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Conclusions of early NPM outcomes in China stress successes in reinventing the Chinese Communist Party and in stimulating favorable economic performance, as well as critical problems related to social inequality and unemployment. As figurative food critic, H. George Frederickson scrutinizes the ethical implications of the new managerialism recipe in a recently edited volume on ethics and public management (<>Frederickson and Ghere, 2005 165-183). This recipe calls for ingredients that various advocates of the New Public Management recommend for improving the taste (that is, performance) of government: First, sharply reduce governmental regulations and red tape;then mix this with privatize and contract-out many public functions thought heretofore to be primarily governmental; now reduce significantly the directly employed governmental workforce; do not train a cadre of government employees to be competent contract managers; now mix all of this with the widespread application of market logic, particularly the idea of institutional competition (165). In effect, NPM doctrines relate to the following principles: government productivity (do more with less), marketization, service orientation, decentralization, policy improvement, and accountability (Frederickson and Smith, 2003 215). As could be expected, Frederickson judges this NPM dish against American standards of tastethat is, according to U.S. public service values and professional norms. He eventually detects the bitter aftertastes of heightened public-private corruption and diminished concern for fairness, ultimately deciding that the recipe leads to unappetizing fare. Inquiry in this paper applies Fredericksons approach to an assessment of post-Mao administrative reforms, regarded by some Chinese scholars as NPM initiatives, ongoing in the Peoples Republic of China (PRC). At first glance, imagery of a Communist regime championing free-enterprise ideology makes for great contemporary irony. Nonetheless, intrigue over the transplantation of managerial ideas from one national setting to another has deep roots in scholarship on governmental administration. For example in his essay The Study of Administration, Woodrow Wilson used the often-quoted passage, If I see a murderous fellow sharpening a knife cleverly, I can borrow his way of sharpening the knife without borrowing his probable intention to commit murder with it; and so, if I see a monarchist dyed in the wool managing a public business well, I can learn his business methods without changing one of my republican spots, to commend large-scale government authorities for infusing business procedures into their operations (1887 209; also see Doig, 1978). (The twist here is that PRC leaders assume the first person in Wilsons analogywith an appropriate substitution for republican.) And for another, John Gaus recommended that questions of administrative practiceincluding the importation of management systemsbe understood within a political ecology, wherein functions of government are shaped by interactions among people, place, physical technology, social technology, wishes and likes, catastrophe, and personality (1946, 1-19). The organization of this study for the most part parallels that in the Frederickson essay. The first section provides background on post-Mao administrative reforms as parallel to NPM initiatives in the U.S. and elsewhere. The second part stipulates some defining assumptions from which to assess the NPM recipe in Chinaas contrasted to those related to governance in the U.S. A third focuses on Fredericksons three main ingredientscutting red tape, increased privatization and contracting-out, and downsizingas they pertain to the Chinese setting. The fourth offers a brief appraisal of contract management competencies connected to NPM-like initiatives in the PRC. Finally, the conclusion summarizes some comparisons between ongoing administrative reforms in China and New Pubic Management initiatives in the U.S. Is There NPM in the PRC? Taken together, several papers presented at a 2005 public administration conference in Chengdu, China1 document the adoption of particular administrative reform initiatives patterned from New Public Management ideas. The case that the NPM (or at least, a recognizable variant of it) is shaping PRC government is better understood within the current economic and social transformations in China. That nations peaceful rise to great-power status comes at a time when population is still increasingnot expected to peak until 2030 when the figure will reach 1.5 billion (Zheng, 2005 18). In 2002the year before it entered the World Trade Organization (WTO), China ranked first as a recipient of foreign direct investment. But even with the third-highest foreign trade, China joined the WTO as the only major trading nation not classified as an advanced industrial economy (Zheng, 2005 18; Fung et al., 2006 xi). Hence, Chinas transition2 will continue for another half-century, and societal reforms will be introduced incrementally during that period (21). In the United States, the NPM took root in government as Vice President Al Gore emerged as its champion in shepherding the National Performance Review Process that decreased and simplified administrative rules at the federal level. Chinese scholars identify Zhu Rongjipremier from 1998 to 2003as the figure most responsible for instituting NPM-like policies in the PRC central government. Although it cannot be confirmed that Zhu actually read Osborne and Gaeblers Reinventing Government (1992), descriptions of his official persona and style, as economic tsar and rectifier, (Luo, 2005 732) qualify him as one who could effective, separate government from its state-owned enterprises (Lan, 2005 9). Zhus policies led the central government to convert state-owned enterprises to privately-owned firms expected to re-employ displaced workers (Hughes, 2002 189), thus smashing the iron rice bowlthe Communist Partys commitment to provide cradle-to-grave security for all citizens (5). Zhus actions can be understood within an emerging definition of urban governance that appears nearly synonymous with entrepreneurial initiative3. Bao suggests the fundamental irony of local government in Chinaon one hand it exercises little formal power in a unitary system, but on the other it owns its autonomy, due largely from its direct interface (and thus, revenue-creating capacity) with citizens and businesses (2005 15-16). Correspondingly in rural areas, entrepreneurs emerging in the post-commune economy have by necessity undertaken political roles (such as lobbying and constituent representation), thus laying the groundwork for local activism (Gilley, 2002 73-81). Thus, it is appropriate to regard the NPM in China as locally-driven (Bao et al, 2005 418-419). Nonetheless, the mandates calling for market reforms are generally national and global in naturefor example, the imperative to abide by free trade obligations resulting from WTO membership. Zhus administrative reforms take on meaning within the traditional entanglement of the Chinese Communist Party and government service, both in terms of personnel and authority structures. To simplify some of Zhongs discussion in Local Government and Politics in China (2003), it can be said that the overlap between party membership and administrative office-holding has been pervasive at all levels. An intriguing dilemma therefore arises: On one hand, Zhus reforms are intended to remove the Party from the day-to-day operations of government, as later mandated in the 1992 constitution (Lan, 2005 7; Hughes, 2002 188). But on the other, Zhu made it clear in an interview with CNN during his visit to Washington in 1999 that China would stick to the one-party system, because only the Communist Party and socialism could save China (Luo, 2005 734). One feasible explanation around this quandary is that the Chinese-styled New Public Management involves (a) reinventing the Communist Party in tandem with reconfiguring the administrative structures of government as well as (b) improving the public image for a smaller, actually more accessible, government (San, 2005 182-187; Wang, 2005 349-351). Reform policies in the PRC are exacting significant social costs. Economists probe whether policy actions themselves account for sharp increases in income inequality apart from economic growth (see Risken et al., 2002). Clearly, the traditional economic dimensions (urban-rural, regional differences) add to the complexity of this empirical question. Nonetheless, one set of studies generally answers in the affirmativeit was not economic growth per se that caused increasing inequality, but reform policies, according to the data (Risken et al., 2002 9). In summarizing the analyses in their edited volume, Risken and his colleagues moderate this assertion by acknowledging that the policy intended to bring into play market forces expected to stimulate faster growth (9). Still, there is evidence that a number of policy factors causes what Zhao Renwei calls disorder changes that have a pernicious effect on the distribution of income (Riskin et al., 2002 8; Renwei, 2002 25-43). Knight and Song maintain that in adopting reform policies, government pushed economic growth outcomes over all else, reasoning that prosperity to some would eventually reach the restprosperity to some, to most, and then to all (2002 120). Understanding the NPM in the PRC: Starting From Different Assumptions Efforts to forecast the outcomes of NPM-like policies on Chinese governance need to stake out some beginning assumptions about the character of PRC government. In this regard, it is instructive to draw upon Fredericksons defining assumptions of relationships between NPM ideology and governance in the United States as points of departure for appreciating the basic ecological differences between these two settings. Fredericksons first assumption (or axiom) associates government corruption in the U.S. with the intersection of public and private interests: Most forms of government corruption--conflicts of interest, bribery, fraud, kickbacks, skimming, trading on the prestige of office--occur at the point of transaction between officials who formally represent government authority and the use of public money, on the one hand, and individuals or organizations who seek money, favor, or influence, on the other hand. In this assumption the key is the point of transaction at the boundaries of a jurisdiction or agency between an agency official and a contractor, a client, a regulated firm, and so forth (2005 166). His first axiom aligns well with comparative analyses of systemic corruption among global regions (see for example, Caiden, 2001 26-30). Caiden cites entrepreneurial politics as a major source of corruption in North America and then adds that Nonetheless, definite limitations on corruption are imposed by constitutionalism, growing professionalism, legal-rational norms, effective public management practices, a vigilant mass media, and watch-dog pressure groups (27). In contrast, Caiden characterizes systemic corruption in Asian nations as endemic within governments (29; my italics).4 Nonetheless, what might be regarded as endemic and entrepreneurial corruption (through Western eyes) merge in the midst of opportunities afforded by the current Chinese economic transformation. In their CSIS-IIE study5, Bergsten et al. report that Transparency Internationals Corruption Perception Index rates China as a 3.2 on a scale on 1 to 10, with 10 as the least corrupt, and ranks [it] 78th out of 158 countries surveyed(2006 43). Yet such increased corruptionlinking opportunity with broad societal goalsoccurs within cultural and structural contexts in a way that defies boundary setting and blurs points of transaction, and that instead encourages more informal networks of influence (from the tradition of guanxi discussed below). Furthermore, the flexibility and informality of these associations, alliances, and ventures, can be understood as supportive vehicles for integrating diverse interests toward common pursuits (44). Still, the opportunity unleashed by this post-Mao economic boom drives the quest for economic advantage to get a piece of the action. McGregor argues that Maos egalitarian ideology now fuels a pervasive self-interest stemming from the right to eat from the emperors grain, or to cash in as entrepreneurs on Chinas economic achievements. In some cases, this impetus moved citizens to establish home-grown family businesses encouraged by the Party to relieve unemployment (Wu, 2006; Gold, 2006 122-124 [my italics]). Neil Hughes, a World Bank economist, suggests that this new economic freedom stimulated the spontaneous privatization of state assetssuch that millions of private citizens entered the economic arena, resulting in a vast expansion of traditional guanxi [that is, exchange of favors] networks and the corruption that often accompanies them (2002 188). Thus, the way to achieve success, whether as a nation in international alliances or as individuals (even peasants), is to establish leverage within informal networks. By contrast, it follows that contractual formality needed to define boundaries and limits of transactions would require a rule of law to support proprietary rights. Yet Hughes comments elsewhere that without a clear concept of property rights to define ownership, increasing autonomy simply allows economic actors to pursue their own ends on a grander scale and with less risk of getting caught (25). From an American business perspective, McGregor highlights the trepidations foreign businesses confront in investing in Chinas expanding markets. His chapter Same Bed, Different Dreams relates how the China International Capital Corporation (a government entity) adroitly positioned itself in a network of U.S. investment banks so as to pit one prestigious firm (Morgan Stanley) against another (Goldman Sachs) to maximize governmental control of the investment venture.6 But McGregor also characterizes the dark side of entrepreneurial networks absent the protections of rule of law. In exercising rule by (as opposed to of) law, government can apply existing laws against individuals (citizens, entrepreneurs, bureaucrats) selectively to achieve particular purposesin this regard, Hughes contends that the Party relies on rule by law as its prime instrument of control (2002 187). If, as suggested above, entrepreneurs need extensive networks for success, they compound their vulnerability to arbitrarily imposed law in assuming the sum-total of individual vulnerabilities within their network. Thus, authorities can work through the various individual parties to implicate the individual target sought out.7 Thus, networks pave the road to economic success, but they also loom as vehicles for demise within this authoritarian society. Fredericksons first axiom that associates corruption with points of transaction between government and business certainly bears out in the Chinese context. Yet, the vocabulary of boundary and point of transaction presupposes a definitive, legalistic relationshipas an ethical ideal frequently breachedthat is intentionally avoided within some government-business relationships (particularly, those entrepreneurial in nature) in the Chinese quest for finding niches that can leverage advantage. (Indeed, Lucian Pye identifies the propensity to shun legal considerations and instead stress ethical and moral principles as a key cultural characteristic of Chinese negotiating1992 23). But, by comparison to the American context in which businesses tend to profit from corrupt practices at the expense of government, the Chinese setting allows government entities not only to engage businesses who seek entre into expanding markets but also to apply a rule by law that can tailor the venture to favor the interests of government and/or bureaucratic entrepreneurs. As Pye indicates, Chinese negotiators realize that in horse trading, theres always a loser (1992 80). In effect, negotiation within networks allows for extremely wide intersections between government and business that make Fredericksons first axiom all the more salient. The second assumption put forth by Frederickson speaks to self-interest as the driver of individual and (private) corporate behavior, an especially potent motivator in the absence of democratic laws and norms as checks on that behavior. Absent laws, rules, social conventions or social reciprocity, rational persons and firms will act on the basis of self interest. Here I accept the rational, utilitarian assumption and argue that it is democratic laws, rules, and social conventions that cause or influence both individuals and firms to adjust or adapt self-interested behavior in the direction of collective interests (2005 167). In the American context, the inference here is that NPM initiatives that eliminate procedural rules will maximize self-interest in the conduct of government operation while sacrificing capability to facilitate public values, such as equity and due process. Yet, in the PRC, institutional constraints on government are abjectly under-developed if they exist at all. Some liberalists expect a natural evolution of a rule-of-law and other democratic features to accmpany the emergence of a viable private sector in an emerging context (Monshipouri, 1997 237-242). Yet the supporting evidence for this claim, particularly in the Chinese context, is contestable (see Pearson, 2002 130-155). U.S. Supreme Court Justice Anthony Kennedy (speaking at the International Rule of Law Conference in November, 20058) argues that a rule-of-law can only take root if regimes take specific actions to institutionalize it. In conversation with Kennedy (at this conference), Justice Stephen Breyer added that such institutionalization depends upon the willingness of a regime and society to take a gamble that a rule-of-law will offer significant societal benefitspresumably, that gamble would involve willingness to surrender a considerable measure of governmental power. Hughes adds that the PRCs unwillingness to let go of rule by law impedes market liberalization policies called for by WTO membership[needed regulatory] laws lack a sound supporting structure to enforce them, because legal institutions and regulatory agencies are neither independent or effective (2002 196). Nonetheless, Frederickson expresses his second axiom in terms that may distinguish two cultural contexts in which government and business interact in a couple different ways. First, his initial sentence aptly conveys that in the U.S. social norms must be imposed to curb self-interest. Yet there are indications that in China self-interest and collective wellbeing flow together as merging streams rather than opposing forces. As especially evident in foreign affairs, the Chinese appear more adept working with ambiguity than Americans to seek stable outcomes through collaboration among diverse interests. Yet it is within the grist of such cooperative effort (common good) that strategic opportunity to advance self-interest arises. Referring to the contemporary Sino-U.S. relationship, Jisi relates: As this complex dynamic suggests, trying to view the Chinese-U.S. relationship in traditional zero-sum terms is a mistake and will not guide policy well: indeed, such a simplistic view may threaten both countries national interests. Black- and-white analyses inevitably fail to capture the nuances of the situation (2005 47). Thus, it has been suggested that PRC leaders chose to squelch their opposition to the U.S. war on Iraq to gain strategic advantage in subsequent dealings with the Bush Administration (Jisi, 2005, 42: Bergsten et al., 2006 141). Applied to government and business, strategic opportunity steers the Chinese toward joint ventures established on trust as a cooperative arrangement that can be leveraged over time. In the context of working with U.S. business, PRC government officialsperhaps due to Chinas historic sense of vulnerability to outsiderswant to be understood and respected by those with whom they deal (McGregor, 2005 85-91; also San, 2005). Second, Fredericksons reference to utilitarianism as central to the necessary adjustment of behavior toward collective interest warrants some comment. Connected to reluctance toward contract is an aversion to the explicit instrumentality of terms, stipulations, strings, and preconditions in governing cooperative relationships. In foreign policy, there is evidence that China claims the moral high ground in claiming lasting adherence to cooperative affairs in contrast to the U.S., viewed as acting through the prism of current expediency, such as fighting the war on terrorism (Bergsten, et al., 2006). Yet more generally, reform in various organization contextseven within state-owned enterprisesneed not be rule-directed (Meyer et al., 2002 268-270). In fact, Xin et al. suggest that goals of accountability to society and national enterprise revitalization are especially powerful in spurring on worker innovation in state enterprises (2002 440). This leads to an especially important third pointthe business-government nexus in China is better understood as symbiotic rather than dichotomous (as in the West). Schoonover advises that the term private firm may mislead since it comprises various hybrid forms of businesses representing different phases of evolutionary ownership and corresponding government involvement (2006 300). In this sense, Tsui et al. refer to this symbiosis as the entrepreneur-bureaucracy connection, wherein the emerging private economy was born out of and continues to live on business-official ties (2006 8). Since local entities typically grant corporate property rights (Li 2006 136-137), self-interests flow both ways. Private entrepreneurs seek out local politicians to serve on corporate boards in order to control local markets, thereby restricting competing entrantson the other hand, those officials could divert corporate assets or take bribes in return (Tsui et al,. 2006 16; Chen et al., 2006 149). Suffice it to say then that Fredericksons second axiom indeed has relevance in affairs of business and government in China. Clearly, entrepreneurs and politicians tend to act rationally within calculated, symbiotic relationships as extensions of guanxi (traditional social networks). Nonetheless, explicit controls (rules and contracts) to counteract such self-interest (as often imposed in the West) may be viewed as impediments to the strategic opportunities these connections promote. In reference to China, the third assumption presented appears closely related to the second. Frederickson lays out this axiom as follows: Under democratic conditions, government institutions are more public-regarding than are either nongovernmental institutions or public firms. It follows, then, that the values of justice, equality, and equity are greater in governmental institutions than in nongovernmental institutions or private firms (2005 167). Public-regardingness as an ethical abstraction can take on a number of meanings in Chinese government, three of which are worth mentioning here. First, the lowest rungs of the Communist Party (for example, the neighborhood committee) address communitarian concern for the accomplishment of public tasks within the immediate communityeven though some might object to the nature of those tasks (e.g., limiting family size) and the means of accomplishing them (e.g., forced sterilizationsee Johnson, 2004 195-196; Zhong, 2003 134-135). Second, democracyespecially as it relates to NPM initiativescould be taken as an intentional governmental responsiveness to certain external groups or even individual citizens. Some forty ICPA papers spoke to the innovation of e-government, particularly as it expedites the needs of new entrepreneurs navigating their ways through the requisite regulatory hurdles.7 In reporting on these process-oriented technologies, these scholars place a strong faith in information technology as the key to improving the quality of governmental decisionsthereby rolling back the bounds on rationality [their words in specific reference to Simons work (for example, Tu et al., 475-485)]. And thirdly, with regard to morality and virtue in government office, it can be said that the Chinese Communist Party has traditionally held office-holders to stringent standards of personal conduct.8 Public-regardingness in government could then be understood in the contexts of communitarian concern, responsiveness to customers, and official virtue. Yet suffice it to say that in the Chinese experience, it does not typically embrace those public service values, revered in the U.S. public service, that are committed to procedural fairness and benevolence for allespecially the marginalized and vulnerable in society. Nor does it embrace a robust sense of external (legal and political) accountability in support of citizen rights (Mao, 2005 1068-1069; also Hughes 2002 23-25). Still, the first sentence of Fredericksons third assumptionthat under democratic conditionsgovernment institutions are more public-regardingraises crucial speculative questions about the future of government bureaucracies should Chinas economic and social transformations succeed. Could these momentous achievements lead to a stronger sense of public regardingness in government? If it is the case that government officials stake a moral claim on the fruits of this new market economy (or on the emperors grainMcGregor, 2005 96) yet face sanctions if their deals turn sour, then this transformation reinforces private-regardingness as a pervasive ethos in government and society. Yet interestingly, this egalitarian individualism to cash-in on economic prosperity coexists with a strong sense of social accountability within worker-organization relationship (as discussed above). Finally, Frederickson concludes his discussion of defining assumption with a last prime axiom, which states the following proposition: Over time, for every increase in jurisdiction boundary-spanning transactions there will be a corresponding increase in the probability of government corruption (2005 167). More than likely, this assertion will generally hold true as the private sector expands over time in China. In comparative perspective, it appears significant that the PRC government takes the lead in widening boundary-spanning transactions in its preference for flexible joint ventures (at least with foreign business) over clear-cut contractual terms. The irony here is in the presumption that NPM-like reforms can counteract the tradition of endemic corruption in government. Rather, a select body of elite bureaucrats, accountable for their negotiating skills, seems to be replacing a bloated cadre whose advantage accrued merely through their Party membership. Thus, it appears that economic reforms, although perhaps reducing some endemic corruption, set the stage for external corruption in expanding the government-business boundary to seek advantage through successful joint ventures. NPM Ingredients in a Modified Recipe Clearly, the primary ingredients of the NPM recipecutting red tape, increased privatization and contracting-out, and downsizingcan be found in the Chinese adaptation as well. Nonetheless, the appeal for each of these initiatives needs to be understood within the PRC experience, given defining assumptions (above) underlying its governance that vary from those in the U.S. Cutting Red Tape As in the United States, the prospect of cutting red tape appeals to government leaders and academics promoting entrepreneurism in the new China. Yet it is important to identify the particular form of red tape impeding business as that having stemmed from the multiplicity of overlapping bureaucratic authorities at various levels of Chinese government. It is in this context that information technologies and government affairs service centers (see note 9) are so highly touted as innovations that can eliminate red tape (Zhang and Ruan, 2005). In the U.S., red tape of such a structural nature can be largely explained as institutional constraints limiting and decentraling government power. In the PRC however, the dense and overlapping bureaucratic structure of government has traditionally mirror-imaged the organizational composition of the Communist Partyin such a manner that party members serving on particular programmatic committees can be easily recruited into counterpart offices in government (see Zhong, 2003 57-62; 94-127). Thus, it appears that cutting red tape in the PRC amounts to wrestling day-to-day authority away from the old-Party apparatus to be placed in the hands of more professionalized administrative core in government. By contrast, the red tape that results from governmental obligations of due process, fairness, compassion and protectionof which Frederickson speaks in reference to the U.S. contexthas been historically absent from Chinese governance. In fact, a crude form of performance contracting (called the bao jia system) used first in the twelfth century still provides a template for the local implementation of the central governments domestic policies (such as rural taxation). Very little red tape can be found in the bao jia systeminstead, central government officials hold their local agents accountable to performance targets. Principals do not typically scrutinize the means by which town or village officials fulfill those contracts (Zhong, 2003 21-22; 156-157), and local agents could shirk (that is, lie or cheat) in how they account for their local circumstances. In the current period of economic transformation, bao jia takes shape as a performance discipline that holds business-savvy government officials accountable for their effectiveness in negotiating entrepreneurial deals (see Pye, 1992 64-65). It is ironic but understandable that the economic transformation that requires cutting the red tape connected with bureaucratic overlap needs procedural red tape to support its new professional apparatus. Certainly, the various civil service acts of the 1990s (adopted in an incremental fashion) facilitate a modern workforce that can integrate information technology and attract entrepreneurial talent into its ranks (Wang, 2005; Worthley and Tsao, 2005). Not surprisingly, the Party has invoked similar procedural rules for restructuring its cadre system making cadre more revolutionary, more educated, more professional, and younger, presumably to maintain its influence on government (Zhong, 2003 98) and to acquire sophistication in business finesse (Pye, 1992 64-65). In summary, it appears that China has traditionally lacked red tape associated in the West with rule-of-law but has suffered from that resulting from the close interface between the Communist Party and government. Although the Party now depends on some red tape to guide professional developmentas well as to phase-in of new corporate property rights (discussed below), government officials tend either to steer clear of red tape in negotiating joint venture arrangements with businesses or to use it selectively to shape the course of privatization. Privatization and Contracting Out In the American NPM recipe, the privatization ingredient in large part accounts for the ethical aroma of the dishin essence, it focuses upon what Frederickson calls the point of transaction, or the specifics of the deal between government and contractor. This terminology makes good sense in the buyer-seller imagery deeply ingrained in the American psyche and the long history of government contracting for capital projects (such as buildings and roads) and defense weaponry (Frederickson, 2005 170). In the Chinese experience, there is evidence that local government has used subcontracting as a means of improving management in state enterprises for some time.11 Anthropologist Eugene Cooper describes the use of cheng bao contracts as the basis for such a practice observed in a particular county, recounting that these contracts (with entrepreneurial artisans) called for an explicit distribution of contractor profits due to local governments, managers as bonuses, and reinvestment accounts (1998, 24-25 and 178). Cooper understands these subcontracting practices as precursors to the current privatization thrust of economic reform (discussed below as creeping privatization). Additionally, Doug Gutherie characterizes the interaction between state enterprise managers and entrepreneurs in terms of a shared commitment toward innovative risk-taking, whereby governmental managers appear as assertive in advancing innovation as private entrepreneurs (2002 178-164)although respective leadership skills may vary (lower among state managers; see Tsui et al., 2002 369). In the American NPM experience, privatization typically allocates public responsibilities to autonomous firms with long-standing property rights, such that the contract sets the conditions for transactions between a governmental entity and autonomous business. Walder indicates that such an arrangement is possible in China but as the extreme of a continuum between full-scale privatization and traditional state ownership. Various points in-between depict successive stages of creeping privatization wherein government officials use management contracts as means to allocate rights of asset control, income, and sale to firms in phases--hence the above references to phasing in property rights (2006 322-326). Within a global perspective, Walder shows the performance (in growth of real GDP between 1990 and 200l) of Chinas creeping privatization significantly outpacing transitional economies of Central Europe and Russia where market conversions were relatively sudden and immediate (2006 312). Associating the success of this phase-in strategy with the Communist Partys intended new role in macro-management (mentioned elsewhere), it follows that the Partys entrepreneurial elites will likely rely on similar contractual tools to exercise their regulatory and re-distributional authorities as the economic and social transformation progresses in the PRC. Downsizing What is in a word? That is the question that George Frederickson asks of downsizing as an ingredient in the American recipe for NPM. Does it mean cutting out public programs, agencies, and net jobs, or is it more a matter of hiding them in the private and voluntary sectors via government contract? Reasoning that the latter more accurately depicts the NPM reality in the U.S., Frederickson argues that hiding bureaucracy does not necessarily reduce the number of people or programs in the public sphereand may in fact increase those numbers. In the PRC, the Post-Mao reform experience has been presented as stories of numbersperhaps confusing and in dispute. Pointing to Zhus tenure as premier, one account tells of Zhu dramatically reducing the number of ineffective government institutions (from 45 ministries to 35) and the number of government employees (from 100,000 to 60,000Wang and Zhang, 2005 164 [no explanation of ineffective provided]). Yet scholarly commentaries11 on administrative reform since Mao offer a broader perspective that reveals oscillating patterns of bureaucratic shrinkage and expansion (both downsizing and up-sizing), generally reflective of the varying political agendas of successive government leaders (see Lan, 2005; Shen et al, 2005). In recent years, the word downsizing takes on specific meaning as load-shedding, or the wholesale reduction of government (and Party) jobs. At least in part, the CSIS-IIE Report characterizes downsizing as a response to Chinas accumulating (although perhaps implicit) fiscal obligation and contingent liability of various institutions (and in particular, banks) at different levels of government (2006 31-33). Hughes portrays the traditional role of banks as mere conduits through which government and Party leaders have pushed money toward state enterprisesrather than as market-competitive investment institutions. A causal chain between weak banks (not subject to government audits [40]) and downsizing generally follows this pathgovernment/Party directs funds through bank loans to state enterprises, those enterprises lack capacity to repay loans, government bails out state enterprises with subsequent loans (loans disappear like stones dropped in the sea), and thus government engages in massive downsizing to eliminate the staggering indebtedness from repetitive bailouts of state enterprises (see Hughes, 2002 39-65). Financial reforms adopted since Chinas entry into the WTO are intended to make banking more market-competitive (see Fung and Liu, 2006; Liao, 2006). From a values perspective, Party members can no longer expect their loyalties to be rewarded by long careers. Beyond this, the downsizing of state-owned companies results in substantial increases in unemployment and swelling of the urban labor supply (32). Along with the accompanying curtailment of basic government services (such as pension support, housing, and health services), these economic adversities account for citizen unrest as manifested in recent demonstrations of citizen confrontations with governmental authorities (Bergsten et al., 2006 41-42). The PRC faces a monumental dilemmait cannot continue its wholesale downsizing agenda for fear of the political upheavals likely from shutting down hundreds more obsolete state enterprises. Currently, the urban areas suffer from legions of redundant workers unemployed from downsizing (Hughes, 2002 193-194). The tradeoff for a more fiscally-sound PRC market against the losses of jobs and servicesas well as sharp increasing in inequalityhas already provoked some thought about the ethics of NPM in China (see Wang and Qin, 2005) and the necessity of a third sector in Chinese governance (see Cao, 2005; also Cai, 2005 317-318). Wang and Qin suggest that NPM-like efforts scaling back Party influence leaves an ideological, moral void needing to be replaced by a value system compatible with the new public managementhow else might citizens enduring sacrifices be expected to bestow legitimacy on this radically new approach to governance? (2005 1116-1118) And in his related essay, Cao argues the need to cultivate the third department of the society [presumably the equivalent of a nonprofit or nongovernmental sector] to undertake the service duties for the society disintegrated from the government [and] the effective way to save the government and market out of the state of being out of work (2005 401). Along similar lines, Guo and Ai use the term intermediary organization as that making up the shortage from the government and the market, suggesting that this third sector needs to activate social power (2005 188-189 [no explanation given for how]). The CSIS-IIE Report corroborates Caos and Guo and Ais appeal for a vibrant voluntary sector to attend to the social welfare void resulting from the PRCs abandonment of these functions (Bergsten et al., 2006 50). Although referring to a wide spectrum of organizations, that report speaks to the growing number (2005 estimates in excess of 8 million registered and unregistered) nongovernmental organizations in China: These growing numbers of social entrepreneurs are essential to Chinas future not simply because of they services they provide, but because they are forming the foundation of a more vibrant civil society. While environmental NGOs were the vanguards, other major areas of social entrepreneurship have opened up, including health, legal aid, and rural development and poverty alleviation (61-62). Competent Contract Managers? After reviewing the implications of NPM ingredients for American governance, Frederickson asks Are we training a cadre of government employees to be competent contract managers? (2005 175)and then concludes that we are not. Implications about such evaluative competency in the Chinese context draw upon three assertions raised above. First, the Chinese Communist Party is reinventing itself as a core of business-savvy, technologically adept elites, poised to macro-manage government toward its economic, social, and political goals. Second, those elites involved in negotiating joint ventures with private firms are held individually accountable for the successes and failures of the deals they craft. And third, with regard to the wholesale downsizing of state industries and governmental functions, recent accounts provide evidence that government officials rely on managerial contracts and evaluation as means of holding firms at various stages of creeping privatization accountable to a prescribed conversion process. Assuming their new macro-management roles, the emerging core of Party entrepreneurs take on dual roles as sophisticated negotiators in joint-venture deals and as proficient contract managers. With regard to the latter, it is significant that they are expected to perform proactively in shaping new private firms rather than simply assuming a reactive posture in monitoring behavior against the terms of a full-blown contract (more often the case in the U.S.). Based on comparative evidence of Chinas market conversion success thus far (Walder 2006), it appears that these new Party elites are becoming proficient contract managers in directing the shift of state- to private-ownership in particular firms. It also seems likely that the skillful macro-manager will need to integrate this contract development proficiency within a broader array of coordinative and regulatory competencies. Conclusion The thick context of issues, forces, and motives surrounding administrative reforms casts some doubt as to whether the PRC government actually borrowed the Wests way to sharpen the knife in reforming government. Indeed, Gauss framework of particular ecological circumstance appears a bit more apt in examining linkages among a driving economic motive, need to streamline the Party apparatus, high rates of foreign investment, and the imperative to realign (and radically reduce) the roles of government. Although it offers a less than perfect fit, Woodrow Wilsons sharpening the knife passage still invites an instructive comparison between outcomes of New Public Management initiatives in the U.S. and administrative reforms supporting Chinas drive to achieve a global economic presence. In the U.S. setting, the NPM serves as a rubric for (politically conservative) doctrines to stimulate the economy through expanding private participation, and correspondingly reducing governments direct role, in the provision of public services.13 For Frederickson, the NPM rubric essentially translates to a global public management reform, advocated by the Organization for Economic Cooperation and Development, to privatize state enterprises and reinvent government by emphasizing market competition.14 Yet in the American setting, there are few state enterprises to privatize in the first place, so it has been argued that the net effect of NPM reforms has been to stretch governments responsibilities to meet public demands while constraining its administrative capacities and resources (see Kettl, 2000 488). Yet generally, the observations discussed above suggest nearly the opposite to be the case in ChinaNPM-like administrative reforms have allowed the PRC government to abandon many of its critical public responsibilities while strengthening the Partys capacity to maintain its elite status in shaping governance and even to benefit from the fruits of the global marketplace. Clearly, Chinas drive for great economic power status forces government to confront the many political and social problems associated with a national imperative of this magnitude. Yet it also has provided the stimuli for the Party to reinvent itself to maintain its elite role at the macro-level coordinating market forces. From the Wilson passage, it appears that governmental leaders have used administrative reform as a way to sharpen not only to facilitate economic and social transitions but also to assure a significant presence for the Party in the future. Inclinations to dismiss the Partys reinvention efforts simply as rear-guard actions against the forces of market liberalization and democratization would overlook a number of key issues raised in this inquiry, among themthe continuing reliance on rule by (not of) law as a controlling mechanism over the market (and society); the competitive drive for status among a smaller, more sophisticated elite cadre; the cultural strength of guanxi (relationship) as the basis for social action; and the political resolve to control foreign direct investment in becoming a strong global player. Thus, it appears that the PRC government has enlisted reform techniques from New Public Management doctrines shaping policy in the U.S. (and elsewhere15) without changing many of its authoritarian spots. So how appealing is this Chinese adaptation of the NPM dish as compared to more traditional fare? Keying in specifically on the ethical implications (as Frederickson did), the differences may not be all that noticeable. Indeed, government priorities upon leveraging joint business ventures invite greater external corruption in addition to historic patterns of internal governmental abuse stemming from authoritarian power unchecked by a rule of law. Yet from a broader governance standpoint, the difference in taste becomes more detectablesome welcoming it as more satisfying while others finding it bitter. The new cuisine appeals to those of an entrepreneurial bent (even among peasants) intending to cash in on new business opportunities. The highly-educated and technologically skilled benefit from career opportunities not available in the past16, certainly not during Maos cultural revolution. On the other hand, PRC reforms have been especially distasteful for segments of the urban population having lost jobs and basic welfare services provided by the state and for farmers in the countryside traditionally exploited by government. Both suffer from the sharply rising inequality accompanying governmental reform and the lack of employment possibilities due to the accumulation of surplus labor in urban centersthe reason why city authorities act to restrict entry into their jurisdictions. These aftertastes appear to be mobilizing citizen discontent and unrest of critical proportion, such that the fate of the PRCs economic and social transitions may depend upon improving the recipe in the immediate future. Notes Some twenty delegates from the American Society for Public Administration (ASPA) attended the 2005 International Conference on Public Administration (co-sponsored by the Chinese Public Administration Society, ASPA, the School of Public Administration of Moscow State University, The University of Electronic Science and Technology of China, and the Chinese Public Administration Journal) in Chengdu, China, October 21-22, 2005. A published proceeding from that conference (that includes the 191 papers delivered there) offers a modest but informative set of commentaries about NPM-like initiatives prepared by Chinese scholars. Zheng adds that national policies affecting this ambitious transformation address three fundamental strategies (or three transformations): The first of these transformations pursues a new form of industrialization based on technology, economic efficiency, low consumption of natural resources relative to the size of population, low environmental pollution, and the optimal allocation of human resourcesto build a society of thrift (22). The second is to emerge as a great power through visibly peaceful means instead of an aggressive nation vying for global domination (22). And third, the PRC intends to transcend its pervasive pattern of social control to construct a harmonious socialist society (22). It is noteworthy that Kenneth Foster (2005) speaksin a tone reminiscent of Daniel Elazars classic work on American federalism (1974)of democratization as a grass-roots phenomenon sparked by municipal experimentation in governance. In analyzing the Chinese setting, Stephen Ma reveals an historically endemic, pervasive kleptocracy that is entrepreneurial in so far as it has enabled government personnel with exclusive entre to office by virtue of their Communist Party membership (2001 141-147). Against this backdrop, Ma devotes most of his commentary to Deng Xiaopings post-Mao reforms that link modernization to reforming the administrative structure, especially those institutionalizing a civil service. The Center for Strategic and International Studies (CSIS) and Institute for International Economics (IIE) are nonprofit, bi-(or non-)partisan policy research organizations that jointly sponsored Bergsten et al., China: The Balance Sheet (2006). In essence, the Chinese proverb Two people sleeping in the same bed but having different dreams refers to the goal misalignment and divergent interestsnot simply as contractual (principal-agent) problems but as logical outcomes of a cultural preference to find advantage within fluid relationships. McGregors chapter here speaks not only to a cultural preference for fluid networks of relationship, but also to the PRCs immediate need to check its dependence on multi-national corporations given its steep foreign direct investment (see Zhang, 2006 23-35), In this regard, McGregor relates how Premier Rhongi, gaining office through a pledge to crack down on smuggling, set authorities in motion to trap a well-known entrepreneurone who as a peasant began his fortune as a cigarette smugglerin order to send a message of making good on the political promise. Police apprehended family members and other individuals in Lai Changxings network who had in some way partaken of the emperors grain (and were at least marginally guilty) to get to Laidespite his escape to Canada to seek political refugee status (2005 94-125). The International Rule of Law Symposium, sponsored by the American Bar Association, was held in Washington, D.C. in November of 2005. Specifically, three U.S. Supreme Justices (Kennedy, OConnor, and Breyer) spoke at the symposium session The Role of the Judiciary in Promoting the Rule of Lawaccess  HYPERLINK "http://www.pqhp.com/aba-ceeli-05/" http://www.pqhp.com/aba-ceeli-05/. Such an interpretation of emerging democracy is embodied in the creation of government affairs service centers, local government buildings that are streamlined as one-stop-shops (adapted from the Thatcherite model in Britain) as a convenient means for citizens to interface with government (Zhang and Ruan, 2005). On a similar note, Zhang and Yi advocate for the diffusion of what they call government process reengineering, or digital government (2005 168-176). Citizen satisfaction is often mentioned as a priority in the current scholarship (for example, Guo and Ai, 2005; Guo et al., 2005). Zhong relates how virtue serves as a major criterion in evaluating job performance: Virtue refers to ones political loyalty to the Communist Party. Specifically, local cadres are required to closely identify with central Party and government policies and positions, and faithfully carry out central government policy in both word and action. Virtue also includes ones clean official behavior (i.e., free from corruption) and ones private lifestyle (e.g., free from adultery; 2003 113-114). Historically within government, buyer-seller (or principal-agent) relationships have traditionally taken on meaning with regard to interactions between officials at different levels of government. In a unitary system, one might well expect highly structured accountability relationships in the way officials answer to their counterparts at higher levels of government. Yet hierarchical accountability has borne the strains of governing in such a vast and diverse domain. Given geographic distance and cultural variation, the buyer-seller (transactional) reference in agency theory takes on meaning, especially in the context of implementing central government policies in remote areas. With tongue-in-cheek, one could dispute claims about the NPM as cutting-edge by linking it back to the twelfth century when the Northern and Southern Song dynasties introduced bao-jia as a performance system to keep their military agents honest in thwarting opposition forces in the hinterlands (Zhong, 2003 20-21). For example Lans commentary on administrative reform includes (among others) the following explanations related to the size of bureaucracy: (A) Between 1977 and 1981, many of Chinas veteran bureaucrats who had been pushed aside during the Great Cultural Revolution had their positions restored. In 1978, the State Council alone housed forty-eight administrative unitsBy 1981, it was expanded to 100 ministerial-level units (6). (B) In March1982, [the standing committee of the Fifth Peoples Congress approved reforms] aimed at (1) clarifying the job responsibilities of various units and personnel, (2) selected talented and competent leaders (revolutionary, young, knowledgeable, and specialized), (3) establishing a systematic retirement system for the veterans, (4) strengthening cadre training, and (5) reducing the ministerial cabinet department from 100 to 61 (6). (C) On March 10, 1998, [the Ninth Peoples Congress approved the plan] to streamline the central governments bureaucracy by cutting cabinet ministries from forty to twenty-nine, to reduce the size of the civil service, and to change some of the major functions of the government (8). And (D) The trajectory of Chinas administrative reforms shows that China has traveled a torturous and difficult road during the past fifty years. Its reform practices have always been top-down. They have often repeated a cycle of downsizing, expansion, downsizing again, and expanding again. These reforms kept Chinas system of governance as well and its economy alive. Chinas bureaucracy has proven to be extremely buoyant (8). Specifically, Shafritz and Russell characterize NPM as a rubric of the romance of managerialismwith managerial heroes to slay the dragons of self-serving unions and inefficient bureaucracyembraced by right-of-center interests (2003 258-270). 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