Interview with Tony Saich: Philanthropy, Governance, and Future Challenges

China Development Brief

This article contains the remaining parts of an interview with Tony Saich, director of the Ash Center for Democratic Governance and Innovation and Daewoo Professor of International Affairs at the Harvard Kennedy School. The interview was conducted by CDB’s Tom Bannister and Yimei Chen in September 2014 when Professor Saich was attending the China-US Strategic Philanthropy (CUSP) workshop. In his capacity as Ash Center Director, Tony also serves as the director of the Rajawali Foundation Institute for Asia and the faculty chair of the China Public Policy Program, the Asia Energy Leaders Program and the Leadership Transformation in Indonesia Program, which provide training programs for national and local Chinese and Indonesian officials. The first part of the interview can be found here.


TB: You are now writing the fourth edition of a book called The Governance and Politics of China. The first edition was published in 2001, what changes have been made between all of these editions?

AS: Some things haven’t changed. The basic structures of government, the basic structures of the Party, in a book like this still need to be explained. What does the Politburo supposedly do? What does the State Council supposedly do? And so on. However what stunned me was that I finished writing the last one in 2010. I thought it will be simple, just scribble a few things. So much has changed, it is unbelievable. It doesn’t matter which area you look at. There’s been the leadership transition of course but the policy shifts with respect to what they’re now trying to do with economic policy, the renewed push on corruption, social policy expansions since the social insurance law in 2010, I don’t think I covered that either in the last book. The growth of new wealth, the increasing role of social media, I think there what has really interested me is how a lot of Western predictions about new social media have been proven wrong. That the government can actually manage new social media much more effectively than many of us thought in the past. The environmental challenge that has now become obviously a core thing facing the new leadership.

I have added a completely new chapter around urbanisation and urban-rural relations. Some of it was buried away in different parts but that has become such a core part for the challenge of the new leadership moving ahead over the next 10-15 years that I decided to pull it out into a discussion about what makes for a good strategy for urbanisation and how do you deal with the challenge of integrating so many migrant workers. In Chinese I don’t use the phrase chengzhenhua(城镇化), I use the phrase chengshihua(城市化)because I think chengzhenhua is problematic in that it’s very difficult through small town development to create enough jobs and create enough infrastructure to satisfy the urbanisation drives. There’s also a study by CDRF (China Development Research Foundation) and DRC (Development Research Center of the State Council), which shows that if you have a strategy based on small town development rather than one on integrating more effectively the large cities, the amount of extra land it needs is a huge difference and given that declining arable land is a major problem in China, I think more concentrated development would be more beneficial. Chinese cities are less dense now than they were 10 years ago. You’ve got this whole problem of urban sprawl and my fear is if you concentrate on chengzhenhua, that tendency to sprawl is going to increase and be very problematic. So that’s one thing that I talk about.

The other thing is who pays for integrating migrants into urban services? My argument is that’s a central government responsibility because local governments can’t take it on. Why do I say it’s a central government responsibility? Because what I talk about is a transition debt or transition problem. You have a number of these transitional issues, some of which are unresolved, some of which have been resolved because of the shift from an old system to a new system and clearly this whole thing around household registration is one of the transition problems. My view is that it’s a responsibility of the central government to fund it fully, to be able to provide the social welfare infrastructure for migrants coming in. So that’s a completely new chapter and it talks about inequality and so on.

In the final chapter of the book where I look at future challenges, I look at new social media, environment, corruption and political reform which were in the last edition but quite a lot has happened in all those areas except the last one, political reform. So it was more than just updating, it was actually quite a significant rethink and rewrite of a lot of it and in the original versions I had an extensive chapter on ‘49-78 and I’ve compressed the history ‘49 up to 2012 into one chapter in part because it’s not to say that ’49 through ’78 is not important but I tried to distil more thematically what things shaped the paths that reform could take after 1978 whereas before I had a bit more of a blow-by-blow account of the Cultural Revolution, Great Leap Forward, Soviet Plan and so on. That’s dealt with much more briefly and in a more thematic way than before and I tried to dwell much more on really the periods of rule of Jiang, Hu and Wen and into the present. So I carved out the space for a new chapter which just looks at the Xi Jinping and Li Keqiang period of leadership and the kinds of reforms that they are trying to introduce so it finished up being a lot more work than I thought.

And then I’ve used these surveys I’ve been doing of what Chinese people think of the government and we did the last survey in 2011. What is interesting is that in Hu-Wen years, satisfaction increased with government, particularly at the local level. I mean it’s still low but at the very local level it improved and those in the rural areas, their perception improved the most were the poorest and I think that’s indicative that some of Hu and Wen’s policies, the yiliaobaoxian(医疗保险 – medical insurance)and the dibao(低保, short for 城市居民最低生活保障 – Minimum Livelihood Guarantee Scheme)did filter through and have some effect. It was very noticeable the poorest’s satisfaction rates went up perhaps the steepest in the rural areas. Actually, sorry this is going on too long, but going back to the chengzhenhua issue, what becomes quite clear through the surveys is the problem of governance and satisfaction is deepest in the zhen(镇– towns)and the xiang(乡 – townships. In big cities, yeah everybody grumbles, but on the whole they think government officials are pretty competent. High levels of satisfaction in the villages derive in part because of these policy initiatives and when we see a kind of a gap where satisfaction is lower it is in the smaller towns. So again that raises questions about the quality of governance and if you are going to focus your urbanization strategy around that it becomes a challenge. I wrote a book with Hu Biliang called Chinese Village, Global Market that deals with some of these issues.

CY: That’s right. Would you like to talk about it?

AS: I only thought about it because of this question of urbanisation. One of the strategies of course has been to urbanise the countryside. There if you think about what has been successful, it’s where really it’s been natural urbanisation rather than administrative urbanisation and again going back to the book, one of the things that I look at is whether a process of administrative urbanisation over the long term can be really successful – my answer is no. The book I did with Biliang is about a village called Yantian in Dongguan, Guangdong. I first went through that village in 1976 and it was what you’d expect: it was rice fields, water buffalo, little houses and so on. Quite a poor area. Now that has all changed. At its peak it was home to over 400 foreign-invested factories, 150,000 migrant workers but only 3,000 people with the village hukou and registration. So we called it Chinese Village, Global Market. It’s really the story of development of one part of China, about its integration into global production chains. But it’s also interesting because 70% of the people in the village have the surname Deng. And they built a Citang(祠堂 – Ancestral Hall)where they have every Deng since 900 listed and of course a special room for Deng Xiaoping who they also claim as part of their zu(族– clan). But the Deng clan control everything, I mean 6 of the 7 on the Party committee xing(姓 – are surnamed)Deng, 5 of the 6 in the Cunweihui(村委会– Village Committee) are Deng, 6 of the 7 or 5 of the 6, I can’t remember, of the Shareholding Economic Cooperative have the surname Deng and the only person in the Party Committee who’s not surnamed Deng looks after women’s affairs and guess what her husband is called? Deng. So she’s surnamed Li but her husband is surnamed Deng.

It’s very interesting, what they’ve done is through the Shareholding Economic Cooperative they’ve basically locked up the wealth for the 3,000 for generations to come. It pays out a dividend every year and it’s a sealed entity, you can’t buy into it. You can pass it on when you die to your children. So I think what they’ve looked at, and there’s a lot of villages in south China now like this, that should they become a Shiqu(市区–Urban District)or should the village elections genuinely expand to include the migrant workers, potentially they could lose political power but all the economy now is locked up in the Shareholding Economic Cooperative and the migrant workers can’t get into that and it’s a lot of money. It spins off a lot of money each year for those who are in it and then they have their own businesses on top of that.

TB: On the surveys that you mentioned, you said the last survey was in 2011, would there be any significant changes if the survey was carried out in 2014?

AS: I don’t know, is the honest answer to that. All I can talk about is the trends of what we saw and I would think those trends would have carried on through. Almost every year, and this would certainly be the case this year, given what Xi Jinping has targeted, they’ve highlighted corruption as the area of government public service they’ve found most unacceptable. I would think responses to that would be even stronger now because it has now been legitimized by the government.

I would think the other trend you would see is in terms of concerns about environmental health and environmental investment which was slowly over the years beginning to move up, particularly in the major urban areas, but also in the small towns as well. When we first started the surveys it didn’t really register particularly highly but certainly by 2011 it was beginning to creep into the category we have of being something that people thought was an important problem to deal with but where they were not satisfied with government provision. But I think the overall situation would remain the same, it’s what you’d expect, they see the government good at building roads, good at building hard infrastructure, but they really want government to focus on the challenges which have been wrought by rapid economic change and have made families vulnerable.

Again, it would be interesting to look at some things like the Rural Cooperative Medical Insurance Scheme because in the villages in 2011 or so, this whole question of medical insurance was a big priority but satisfaction is improving. It will be interesting now that the scheme has been running for a number of years. Are citizens still as satisfied as when it was just being introduced? So that would be an interesting thing I think to look at.

I suspect the disaggregation of the state would still continue because that has not fundamentally changed, it’s still local government that has to provide the overwhelming amount of funding to provide public goods and services and as you know, health, education, social security, over 90% of the spending is at local government level and sometimes provincial, sometimes county level. It’s only in transportation that it drops to 70% and that’s because of the high speed rail investment, I don’t know what it would be by 2014-15 or something. So I would imagine you would still have the differentiation between that and the overall satisfaction with the higher level government. I suspect that the things about who the local government officials represent, those figures might have got a little bit worse because now the Party’s talking so much more about corruption, particularly corruption at local levels. People might feel more willing again to speak out about their dissatisfaction.

The high point of satisfaction in fact was 2009 and I think that was because of the Olympic Games and the response to the Sichuan earthquake. People were generally feeling that government was doing a good job. By 2011 it had begun to, not drop, but tail off and fall a little bit again. So it would be interesting to see, has the trend declined? Has it stayed relatively stable? I doubt it’s gone up because media and government propaganda does influence the way people respond and I think it’s the Chinese government now that are saying things are so terrible about corruption and so on. I would imagine people pick that up and say yeah, things are really terrible, it’s awful. So I would imagine that might well be reflected through the survey.

CY: According to your teaching experience with them, what are government officials’ perceptions about the not-for-profit sector?

AS: A lot of what we focused on in the early years of the teaching programme was about financing big infrastructure projects, how you build up that kind of infrastructure and so on. Then what you saw increasingly as the programme went along, was a shift to more interest in social policy which is, how do you set up programs, how do you think about social welfare, how do you think about equity, how do you think about a framework for structuring social welfare and giving. And then these last two years as I’ve said they wanted to focus specifically on urbanisation. But urbanisation in a broader sense which also includes of course, shehuiguanli(社会管理–social management), although they now talk about shehuizhili (社会治理, social governance). And it’s interesting that there’s a lot more willingness to accept within government, the idea of co-production, that is government in partnership with other organisations or government contracting out services. I used to teach a case with them about two different models of working with NGOs. One is on a vaccination campaign and they love that because it’s basically the idea of a bridge. The government has set a policy: vaccinate all the kids. Government doesn’t have the capacity to do it so they find a big NGO, this is in Bangladesh, who then carries out the programme and so it’s all top-down.

I then do one with them on the slums in Karachi where the government doesn’t do anything and it’s much more about organisation within society and bottom-up where it has to take on government apathy, there’s much more conflict in it. They’re much more uncomfortable with that case. What I say is that in some ways,allowing organisations within civil society can actually mobilise more resources than the government top-down approach. I dropped this case study for a number of years because they just didn’t want to hear the message. Then I revived it and found much more acceptance, still a bit uncomfortable, but there’s an interest. So how do we mobilise resources within the community and so forth? So I would say there’s a lot more receptiveness now to not thinking about government being the sole actor in development. Probably still the most important one but accepting it has to be in partnership and that a number of services need to be delegated.

One of the things I was talking with them about was then how do you ensure you don’t get corruption in that process of contracting out? Again, they are very interested in that. So I think there has been a mental shift, I think there’s no doubt about that. That they recognise this is inevitable. I think a lot of it is now how do you manage it and control it so government still sets the agenda. I would say when we started the programme just a very small percentage were receptive to that. It was still very much the mentality of buxuyao(不需要 – don’t need), you’ve got the government!

TB: There’s a line in an article that you had published in 2000 which reads something like “a focus on vertical integration and lines of administrative control […] ignores important horizontal relationships in society.” How have these horizontal relationships changed since you wrote the article?

AS: I think Chinese scholars and Western scholars have always imposed more order on China than is really the case. In the institute that I used to teach at in Holland, our director really was a reader of Confucian texts and really believed that traditional Chinese society was ordered on a Confucian basis. We had another professor who was a Daoist and he believed the reality was horizontal Daoist connections. So he would say ‘yeah, by day people put virtuous Confucian reporting upfront and by night they operate in the Daoist environment’. And I think a lot of that has continued into the present day, that there’s an official line, a vertical line of reporting. Everybody says whatever the mandate is and then people actually going out, organising in a completely different way, that works around it or finds a way round it. I think that’s what has been the success of Chinese reforms. The real credit should be with the Chinese people. They’re the ones who have been innovative, they’re the people who have kept things going. So Chinese society I think has always had a tremendous ability for auto-organisation. It’s something Tim Brook has written about.

What would the difference be from when I wrote that? I suspect it is just more publicly visible now than it was before. In the countryside, it’s the temples, it’s the miao(庙– temple), it’s the hui(会– associations)which organise a lot of issues of reciprocity, which deal with a lot of things. Informal mediation is returning. In Shanghai they are trying to institutionalise informal mediation mechanisms to keep things out of formal court procedures and so forth, there’s a lot of experiment going on there. So I think Chinese society has always had this horizontal organising which cuts across vertical flows of information or virtuous couplets from Confucius or virtuous slogans from the Communist Party and people find a way and kind of flow around it. So I think it’s one of the most important things and I also think, why I call it a negotiated state is that I really do think most things in China are negotiated. I think between bureaucracies, between society. Now that doesn’t mean you don’t get oppression, you don’t necessarily get bad outcomes at certain times but things are just very fluid and people find a way. So that’s what kind of gives it the vibrancy.

My suspicion is that the horizontal organising principles are as strong as ever. I think what is different is that the Party is slowly coming recognise this reality. I saw it in the 18th Party Congress report of Hu Jintao, where the most important sentence I noticed was zhengshefenkai(政社分开 separation of government and society). It was the first time I’d seen it in an official document. This really begins to open up this possibility that communities and social organization can represent itself and this goes back to where we started: what does this mean in terms of charity, philanthropy, and giving. China has a tremendous history of local place associations; temple giving, clan organisations and so on. I think what is remarkable is how resilient those traditional mechanisms for organising have remained.

TB: My final question: you’ve been involved with China since 1976 which is quite a long time. Does the country continue to surprise you?

AS: Well the answer is of course, yes. I mean I wouldn’t have kept hanging around for so long if it didn’t keep surprising me. You know, on occasion, I’ve been amongst the doomsayers; the walls are all going to come down, it’s going to fall apart. It’s just stunning that it’s just kept going. I mean if you think about the huge challenges that China’s faced and it’s somehow found a way to get through is quite extraordinary. In the mid-‘90s everybody was saying qiyegaige(企业改革– Reformation of State-Owned Enterprises), that’s going to be the end. How can you let loose 50 million industrial workers? But when I started talking to a lot of the workers it was very interesting and they bought into the ideas that this was a good thing and what they said to me mostly was OK look, we realise we’re finished. We just hope that our kids will have a job and a better future if these processes of reform go through. So to go through that, to go through the financial crisis and so on.

I think just the inventiveness continually amazes me. I am less happy in China than I used to be and I find it a meaner place than it used to be. It’s much harsher, much more brutal, much more self-interested than before I find. And that’s an outcome of reforms but every now and again you come across people doing amazing things and you think wow, OK, this place really is still fascinating. And that’s why I got more interested again in some of these challenges around the new philanthropy. I kind of got bored in the things I was doing before and I’m not sure they were that fruitful. So it will be interesting to look at.

CY: Do you see a new philanthropy in China too? Are you talking about the movement or the new wealth?

AS: I’m not necessarily talking about the new wealthy because some of them I don’t think have particularly philanthropic sentiments. What I am thinking about is really those who are interested in seeing themselves as the Rockefellers or the Carnegies, or the Bill Gates of the new China. And do want to think about questions of social justice, giving back, social equity. I would broaden that into companies that try and seriously think about Corporate Social Responsibility as well and I think those are areas that are quite exciting for the future and development. And they’re all part of delegating some responsibilities to society, away from government. Of course a lot of the enterprises are government-run but not all of them. So I think it’s an interesting area and the challenges remain huge. They are fairly obvious. There’s no rocket science about it. One of the major products of the reform process has been huge environmental degradation and pollution and food safety issues. I think that is perhaps the biggest threat to the Communist Party because they produced it with their policies and I think the important thing is it’s something that affects everybody. A lot of other policy areas affect one group, not another group. This doesn’t matter whether you’re rich or poor, a government official or a farmer, it affects you and it affects your family and it affects your children. So I think that’s a massive thing for the Party to take on and the incentives are poorly aligned to meet those objectives at the moment. That’s a huge issue.

Aging of course. Everybody says China is going to be the first society to grow old before it grows rich. We don’t know what the consequences of that are or what those will be. So obviously a clear set of issues. If China doesn’t get urbanisation right that’s going to be a huge problem. Where are you going to generate the GDP growth, the employment and so on? The most frightening thing I saw in The China Daily over the weekend was this guy who just 3D printed 30 houses, which from an environmental perspective is great but where are these migrants going to work if you’re building by printers? So I think there’s going to be huge challenges about the informal sector and labour. Where are these people going to work? What are they going to do? That’s going to be a massive challenge.

The obvious other issues are related to political structures. Good luck to the Communist Party if they can manage this process of transition and they can provide the kind of transparency, the kind of accountability that you need as a society modernizes, as you get more diverse influences, as you get an increasingly affluent middle class, good luck to them. No-one else has ever done it so it would be interesting to see. So I think the huge challenges around matching government structures to the development of society will be crucial.

Interview by Tom Bannister and Chen Yimei

Reviewed by Patrick Burton

Edited by Patrick Burton

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