Organizer: Zhimin Lin, Valparaiso University
Chair: Peter Tsan-yin Cheung, University of Hong Kong
Discussant: Kevin P. Lane, Franklin and Marshall College
Zhimin Lin, Valparaiso University
Under the recent economic reform, provinces were faced with rising demands for resources. Yet, their ability to deliver hinged on obtaining a favorable deal with the center in resource sharing and on some better way of mobilizing and utilizing available resources. The author's previous works on Shanghai have focused on the former aspect of the experience, this paper intends to address the latter.
Initially, Shanghai was not in a good position to mobilize local resources effectively and apply them more closely to where the local needs were the most urgent. However, since the mid 1980s, things have changed substantially. Much more resources were mobilized through both the traditional and newly created channels. There were major adjustments in the allocation of these resources. For example, huge sum of money was put into improving existing local industries while welcoming foreign investment; local investments concentrated on the politically sensitive areas such as housing and public transportation in a way not seen before; and, local investments, both official and private, were encouraged to tie more closely to the city's long term development goals than to ad hoc decisions. A key variable to these developments was the exercise of a still evolving and yet increasingly visible local development strategy on the part of Shanghai's municipal government. Most of this paper is devoted to demonstrate the dynamics, patterns, key mechanisms, and limits of this strategy.
Overall, this paper shows that even in a place such as Shanghai where the grip of central planning used to be the tightest, the economic reform has opened the door for the rising role of provincial leadership. By the same token, it has also placed a heavier burden on provinces to show their competence before an increasingly demanding and scrutinizing local population.
Peter Tsan-Yin Cheung, University of Hong Kong
Guangdong's rapid economic development has made it a pacesetter in China's modernization since 1978. One of the most important factors that contributed to such success is its effective mobilization and allocation of resources for economic reform and development. This paper will examine the strategies of Guangdong's leadership in undertaking reform in two key areas of resource allocation, namely fiscal management and investment policy, and evaluate their implementation in the post-Mao era.
Effective extraction and allocation of fiscal revenue are essential tasks for the state in the process of economic reform and economic growth. The role of Guangdong's provincial leadership is critical in securing a favorable fiscal arrangement with the central government and in decentralizing resources and authority to sub-provincial governments. The lump sum transfer regime was adopted as the primary fiscal arrangement between the provincial government and the central government as well as between the provincial government and sub-provincial governments. Despite various deficiencies, this regime has helped to stimulate local enthusiasm in revenue collection, facilitated economic reform, and promoted rapid economic growth. Similarly, Guangdong's leaders were equally skillful and successful in mobilizing resources for investment from both domestic and international sources, acquiring favorable treatment from the central government in the area of investment, setting priorities for capital investment and technical renovation, and reforming the investment system. Not only did these reform efforts help to expand the sources available for investment, but they also encouraged flexibility, competition, as well as economic responsibility in the investment process.
In sum, this study of the strategies of Guangdong's leadership in resources allocation in the post-Mao era highlights their contribution in taking advantage of the changing economic and political environments and in formulating an effective reform strategy in accordance with the unique conditions of the province.
Jae Ho Chung, The Hong Kong University of Science and Technology
Throughout the 1980s, China's reform had mainly evolved on the experiences of the coastal regions in general and Guangdong, Fujian and Special Economic Zones in particular. In the l990s, however, the regional focus of the reform has been widely expanded and Shandong has become a fastest "late-comer." Shandong's recipe of development consists of a combination of conditions. While Shandong is known for its abundant natural resources-oil, coal, gold, and so on-most of these resource-extracting businesses have been taken over by the center. Thus, Shandong's strategies of reform had to rely upon "preferential policies" granted by the center. For this purpose, Shandong's top officials depended heavily upon personal connections and informal networks. One of the important indicators is that for the first time at the 14th Party Congress Shandong's party secretary joined the Politburo. As the center's "special treatment" often had limitations, provincial leaders had to maximally utilize the policies provided by the center for key projects on infrastructural development, particularly railways, roads, airports, electricity and so on. The provincial leadership is also accredited with innovating various development strategies, particularly in reducing the east-west intraprovincial differentials. Yet, given the general scarcity of development capital in China, it may be an overstatement that Shandong's recent progress is attributed solely to the productive alliance between the center and the province. In fact, there was a special international environment highly favorable to the transformation of Shandong's economy into an outward one: initially the rapprochement and later the normalization of diplomatic relations between South Korea and China.
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