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Localized Bargaining: The Political Economy of China's High-Speed Railway Program
Exclusive excerpt: What the Railway Lobby Reveals About China’s Political System
Pekingnology is privileged to share an exclusive excerpt from the new book Localized Bargaining: The Political Economy of China's High-Speed Railway Program, just published by Oxford University Press (and available on Amazon).
The author is 马啸 Xiao Ma, an assistant professor of political science at Peking University. He teaches and conducts research on comparative political institutions, political economy of development, and Chinese politics. In particular, Ma's research examines how institutions and incentives shape elite behaviors and policymaking in developing states like China.
Ma has a B.A. in Japanese Studies from Zhejiang University, an M.A. in East Asian Studies from Yale, and a Ph.D. in Political Science from the University of Washington.
Ma has published an introduction at Sixth Tone last week: What the Railway Lobby Reveals About China’s Political System: China has spent trillions on railway construction over the past two decades, and local governments have pulled out all the stops to ensure they get their share.
Bill Bishop recommended the book on June 17 at his Sinocism.
A brief introduction to the book before the exclusive excerpt:
China's high-speed railway network is one of the largest infrastructure programs in human history. Despite global media coverage, we know very little about the political process that led the government to invest in the railway program and the reasons for the striking regional and temporal variation in such investments. In Localized Bargaining, Xiao Ma offers a novel theory of intergovernmental bargaining that explains the unfolding of China's unprecedented high-speed railway program.
Drawing on a wealth of in-depth interviews, original data sets, and surveys with local officials, Ma details how the bottom-up bargaining efforts by territorial authorities—whom the central bureaucracies rely on to implement various infrastructure projects—shaped the allocation of investment in the railway system. Demonstrating how localities of different types invoke institutional and extra-institutional sources of bargaining power in their competition for railway stations, Ma sheds new light on how the nation's massive bureaucracy actually functions.
Feel free to reach out to Xiao Ma at x.m[AT]pku.edu.cn. Or you can reply to this email and I'll pass on a word.
I recommend it to readers with business interests in China as well, for it details the knowledge, logic, and dynamics of the Chinese bureaucratic system, all of which are crucial to getting business done.
(The excerpt removes all footnotes and in-text citations for simplicity.)
1. The Hook
On November 5, 2019, five weeks before the newly built Xuzhou–Huai’an–Yancheng high-speed railway began operation, the official newspaper of Yancheng published a front-page article describing the locality’s decade-long quest for high-speed railway service. A communist base during the Chinese communist revolution, Yancheng is a coastal, industrial city of Jiangsu province with over eight million residents. The article recounted how the province’s high-speed railway construction plan released in 2008 originally did not include service to Yancheng. It is a major regional center in the northern part of the province, and the neighboring city of Huai’an, which has fewer than six million residents and plays a less prominent role in the region’s economy, was to have service. According to the article, the city’s leaders had been advocating for service to Yancheng since the plan’s release, tirelessly traveling to the relevant departments in Beijing and the provincial capital to make the case for the city’s inclusion in the plan. It described countless meetings by the city’s then party secretary and the city’s mayor, and that reports about the need for an extension that would connect Yancheng by way of Huai’an were “pil[ing] up like a mountain.”
Yancheng officials’ efforts paid off in 2011 when the Jiangsu provincial government agreed in principle to extend the planned rail network to Yancheng. But before Yanchengers could celebrate, things took an expected turn. The construction plan the Ministry of Railways released listed the design speed of the extension segment to Yancheng as only 160 kilometers per hour, significantly slower than the above 200 kilometers per hour speed of the state-of-the-art high-speed trains. According to the report, Yancheng officials again mobilized a response. They visited the National Development and Reform Commission, a powerful regulatory agency that oversees infrastructure investments, and the China Railway Corporation, the successor to the Ministry of Railways after 2012, numerous times, seeking an upgrade of the key parameters of the railway. The National Development and Reform Commission revised the designated speed of that segment of the railway twice, first from 160 kilometers per hour to 200 kilometers per hour in 2013, and then to 250 kilometers per hour in 2015, when the railway finally received approval for construction.
The Xuzhou–Huai’an–Yancheng intercity high-speed railway began operation on December 16, 2019. As the newspaper headline exulted, “A Long Dream Eventually Comes True.” While a decade might not be a long time in which to build a railway by international standards, China’s high-speed railway has developed much more quickly in some other places. For example, it only took 19 months from finalizing the construction design to operation for the Shanghai–Hangzhou intercity high-speed railway, which is located roughly 300 kilometers south of Yancheng.
Yancheng’s case is the tip of the iceberg: many local governments have had similar battles since the Chinese central government released the Medium-to Long-term Railway Network Plan, proposing the construction of 12,000 kilometers of high-speed railways in 2004. As the addition of the Huai’an–Yancheng extensions suggests, the construction has exceeded the original plans. Fifteen years after the release of the initial plan, in 2019, China had over 35,000 kilometers of railway track running trains at or above the speed of 250 kilometers per hour. That is twice the length of high-speed track in every other country in the world combined.
2. The Argument
This book proposes a theory that focuses on how proactive actions on the part of those who receive policy benefits could make a difference in policy outcomes. I argue that bottom-up bargaining by territorial administrations, or what I call localized bargaining, importantly shapes the allocation of policy benefits like infrastructure investments. While ordinary citizens are the eventual recipients of government policies, they do not directly negotiate policy details with the decision-makers. Thus I focus on the actions of intermediary recipients. The intermediary recipients of China’s high-speed railway program are territorial authorities such as the provinces, the municipalities, the counties, and their functional departments. Their nominal job is to implement the policies of higher authorities. However, they benefit personally if their superiors’ allocative decisions give their jurisdictions greater shares of policy resources. A multitude of factors, including a mismatch of resources and responsibilities, constantly present career incentives, pressures from local constituents, and sometimes even a sense of localism, motivate Chinese local authorities and their administrators to solicit policy resources from their superiors. In a parsimonious diagram in which the process of distribution flows from the decision-makers on the left end to the eventual recipients of policy benefits (i.e., the citizens) on the right end, these “intermediary recipients” are slightly right of center. To ordinary citizens, these actors appear as a part of the government authority, whereas within the government, their superiors see them as recipients of policies.
The term localized bargaining is a play on the more commonly used term “collective bargaining.” In collective bargaining, employees with shared interests form a group to negotiate work conditions with their employers. In localized bargaining, localities share the same goal of gaining access to more resources from their superiors. There are also important distinctions. Unlike unionized workers, localities seldom coordinate their actions. In negotiating for resources they often compete with one another, as policy resources at any given time are limited. Inter-jurisdictional competition can be fierce. Consequently, the actions of bargaining remain localized and, unlike a unionized workforce, localities differ in their paths in gaining access to resources. This book reveals which factors give particular localities greater bargaining power than others. The word localized also describes the scope of the bargaining. Localities are seeking to bring policy resources to their jurisdictions in these processes. They are not trying to change or overthrow the broader institutional framework that defines and regulates central–local relationships in China.
3. The Fragmented Decision-Making Authority
The structure of authorities in the central government has made obtaining permission to build a transportation complex following Hongqiao’s model nearly impossible because there are so many “veto points.” Even getting permission to build a railway terminus is extremely difficult. It requires localities to present proposals and plans to, negotiate details with, and receive approval from at least six ministries: the National Development and Reform Commission, the Ministry of Transport, the China Railway Corporation (formerly the Ministry of Railway), the Ministry of Natural Resources (formerly Ministry of Land and Resources), the Ministry of Ecology and Environment, and the Ministry of Housing and Urban-Rural Development. Including an airport terminal in the proposed complex requires the permission of the Civil Aviation Administration, the People’s Liberation Army (PLA) Air Force, the military region to which the locality belongs, and in some cases the PLA Navy.
Each of these central or military institutions oversees a specific issue that pertains to the construction of the complex. For example, the National Development and Reform Commission decides whether the project is feasible or necessary at all; the Ministry of Natural Resources is responsible for scrutinizing a land requisition request for the construction; the Ministry of Ecology and Environment evaluates the environmental consequences of the project (such as noise or light pollution) and the effectiveness of any preventive measures; the Civil Aviation Administration evaluates whether the design of the terminal per se and the surrounding structures (i.e., the train station) meet the aviation safety requirement (e.g., airfield clearance); and the military authority assesses whether the changes in the existing parameters of the civilian airport affect the military-controlled airspace. Localities need to prepare and submit different files to each of these institutions. Some of them can be done simultaneously, while some need to be done in sequence, meaning that in some cases localities cannot apply to some institutions until they have secured permission from another. Any mistake in this process will result in delay or no project.
Getting permission from any individual ministry is generally difficult. Ministries like the National Development and Reform Commission have hundreds or even thousands of local proposals to evaluate, and for a given project there may be competing proposals from other localities. Projects can easily get sidelined by such competition. Beyond the sequencing of submissions, localities must fulfill particular regulations and requirements based on a given ministry’s mandate. For example, a locality could propose a railway station with eight platforms and find that the National Development and Reform Commission or the China Railway Corporation determine that five platforms are sufficient, and prevent the project from going forward with eight. Keeping the original design will require lengthy negotiations and bargaining with the technocrats in the ministries. Localities do succeed in defending their original plans on occasion, but more often they make some forms of concession. However, ministries do not always agree with one another. Changing the parameters of a project to fulfill the requirements of one ministry could contradict the requirements of another ministry. For example, the China Railway Corporation prefers to have grandiose stations, as many recently completed high-speed railway stations across China have evidenced. Yet, placing a huge station next to an airport terminal can easily violate the Civil Aviation Administration’s regulation on airfield clearance. However, designing an underground station to satisfy the requirements of the Civil Aviation Administration may create a design that the China Railway Corporation or the Ministry of Ecology and Environment will not approve.
4. The “Cardinals”
A local leader’s rank also directly affects the process of interactions between local and central bureaucracies. Whereas the party secretary of city N was able to travel frequently to Beijing and meet with the ministers, most local leaders have difficulty getting audiences with the most powerful members of the ministries. While the schedules of the ministerial leaders play some role in determining this outcome, the ranks of the local leaders are generally determinative. The official exchanges between different bureaucratic entities in China follow the norm of reciprocity, something similar to what heads of states practice in international diplomacy. That is, a leader is only obligated to deal with his or her exact counterpart (in position or rank) from another bureaucracy. This means that if a provincial party secretary or a governor visits a ministry, the minister has an obligation to meet with him or her. The only exception would be if the minister’s schedule is previously booked (e.g., the central leaders have summoned the minister), in which case it would be appropriate for the deputy minister to host the provincial leaders instead. If a municipal party secretary or mayor visits the ministry, the ministry only needs to send a bureau director to meet with the visitor (see Table 3.1 for the ranks of the two positions). In practice, when receiving party secretaries—the top leaders in their regions from below the provincial level—the ministry would send someone just above the rank of the guest to show courtesy, or to “give face (给面子)” in Chinese. For example, when the party secretary of a deputy provincial city visits, he or she might be able to meet with the minister, but the minister is not obliged to take the meeting. Similarly, a municipal party secretary might sometimes be able to meet with a deputy minister if his or her schedule allows. If the locality sends a deputy (instead of its top leader), the ministry is likely to provide a meeting with someone with commensurate rank.
The rule of respect means that by design, localities with higher ranks have greater access to more powerful figures in the ministries. This has consequences for the bargaining outcomes. Meeting the minister can help produce meaningful progress on the issues. Local and ministerial leaders both know that for most technical issues, the ministers have the authority to call the shots, and it would appear disingenuous for a minister to further defer a decision to another actor. In contrast, if a municipal leader meets with a bureau director or a deputy minister, the host might not have the authority to decide on the issues in question and instead must consult his or her superiors. Even if a person does have the authority, he or she can still use his or her relatively inferior position as an excuse to avoid making a commitment. Opportunities to meet with top ministerial leaders also save localities the costs of coordinating consensus among subdivisions of a ministry. Once a minister commits to an action, his or her ministry has some burden to mobilize cooperation and reduce tension between ministerial bureaus with conflictual interests, or between his or her ministry and other central authorities. Thus the coordination task that Beijing office staff described to me largely falls to localities of lower ranks, who go through painstaking negotiations with heads of ministerial departments to achieve cooperation in the absence of greater support.
A simple illustration: Imagine that two nearby cities have competing proposals on the location of a railway station, and the railway ministry has to choose between them. One of the cities is a deputy provincial city, and its party secretary was able to secure a meeting in person with the minister and plead the case for the city. The other city is just a regular municipality, and its party secretary got to meet with a deputy minister (or in a worse scenario, only a bureau director). It is not difficult to determine which city will get the station.
5. The Power of the Masses
On May 16, 2015, more than 20,000 residents in Linshui county, Sichuan province, took to the streets to protest a construction plan for high-speed railway released not long before. The proposed line would connect Dazhou and Chongqing. It would stop in Guang’an, but not stop in Linshui. The two localities, which are adjacent, had been competing for a station for a long time, and Linshui residents were angered and disappointed by the plan. For days they had undertaken public mobilization, gathering over 10,000 signatures in a short time on a petition seeking a change to the direction of the track— directed at, according to the petition, “the relevant department of the state (国家有关部门).”
While Chinese local officials generally spare no effort in repressing mass mobilization, local authorities in Linshui did very little. As protesters gathered signatures, they did not act. When the public demonstration began, local police did not try to quell the crowd until it had been going on for hours, when protesters began to burn cars in the streets. Even so, the protest had an impact: the Sichuan provincial government stated that the released plan was not final, and the location of the stations was subject to reconsideration.
Mass mobilizations about railway stations and other types of policy benefits like the one in Linshui have been increasingly common in China. What do these protests tell us about the internal dynamics of policy bargains? What roles do local authorities play in these events? This chapter studies how the power of the masses shapes intra-elite bargaining on policy resources. I argue that some jurisdictions in China have experienced “consent instability” in which local officials strategically tolerate bottom-up mobilizations to strengthen their bargaining power. Specifically, “cleric” officials, who oversee less influential segments of the regime and therefore lack other bargaining power, often favor this strategy. They capitalize on local mass mobilizations when the demand of the masses is congruent with elements of their agenda that they are otherwise unable to pursue, especially those that involve bargaining between the locality and higher levels of the government. The protesters in the street function as a powerful bargaining chip for local officials. They illustrate ex-ante that rejecting the locality’s demand brings a risk of social instability, which brings the pressure of the masses to bear on higher-level leaders.
6. The Rise of Popular Localism
Parallel to the rise of institutionally engineered localism on the part of local leaders is the surge of localist identity among ordinary citizens. One manifestation of the existence of such identities is the growth of numerous online forums and bulletin boards dedicated exclusively to discussions of local development issues. One typical site is the Baidu Tieba—China’s equivalent of Reddit, where each Chinese city and province has its own discussion board. The site also has other dedicated discussion boards on themes such as urban development, skyscrapers, subways, high-speed rails, or local economic statistics. Millions of users on these boards engage daily in lively discussions and debates on local development issues and comparisons across localities. I frequently visit these outlets as a part of doing my research, and also got to know and meet offline with some of their users. Their passions and interest in local development appear to be genuine. Typically young males, these people are not shy about expressing their pride in their localities, mostly their hometowns, and are very knowledgeable about details of their localities’ development programs. They are also particularly vocal in defending against potential (often imagined) encroachment of local interests by other places or higher levels of government. Falling behind in development is considered a major humiliation, and these netizens often spend hours online arguing with others like themselves about why their localities are superior. They have held offline activities from time to time through shared WeChat or QQ groups. This kind of “popular localism” is a crucial part of this book’s argument. As has been discussed in Chapter 6, these spontaneous sentiments of defending local interests are important drivers behind “consent instability.” Without an opinion base that supports the agendas of local governments, local officials have little to mobilize to put additional pressure on their superiors. Despite being a loosely connected community that mostly exists online, these people also prove that they have the abilities to organize themselves, as revealed in the case studies of “consent instability.”
Two important questions to ask are what gives rise to popular regionalism, and what consequences does it have on Chinese politics? I lay out some hypotheses for future studies to explore. On the origins of popular localism, one possibility is that it is the product of the growing individual demand for political participation in a rather confined environment. Rising income and education levels, as well as a quickly expanding middle class, create strong demand for political participation in China, like elsewhere in the world. People want to get involved in politics and have a say in policies that will affect their livelihood. Such demands are evidenced in the rising activism by urban residents to organize and manage their own neighborhood associations. Yet, beyond the basic neighborhood level, there are few institutional channels through which urban residents can legally participate in local governance. The regime has kept a tight control over political participation, silencing expressions of dissent on political and ideological matters. When local social and economic policies become the only few areas in domestic politics where there is some latitude of freedom in online discussions, these topics naturally attract a large number of netizens eager to vent their opinions. Some of these discussions can be very contentious (just like most political discussions), such as economic rivalries among nearby localities, which further attract more participants to the discussions. Most discussions and demands by localist activists call for advancements of local interests, which are also more or less congruent with what local state actors prefer. These discussions and their communities are therefore dealt with a greater degree of tolerance by the regime and the local state.
The above is from 马啸 Xiao Ma’s book Localized Bargaining: The Political Economy of China's High-Speed Railway Program, just published by Oxford University Press (and available on Amazon). Feel free to reach out to him at x.m[AT]pku.edu.cn. Or you can reply to this email and I'll pass on a word.
More exclusive book excerpts in Pekingnology:
Lessons from Success & Failure: Indigenous Innovation in China from China’s Drive for the Technology Frontier: Indigenous Innovation in the High-Tech Industry, due July 7, 2022, by 李寅 Yin Li
China's Land Finance, from Embedded Power: Chinese Government and Economic Development《置身事内：中国政府与经济发展》by 兰小欢 Lan Xiaohuan
How Academic Research Contributes to China's Decision-Making, from Academic Autobiography of Jiang Xiaojuan《江小涓学术自传》by 江小涓 Jiang Xiaojuan
Former Deputy Secretary-General of State Council on foreign investment, WTO, industrial policy, etc. from Academic Autobiography of Jiang Xiaojuan《江小涓学术自传》by 江小涓 Jiang Xiaojuan