A fascinating research paper by Peng Wang and Xia Yan on the impact of corruption and anti-corruption actions of the Xi Jinping government on bureaucratic efficiency in developing the local economy.
They point to a very distinct personalised nature of interactions (guanxi) between bureaucrats across different levels of the government, which creates patronage networks, is characterised by gift-giving and lavish hospitality, and which both enhances bureaucratic efficiency as well as creates opportunities for corruption.
Personalized bureaucratic ties (patronage networks) are commonly used by local bureaucrats to mobilize resources for the growth of local economies. In patronage networks, the more powerful bureaucratic actor (patron) is able to offer protection and distribute state resources (for example, promotion opportunities and financial support) to the less powerful bureaucratic actor (client) who reciprocates by offering loyalty, bribes, personal services and political support to the patron. In other words, those at the top of the bureaucratic hierarchy generate resources that are channelled down through patronage networks, while political support, loyalty and bribes flow upwards. Bureaucratic ties are largely personalized through informal practices such as gift-giving and entertaining with expensive food and drink... Organizing banquets and giving gifts are important strategies for Chinese government officials seeking to build reciprocal relationships with others in order to mobilize resources, meet policy targets and develop the local economy. The acceptance of a banquet, gift or favour places the obligation to reciprocate on the recipient...
In order to cultivate and maintain reciprocal relationships with their superiors and with colleagues in other government agencies, Chinese bureaucrats spend a great deal of time and money eating and drinking together... Local governments also use official extravagance to show their respect and appreciation of investors. Extravagant consumption, although prohibited by Party regulations, has become a key means through which local states can pro- mote economic development within a Chinese bureaucracy characterized by centralized decision-making and resource allocation.
This is another reason,
Party chiefs and heads of governments at all levels are periodically rotated in order to reduce localism. However, frequent transfers lead to information asymmetry between superior and subordinate. In addition to formal channels and practices such as document flows, meetings, supervision and inspections, banqueting and socializing with subordinates has become a common way for superiors to adapt to a new job and grasp essential information, such as personnel arrangements and policy implementation, within a short period of time.
And another,
Interpersonal ties act as an important mechanism for superiors to mobilize their subordinates to “accomplish important but challenging governing tasks,” especially when the formal incentive structure is incomplete. Superiors throw official banquets for hardworking subordinates to demonstrate their appreciation. Although this practice increases public expenditure, it cultivates affective commitment among subordinates and motivates them to work. Furthermore, lower-level officials often demonstrate great attachment to their superiors in Chinese bureaucracy. Loyalty to superiors exerts a greater influence on subordinates’ behaviour than loyalty to the party-state.
And another,
Personal ties among bureaucrats also work to cover up wrongdoers and encourage innovative policy implementation. Given that the Chinese government has not established a fault-tolerant mechanism for policy implementation, government officials rely on the safety net of patronage networks for protection and to avoid punishment. The centralized nature of policymaking in China leads to uniformity in state policy, but policies are not always suited for every locality. Flexible or innovative local adaptation leads to “a better fit of policy goals and local conditions,” but this means that local governments have to deviate from the original policy design. In response to uncertainties in policy implementation, malfeasant local officials seek protection or leniency via their bureaucratic ties and ensure their political survival through the hosting of lavish official banquets... Although the protective network fuels corruption, to a certain extent it also encourages innovative implementation and promotes the growth of the local economy.
How does this arrangement impact the bureaucratic efficiency?
Corruption, in the form of extravagant position-related consumption and gift- giving, contributes positively to the efficiency of bureaucracy when it comes to implementing policies and furthering local economic growth... to further local economic development, a lower-level government (or agency) makes use of lavish official hospitality to foster patronage networks with its supervising government (or agency) in order to access resource distribution and gain support from supervising governments or agencies. At the same time, the supervising government or agency employs patronage networks to solve the problem of information asymmetry, coordinate bureaucratic interactions and ensure that policies are properly implemented... Extravagant position-related consumption has become a common way in which lower-level officials can please higher-level officials who have the discretionary power to allocate financial resources to their favoured subordinate units.
The impact of the anti-corruption drive has strong resonance with the problem of decision-paralysis in India.
Government officials... are primarily “motivated to avoid blame and ensure their political survival” rather than to seek credit through taking the initiative. As a result, local officials prefer to reduce bureaucratic interactions and avoid providing official hospitality in order to protect themselves. Moreover, the Chinese government has introduced a lifelong accountability mechanism in many policy areas, such as environmental protection and economic development, in order to prevent government officials from making irresponsible decisions. The lifelong responsibility system makes public officials accountable for their administrative errors and the losses resulting from their decisions. An adaptive response from local officials, as China Daily reveals, is “trying to do as little as possible” because “the more work one does, the more chances there are for one to commit an error, which will possibly result in disciplinary penalties.”... dilemma for local officials: if they stick to the rules on official hospitality they risk offending their superiors; if they disregard the rules, they risk being investigated and punished. As a response, local government officials have reduced their interactions with different government departments in order to avoid this dilemma. This has directly led to the decline of the use of personalized bureaucratic ties in developing local economies.
This is the clincher, and spot-on for India's higher bureaucracy today,
“Not hoping for merit, just avoiding the risks” (buqiu yougong, danqiu wuguo 不求有功，但求无过) has become the survival strategy of Chinese bureaucrats in a highly uncertain political environment.
On local hospitality budget, this is so reminiscent of the dilemma faced by field officials in India,
The fact is that the formal hospitality standards set by the local government are unrealistically low and do not take into account how hospitality works. In 2013, a senior official from the county’s finance and economics bureau informed us that the standard allowance for catering for a provincial-level official was 60 yuan and 50 yuan for a prefecture-level official. Local officials viewed these allowances as rather low, so they felt they were unable to show proper respect and appreciation to those higher- level officials; what was even worse, higher-level officials might feel offended by the poor hospitality offered to them... The local government’s hospitality standards are unrealistic ... if the [formal] hospitality standards are strictly enforced, you will easily offend the leaders. If you offend the higher-level officer today, he might cut your project tomorrow.
This too is so true of India,
To be honest, the salaries of civil servants and cadres in the government are not high. What I mean by “not high” here is that the salary does not match public officials’ abilities and qualifications ... in fact, many local cadres, especially senior ones, are very capable of doing things [developing local economies] and building interpersonal connections. If they quit their current jobs and join private companies, they would receive very high salaries, maybe more than ten times higher than the salaries they get from the government.
Some observations.
1. So many things in this paper - local hospitality, within bureaucracy patronage networks, decision paralysis from anti-corruption drives, limited salaries etc - have strong resonance with India.
2. Borrowing Mancur Olson, corruption can entrap systems in either the roving bandit or the stationary bandit modes. For long, the grease lubricated the Chinese system, encouraging local government officials to work towards local economic development. What determines this entrapment? Or are they merely happenstance, just the natural, unique, and unexplainable emergent dynamics associated with the evolution of such activities in complex systems?
3. In systems with low remuneration, in particular disproportionately low for their abilities and their value addition (even if only for a small share of the total bureaucracy), the extravagant position-related consumption, lavish hospitality, and gift-giving should also be seen as a form of efficiency wage. This is one of the driving forces of corruption in Indian bureaucracy too, among the extremely competent bureaucrats who feel almost aggrieved by their very low salaries (compared to their private sector peers) given their qualifications, abilities, and track-record.
4. The paper also highlights the value of good old ethnographies in understanding complex systems, an essential requirement to design an implementation model for any idea or program. Interesting that the authors are two sociologists. These ethnographies are critical to understanding how bureaucracies and systems work, itself critical to any meaningful diagnosis and prescriptions.
5. Given that the insiders know all these dynamics, such papers are important for two reasons. One, it is valuable for outsiders who are trying to engage with the Chinese government. Two, they infuse public debates on the issue with an element of sophistication and nuance essential to generate a high quality of debates.
6. The argument in favour of corruption is that in systems with weak institutional strength and maturity, rents and bribes grease the system and enhances its efficiency. While this may have been the case in China for long, the rapid economic progress made in the last few decades and the associated increase in state capacity means that the case for tolerating such corruption may have become weaker.
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