To celebrate its May Release, the Stanford China Program hosted a virtual book launch event for Fateful Decisions: Choices That Will Shape China’s Future (Stanford University Press) on June 2^nd. Joining co-authors Thomas Fingar (Shorenstein APARC Fellow, Stanford University) and Jean C. Oi (Director, Stanford China Program; William Haas Professor of Chinese Politics, Stanford University) were contributors Karen Eggleston (Senior Fellow at FSI; Director of the Asia Health Policy Program, Shorenstein APARC, Stanford University), Barry Naughton (Sokwanlok Chair of Chinese International Affairs, School of Global Policy and Strategy, UC San Diego), and Andrew Walder (Senior Fellow at FSI; Denise O'Leary and Kent Thiry Professor, Stanford University). As Fingar and Oi point out in their volume, despite China’s extraordinary growth over the past 40 years, the country’s future is uncertain. China has enjoyed optimal conditions for development since the 1980s, but new hurdles including an aging populace, the loss of comparative economic advantage, a politically entrenched elite, and a population with rising expectations will test the country’s leaders. With each focusing on a different facet of China’s challenges, the panelists gathered to share their expertise and provide the audience with a glimpse into what the future might hold for this important country.

Available Now: Fateful Decisions: Choices That Will Shape China’s Future

Following an introduction from Professor Jean Oi, the program kicked off with Professor Barry Naughton of University of California, San Diego, who discussed his chapter entitled “Grand Steerage.” Professor Naughton argued that, as it plans for the future, China’s policymaking is becoming increasingly technology-focused, particularly in the realm of economic policy. Naughton further notes that China’s economy is becoming simultaneously more state-guided and more centered around technology. This decision is a gamble, though: China is investing heavily in high-tech industries, advancing massive, centrally steered projects like the Greater Bay Area initiative and the Xiong’an New District. If they are successful, says Naughton, this will indeed be an incredible success. But, if they are not, China’s losses will be major: “There’s not really a middle ground.”

After Professor Naughton was Professor Karen Eggleston, an expert on health policy in Asia. Professor Eggleston’s chapter, “Demographic and Healthcare Challenges,” deals with emerging obstacles for China’s healthcare system, including population aging and the problems that come with it, like chronic diseases and elder care. Although China’s healthcare system has improved dramatically in recent decades, it has done so unevenly, notes Eggleston: life expectancy has greatly increased, but with disparities according to income, region, and urban vs. rural status; universal healthcare is available, but the benefit level is low, effectively limiting the standard of care many can receive. The ratio of health spending to GDP is also increasing, yet it is still modest compared to high-income countries. The COVID-19 crisis has, of course, introduced even more challenges: Will China be able to distribute future vaccines equitably? Will this crisis negatively affect young people’s decisions to choose healthcare as a career? Will telemedicine, which has seen a surge under the pandemic, improve or exacerbate existing disparities? China faces a multitude of constraints and choices going forward if it hopes to meet its population’s healthcare needs.

The audience then had a chance to hear from co-editor Thomas Fingar, speaking on his chapter, “Sources and Shapers of China’s Foreign Policy.” Fingar noted three key takeaways from both his chapter and his talk: Firstly, China’s foreign policy is a fundamental part of its national policy. Secondly, the global political environment plays an important role in shaping both foreign and domestic policy which, thirdly, plays an important role in shaping foreign policy. The conditions that allowed China to flourish over the past 40 years, emphasized Fingar, are very different from those of the present. In the 1970s and 80s, China was able to take advantage of Cold War bipolarity, globalization was in its infancy, and “China was the only significant developing country willing to embark, at that time, on the export-led path of development.” In recent years, though, China’s behavior internationally has alienated other countries; there are many competitors pursuing its style of development; and its needs and aspirations have changed, requiring more raw materials and depending upon multi-national economic agreements. Fingar suggests two potential foreign policy options: China could continue with its wolf warrior diplomacy, which has “alienated essentially all China’s neighbors to some degree,” or it could return to a style more similar to that of the 1980s and 90s Reform and Opening era. It remains to be seen which style will win out.

Finally, Professor Andrew Walder concluded the program with his discussion of China’s political future at large. His chapter, “China’s National Trajectory,” follows China’s remarkable advancement in recent years and “tr[ies] to divine what a lower growth era will mean for China’s political future.” The last 40 years of rapid growth have generated support for China’s political system, more patriotism, the near eradication of democracy movements, and an elite unity not seen in the 1970s and 80s. However, low growth rates could mean a reversal for many of these trends, says Walder. While the aforementioned support for and stability of the Chinese government was maintained by ever-improving living standards and upward mobility, a low growth period (coupled with an aging population) means the government will no longer be able to rely on these trends for popular support. Rather, it will need to improve its provision of public services to address present-day challenges. Regardless, argues Walder, the low growth era will undoubtedly lead to “dynamic changes underneath the façade of stability of Chinese politics….”

For more insights on the modern obstacles China faces and what they mean for the country’s future, check out Fateful Decisions: Choices That Will Shape China's Future, available for purchase now.

President Xi Jinping’s tenure has been marked by growing state influence over all spheres of governance in China, including a marked tightening of control over the economy.

Curtis Milhaupt, the William F. Baxter-Visa International Professor of Law at Stanford Law School, addressed the hardening of Party controls over Chinese corporate governance. His lecture to the China Program on February 6 was based on research conducted by Milhaupt in collaboration with Yu-Hsin Lin of City University of Hong Kong, and examined the expanding role of the Chinese Communist Party (CCP) within both state-owned enterprises (SOEs) and privately-owned enterprises (POEs). The influence of the CCP within these enterprises, Milhaupt says, is not as straightforward as it might seem.

Milhaupt posits that the level of control exercised by the CCP on SOEs is lower than one might generally expect. At the same time, the CCP exercises a surprisingly higher level of control over POEs than we would typically assume. To draw these conclusions, Milhaupt uses a set of ten model provisions deemed to be dangjian, or “party-building,” measures that were developed and released by the Central Committee of the CCP. From data compiled between 2015 and 2018 from the charters of publicly-listed companies, Milhaupt shows that 10% of SOEs chose not to adopt any of the provisions distributed by the Central Committee. Meanwhile, 6% of POEs had at least a low level of adoption, despite the fact that the provisions were not directed at them. The reason for such variation, according to Milhaupt, can be explained by the characteristics of the provisions, the SOEs, and the POEs.

Image

Which enterprises adopted which provisions was highly correlated to those enterprises’ characteristics. SOEs were far more likely to amend their charters if they had direct state shareholding, but less likely to amend if they had large non-state shareholders, were further down in the state-ownership chain, or were cross-listed on international stock exchanges. POEs followed a similar structure, with enterprises being more likely to adopt provisions the more politically connected they were or the more direct state shareholding they had.

It remains unclear how the government can actually enforce the dangjian policy, and how these policies will affect the enterprises that adopt it. Despite the official rhetoric behind the dangjian policy, with claims that greater loyalty to the Party will lead to more economic success, Milhaupt expresses doubts:

“What’s [the danajian policy] going to mean for firm performance? Certainly, from a . . . straightforward economics or corporate governance perspective, one would not be optimistic that infiltrating corporations with political influence is going to do good things for firm performance.”

Milhaupt also has concerns about how the strategy will impact international investment, noting the already high levels of suspicion surrounding Chinese motivations: “This [emphasis on loyalty to the Party] would certainly seem to add fuel to the fire, and heighten concerns or suspicions with respect to Chinese outbound economic activity.” As SOEs and POEs continue to navigate both domestic and international markets with their amended charters, the future feasibility of the CCP’s reassertions over the economy is far from certain.

Organizational sociology may not be the first academic field people tend to look to for an explanation of the origins of a public health crisis such as the spreading Wuhan coronavirus, but from the perspective of Stanford sociologist and APARC faculty member Xueguang Zhou, who specializes in institutional change in contemporary Chinese society, the writing on the wall has long been there for all to see. Zhou, who is also Kwoh-Ting Li Professor in Economic Development and senior fellow at FSI, studies Chinese organizations, Chinese state building, and Chinese bureaucracy. His work sheds light on the characteristics of and tensions in governing China, and is pertinent to understanding the unfolding of the coronavirus crisis and the Chinese government’s response to it.

In the following interview, Zhou talks about these issues, his research into the institutional foundations of governance in China, and some of the challenges the country now faces. The conversation has been edited for length and clarity.

Q: The death toll from the coronavirus continues to rise in mainland China along with anger over the government’s response to the outbreak. What are the implications of this crisis for Chinese governance?

This is not only an outbreak of a novel virus, it's also a manifestation of the breakdown of China’s governance structures. The crisis has exposed the cracks in the system. Granted, any government might be underprepared to handle an outbreak of a new epidemic. However, based on what we now know, the new virus strain was detected in Wuhan some weeks before the beginning of the outbreak, yet the bureaucracies at several levels didn’t work and the authorities involved were not put into high alert.

I wouldn’t place the blame on the local officials, who have followed the same old pattern of crisis response. For both cultural and political reasons, their primary concern was to lie low and keep things stable just weeks before the Chinese New Year and in the lead-up to the annual gatherings of the Provincial People’s Congress. That pattern of response has been built into the Chinese bureaucracy for years. But in this case, the default behavior exposed the weaknesses of the central and local governments. We can imagine similar scenes of health crises and other problems happening in other Chinese provinces and cities, because the officials have similar mentalities. The problem is not with individual officials here or there, but rather that the general bureaucracy has been tamed to respond to such dissonant information in this manner.

I hope that this crisis becomes a turning point; that the gravity of the situation touches people's lives deeply enough to make them aware of the kind of conditions that need to be transformed. I hope it makes them realize that the government must improve its decision-making process, transparency, and openness to societal input. The present system of governance in China is designed for top-down decision implementation, not bottom-up information pooling and transmission. Therefore, even though information is abundant — as has been the case with the coronavirus — there is no efficient information transfer from localities to the upper levels. And the latter cannot deal with the load of information coming from the country’s vast territory and huge, heterogeneous population. In fact, top officials tried to shield themselves and filter information instead of open up to input the scale of which they cannot deal with.

[To get more stories like this delivered directly to your inbox sign up to receive our newsletters.] 

Q: Since the coronavirus broke out, there has been a surge of interest in your research on Chinese governance. Tell us more about that.  

For more than ten years, I have been doing fieldwork in China and publishing my writings on that topic in Chinese. In 2017, I published a collection of essays in a volume whose English translation is The Institutional Logic of Governance in China: An Organizational Approach. The book’s theme is the relationship between China’s central government and different levels of local government with regards to various governance issues. That relationship is fraught with frictions in and challenges for governing China, which the coronavirus crisis has now exposed.

Within six months of publication, the book was “unshelved” in China and reprint was prohibited. The publisher returned the copyrights to me. So I made a digital version of it available for free download. Since the coronavirus broke out, within a few days, references to the book have been shared on Chinese social media platform Weibo nearly 4,000 times. This set of issues that I have been discussing for more than a decade has suddenly become highly relevant. On the one hand, I am sad about this turn of events: sometimes you don't want your predictions to come true. Yet I also feel vindicated. That is to say, for the longest time, I have been studying something that I thought was fundamental yet never fully understood, and now suddenly the lines of argument I developed over the years are circulating broadly and having impact. I am working on an English translation of the book.

Q: You describe a fundamental tension in governing China. What is this tension and how is it manifested?

Given the formidable scale of governance in China, the centralization of authority inevitably introduces a separation between policymaking at the center and policy implementation at local levels. This separation gives rise to a fundamental tension between the centralization of authority and effective, local governance. The source of the tension is this: the extent of the centralization of authority is achieved at the expense of the effectiveness in local governance. That is, the centralization of authority places decision rights and resources further away from those levels that have more accurate information and capacities in problem solving. Conversely, the strengthening of local governance capacities implies the expansion of local authority, which often leads to (or is interpreted as) deviation from the center, thereby becoming an acute threat to the central authority.

Over the last several years under the new leadership, China has undergone tremendous consolidation and centralization of political power. And that's what made local governments paralyzed. They lack autonomy and initiative and shun responsibility. One outcome is that information is filtered or being blocked from one level of governance to another. Problems arise every day and never make it into media or public attention: there are accidents, crimes, corruption, and people protest, but we never hear of that. The coronavirus outbreak is one extreme case that the authorities simply cannot hide, and, temporarily, we hear more voices and criticism via social media and other informal channels.

It is my hope that this crisis will be a turning point and make Chinese society realize that information, and efficient information sharing is critical for its well-being. From time to time, I post book reviews, commentary, and my thoughts on various topics via a personal page on Weibo. A while ago, I posted my reflections after watching the HBO miniseries Chernobyl, considering the failures that caused the Chernobyl disaster from the perspective of organizational sociology. And those are all information failures. There are many parallels to what has now happened in Wuhan. Since the virus outbreak, this post of mine has been shared many times in China, in social media and various other channels.

Q: What are the implications of this fundamental tension between the centralization of authority and effective governance for China’s future?

This tension creates cycles of centralization and decentralization over time. Decentralization gives rise to diverse interests and propels economic developments in different parts of the country. Indeed, China’s decades of economic rise and reforms were marked by tremendous decentralization. It’s what made China so successful. But decentralization poses a threat to the central authority, so it reverts back to power consolidation, such as we have observed over the last several years under the new leadership.

Then again, the more resources and decision rights are centralized upward, the lower is the effectiveness of governance at local levels. This is manifested in the form of lack of initiative by local governments, which, in turn, creates burden on the central government. China’s economic slowdown has already been putting tremendous pressure on the central government and now, with the scramble to contain the spread of the coronavirus, China’s economy is virtually grinding to a halt. Economic stagnation is almost inevitable, the questions are how severe it will be and how long it will take to recover from it.

I therefore believe it is only a matter of time until China goes through yet another phase of decentralization, but that will most likely be merely another part of a perpetual cycle. The cycle will continue unless China’s challenges are translated into political action and fundamental changes are made to the institutional foundations of governance. Such changes, however, will involve the Chinese bureaucracy and official ideology and are unlikely to happen in the foreseeable future.

Q: What are some of the findings from your research into the Chinese bureaucracy?

Over the last decade, I have been conducting fieldwork and studying the inner workings of the Chinese bureaucracy in action: observing how local officials behave in problem solving, crises management, policy implementation, and interact with both higher authorities and lower-ranking bureaucrats. I have developed theoretical models and arguments about how the Chinese state has been organized and how it operates both at the local levels (bottom-up perspective) and central level (top-down perspective).

As part of that project, I have been studying patterns of career mobility among bureaucrats in the Jiangsu Province, which has the second largest economy in China, just behind Shanghai. I now have a dataset encompassing half a million records on more than 40,000 officials, detailing their career flows from 1990 to 2013. This project sheds light on many important issues related to the Chinese bureaucracy and governance in China. For example, the dual authority between the party and government lines is a defining feature of the party-state in China. We can examine the key characteristics of this phenomenon through the lens of personnel management, that is, how officials are moving through different positions between the party and government. We have a paper forthcoming on this topic.

Another line of research in this project is what I call “stratified spatial mobility,” meaning a pattern whereby just a handful of officials are able to move beyond the administrative jurisdiction along the bureaucratic ladder into the immediate next higher-level administrative jurisdiction, whereas most officials stay within their own jurisdiction for life. It’s polarized mobility, in stark contrast between spatial mobility and local mobility. That’s why in each locality there are dense social networks and strong boundaries. This type of stratified mobility in the Chinese bureaucracy has huge consequences for understanding how China is governed. For example, local networks fiercely protect each other and have strong ties with those officials at an immediate authority, resulting in collusion among local governments when they respond to crises or interact with higher authorities. The failure to keep the Wuhan coronavirus outbreak from becoming an epidemic is a case in point. So we opened this conversation with the coronavirus and end it with the same topic.

“Our dystopian present is your dystopian future if nothing significant is done,” cautioned Ressa, urging the Stanford community to pressure technology platforms and social media to stop disinformation spread.

“This is an existential moment for global power structures, turned upside down by technology. When journalists globally are under attack, democracy is under attack.” With these words, the internationally-esteemed investigative journalist and press freedom champion Maria Ressa, winner of the 2019 Shorenstein Journalism Award, opened her keynote address at a lunchtime ceremony, held at Stanford on October 21.

Ressa knows first-hand the terrifying reality of continuously being subject to online attacks and politically motivated attempts by the government to silence and intimidate. As CEO and executive editor of Rappler, she has led the Philippine independent news platform in shining critical light on the Duterte administration's policies and actions. President Duterte in turn has made no secret of his dislike for Ressa and Rappler, accusing the platform for carrying "fake news." Ressa has been arrested twice this year, accused of corporate tax evasion and of violating security laws, and slapped with charges of cyber libel for a report that was published before the libel law came into effect. Since Duterte’s election in summer 2016, the Philippine government has filed at least 11 cases and investigations against Ressa and Rappler.

“And all because I’m a journalist,” she says.

Speaking at the Shorenstein Award’s eighteenth annual panel discussion, Ressa detailed the devastating effects that disinformation has had on democracy and societal cohesion in the Philippines. She vividly explained why each and every one of us should be gravely concerned about the breaking down of the information ecosystem in a country halfway around the world. The Philippines, she said, is a case study of how attacks on truth and facts rip the heart out of civic engagement and gradually kill democracy, “a death by a thousand cuts.”

Ressa was joined on the panel by Stanford’s Larry Diamond, senior fellow at the Hoover Institution and the Freeman Spogli Institute for International Studies, and Raju Narisetti, director of the Knight-Bagehot Fellowship in Economics and Business Journalism and professor of professional practice at Columbia Journalism School, who also serves on the selection committee for the Shorenstein Journalism Award. Shorenstein APARC’s Southeast Asia Program Director Donald K. Emmerson chaired the discussion.

[To get more stories like this delivered directly to your inbox sign up to receive our newsletters.] 

A Cautionary Tale

Modern authoritarians follow a familiar playbook, noted Ressa, for they know well that “If you can make people believe lies are the facts, then you can control them.” Their first step is to lie all the time. The second is to argue their opponents and the journalists are the ones who lie. Then finally everyone looks around and says, "What's truth?" And when there is no truth resistance is impossible.

Ressa went on to describe detailed examples of patriotic trolling in the Philippines, that is, how state-sponsored online hate and harassment campaigns silence and intimidate journalists and others who voice criticism of the Duterte administration. Instead of censoring, she said, state agents now flood the information ecosystem with lies, blurring the line between fact and fiction. These information operations are conducted through the weaponization of technology and social media platforms, first and foremost Facebook. Ressa’s team at Rappler uses network analysis methods to unveil the flow and spread of online disinformation and harassment campaigns on Facebook and from there to other platforms as well as traditional and state media.

Ressa urged the packed audience of campus and community members to remember that “Without facts you cannot have truth, without truth you cannot have trust, and without any of these three democracy as we know it is dead. The public sphere is dead […] our Philippine dystopian present is your dystopian future, if nothing significant is done.”

She closed her keynote by pleading: “Please push tech platforms and social media to do something to stop the lies from spreading. Lies laced with anger and hate spread faster than facts. Fight  for your rights.”

Watch Ressa’s keynote and the entire panel proceedings here or on our YouTube channel. You can also listen to Ressa’s keynote below and on our SoundCloud channel. A transcript of the keynote address is available below.

No Ministry of Truth

Is the attack on truth a technological problem, and can it have a technological solution? It's naïve, said Diamond, to think that there is a purely technological solution or that we can rein in the alarming developments in the Philippines and elsewhere without addressing their technological elements and the economic incentives underlying these elements. “There has to be a macro political element of response,” argued Diamond, “which obviously has to involve advanced liberal democracies condemning and drawing boundaries around the murderous authoritarianism of Rodrigo Duterte.”

Image

Left to right: Donald K. Emmerson, Maria Ressa, Raju Narisetti, Larry Diamond.

Narisetti emphasized the need to look at the problem and its potential solutions holistically and bear in mind that solutions must come from multiple areas. “We must remember that technology has value, but it has no values. It's a matter of who is using it and how they're using it.” And while we certainly don't want Facebook to be the Ministry of Truth, continued Narisetti, by no means do we want Congress to take on that role. He pointed to specific possible regulatory solutions, such as insisting Facebook enable its users to port their complete data outside of the platform if they wish to do so, or establishing a system of data and privacy courts.

Commitment to Journalism that Courageously Seeks Accuracy

The Shorenstein Journalism Award, which is sponsored by APARC, was presented to Ressa at a private evening ceremony. “You would be hard pressed to find a person whose work more fully embodies the ideals that define journalism than Maria Ressa,” said James Hamilton, Stanford’s Hearst Professor of Communication, Chair of the Department of Communication, Director of the Stanford Journalism Program, who also serves on the selection committee for the award. Shorenstein APARC Director Gi-Wook Shin joined Hamilton in co-presenting Ressa the award.

The Shorenstein Award, which carries a cash prize of $10,000, recognizes accomplished journalists committed to critical reporting on and exploring the complexities of Asia through their writing. It alternates between honoring recipients from the West, who mainly address American audiences, and recipients from Asia, who often work on the frontline of the battle for freedom of the press in their countries. Established in 2002, the award honors the legacy of APARC benefactor Mr. Walter H. Shorenstein, who was passionate about promoting both excellence in journalism and a deeper understanding of Asia.