Stalemate

There is no doubt that the central-cities policy has permitted the growth of interurban economic networks. Solinger outlined the economic institutional framework built up in the Yangtze River Valley, centered at Wuhan, between 1984 and 1988.^[65] This framework, if granted appropriate authority, could help transform the economy of central China from an administrative hierarchy into a regional economic network. The framework includes the creation of a wholesale marketing network; the creation of the Yangtze River Joint Transportation Company by thirteen cities along the river in 1984; establishment of sixty-four networks in commerce, materials supply, transport, and finance, plus the Wuhan Economic Cooperation Region by seventeen cities in Hubei, Hunan, and Jiangxi provinces; and creation of five capital markets to serve the region. Despite the creation of these various networks, the question was whether they would be permitted to act in their own economic interests or whether they would continue to be controlled by government agencies at the local, provincial, or central levels.

Since 1985, when jihua danlie was implemented, relations between Wuhan and Hubei have worsened. A stalemate ensued until China's overall economic situation worsened in the second half of 1988 and, as part of a national retrenchment program and Wuhan's loss of central backing in its efforts to negotiate with Hubei, the province was able to impose its will on Wuhan economic activity once again. Prior to the retrenchment program, however, Hubei continued to exercise authority in areas where Wuhan thinks it should have authority. Provincial and

[64] I.F. 9, no. 1 (6 April 1988): 3.

[65] "The Place of the Central City in China's Economic Reform," 18–23.

municipal leaders were locked in debate, largely in scholarly journals, about the efficacy of jihua danlie . The debate involved those who oppose separation and those who think it has not gone far enough. Although the scholars do not say for whom they are speaking, those opposed to jihua danlie are voicing Hubei's opinion while the other side voices that of city officials.^[66]

Opponents base their argument on three basic factors. First, the goal of urban economic reform was to diversify into a market economy with limited planning. Separation strengthens planning by elevating another governmental actor to an active role in the planning process. Second, jihua danlie does decentralize enterprises from the province to the city, but in the absence of management system reform "nothing has changed except the grandmother."^[67] And third, the only real result has been the creation of "new contradictions" between Wuhan and Hubei, making a bad situation worse.

In my work as trade representative for the state of Ohio, based in Wuhan, I was continually mindful of the growing competition between Hubei and Wuhan. For example, prior to jihua danlie , Wuhan was always included in trade shows and other Hubei efforts to find foreign markets. From 1985 until 1988, however, Wuhan representatives were conspicuously absent from Hubei-sponsored trade promotion events. In 1988 the two began an annual, jointly sponsored trade exhibition in an effort to show greater cooperation. The competition between Hubei and Wuhan foreign trade corporations, trading companies and officials, however, became all the more obvious at these events.

Further, with jihua danlie came a division of the Bank of China, Hankou branch (the provincial branch), to exclude the Bank of China, Jianghan branch, representing Wuhan city. The Hankou branch moved to new, fully automated quarters, leaving the Jianghan branch to the old bank building. Also, the Hankou branch would not permit the Jianghan branch to cash personal checks, written in U.S. dollars, above $134, or about 500 yuan in foreign exchange certificates, even with a credit card as collateral. The Hankou branch, meanwhile, gladly cashed personal checks up to $750 if a credit card was used. This was done to limit Wuhan's ability to earn foreign exchange.

In 1988 interviews in Wuhan, Solinger also found that, in an effort to boost provincial income and to cut Wuhan's, Hubei "forbade lesser cities in the province which are still under its immediate control to order goods—such as shoes or tape recorders—from Wuhan."^[68]

Proponents of separation do not dispute the poor showing jihua danlie

[66] I.F. 9, no. 1 (6 April 1988): 2.

[67] Ibid.

[68] Solinger, "The Place of the Central City in China's Economic Reform," 28.

has had so far, but lay the blame for this on Hubei's recalcitrance and not on the policy itself. To them, separation must include granting wider powers to the cities if the policy is to succeed. "It is clear Wuhan has not been given enough power. Society is a complex system of laws, administration and economy. ... Presently administration is above law and economy. Administrative separation has not been given to Wuhan, only economic planning. Problems exist when there is a mix. It is hard to say which is which when both are present to Hubei claims the rights."^[69]

The bargaining required to find a modus vivendi and to implement policies has become tougher. The result is a vicious circle of poor policy planning or backdoor deals that only heighten mutual mistrust. "When problems arise, everyone adopts a gentlemanly attitude and sits at the table. But when their interests are involved, the result is either no solution or under-the-table bargains and the creation of new contradictions that arise from them."^[70]

My sources say it is more and more apparent that a successful negotiation will be difficult. Consequently, Wuhan has begun to ask the Center to mediate, a fact some Wuhan officials admit further alienates Hubei. Despite the Center's interest in pushing jihua danlie , it is apparent that Hubei continues to exercise authority and expects Wuhan to accept this fact. At a conference of Party and government leaders in August 1987, the provincial Party secretary, Guan Guangfu, pointedly told Wuhan it would not be permitted to go it alone: "By giving full play to Wuhan's multiple functions, the city should work in full cooperation with the whole province toward overall development. [But] ... successfully developing Wuhan needs joint efforts by the province and the city."^[71] Nine months after this admonition, however, Wuhan had yet to give up ideas of a more complete separation. My sources with the city agreed that reaching an accommodation under the original separation plan was hopeless.^[72]

By spring 1988 Wuhan's various research organizations had developed five alternatives to the original separation scheme that could be presented to the Center at an appropriate and opportune time.^[73] The first would make an effort to better define the limits of separation by making Wuhan a practice case for more local authority in administrative and legislative activities in addition to economics. Wuhan would still be attached to Hubei but would have more authority that would be better defined. The second plan would make large portions of the city a Special

[69] I.F. 9, no. 1 (6 April 1988): 2.

[70] Ibid.

[71] FBIS , 3 September 1987, 19.

[72] I.F. 9, no. 1 (6 April 1988): 4.

[73] Ibid.

Economic Zone, similar to Shenzhen. This idea has been studied at length, with a section of Hankou along the north side of the Yangtze River in the city's northeast earmarked for it.

The third plan, which gives Hubei anxiety, is to make Wuhan a provincial-level city, like Beijing, Shanghai, or Tianjin. Both the second and third plans include the fourth idea, setting aside a Special Administrative Zone within Wuhan for the provincial government, allowing it to operate under its own authority without having to move the provincial capital. Finally, there is discussion about making Wuhan a test case for an entirely market-oriented economy with no planning and little government administration of economic activity.

Though these alternatives are being prepared by Wuhan's planners, my sources had no answer as to how these plans could ever be implemented, given Hubei's unwillingness to grant jihua danlie as stipulated and the Center's lack of enforcement powers. The proposals reveal, however, what Downs might call the "excessive territorial sensitivity" of Hubei and Wuhan, which make change more difficult because it leads to irrational policy choices.^[74] Such sensitivity makes conflict between territorial actors likely. The bureaus involved, therefore, seek to minimize this conflict either by narrowing the scope of proposed actions or by ignoring their competitors and going for broke. Both reactions, which Downs calls the shrinking violet and superman syndromes, respectively, are irrational.

It is highly unlikely the Center would approve any of the final three plans, while Wuhan's financial problems eliminate the creation of a special economic zone in the near term. Given this, these options are irrational by attempting too much—that is, Wuhan planners are engaging in the superman syndrome. The first plan is more realistic, but, given China's administrative system, its lack of institutionalization and law in determining how power might be shared and how disputes are settled, it too is irrational.