China's Provinces and the Belt and Road Initiative

Dominik Mierzejewski

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000374490
• Edition: 1
• Topic: Volkswirtschaftslehre
• Subtopic: Wirtschaftspolitik

This book discusses the Belt and Road Initiative at the provincial level in China. It analyses the evolution of the role of local governments in Chinese foreign policy since the opening of China's economy in 1978, showing how the provinces initially competed with each other, and how the central government was forced to react, developing more centralised policies. Unlike other books on the Belt and Road Initiative, which focus on the international aspects of the initiative, this book demonstrates the importance of the Belt and Road in reinforcing China's unitary status and for managing and coordinating development at the local level as well as centre-province relations and province to province relations inside China.

1
Understanding the Belt and Road Initiative through central-local perspectives

Taking into account the ongoing discussions regarding China’s political structures, the announcement of the Belt and Road Initiative brought new light to the decentralisation and centralisation nexus. The recent policy measures taken by Chairman Xi Jinping indicate that centralisation processes are critical to the agenda in Mainland China and that the BRI forms part of the story. By introducing the New Silk Road Economic Belt in Astana, in September 2013 Xi Jinping referred to China’s past of the great Emperor of Han Wudi and the special envoy Zhang Quan. While taking about Han Wudi and his highly centralised government, the Chinese policymaker signalled the ongoing centralisation within China. The dream of having effective centralisation government was realized in a step by step manner. The growing role of the leading groups, anti-corruption campaign and finally mass mobilisation with the Belt and Road Initiative became vital symbols of the new deal. But as discussed here, this process sounds successful within vertical relations, but horizontal relations are still far from narrowing the domestic fragmentation.

The first section of this chapter focuses on the domestic modus operandi between central and local governments and discusses the rationale of the BRI as the vehicle for managing central supervision over the lower level. It does so by examining the relationship between centralisation, decentralisation and horizontal competition. The second section explores the theoretical discussion on the role of China’s paradiplomatical activities in foreign policy in general and in the BRI in particular. It examines the extent to which the provincial-level governments might utilise their foreign activities in order to gain more preferential policies delivered by the government in Beijing. The final part explores the reaction of provincial, municipal and autonomous regional governments to the central proposal of the BRI. Sometimes the reactions are mixed, or ambiguous, and demonstrate the different levels of willingness for cooperation with the central government. In other words, the core questions here are related to the upper-lower relations and proceed as follows: to what extent is the BRI part of central-local management? How does the central government use the BRI to navigate the external actions of the Chinese provinces to limit their competition and build the platform for collective actions that ultimately connect the domestic economy of China through a pan-provincial project like the Yangzi River Economic Belt? And, finally, how does the local government translate the BRI into their local policy planning and external interactions?

1.1. The BRI: between decentralisation, horizontal competition and centralisation nexus

Central-local relations in China can be examined via a range of approaches. The recent development of the Belt and Road Initiative should prompt a search for factors that redefine the relations between central and local government in China and, as the majority of experts agree, push towards a more centralised and coordinated relationship. In September 2013 President Xi Jinping proposed the establishment of a Silk Road Economic Belt. Thus, by reviving the Silk Road diplomacy, China presents itself as a global player. The global understanding of China’s strategy has been dominated by debating the strategic interactions of the global players (namely China, Russia and the United States), Sino-US economic controversies and the future of the global structure and has finally perceived China as a unitary, coherent power. Nevertheless, this perspective might not necessarily be proved correct. In its history, as a typical Chinese saying goes: ‘the river changes its curves for every thirty years’ (san shi nian hedong, sanshi nian hexi 三十年河西三十年河东), the centralisation-decentralisation cycles have become an inherent part of China’s political reality. Within this dichotomy, the BRI is seen as the vehicle for bringing more centralised governance with special regard to the provincial level. Taking into consideration these understandings, the main narrative here is not only related to China’s foreign policy strategy, but discusses the Belt and Road Initiative together with other economic integration projects, mainly the Yangtze River Economic Belt and the Beijing-Tianjin-Hebei Metropolitan Area as the domestic political campaign that allows the central government to regain control over local actions and to navigate the local government’s external actions as well as economic development. The primary reason was to narrow disparities and fragmentation at the horizontal level by strengthening the role of intra-provincial relations and cooperation between them.

On the other hand, by stimulating local governments to take part in the central government initiative of the Belt and Road, Beijing checks their willingness for cooperation and encourages enthusiasm, and, by using centrally planned projects, limits the fragmentation and competition between provincial-level governments. At the same time, the central government allows local governments to compete with each other in the global arena. On paper, this might look easy, but in fact it ignores the complex political reality in Mainland China. The general fragmentation of power necessitates consensus building. This need to deliver a consensus predisposes officials to negotiate with other relevant officials and creates a huge number of meetings (kaihui 开会). The Beijing-based government, in its vertical management, needs to use coercion, it needs to bargain and finally it needs to look for reciprocal measures (Zheng Yongnian 2007, 2–17; Lieberthal 2004, 189–191).

The central-provincial dichotomy started during the Yuan dynasty. Its essential principles were based on administrative rather than economic considerations and have remained in force ever since. From the time that the administrative divisions were established, the provinces have formulated their economic programmes and articulated their specific interests in the light of their differing circumstances. By building up their expectations in the process of relations with the political centre, they gain stronger political identities and promote particular political figures at the local level. Historically, many provinces have distinct cultural identities based on local histories, traditions, art forms, cuisine and cultural activities. Since the establishment of the People’s Republic of China, the role of the provinces has been to bring existing notions of provincial identities out of their cultural isolation by integrating them into the provincial-level political and economic agendas (Jae Ho Chung 2011; Donaldson 2017, 17–21). However, the particularities of different provincial-level structures in China remain far deeper than may initially be perceived. As Lucian Pye (1992, 24–25) rightly notes:

Although the government in the PRC involves more concerted policy efforts, it is one of the grand illusions of the day that Chinese authorities are as omnipotent as they pretend to be. In a host of fields, from tax collecting to controlling economic activities in Guangdong, Fujian and other dynamic provinces, central authorities know that feigned compliance still reigns and that it is best not to attempt the impossibility by demanding precise obedience. Sovereignty, after all, calls for theatrical representation.

Having experienced the Republican period of turmoil and total fragmentation, the central government recognised localism as a threat to China’s unitary position. The negative evaluation of Sun Yat-sen’s decentralised republican system influenced by the US federalist system have had an impact on further actions taken by the Communist Party of China (Yang 2015, 33–34). The illustrative example of localism in China appeared during the first years of the People’s Republic of China when the central government promoted land reform in southern China. In an agrarian society like China, the model of governing and managing land symbolised the level of decentralisation. At that time, Guangdong had the most significant stake of China’s foreign currency reserves and land rights, as well as the biggest community of Chinese overseas that made the province an ‘independent stakeholder’. To limit the local tendencies in Guangdong, the central government decided to establish a South China branch, under the leadership of the Central South Bureau of the Communist Party of China with Lin Biao as the leader. The newly established South China Branch came into conflict with the Central South Bureau regarding measures and steps related to land reform. The South China Branch emphasised that the land reform should be carried out from the actual situation in Guangdong and by the local regulations. Finally, the central government believed that the party had committed the error of ‘right-wing thinking and localism’ and accused them of being independent. The ‘local patriotism incident’ was the first anti-localism incident after the founding of the People’s Republic of China (Song 2017).

The newly formed government in Beijing discussed the relations within the People’s Republic of China but the decisive voice was given to Chairman Mao Zedong. In 1956 in ‘On the major relationship’ Mao Zedong discussed the dialectic of central-local relations: ‘centralization and decentralization are the unity of the opposite, and change according to the economic base and social structure’. Furthermore, Mao, in order to limit the negative impact on China, called for ‘the red line’ between both:

To resolve this contradiction, our attention should now be focused on how to enlarge the powers of the local authorities to some extent, give them greater independence and let them do more, all on the premise that the unified leadership of the central authorities is to be strengthened.

(Mao Zedong 1956)

This quotation demonstrates that the central government recognised the importance of reciprocity in relations with the local authorities and acknowledged the difficulties in managing localism in China. The main aspects of the Maoist decentralisation were as follows: the majority of central enterprises were transferred to the management of the local authorities; emphasis was placed on local planning and replaced central planning with the more significant delegation of powers to local governments. However, as Mao Zedong recognised, the central-local dichotomy was in flux, lacking basic principles or grounding in the economic situation. The ‘localism’ issue became part of the political controversies of the 1957 ‘Rectification movement’, and further in 1962 after the Great Leap Forward failure. Following the short period of ‘regulation’ sponsored by Liu Shaoqi and Deng Xiaoping, Mao started the Cultural Revolution: the symbol of Maoist style decentralisation. Finally, the ten years of turbulence positioned China as a backward country in the international arena, and Deng Xiaoping took the pro-market economy path. The second important feature of the Maoist period is primarily based on the fact that the spatial economic development mainly contributed to inland development: that is, of the central and western provinces. During the First Five-Year Plan (1953–1957) almost all projects were located internally. Due to the national policy of ‘preparing for the next war’ and the self-reliance policy of the whole Maoist period, 59.4% of national investment was allocated to the interior provinces. The situation created disparities between Central and West China and East and South China and favoured the interior while limiting the role of coastal areas (Dali 1997, 7–9).

Apart from favouring landlocked China, fluctuations in the fiscal and regulatory authorities from the central to local governments and the highly decentralised system during the Cultural Revolution enacted the Communist Party of China to implement ‘market-based federalism’ under the Deng Xiaoping period. By limiting the interventionist role of the central government, reformers reoriented previous policies and asked the provincial-level governments to take responsibility for economic development (Liu, Shih, Zhang 2018). However, the reforms were not to be undertaken immediately, rather they were to follow the principle of ‘crossing the river but touching the stones’ (mozhe shitou guo he 摸着石头过河). Xi Zhongxun (the father of Xi Jinping) in Guangdong and Zhao Ziyang in Sichuan (with his ‘Sichuan experiment’) took the lead in China’s reform and opening-up period (Tong 1987, 3–18). Regarding the practical measures in the late 1970s and early 1980s, the reformers identified three critical initiatives for encouraging local political autonomy to develop the economy and initiatives that at the same time sowed the seeds for potential political disintegration. First, based on the ‘Sichuan experiment’ evaluation, the state sector was decentralised, and the local authorities were responsible for the effectiveness of production. This meant that the centres of economic powers moved away from the political centre in Beijing to the localities. Second, due to attracting foreign investments and trading with foreign partners, localities were placed as more important than the Beijing-based government, and they took advantage of the situation with alternative sources to assist their economic development sources which were not controlled or planned by the central governments. Finally, all were taken under the ‘four cordial principles’: the principle of upholding the socialist path; the principle of upholding the people’s democratic dictatorship; the principle of upholding the leadership of the Communist Party of China (CPC); and the principle of upholding Mao Zedong Thought and Marxism-Leninism declared in late March 1979 by Deng Xiaoping and allowed the government to secure China’s unitary status. Moreover, the geographical reorientation from the interior to the coastal areas was perceived as compensation for the eastern part of China being ‘forgotten’ during the Maoist period. Now, China’s economic governance was precisely in the hands of the coastal areas, mainly Guangdong and Shanghai. The southern provinces, with their long periods of interaction with foreign countries, trade, open mentality and traditions of being ‘far away from the pollical centre’, cherished Beijing’s policy of economic decentralisation. But nothing comes without cost. The reform and opening-up policy has determined the transformation of China’s economy and fundamentally changed the situation of the relationship between the central and local governments. Before the reform and opening up, the Chinese egalitarian model of social governance, by shaping the status of ‘coalition of poor people’, secured the country’s unitary status. The new understanding by Deng Xiaoping’s ‘black-white cat’ strategy was taken from old Sichuanese proverb: ‘it doesn’t matter what color the cat is (yellow or black) as long as it catches rats is a good cat’ (Deng Xiaoping 1962), finally leads to local economic separatisms. In order to win the race, the local entities have taken different strategies of reform, advancing the system and regional promotion and maximising their interests. By giving the provincial-level governments a free hand, the horizontal style of competition became the most essential vehicle for China’s economic growth, fulfilling Deng Xiaoping’s motto that ‘without the competition there is no development’. This statement indicates that the only thing that was anticipated by the central government was economic growth.

The discussed approach shapes the situation in which the local government has gradually become a relatively independent stakeholder with its interests and objectives. Reform with the basic idea of ‘simplifying government and decentralizing power’ or ‘decentralizing power and transferring benefits’ or ‘small governments’ devolves more decision-making power to local governments and production units, and provides more benefits to local governments, enterprises and workers. But as a part of delivering growth, the decentralised approaches utilised the self-reliance model and created a vacuum for horizontal rivalry, as discussed later in the chapter. In order to achieve economic growth, China’s policy aimed at mobilising the enthusiasm (jijixing 积极性) of local governments and producers. The local governments are not only responsible for balancing the macroeconomic aggregation of the national economy in different regions, but also play the role of independent regulators of economic activities. As a result of the newly implemented policies, the local government has a new role based on market-oriented reform as an independent stakeholder with its own interests and policy orientations. The critical issue is that the power of approving foreign investment belongs to the provincial-level governments. At the same time, they have more autonomy in the local economy, such as establishing industrial projects and establishing local markets to promote local economic development (Zhu 2008, 272–273).

As presented in the literature, the Chinese power structure in Beijing has never been transparent – much more is known about the perspective of leadership conflict and central-provincial relations than the provincial perspective of inter-provincial conflict and relations with the centre and even foreign policy. The level of autonomy of the provinces in relation to the political centre is difficult to assess because it emerges as the result of an ongoing, perpetual bargaining process. Zheng Yongnian (2007), by introducing the ‘de facto federalism model’, discusses three models for analysing central-local relations: cellular, structural and pluralist. First, the cellular model provides the platform of limited interaction between central and local governments, and the centre is not always capable of implementing its policies. From this perspective, provincial governments tend to be very important in regard to the developing local economies. This model discusses the fact that the centre and the provinces do not interact following a formal organisational formula but it is instead based on patron-client relations. A similar argument is presented by Audrey Donnithorne (1981) when she states that China is not a monolithic society, but in this model, the centre cannot always seek compliance from the provinces. Rather, the localities act like entrepreneurs: developing local industries, providing coordination and fi...