One country,two experiences: administrative reforms in China and Hong Kong

Abstract

Neither Hong Kong nor mainland China is a democracy, yet both have been active administrative reformers, having achieved significant changes but continuing to operate within systematic and institutional constraints, shaped by path-dependence. Within three decades, China has been transformed from a centrally planned economy into a thriving market economy in the name of ‘socialism with Chinese characteristics’ – a form of market authoritarianism. Hong Kong, meanwhile, had prospered as part of the ‘East Asia miracle’, and been an enthusiast of public sector reform in the ‘new public management’ fashion. Their path and logic of reform have never been entirely straightforward, displaying compromises and uneasy hybrids (more so in mainland China). Though confronted with rising political challenges to governance, both are arguably still ‘success’ types in their own right. The two reform trajectories have run in arguably totally different political contexts, but there is one similarity – administrative reforms were implemented in an authoritarian setting and had embraced a strong agenda of substituting political reforms.

Points for practitioners

This article uses the case of China and Hong Kong to illustrate administrative modernization under authoritarianism. Both have been active administrative reformers over the past three decades despite not being a democracy. Though confronted with rising political challenges to governance, both are arguably still ‘success’ types in their own right. Hong Kong, along with Singapore, is rated as high achiever by the World Bank’s global governance indicators. Despite political constraints and ideological hurdles, the scale of China’s transformation of the party-state is anything but gigantic. It was held up as exemplary of an alternative growth model, dubbed by some as the ‘Beijing Consensus’, as a counterweight to the neoliberal ‘Washington Consensus’. Their experience underscores the dynamics of governance reform under institutional and political limitations.

Keywords

administrative modernization under authoritarianism administrative reform civil service reform government restructuring public sector reform reform hybrids

Introduction

With the reunification of Hong Kong and Macao with mainland China in July 1997 and December 1999, respectively, China has entered the era of ‘one country, two systems’ whereby, within a unitary sovereign nation, capitalist systems in the two cities (now ‘special administrative regions’ (SARs)) coexist with the mainland’s socialist system. Despite such systemic differences, both the mainland and Hong Kong have embarked on significant administrative reforms over the past three decades – though with distinct agendas, motivations and opportunities.

China began its trajectory of opening up and reform after the end of the Maoist era in the late 1970s. Within three decades, it has been transformed from a centrally planned economy into a thriving market economy in the name of so-called ‘socialism with Chinese characteristics’ – a form of market authoritarianism. In the process, both domestic motivations for modernization and for keeping the socialist party-state intact, as well as the influence of Western market ideas and administrative practices, have shaped the country’s reform journey. Hong Kong, meanwhile, had prospered as part of the ‘East Asia miracle’ (World Bank, 1993), and had been an enthusiast of public sector reform in the ‘new public management’ (NPM) fashion. Its administrative modernization started with the British colonial government’s attempts in the 1970s to reform the city-state so as to address the legitimacy deficit and meet rising social demands for public services and municipal management.

This article provides a short narrative of the respective reform trajectories noting their characteristics, achievements, constraints and paradoxes within different political and institutional settings, with a comparative discussion on their similarity in having displayed a form of ‘substitution’ by administrative reforms of more fundamental constitutional and political transformations to cope with governance challenges.

Administrative reforms in China: transforming a Leninist party-state

Upon the founding of the People’s Republic of China (PRC), a Soviet-style omnipresent party-state was created – with the extraction and monopoly of all resources and labour, operated through a party-controlled centralized cadre system, and state-owned production units and enterprises run by central ‘industrial ministries’. In the immediate post-Mao period, after the turbulent Cultural Revolution (1966–76) that almost paralyzed the country, the people’s communes were abolished and the life tenure system for leading cadres terminated. Deng Xiaoping, the new strongman, initially favoured political reforms in three directions: separating party and administration; empowerment and decentralization; and organizational restructuring (Yang K., 2007: 1383). Zhao Ziyang, the short-lived party General Secretary disgraced during the 1989 Tiananmen crisis, once advocated a fundamental reconfiguration of the party-state: the separation of party from government, government from enterprises, and government from society; the nationalization of the armed forces; and the establishment of a more independent legislature and judiciary. Post-Tiananmen, political reforms had become taboo, though economic reforms were given a free run, especially after Deng’s famous southern inspection tour of 1992, resulting in a rapid process of marketization and privatization. The consolidation of a ‘socialist market economy’ was finally declared at the 14th Chinese Communist Party (CCP) Congress in November 1993.

Government restructuring and downsizing

Amid the political twists and turns, a series of administrative reforms had taken place to restructure the state machinery, to downsize and streamline the bureaucracy for financial and efficiency reasons, and to redefine state functions so as to be compatible with the new marketized economic structure. Under Zhu Rongzhi, who took over as premier in 1998, a more fundamental restructuring of central government, and reformulation of state–economy and state–society relations took place – including enterprise reforms, commodification and privatization of housing and healthcare, and a process of ‘societalization’ (shehuihua) to shift welfare responsibilities away from the state-owned work-unit (danwei).¹ In 1995 large state-owned enterprises (SOEs) were required to restructure by means of merger, debt restructuring, corporatization or privatization (Tung, 1995), while small SOEs were ‘let go’, either to be sold or leased to workers or management, closed down, or simply bankrupted, under Zhu Rongji’s ‘zhuada fangxiao’ strategy (grabbing the large ones and letting go small ones). By 2008, state-owned and state-holding industrial enterprises accounted for only 5 percent of the total number of industrial enterprises, and 28 percent of the gross industrial output value, taking up only 28 percent of total investment in fixed assets and 5.5 percent of the total workforce (National Bureau of Statistics of China, 2009).

The State Council managed to shift 280 functions to SOEs, social intermediate organizations, and local governments (Song, 2001: 375–376). The separation of government from enterprises and the restriction on state growth spurred further functional and structural reforms (Huque and Yep, 2003). The once-powerful State Planning Commission was replaced by a new State Development and Planning Commission with a reduced role in 1998. The 15 industrial ministries previously controlling large sector-based SOEs were dismantled (Ngok and Zhu, 2007: 227–228). Restructuring has since focused on the management of state assets, and macro-economic control and regulatory functions. In the late 1990s, ‘service pledges’ were adopted in some cities (Foster, 2006). In March 2008, the State Council adopted the so-called ‘Super-Ministry’ mode, to cut down the number of ministries and strengthen policy coordination. Table 1 summarizes the six rounds of institutional restructuring of the central government.

Table 1.

Major administrative reforms in China from the 1980s

Reform period	Reform dates	Reform agenda/measures
The 1980s – Institutional reconfiguration	1982 reform	Downsizing (number of organs in State Council reduced from 100 to 61) Streamlining Reorganizing Imposing an age limit on government positions Increasing professionalism of public servants
The 1980s – Institutional reconfiguration	1988 reform	Downsizing (number of organs in State Council reduced from 72 to 65) Functional reorientation Separating the party apparatus from the government Separating the government from the enterprises Separation of ‘political officers’ and ‘professional officers’ within proposed civil service system (aborted) Setting up of Ministry of Personnel in charge of management and reform of cadre system Setting up of Ministry of Supervision in charge of performance and behaviour of cadres
The 1990s – Functional transformation for market economy	1993 reform	Merging and downgrading of State Council organs (total number reduced from 86 to 59) Central government personnel reduced by 20% Reducing number of specialized economic ministries and departments Corporatization Implementing state civil service system in 1993
The 1990s – Functional transformation for market economy	1998 reform	Streamlining, downsizing and merging (total number of State Council organs reduced from 59 to 53; and constituent departments from 40 to 29) Number of central-level civil servants halved Strengthening macro-control ministries; renaming once powerful State Planning Commission as State Development and Planning Commission with reduced focus on long-term development planning and macro- management functions of regulation Eliminating the 15 industrial ministries, and further corporatization Strengthening law enforcement and supervision departments and reinforcing their functions Functional reorientation Enhancing role of government in social security and social services, with establishment of a Ministry of Labour and Social Security
The 2000s – Reshaping government in response to economic globalization	2003 reform	Transforming government’s role from micro- management to macro-regulation Strengthening state assets management system by establishing State Assets Supervisory Commission Improving macro-economic control and regulatory regime by establishing State Development and Reform Commission Unifying domestic trade and foreign trade regimes by establishing Ministry of Commerce Stepping up food safety and production safety regulatory regimes in light of outbreak of SARS (severe acute respiratory syndrome) and various food and production safety scandals – by establishing State Food and Drugs Supervisory Administration and upgrading the State Production Safety Supervisory Administration
	2008 reform	‘Super-Ministry’ model adopted. The number of ministries and ministry-level organs reduced to 27. Newly reconstituted super-ministries were: Ministry of Industry and Information, Ministry of Transport, Ministry of Human Resources and Social Security, Ministry of Environmental Protection, and Ministry of Housing and Urban-Rural Construction.

Source: Adapted from Ngok and Zhu (2007), especially Tables 1, 2 and 3, with modifications and additions for 2008 by this author.

Cadre management reform and the state civil service system

The first comprehensive programme of cadre system reform was unveiled by Zhao Zhiyang at the 13th Party Congress in 1987 – envisaging a new state civil service system comprising an upper ‘political officers’ category (‘elected’ officials nominated by the CCP at national and local people’s congresses) and a subordinate ‘professional officers’ category (of career bureaucrats recruited on merit and regulated by civil service law); such a distinction was somewhat similar to the politics–administration separation practised in Western liberal democracies. Had Zhao succeeded, it was estimated that less than 1 percent of the 4.2 million cadres in 1988 would have been designated ‘political officers’ subject to direct party control (Burns, 1989). His drastic reforms were, however, opposed by both party elders and the organization departments (Lam and Chan, 1995), and were made redundant after the 1989 Tiananmen crackdown. The new Provisional Regulations on the State Civil Service promulgated in August 1993 was a compromise – establishing a new civil service regime which put merit and efficiency as the foremost institutional goals, but also reaffirming political loyalty to the party. The dichotomy between political and professional officers was replaced by the division between ‘leadership’ and ‘non-leadership’ positions, both subject to the ‘party managing cadres’ principle. Despite the call for ‘management by categories’ (Chan, 1998: 83–84), the party’s organization departments continued to exercise personnel control under the nomenklatura principle borrowed from the Soviet Union in the 1950s.

A series of new regulations and instructions followed, aiming at streamlining and modernization: e.g. on appraisal (1994); appointment, resignation and dismissal (1995); training requirements (1996); categorization of entry-level positions and fixed grades of civil service positions (1997); merit competition (1998); methods and procedures for interviews of civil servant candidates (2001); behaviour norms for civil servants (2002); and recruitment and appointment of leading cadres (2003) (Tsao and Worthley, 2009). In April 2005, the first State Civil Service Law was enacted for nationwide implementation from 2006, covering 6.5 million state employees at various levels. The new state civil service system ‘with Chinese characteristics’ represented an uneasy marriage of two different organizational logics – the Leninist notion of socialist cadreship and the Weberian notion of bureaucratic rationality. Civil servants were required to be both professionally competent and politically obedient to the party. Some see the political requirement as only a threshold while the professional requirements would become more critical in recruitment and promotion (Bo, 2002); but others were more sceptical, lamenting that political control still dominates the new system (Chan and Li, 2007).

Fiscal reforms

In 1980, a new ‘revenue-sharing’ system was introduced. A gradual process of financial devolution to local governments known as ‘fiscal contracting’ followed. This allowed local authorities to seek ‘self-reliant’ solutions that, over time, led to a proliferation of off-budget revenues (Wong, 1998, 1999). The 1994 ‘tax-sharing’ system – where taxes were divided into central, local and shared categories – was an attempt to put central–local fiscal relations on a more structured and rational footing. To mitigate provincial resistance, schemes were included to guarantee the vested interests of local governments, resulting in counter-equalization effects in favour of rich provinces (Wong, 2000). In the 1990s, major budget management reforms were implemented, including the promulgation of the Accounting Law (1993), Budget Law (1994) and Audit Law (1994). Reform of extra-budgetary funds began in 1996 and has intensified in recent times. In 1999, tripartite reforms – comprising Departmental Budget Reform, Treasury Management Reform, and Government Procurement Reform – sought to impose budget discipline by consolidating all revenue and expenditure items including extra-budgetary ones within a single departmental budget (Ma, 2009; Ma and Niu, 2006). Their implementation, however, had been uneven across and within provinces; extra-budgetary funds were often not included as a separate account at sub-provincial governments, and treasury management reforms not extended to the county level (Ang, 2009: 270). Still, some degree of legislative and audit oversight of government finance has developed to provide horizontal accountability (Ma, 2009; Yang D.L., 2004: 266–270, 278–288). In recent years the National Audit Office, which reports to the National People’s Congress Standing Committee, has played a more active role in reporting on budget implementation and financial irregularities and malfeasance.

Decentralization

Fiscal devolution and contracting in the 1980s had encouraged local governments to resort to ‘extra-budgetary’ incomes and local taxes to finance local economic growth, giving rise to regional protectionism and a local developmental age (Wong et al., 1995), with scant transparency or accountability (Tsui and Wang, 2004). Regional fiscal disparities accentuated because the rich coastal provinces were able to gain advantage by virtue of their greater political leverage supported by economic power (Shen et al., 2006). The World Bank warned of income disparities being exacerbated by fiscal decentralization (World Bank, 2003), and some recent findings supported such concerns (Zhao, 2009). The rise of localism is such that today ‘real politics in China is local politics’ (Saich, 2004: xv). Central–local dynamics had long been a feature of policy change and implementation dating back to Maoist days (Goodman, 1983). Nowadays, centrally driven reform agendas and programmes could easily be frustrated and delayed by local inaction or recalcitrance, due to a significant gap in capability between the central and local governments (Zhao and Peters, 2009: S125). Policymakers tend to perceive most local stakeholders as ‘resisters’ of change or at best passive beneficiaries, thus becoming very cautious over both the range and pace of reform (Li, 2009: 80). As the central state decentralizes and downsizes, it runs the risk of weakening its fiscal capacity and authority over provincial ‘feudal lords’ that have accumulated considerable economic and political might. There have been increasing calls for re-strengthening the central state in order to check excessive local protectionism, curb unbalanced growth by inter-governmental fiscal transfers, and impose fairer administration and more even-handed justice across the nation (Yang D.L., 2000).

Anti-corruption reforms

Anti-corruption had been a persistent theme during Maoist times, resulting in repeated campaigns to purge the bureaucracy (Harding, 1981). In the reform era, despite the restoration of the party’s Central Commission on Disciplinary Inspection and the Ministry of Supervision, supported by corresponding local organs, the new but under-developed market nurtured by a state still exercising immense administrative power had actually led to widespread bureaucratic-cum-economic rent-seeking activities, bringing corruption to a record high (White, 1996: 151). Since the 1990s, the state has taken up a corruption-fighter role to gain popular legitimacy in the absence of democratic appeal (Hsu, 2001). In January 2005, an ambitious ‘Implementation Outline for Building and Improving the System to Punish and Prevent Corruption’ was promulgated, advocating a three-pronged approach – education, institution-building, and supervision and monitoring – to combat and prevent corruption. A new ministerial-level National Corruption Prevention Bureau was established in March 2007, headed concurrently by the Minister of Supervision. Still, corruption control efforts have persistently been frustrated by enforcement constraints and caught in the politics of corruption (Cheung, 2007).

Campaign enforcement has succeeded more in deterring low-level corruption than high-stakes high-level corruption (Wedeman, 2005). Also, selective implementation is widespread – in terms of sanction, prosecution and sentencing – due to local protectionism and the broad and unchecked discretionary powers enjoyed by local anti-corruption organs which might tolerate illegal practices seen as promoting local economic interests (Sapio, 2005). Political interference, especially at the local level, has remained a major obstacle to anti-corruption work (Gong, 2006). Quah identifies three distinct patterns of corruption control (Quah, 2003: 16–17) and argues that both Hong Kong and Singapore have been highly successful in keeping a clean government and society because of the impartial implementation of comprehensive anti-corruption laws by a specific anti-corruption agency which is largely incorruptible. Mainland China has the combination of anti-corruption laws and several anti-corruption agencies, but lacks a high-power anti-corruption agency that can enforce anti-corruption laws impartially and vigorously.

Administrative reforms in Hong Kong: towards responsive administration

Hong Kong has a unique system of government. Although a free society, some 150 years of colonial rule under a British governor with almost autocratic power had nurtured an authoritarian administrative state dominated by bureaucrats (Harris, 1978: 53–61), whose legitimacy hinged on the support of business and professional elites co-opted into the executive and legislative councils, and numerous advisory committees, in a process depicted as ‘administrative absorption of politics’ (King, 1981). This was the so-called ‘executive-led’ system – i.e. government by bureaucrats (in effect the elite Administrative Officer (AO) class of civil servants) – which the new semi-democratic political system of the SAR tried to preserve after reunification with China in 1997. The city had a longstanding trajectory of administrative reforms since the 1970s, when the colonial government began to modernize, expand public services and introduce social policy reforms, supported by rapid economic growth and fiscal surplus in a political strategy to win public acceptance (Cheung, 1999). A review of the core government machinery in the 1970s led to the creation of quasi-ministerial ‘policy branches’ (renamed ‘bureaus’ after 1997) headed by super-secretaries in the Government Secretariat to strengthen the policy centre (McKinsey & Co., 1973). Another institutional innovation was the establishment of the Independent Commission Against Corruption (ICAC) in 1974 to combat widespread and syndicate corruption within the public sector. The civil service has subsequently grown to become one of the most efficient and cleanest institutions in the world.

Public sector reform in the 1980s–90s: efficiency and empowerment of bureaucracy

Public sector reform was promoted from the late 1980s onwards, in response to both the global NPM movement and Hong Kong’s domestic politics of transition prior to the reunification with China. The 1989 Public Sector Reform programme unleashed initiatives resonating NPM reforms in Britain – such as budgetary devolution, contracting out, corporatization, divestment, self-accounting trading funds, customer-orientation and performance pledges (see Table 2). Apart from management objectives, public sector reform also helped to empower the centre of policy management, with the policy secretaries given the powers and resources to hold various executive agencies (i.e. departments, trading funds, non-departmental public bodies and public corporations) accountable for performance and policy outcomes. The re-delineated bureau–department relationship, in line with the principal–agent relationship advocated by NPM, could also be seen as further extension of the logic of ministerialization of the upper echelons of government, first started by the McKinsey reforms in the 1970s (Huque et al., 1998: 146–149). As the government was run by bureaucrats, public sector reform was largely designed in a civil service-friendly manner, unlike Western NPM.

Table 2.

Significant public sector reforms in Hong Kong since the 1980s

Period	Reform measures
1980s	Devolution of authority to heads of departments to create non-directorate posts subject to limits on staff numbers and salary value. Amalgamation of line items in budget Abolition of block vote arrangement for service supply departments Introduction of inter-departmental charging
Early to mid-1990s	Launch of ‘Public Sector Reform’ (1989) Corporatization of public hospital services under new Hospital Authority (1990) Introduction of performance pledges and customer liaison/user groups (1992), and monitoring customer satisfaction Establishment of Efficiency Unit (1992) Contracting out Setting up trading funds ‘Serving the Community’ initiative (1995) Code of Access to Information Resource Assessment Exercise and Baseline Budgeting Devolution of financial resource authority to policy branches and strengthening policy management Devolution of some human resource management responsibilities to departments
From late 1990s	New management frameworks, and Managing for Results Performance Review system Improving Productivity Private Sector Participation (including contracting out, divestiture) Fundamental expenditure reviews Reinventing front-line services
1997–2002 (Tung Chee-hwa Administration, first term)	Target-based Management Process (TMP) (1997) Enhanced Productivity Programme (EPP) (1998) Civil Service Reform (1999) Step-by-Step Guide to Performance measurement
2002–05 (Tung Chee-hwa Administration, second term)	New executive accountability system for principal officials (or ministers) (2002) Amalgamation of some policy bureaus and subordinate departments Civil service pay reduction began by phases to 1997 level (2003) Review of civil service pay adjustment mechanism Voluntary retirement schemes for civil servants Target for reducing civil service establishment Use of non-civil service contracts Private Sector Involvement (PSI) – including outsourcing and public–private partnerships (PPP) Envelope budgeting ‘3Rs + 1M’ (reprioritizing, reorganizing, reengineering, market- friendly) as the direction of public management reform Partial privatization of Mass Transit Railway Corporation (MTRC) (2000) Privatization of public housing estates retail and carparking facilities – in the form of the public listing of a real estate investment trust (REIT) (2004–05) Public consultation on partial privatization of the Airport Authority (2005)
2005–present (Donald Tsang Administration)	Merger of MTRC and KCRC (Kowloon–Canton Railway Corporation) (2007) Unfreezing of civil service recruitment in certain grades (2007) Extension of political appointment system to Undersecretary and Political Assistant levels

Source: Cheung (2009), with modifications.

From the late 1990s, economic restructuring, the challenges of globalization, regime transition and the need to meet rising public expectations for better responsiveness within a partial democracy, had together induced the second phase of public sector reform (Cheung, 2009). More authority was devolved to those carrying responsibility for policy formulation and service delivery, and greater emphasis placed on serving customers and raising service standards (Efficiency Unit, 1995: 3). ‘Managing for performance’ became a key objective, with government departments required to formulate performance targets and indicators (Efficiency Unit, 2005). Resource allocation was supposed to be linked to programme needs and performance results, although in practice it was still essentially based on historical levels (Cheung, 2006). The result was to create a ‘public service state’ more in line with the changing politics of Hong Kong’s transition.

Post-1997 civil service reforms

The 1997–98 Asian financial turmoil had triggered not only the worst recession in Hong Kong for decades, but also an efficiency and political crisis. Economic downturn and continuing budget deficits lasting from 1998 to 2005 had raised doubts about the cost of the civil service and induced pressures for pay cuts and restructuring. Several post-1997 policy and administrative blunders were attributed by critics to the lack of accountability of a civil service institution. Government failure was blamed on the civil service at large and the top bureaucrats in particular. Hence, civil service reform was launched in 1999: pay adjustment reviews and pay cuts, downsizing, voluntary retirement, use of non-civil service contracts and so on, much to the opposition of civil servants. Then, with Beijing’s blessing, a new system of executive accountability for principal officials (essentially a ministerial system of political appointment) was introduced by former Chief Executive Tung Chee-hwa in mid-2002, to replace the system of government-by-bureaucrats inherited from British rule. This laid the ground for the politicization of core government – with the civil service henceforth expected to focus on vision delivery, productivity improvement, and supporting the ministers (Efficiency Unit, 2004).

Tung resigned in March 2005 and was succeeded by former Chief Secretary for Administration Donald Tsang, an ex-AO for over three decades rising to the rank of head of the civil service. Tsang opted for relying on the civil service (in particular AOs) as the principal source of talent for political appointment. Tung’s ministerial system was turned around to support a ‘government by political bureaucrats’ regime that consolidated the AOs’ power,² which was further extended by two additional layers – Undersecretaries and Political Assistants. The new regime has been less harsh on the civil service.³ Arguably even a government by political bureaucrats, prodded by rising public expectations and a developmental agenda to go for more state intervention and expansion (Cheung, 2010a), could still pursue public sector reform to facilitate a more efficient and effective achievement of its goals and targets. However, the pace of reform at large has actually slowed down, possibly because the Tsang Administration now gets bogged down in the controversies of constitutional reform and democratization, amid a decline in popularity, thus lacking political capacity to bite the bullets of drastic changes (Cheung, 2010b).

Financial management reforms and divestment

The post-1997 period saw significant inroads into financial management reforms thanks to fiscal setbacks following the Asian financial crisis (Cheung, 2006). Under the goal of ‘doing more with less’, an Enhanced Productivity Programme was implemented in 1998–99 requiring all departments to achieve 5 percent productivity gains in operating expenditure by 2002–03, complemented by new ‘Save & Invest Accounts’ to port part of the efficiency savings for use in innovation and development. New flexibilities in procurement and virement of funds were allowed. Cash budgeting and an ‘operating expenditure envelope’ system (i.e. one-line budget) were introduced from 2003–04, both to impose fiscal discipline and to facilitate intra-budget reallocation. Lump-sum grants were similarly introduced to government-subvented social service organizations in 2001. Unlike NPM reform elsewhere, privatization and corporatization have not featured prominently in Hong Kong due to the very limited number of public enterprises. ‘Privatization’ took the form of contracting-out, outsourcing, and divestment. In 2000, the Housing Authority began transferring estate management and maintenance services to private firms and staff-initiated ‘management buy-out’ companies. In the same year, the government-owned Mass Transit Railway Corporation (MTRC) sold 24 percent of its shares through public offering to local and overseas investors; the second phase of public offering, according to the planned sale of up to 49 percent, never materialized as government finances returned to a sound surplus. In 2003–04, to meet revenue shortfall, the government sold and securitized a total of HK$112 billion worth of public assets (including five government toll tunnels and one bridge-link). In 2005 the Housing Authority divested most of its retail and car-parking facilities in public housing estates, through transfer to and listing a real estate investment fund (the Link REIT). In 2007, the merger of MTRC and the government-owned land rail Kowloon-Canton Railway Corporation (KCRC) facilitated the takeover of KCRC operations by the partially privatized MTRC. The 2004 plan to partially privatize the Airport Authority, however, was subsequently shelved because of an improving fiscal condition.

Crossing paths between two trajectories: Mainland China and Hong Kong

Mainland China and Hong Kong have been moving in different institutional contexts and reform trajectories over the past few decades. At first glance, the vast difference in geographic size and socioeconomic stage of development, as well as political and administrative traditions between the two ‘systems’, would suggest that they are not comparable. Yet, even though their two reform trajectories have run in arguably totally different political contexts, there seems one broad similarity – that administrative reforms have been implemented in an authoritarian setting embracing a strong agenda of substituting political reforms. In mainland China, despite the vast changes made in breaking up or ‘modernizing’ the previous Leninist regime, the decoupling of relations (political, social, civil and economic) has remained ambiguous; in Hong Kong, the longstanding administrative logic, still operating within the post-1997 context of politicization, also faces new constraints and challenges to bureaucratic power. Furthermore, given that they coexist within one sovereign jurisdiction there is growing opportunity for interface and even some degree of mutual learning and potential convergence in the years ahead as the two systems enter into economic and social integration.

At present, their respective performance in governance varies greatly, with Hong Kong being rated much higher by some international assessments (Table 3). The unchanged nature of China’s highly authoritarian party-state means that there is a ‘political’ limit to the extent of administrative reforms. As Worthley and Tsao (1999) found in a comparative analysis of reinventing government in China and the USA, China’s administrative reforms have to be understood as an evolutionary process shaped by its political foundations, organizational realities and historical forces, making it a prominently political rather than technical exercise. Hong Kong has attempted, since British colonial rule, to modernize administration and reform the public sector without upsetting its bureaucrats-dominated ‘executive-led’ regime. In both systems, administrative reforms were used to avert, or as substitute for, more fundamental governance reform – namely democratization. China has sought to reinforce CCP one-party rule but has arguably come to a crossroads where even the premier Wen Jiabao realizes that reform of the political system is necessary to sustain economic growth (reported in Xinhua News Agency, 22 August 2010). Hong Kong now has a Beijing-approved timetable for electing both its chief executive and the whole of the legislature by universal suffrage in 2017 and 2020, respectively, which will no doubt have great institutional repercussions on the prospect of its ‘executive-led’ path.

Table 3.

China and Hong Kong, governance indicators, 2009

	Voice and accountability	Political stability	Regulatory quality	Rule of law	Control of corruption	Government effectiveness
China	5.2	29.7	46.2	45.3	36.2	58.1
Hong Kong	63.5	86.1	99.5	90.6	94.3	95.7

Source: World Bank (2009).

Note: The World Bank Indicators Project covers reports on aggregate and individual governance indicators for 213 economies over the period 1996–2009.

Administrative modernization under authoritarianism

In China, the overwhelming desire to rectify the excesses of the disastrous Cultural Revolution and ideological fanaticism of Maoist rule had unified the CCP in its determination to open up and reform three decades ago. Such extensive reform, though, was intended to save the party-state rather than to dismantle or weaken it. Despite disagreement on reform methods, there was consensus even among party reformers to uphold socialism and CCP leadership (hence the ‘Four Cardinal Principles’ written into the PRC Constitution in the 1980s).⁴ Described by Deng Xiaoping as ‘crossing the river by touching stones’, reforms were gradualist and pragmatic, characterized by shifting alliances and rivalries among different forces of change and resistance (Zhang, 2009); hence its ‘lengthy, tortuous, incremental, pragmatic, and compromising’ process (Yang K., 2007: 1383), with frequent setbacks and reversals reflecting intra-party politics. There are both great achievements in transformation as well as political and institutional restraints over the extent of change. As Zhao and Peters (2009) observe, administrative reform at the central level has been marked by continued streamlining efforts, with grassroots administrative reforms carried out and local democratization experimented with since the early 2000s. Despite ultimate party control, the new civil service system has also stood for professionalism, efficiency and accountability. Transparent administration and service pledges were advocated.

However, local government performance continues to lag behind; corruption has become rampant. Many civic organizations remain in the state’s shadow, making them ‘ineffective as counterweights to state power’ (Yang D.H., 2004). Service units, though hived off from government, are regarded politically as the tools of state, so that ‘regardless of whether market alternatives exist, the dominant reform agenda … is for them to be folded back into government bureaucracy’ (Tang and Lo, 2009: 762). This contributes to the ambivalence and ambiguities of reform which has to serve the contradictory dual purpose of modernizing governance and yet preserving the communist party-state’s supremacy and leadership – with the party acting as both the key driver of reform but also the largest counterweight to more fundamental transformation. China’s paradox is not necessarily unique. It is well recognized in the reforms literature that features of existing politico-administrative regimes are likely to significantly influence reform choices and implementation tools (Pollitt and Bouckaert, 2000: 39–61, 149–171). Despite regime limitations, the impact of China’s administrative reforms is far-reaching compared to the pre-reform administrative state which centralized political, administrative, economic, social and cultural functions. Administrative reform has often been political change in disguise. Some reformers seeking more comprehensive changes sometimes preferred to use managerialism to camouflage those reforms with profound implications in order to protect themselves from ideological attacks, especially after the Tiananmen crackdown (Yang K., 2007: 1383).

In a similar vein Hong Kong’s public sector reform has followed a path of administrative change in lieu of political reforms (Cheung, 1999) as a strategic response to rising domestic governance challenges and needs. The pre-1997 political transition caused the decline of the authority and relative autonomy of the departing British administration. The rapid expansion and growing organizational complexity of the public sector, in an increasingly turbulent and pluralist political and social context, brought about problems of policy leadership and coordination. Some of the reforms introduced by the last British governor Chris Patten as part of decolonization – like performance pledges, open government, access to information, strengthening the ministerial core – had as many political as administrative implications for the future of the city’s governance. They underpinned a bureau-shaping strategy (Dunleavy, 1991: chs 7–8) supported by NPM logic and instrumentalities. In terms of the politics of public sector reforms as a tug of war between politicians and bureaucrats – coined the ‘public service bargain’ (PSB) by Hood (2002) – China had no such PSB per se as politics and administration were fused in the Leninist logic of party-state. Hong Kong, similarly, had a tradition of bureaucratic rule. Throughout the public sector reforms in the 1980s–90s, despite the rhetoric, market-type mechanisms had to coexist and square with an institutional culture grounded in bureaucratic authoritarianism, even though of a softer, and rational and reformist, kind thanks to the liberal and rule-of-law traditions inherited from the British legacy, and an emerging electoral politics. Underneath the managerial rhetoric of NPM was a subtle legitimation agenda geared towards preserving public bureaucratic power in a new political context (Cheung, 1996a, 1996b).

The politics for extensive civil service reform only arrived in 1999, when economic and fiscal setbacks triggered by the Asian financial crisis, and the growing public scepticism of civil service performance and resentment of its super-stable employment and remuneration regime, together quickly snowballed into a credibility crisis of the new SAR government. Whatever PSB might have existed before 1997 soon evaporated. Civil service reform was then deployed to overhaul the bureaucracy and restructure core government. The new politics-driven phase of public sector reform since 2002, following the advent of political appointment, had both pro-market and civil service-sceptic connotations, emphasizing contract employment, downsizing, efficiency gains, and private sector involvement. The rhetoric and tools of reform became more aligned to the dominant global NPM discourse. However, politics and administration have not been fully divorced. Since 2007, the rehabilitation of AO power by Donald Tsang in a ‘government by political bureaucrats’ regime has imposed some checks on the NPM logic.

Indigenous traditions and motivations vs international influence

Many Chinese researchers contend that China’s administrative reforms represent a cultural and political path-dependent continuation of past reform efforts, in what could be termed a home-grown agenda (e.g. Lan, 2001; Ngok and Zhu, 2007; Yang K., 2007). Following the lines of Spence (1980) that ‘learning from the West’ had a long history in modern China, Christensen et al. (2008) argued for a ‘multi-causal’ model in which both internal and external factors were present, and in which the flow of reform ideas and the reinforcing impact of technical and institutional pressures made it difficult for leaders to avoid imitating. They also regarded imitation as part of a process of external legitimization for renewed internal momentum, even if constrained by internal institutional and cultural factors. Imitation has no doubt been prominent in China’s contemporary period of administrative reforms, but the imitation of tools or practices alone instead of accepting the whole institutional logic behind them, is at best ‘superficial’ imitation (acceptance of form instead of rationale), as opposed to ‘superstitious’ imitation (acceptance of received wisdom in the absence of any direct experience or evidence), paraphrasing March and Olsen (1976). The impact of internal versus external factors can be better appreciated by conceptualizing the former as ‘motivating factors’ and the latter as ‘instrumental factors’. The relative pertinence of externally derived tools varies contingent on internal motivations and agendas.

The CCP would only allow the importation of ‘Western’ tools and systems as long as these could serve the best interests of the party-state. This is reminiscent of the notion of ‘zhongxue weiti, xixue weiyong’ (Chinese study as the essence, Western study as the tools) espoused by imperial modernizers of the Ching Dynasty in the late nineteenth century, who saw tools as always subordinate to the essence of the country’s own administrative traditions and ethos. Confucian statecraft mandated a paternalistic order of governance, where there was a role for the Confucian scholar-bureaucracy to check and balance the emperor’s absolutist power.⁵ Such administrative traditions, interwoven with Leninist notions of a party-state, would make it difficult for any mere importation or emulation of Western management tools and mechanisms to erode the still authoritarian foundation of Chinese public administration. As Chan and Chow (2007) observed, management innovations and transfers had not been politically value-free; imported practices generating conflicts among stakeholders were easily ‘transformed into a hybrid or be transferred without substance and intended effect’ (2007: 494). In a sense the CCP reformers had tried to embrace Lenin, Confucius, Weber and Thatcher all at the same time – modernizing a socialist regime by preserving its Leninist traditions (hence party control), rediscovering the Confucian ethos of paternalistic governance and social harmony (hence resisting adversarial politics), reinforcing rational-legal ‘bureaucracy’ so as to establish hierarchy and order, as well as learning from Anglo-American managerialism and the pro-market logic of the 1980s and 1990s. The lack of a clear ideological break with the past meant that reforms were pursued only to the extent of not greatly upsetting pre-existing interests and institutions.

In Hong Kong, Britain used to provide models and practices for the colonial administration whether in policy or management. British government advisers were frequently invited to offer advice on and solutions to local problems. The modernization of the civil service in the 1970s was seen as being influenced by the 1968 Fulton Reform of the British civil service (Harris, 1988: 135–141). Public sector reform in the late 1980s similarly followed in the footsteps of Britain’s ‘Next Steps’ and financial management reforms. Notwithstanding this, it is still clear that the impetus to reform came primarily from the domestic problems of politics and administration rather than a simple wish to emulate Western practices. Even as the city embraced NPM in the 1990s, the local context was unlike the typical NPM setting of an efficiency crisis in the West as characterized by government oversize, macroeconomic and fiscal crises, New Right ideology, and party-political incumbency in favour of cutbacks (Hood, 1996). There has never been a collapse of the old public administration regime. Embracing the global NPM could at best be explained as either policy bandwagoning (Ikenberry, 1990) or using methods popularized by external practice to help achieve domestic ends or legitimize a home-grown agenda. Even though a pro-market philosophy has prevailed throughout, demands for more public services and state intervention have continued to grow due to regime change and economic pressures (Cheung, 2000, 2010a). It was only after 1997 that domestic politics and the impact of economic fluctuations together induced a more politics-driven reform agenda.

Concluding remarks: uneasy hybrids or alternative models of development?

Neither Hong Kong nor mainland China is a democracy, yet both have been active administrative reformers over the past three decades. They have made significant changes but continue to operate within systematic and institutional constraints, shaped by path-dependence. Their path and logic of reform have never been entirely straightforward, displaying compromises and uneasy hybrids (more so in mainland China) that would not appeal to a firm believer in Western-style public administration. However, a pure form of the politics–administration dichotomy has never existed in the real world. Aberbach et al. (1981) have long demonstrated an interactive and increasingly power-sharing relationship between politicians and bureaucrats. Such an understanding lends credence to Hood’s PSB thesis on ministers–bureaucrats negotiation on public management reforms. If the politics–administration dichotomy is no more than a facade, then the paths of Hong Kong and mainland China are worthy of further attention in the conceptualization of public management and administrative reforms.

NPM in Western polities has often been portrayed, especially in the popular literature, as a politics-driven reform process to borrow market wisdom and private sector practice at the expense of bureaucratic logic. This is too dogmatic and simplistic a perspective, as a bureau-shaping explanation (Dunleavy, 1991) could well argue that the senior bureaucrats were actually willing partners in NPM in order to achieve a PSB in their interests as well. In the case of a bureaucratic polity like Hong Kong and China, though confronted with rising political challenges to governance, both are arguably ‘success’ types in their own right. Hong Kong, along with Singapore, is rated as a high achiever by the World Bank’s global governance indicators, performing even better than the OECD average – with the only shortfall being in its democratic deficit (Kaufmann et al., 2010).⁶ Despite political constraints and ideological hurdles, the scale of China’s transformation of the party-state is anything but gigantic. It has just surpassed Japan as the second largest economy in the world (after the US) in mid-2010. Because of its impressive economic performance, China was held up as exemplary of an alternative growth model, in contrast to the ‘end of history’ market-democracy type that fuelled the spread of NPM globally in the post-Cold War period. Its achievements have even led some to acclaim its path of development and modernization as the ‘Beijing Consensus’ (Ramo, 2004) as a counterweight to the neoliberal ‘Washington Consensus’. Indeed, as Nathan (2009: 38) observed, ‘the Chinese system as an authoritarianism [is] of a still poorly understood new type, one that mixes statism with entrepreneurship, political monopoly with individual liberty, personalist power with legal procedures, repression with responsiveness, policy uniformity with decentralized flexibility, and message control with a media circus’. China’s deviations from the standard liberal democratic prescriptions led Kaufmann and Kraay (2002) to suggest the possibility of ‘growth without governance’, directly challenging the ‘good governance’ paradigm that often goes hand in hand with NPM.

Hong Kong, because of its British legacy and positioning as a global city, will continue to look for inspiration and good practices from the Western developed world, and be the most liberal, international and Westernized city within Communist-ruled China. However, its growing economic and social integration with the mainland after reunification will facilitate more exchange of administrative experiences and institutional practices, and its immersion in the national administrative fabric and infrastructure (e.g. participating in national plans, matching mainland policy moves, cross-boundary cooperation and mutual learning), with increasing mutual impact. Hong Kong may well find it beneficial or politically expedient to learn from the mainland’s development experience; in the same vein, as and if Hong Kong embarks successfully on a new post-colonial route of administrative reform with results, there is also good reason to believe that other cities of China will follow in its footsteps. Hong Kong’s cautious steps in democratization may likewise bring insight to the mainland. The risk of remaining authoritarian coexists with the opportunity for liberalization. The growing politics of responsiveness and representation, accompanied by the need to sustain economic accumulation and development in an increasingly competitive global environment, are inducing the rise of a development-oriented regime in Hong Kong different from the typical East Asian regime only in degree. Such partial (or soft) developmentalism may lay the ground for closer affinity with China’s developmental state in the future.

Footnotes

Notes

Professor Anthony B.L. Cheung is the President and Chair Professor of Public Administration of The Hong Kong Institute of Education, as well as the Director of the Institute's Centre for Governance and Citizenship. His research interests are: Asian administrative reforms, new public management, and government and politics in Hong Kong and China.

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