Trump was corrupt but charismatic. He broke the rules. He said whatever was on his mind. He appealed to the streak of individualism in American culture. He ran his campaign and his presidency as a mass entertainment featuring a lone patriot fighting a “deep state” controlled by globalist elites. Especially in rural areas between Silicon Valley and the Boston-to-Washington corridor, millions of white Americans felt threatened by the transfer of jobs from physical toward mental labor in a computerized society whose racial make-up was increasingly non-white. Globalization fed those anxieties. Trump stoked them. He promised to end them and “make America great again.”

Joe Biden defeated Trump in both the popular vote and the Electoral College—respectively by 4.4 and 13.7 percent. Biden’s margins were narrower than one might have wished, given the blatant flaws in Trump’s character, including the 30,573 false or misleading claims that he made during his presidency as tracked and noted by The Washington Post . The egregiousness of his behavior is, however, a double testament to America’s democratic system: to its failure to select a less despicable leader, yes, but also to its success in providing the lawful framework within which his desperate effort to stage what in Latin America would be called an autogolpe or “self-coup” could be and was overcome.

On 1 February 2021, watching television at his 126-room estate in Palm Beach, Florida, ex-president Trump would have learned of the coup in Myanmar and might have envied Senior General Min Aung Hlaing. Both men had been banned by Facebook for inciting violence in their respective countries—Trump in 2021, the general in 2018. Both had suffered defeats in elections held just five days apart in 2020—3 November in the US, 8 November in Myanmar. Both had rejected the voters’ verdict, claiming fraud. But whereas Trump’s frantic and deadly effort to subvert the US election and retain power failed, Min Aung Hlaing’s self-coup has succeeded, at least for now. The general quickly seized full power despite his party’s massive embarrassment at the polls in November, Aung San Suu Kyi’s party having won 83 percent of the available seats. In contrast, Trump could not reverse his exit from power despite a far slimmer margin of electoral defeat. To the extent that the ex-president was even aware of the difference, it could have fanned what angry envy of the general he may have felt.

Trump failed mainly due to the checks and balances that generally call government to account in America. Min Aung Hlaing succeeded in no small part thanks to the checks and balances in the bank accounts of the generals who have compromised Myanmar’s transition to democracy and helped make it the second most corrupted country in Southeast Asia (after Cambodia) as measured by the Corruption Perceptions Index.

Among the many reactions to the Burmese coup, several stand out for their courage and creativity. UN Secretary General António Guterres was unequivocal. "It's absolutely unacceptable,” he said, “to reverse the result of the elections and the will of the people.” Presumably speaking on behalf of the UN, its secretariat, or himself, or all three, he went further: "We'll do everything we can to mobilize all the key actors of the international community to put enough pressure on Myanmar to make sure that this coup fails." 

This notable response came from Indonesia’s former foreign minister Marty Natalegawa: “Deafening silence in the face of assaults against democratic principles [has] increasingly become the norm,” he said. He urged ASEAN to “demonstrate its relevance: It must speak urgently for the respect of constitutional process and rule of law in Myanmar, and call for the immediate release of those unlawfully detained.”

In the days immediately following the coup, ASEAN’s Bruneian secretary general said nothing about it, preferring to remain, in the Indonesian expression, “silent in a thousand tongues.” Speaking for ASEAN as its current chair, however, Brunei’s government did at least encourage a “return to normalcy in accordance with the will and interests of the people of Myanmar,” noting that the group charter’s called for adherence to “democracy, the rule of law” and “human rights and fundamental freedoms.”

As for ASEAN’s next chair, Cambodia, its strongman Hun Sen did speak, but only to say that "Cambodia does not comment on the internal affairs of any country at all.” Hun Sen’s restraint made historical sense. Had Cambodia’s old despot chosen to criticize Myanmar’s new despot, observers could have noted that Min Aung Hlaing had only done what Hun Sen himself had bloodily accomplished in 1997 by seizing full control over Cambodia in a self-coup of his own that had enabled him to become the longest-serving prime minister in the world.

Critical Southeast Asian voices, unconstrained by look-the-other-way diplomacy, have been heard. The chairman of the ASEAN Parliamentarians for Human Rights, Charles Santiago, has urged ASEAN to send a high-level delegation to Myanmar to tell Min Aung Hlaing that his coup “violates ASEAN principles and the ASEAN charter” and is “not acceptable.” “If Myanmar does not turn around,” he added, “there should be proceedings to expel Myanmar out of ASEAN.”

Who is better positioned to deal with this crisis than ASEAN’s largest and debatably least authoritarian member country? It was Indonesia’s Natalegawa who patched up ASEAN’s consensus after Hun Sen damaged it on China’s behalf in 2012. And it is Natalagewa who believes, with the Myanmar coup in mind, that “at this critical juncture for the region, Indonesia must demonstrate its leadership within ASEAN.”

Indonesia’s president Jokowi, rather than trying to rally the region against the coup, will likely continue to focus on domestic economic growth. Not to mention the existential priority that COVID-19 also warrants on his agenda.

So why not task Natalegawa with a damage-control trip around the region comparable the one he took with some success in 2012? He could start with fact-finding in Myanmar. He could then explore an intra-ASEAN understanding that would reassert the core democratic values in the ASEAN Charter while lessening, if possible, the chance that Myanmar will revert to entrenched and fully authoritarian rule. That may be a lost cause. But nothing ventured, nothing gained.

Although Donald Trump is no longer in office, America is still not safe from Trumpism. But America’s system—democracy—is working as it should. Is ASEAN really a dictators’ club? Or does it, too, when threatened from within, have a system that can at least manage and minimize the damage that is, in Myanmar as I write this, being done?

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Speaking at the Shorenstein Award’s nineteenth annual discussion, which was held virtually due to COVID-19, Wright detailed the 1MDB story and its beginning with an unknown Chinese-Malaysian Wharton graduate named Jho Low, who allegedly set in motion a fraud of unprecedented scope and magnitude. An epic true-tale of corruption and greed involving heads of state and Hollywood stars and enabled by a raft of Western institutions, the story is the subject of Wright’s coauthored bestseller Billion Dollar Whale, based on his years of reporting on the scandal for the Wall Street Journal.  Mr. Low, who was indicted by U.S. authorities and by prosecutors in Malaysia, remains at large. He has denied any wrongdoing.

Wright’s exposure of the scandal has reverberated around the world. It was read by millions of people in Malaysia and sparked popular revulsion with the corrupt government of Prime Minister Najib Razak, leading to his shocking election loss in 2018. Wright’s revelations also shook the global financial system, underpinned investigations by law enforcement and regulators in six countries, and unveiled flaws of China’s Belt and Road signature program.

Accountability Journalism in Asia

“Tom Wright’s work represents the essence of accountability journalism,” said Jay Hamilton, the Hearst Professor of Communication, Chair of the Department of Communication, and Director of the Journalism Program at Stanford, who also serves as a member of the selection committee for the Shorenstein Journalism Award. “Wright takes the time, often enumerated in months or years, to discover facts about how institutions are operating. When his work is published, the world changes, debates ensue, individuals lose jobs or an election, policies are corrected, and there are people, often in Asian governments and Western companies, who wish they had done a better job of keeping their corruption secret.”

Wright is honored with the Shorenstein Journalism Award for his stellar reporting done over 25 years, mainly in South and Southeast Asia. A theme running through Wright’s work is the blight of corruption in Asia, abetted by Western organizations. In 2008, his investigation revealed how Indian wind turbine producer Suzlon, backed by U.S. investors, was hiding technology defects that made its turbines unsafe, leading to a collapse in the company’s shares. In 2011, he broke new ground reporting about the Obama administration's multibillion-dollar civilian aid program in Pakistan. He was one of the first journalists to arrive at the scene of the raid in which Navy SEALs killed Osama bin Laden. And in 2013, Wright spearheaded the coverage of the Rana Plaza factory disaster in Bangladesh, which killed over 1,000 people, exposing how international garment manufacturers turned a blind eye to safety violations to keep costs down.

A Triumph for Impunity

Five years after the 1MDB story came to light, however, almost no one has gone to jail. In Malaysia, Najib Razak was sentenced to 12 years in jail but is now in the process of appealing the case and continues to campaign in the meantime. In July 2020, Goldman Sachs reached a $2.5 billion settlement with the Malaysian government to resolve all criminal and regulatory proceedings in the country involving the firm, and on October 19, 2020, a day before the Journalism Award discussion, it was announced that the firm had reached a $2.2 billion settlement with the U.S. Department of Justice. While the penalties will cost the firm about two-thirds of a year’s profits, Goldman will avoid the harshest sanctions that prosecutors had sought. And while a Singapore-based Goldman subsidiary tied to the misconduct was expected to plead guilty, no one at the parent firm will face criminal charges.

“I don't think any of this is going to deter the kind of behavior that enabled this scandal,” said Wright. “Goldman just had a record-profit quarter and, astoundingly, in my view, there is no criminal liability […] We’re seeing democracy challenged around the world and, having spent so long on the 1MDB scandal, I feel very strongly that this kind of enabling behavior by Western institutions in foreign countries with poor rule of law is one of the reasons why democracy is so badly rooted in these places. Western institutions need to be held accountable for their actions in these countries.”

The Role of International Media in Exposing Global Corruption

Wright’s discussion was followed by a conversation with Meredith Weiss, professor and chair of Political Science at the University at Albany, SUNY. Weiss has published widely on the politics of identity and development, electoral politics and parties, organizational reform, and subnational governance in Southeast Asia, with particular focus on Malaysia and Singapore. Her current research projects include studies focused on “money politics” and on democratic representation and political elites in Southeast Asia, as well as a monograph on Malaysian sociopolitical development.

In their conversation, Wright and Weiss addressed issues including the implications of current political trends in Southeast Asia for supporting or dismantling systems for accountability or anti-corruption, China's role in enabling corruption, how an international media outlet like the Wall Street Journal was able to carry forward the 1MDB story, the role of investigative journalism in battling endemic corrupt practice, and how the shifting media landscape — especially in the context of social media, changes in media freedom around the world, and the rise of “fake news” — affect this role in shedding light on corruption.

“It’s very important that journalists don't become pulled into the latest political trend,” said Wright. “And it's a very difficult fine line to balance. I think investigative journalism is in trouble. By the way, journalists don't call themselves ‘investigative journalists’ — we are just journalists who do our work, and if we're lucky enough to come across a big story, then so be it. But you need bosses [like I had at the Journal], who give you the space to do that kind of work, even though you don't necessarily sell more newspapers and more online subscriptions because of it.”

A Higher Standard

There have been some positive changes following the lessons learned from the IMDB scandal, such as pilot projects in the United States and in London to stop cash purchases from shell companies. Yet it is still too easy to get around such measures, said Wright. He concluded the discussion on a rather somber note, recognizing that the prospects for large-scale change are not bright. “If you've lived and worked in Asia, you know you can shake a stick in any direction and you’ll find corruption. What I learned through the process of working on the 1MDB story was just how complicit foreign institutions are in all of this. I guess I had a naive view, thinking that they had a higher standard of behavior. What I learned was that they only have a higher standard of behavior when there are rules in place to stop them from behaving badly. Maybe things can change, but I don't feel so optimistic about it.”