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Twelve Urbanizing Rural China: Bureaucratic Authority and Local Autonomy
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Urbanizing Rural China: Bureaucratic Authority and Local Autonomy

David Zweig

As with all major shifts in rural policy since 1949, the current Chinese reforms have altered the distribution of power, authority, and resources at the county and subcounty levels. Peasants have been freed from the dependent relations that bound them to their village leaders (Oi 1985); this change allows them greater leeway to determine their crops and their avocation. Some can now migrate into other rural or urban settlements. A booming rural industrial sector, legitimized by the central government in 1984, is generating new resources, strengthening the power of lower-level officials, who control and tax these new enterprises, vis-à-vis their administrative superiors.[1] And resurgent markets and market towns revitalize both the "natural economy" and the interregional trade that crosses administrative boundaries, further weakening the influence of administrators who previously had tightly controlled all rural marketing.

But the weakening of bureaucratic power through rural reforms does not hold true for all reform policies, as the bureaucracy continues to limit the effect of many reforms on the distribution of resources and authority in the rural areas. One such policy is rural urbanization. Since


the early 1980s the state has called for increased urbanization, with the bulk of growth to occur in small cities, rural towns, and villages. Yet the process of rural urbanization shows that authority remains ensconced within the bureaucracy and distributed among the various levels within it, making bureaucratic authority, not the market, the best predictor of the outcome of decisions and the distribution of resources. County and town officials still possess important mechanisms of command and control over resources, production, migration, and economic opportunities. Although market forces are expanding, new pockets of local autonomy are developing, and county officials often must negotiate with subordinates, old patterns of authority have not decreased or changed as much as one might have predicted, given the sweeping nature of the reforms.

Rural Urbanization As An Issue Area

Like blind men studying the elephant, which aspect of the rural reforms one addresses determines one's perspective on the reforms' impact on the distribution of authority. A village-level focus may show a major transformation, as a new generation of rich peasants takes control from former production-team leaders (White 1987). The privatization of wholesale and long-distance trading would show a dramatic drop in state controls, depending on the location (Watson 1988). But studying "rural urbanization" demonstrates that a decreasing scope for the national plan need not lead to a total shift to a market economy.

This issue area is constrained for several reasons. First, unlike marketing reforms that cross administrative boundaries, these expanding settlements overlap with the existing administrative hierarchy, so prereform authority patterns persist within the reforming rural bureaucracy and community. Second, these settlements and towns remain the locus of Party and government committees and political authority at the county and subcounty levels. Towns are the site of income-enhancing opportunities, the end point of migration, and their governments own much of the expanding industrial base, allowing bureaucrats there to influence strongly the flow of people and resources.

Furthermore, the central government left responsibility for the rural urbanization process to county and county-town governments. (See the appendix to this chapter.) But limited resources for urban infrastructure lets the county influence resource allocations and maintain relations of dependency over lower levels in the hierarchy. This phenomenon mirrors that outlined in Chapter 11 in this volume.

To demonstrate how the rural bureaucracy influences the rural urbanization process I examine prereform rural settlements and administrative hierarchy and then describe administrative changes that have oc-


curred under the reforms. Then I discuss how county officials control developments in the county. Through planning, imposing development labels, and "nesting" administrative offices and enterprises within the physical boundaries of the county-towns and townships, the county has maintained significant control over localities within its domain. A study of the struggle among the county, county-towns, and townships over funds for town development will help clarify this relationship. I also show how county-town and township officials control access to the towns. In conclusion I draw some generalizations about the relationship between resources, hierarchy, and political authority as they relate to rural urbanization.

The Prereform Structure Of Authority And Settlements

In 1949 the Chinese Communist Party (CCP) inherited the Guomintang's local administrative hierarchy. Unlike the Qing dynasty, the Guomintang had established the district (qu ) between the county (xian ) and the administrative villages (xiang ) or towns. The qu was a supervisory agent by which the xian government managed the xiang , which, with a fairly well developed governmental structure, constituted the most basic level of government administration (Barnett 1965, 318–38). Large xiang, whose location made them major marketing centers, were classified as market towns, or zhen .[2]

In their ceaseless efforts to control both the economy and the political administration, the CCP extended subcounty controls. With the qu as the administrative level for organizing land-reform teams, their number doubled by 1955 and became full-scale governments between the xian and the xiang . But as collectivization increased the size of each agricultural producer cooperative, the xiang expanded to ensure continued coherence between economic and administrative organizations. As the xiang grew they began to approximate the size of the qu , so in December 1955 the disbanding of the qu left the xiang as the major administrative level below the xian (Schurmann 1968, 453). Continuing state efforts throughout the 1950s and 1960s to control private marketing killed the market town (jizhen ) as a commercial force and seat of autonomous authority.[3]


When the 1958 Great Leap Forward amalgamated the agricultural cooperatives and the xiang government and placed the headquarters of the new People's Communes in former jizhen or xiang government centers,[4] the former bifurcation of the commercial system and administrative control was ended, leaving the commune seat as a powerful node in the rural bureaucratic hierarchy, which combined economic, political, and social control.[5]

The Great Leap's failure transferred ownership and control over land and most resources to the village or subvillage production team, leaving communes and brigades with weak economic bases. County-controlled market towns, which were not commune seats—by 1978 there were only 1,100 in all of China—disappeared from view, tiny islands afloat in a collectivized countryside with which they had little contact. With commune towns serving supervisory roles for county interests (Butler 1978)—county organizations, such as the Agricultural Bank, Supply and Marketing Co-ops, and the Grain Bureau, had commune-level branches that controlled production and investment decisions, migration, financial exchanges, and labor mobilization—infrastructure in commune seats did not expand, as most investment went into production.[6]

One common trend throughout this period saw county, commune, and even brigade officials expropriate bank funds, grain supplies, and peasant labor to establish rural enterprises, expand administrative capabilities, and build a semiautonomous political-economic base (Nee 1983, 236; Zweig 1989a). On the eve of reform the commune system defined not only a spatial distribution of rural settlements, smaller villages, and fields, but also a governmental and Party hierarchy from the county to the commune, through the brigade to the village, with each unit's location and rank or status within that hierarchy determining the economic


resources under its political control, its relations to other organizations, and its economic and political power.

Administrative Structures And Changes Since 1983

Since the early 1950s the People's Republic of China (PRC) has maintained a sharp dichotomy, almost a "Second Great Wall," between urban and rural: for individuals it was their household registration; for settlements it was whether they were "designated towns" (jianzhi zhen ).[7] For both, the critical question was whether the state would share with a larger population the benefits urbanites were receiving.[8] Thus the PRC has established a hierarchy of urban and rural towns that reinforces these differences and structures the distribution of these benefits.

There are four categories of small towns in China: county seats (xian zhengfu suozaidi ), county-towns (xianshu zhen ), township seats (xiang zhengfu suozaidi ), and rural market towns (nongcun jizhen ). Their characteristics are outlined in the appendix to this chapter. As part of the urban hierarchy of settlements, county seats and county-towns are "designated towns" in that their status within the urban hierarchy has been approved by the appropriate provincial authorities according to the guidelines of the State Council (Ma and Cui 1987: 376). Both are under the direct control of the county government. County seats, sites of the county government, are most directly controlled by that government, but before 1984 over 370 of the 2,074 county seats were not designated towns.[9] County-towns include market towns and former commune headquarters—now sites of township governments—whose population and employment structure meet the necessary criteria to become towns. These guidelines have varied over the years and today they vary regionally also.[10] Since 1984 the state has


raised the status of rural towns to brake the flow of peasants into larger cities, so the number of designated towns has expanded from 2,781 (1983) to 7,956 (1985) and by 1987 to 10,280 (ZGTJNJ 1988, 23). As part of the urban hierarchy, designated towns are eligible for more benefits than their poorer cousins, the township seat and small market town.

Township seats and market towns, which are under administrative control of the township government, are at the top of the rural hierarchy and are treated as part of the rural areas. Although their population is increasing as well, they receive little state assistance and must extract funds from their own industries and the surrounding countryside to expand their urban infrastructure.

But being "designated" has both advantages and disadvantages. Designation increases a county-town's authority vis-à-vis the county government, the township around it, and the county-town's "ability and authority to manage well enterprises and units established at the town over whose affairs they must have administrative authority and responsibility" (Zhang Yuelin 1986, 98). They can levy more taxes than undesignated towns.[11] Also, the county helps former commune headquarters that are designated as county-towns before it helps those that remain township government seats. As a result, some township officials seek ways, such as padding the number of "urban" residents, to shift into the urban hierarchy. Township leaders in Jiangpu county, Jiangsu province, argued successfully that because the residence permits of agricultural workers on the nearby state farm, who ate state-supplied grain, were kept in their town's police station, the town's "urban" population sufficed to qualify it as a county-town. Since then the county has helped build new roads, a drinking-water system, and a new school.

Yet after towns become part of the urban hierarchy, county penetration can increase. The current policy to expand the county's economic role could place more bureaucrats in the county-towns (T. White 1988, 29–31). Officials in a Guangdong township resisted designation because acquiring county-town status would subject their industries to demands from the state industrial sector and stricter tax supervision (Siu 1988). Also, after a town becomes designated, the county can determine its


"developmental nature" (fazhan de xingzhi ) and make the town's economic plan.[12]

Other administrative changes have had only limited effect. Replacing the commune administration with the township government only affected the size of the area they administered.[13] Efforts to separate township Party, government, and economic structures had little impact on the real distribution of power; Party control still dominates. If these township seats do not meet the criteria of county-towns, they remain part of the rural hierarchy with the same control over the countryside that they exercised when they were the commune headquarters. Former brigades have become administrative villages (xingzheng cun ), but they are still run by the Party branch, not the village management committee. Only their size may have changed.[14]

Authority And Hierarchy Under Rural Urbanization

We now turn to an analysis of how the distribution of power within the local bureaucratic hierarchy affects rural urbanization. While numerous indicators demonstrate the distribution of authority within the rural political economy, I focus only on those related to the growth, development, and control of rural urbanization. Reform policies, by their very nature, create possibilities for reallocating resources. Thus the extent to which those resources are reallocated—compared with following the old pattern—will be a good measure of the degree to which the rural reforms have affected the distribution of power within the Chinese bureaucracy and the extent to which that bureaucracy can still affect society at large.[15]


The Special Case of Jiangsu Province

Writing about local changes in China is complicated by the vast regional discrepancies that have emerged. Although these were not insignificant under Mao, today less pressure for uniform policy implementation allows each locality's natural or historical characteristics to affect policy implementation. Therefore one must be cognizant of the uniqueness of Jiangsu province and the focal points of this discussion, Jiangpu county, outside Nanjing, where I did most of my interviewing, and southern Jiangsu (Sunan), where I also did some interviewing, but which is the primary locale referred to in many of the secondary sources used for this chapter. Jiangpu county, as a suburban county (shiqu ), may be more tightly controlled than counties in China that are not directly under a city administration.[16] However, Nanjing has contributed little to its economic development, leaving it with only average per capita income for the nation as a whole. Jiangpu's county-towns and townships are poorer than Sunan's, and rural industries, though important, are less developed. Therefore Jiangpu reflects national trends more than Sunan. However, unlike those in Guangdong and Fujian provinces, private businesses in Jiangpu were quite restricted. As of 1986 there were few private entrepreneurs in the county-towns and townships, although in 1987–88 their numbers increased. Also, there has been little migration to this area from outside the county.

Conditions in Sunan, particularly in counties in Suzhou and Wuxi municipalities, do not reflect national trends. Sunan is more industrialized and urbanized, with a tradition of small towns. For example, Wujiang county, outside Suzhou, where I carried out some interviews in summer 1988, has seven county-towns that have historically been of significant size. As county-towns they had only two vegetable brigades under their authority. Since 1983, however, six of them have been combined with neighboring townships, thus increasing their control over the surrounding countryside. The extent to which this has occurred in other parts of China is unclear; moreover, it is unlikely that there were more than a thousand towns like these Wujiang towns in all of China in the early 1980s.

Towns in Sunan also have powerful industrial bases, and these local government-owned factories inhibit private industrial activity. Wujiang county's Supply and Marketing Co-op simply "swallows" private industrial firms before they become serious competitors.[17] Also, although rural migration is a major factor in parts of rural China (Vogel 1989, 404–


5; Siu 1988), Wujiang and Wuxi factories employ outsiders mainly as construction workers. The townships treat the factories as community resources that should benefit local residents. Only one town in Wujiang county hires outside laborers. Another experimented with moving peasants into town; six hundred peasants moved in, but the policy was not introduced elsewhere in the county.

As owners of most enterprises in this area, Sunan township and county-town governments have more leverage with both peasants and the county government than governments elsewhere in China. Private enterprises may resist government demands for investment funds, but county-town governments can draw funds from factories they own far more easily. Also, county-towns in Wuxi county are wealthy, so the new "financial responsibility system" (caizheng baogan )—a new form of tax farming where each level of government has a fixed tax quota to pass up to the next level of government—makes them more independent, for with so many factories they still have enough funds for urban development.[18] On the other hand, towns in poorer areas in Jiangsu province, such as those in Jiangpu county, which rely on county assistance for urban development, remain vulnerable to county control. To this extent, Jiangpu is more representative of trends elsewhere in China, although the limited development of the private sector and the tighter constraints on migration there strengthen the town's authority vis-à-vis the peasants.

Indicators of the Persistence of County Control

As a formal level of government, the county has numerous measures for influencing local urbanization. It controls the taxation process, including the income tax for rural industries, a new value-added tax, as well as construction and commercial taxes available for infrastructural development; and since it can impose its own taxes, it can negotiate tax breaks in return for various concessions. Through its branch offices that are "nested" in the towns and townships—including the tax office, grain station, supply and marketing co-op, post office, market management committee, local police station, local branch of the Agricultural Bank of China or credit co-op, and middle school (Barnett 1965, 352–57)—it can directly and indirectly influence local development. Similarly, counties own factories, mines, forests, and other productive enterprises located within the spatial domain of county-towns or townships. Because of the


shortage of funds for town development and the major role taxes and profits from productive units play in local development, control over these enterprises gives the county significant leverage when dealing with town and township officials. Also, county investments in town development helps them control outcomes in their own favor. Other mechanisms include labeling designated towns, drawing up development plans, controlling land usage, making loans, and particularly in the case of the county seat, exercising direct administrative control.

Planning and Bureaucratic Control

Rural urbanization policy authorizes county governments to compose development plans for all county-towns, thereby increasing the county's control. In the case of the county seat, county governmental control is very tight. The plan for Zhujiang town, the seat of Jiangpu county, was composed by the county's Urban Planning Office, which reported that the town cannot evade the plan.[19] While officials from the county seat had to approve certain aspects of town construction, they had no decision-making authority: "We want total control of the town, but the county does not want to give it to us, so there is a conflict" (Jiangpu 1986). Mistrust of town planners and the large number of county governmental units in the county seat means that the county must ensure good conditions for its employees. Therefore town development is orchestrated to benefit the county, not the town, even though the county seat may benefit from better funding and urban planning.

Planning for the county seat of Wujiang county is "directly" under control of a fifteen-person County Urban Construction Leadership Small Group (Xian cheng jianshe lingdao xiaozu ), whose sole task is to develop the county seat.[20] With fourteen members drawn from leaders of various county bureaus,[21] only one person represents the county-seat government.

A critical planning question concerns land use. Under China's Land Law of April 1987 the amount of land that can shift out of agriculture is fixed at the provincial level, with quotas passed down to counties and towns. Wujiang county can appropriate 144 mou each year,[22] whose distri-


bution is determined by the county Land Management Bureau. Thus large projects using more than 3 mou of land need county authorization, further limiting county-town autonomy. County-towns have officials responsible to the county Urban Development Bureau who monitor land use and housing construction in the town and in the surrounding countryside as well. All peasants must now get permits from the town government before building new homes, even in distant villages.

But the extent of county control is unclear. If representatives of the Urban Development Bureau are indigenous to the locality, they will be enmeshed in local politics and will have difficulty denying their colleagues a chance to move onto land near the town.[23] Since towns can expropriate three mou of land without county approval, cadres can take land piece by piece for their homes, so long as the local official responsible for monitoring land usage is party to the scheme. In Tangquan town, between 1985 and 1987, all high-ranking township government officials, and many of their relatives and friends, moved into villages surrounding the town under the pretext of "town development." Inhabitants in these villages were furious, since each new home shrunk the allotment of land from which peasants made their living, but they could only send letters and photos to the provincial, city, and county governments. In response, county officials asked town officials to investigate. Thus, although the county may control large projects, town officials can ignore some county directives and expropriate land on the basis of small-town development.

Labeling County Towns

The county controls the "developmental label" a county-town receives; this in turn affects its position in the county's overall development strategy, its own budget priorities, and the type of outside assistance it receives.[24] While labels are not part of the formal planning scheme, Fei Xiaotong saw this classification process as "conducive to deciding the direction of future development of small towns" (Fei 1986, 26).

The five county-towns in Jiangpu county were labeled industrial, port, political, cultural, and tourist towns and received a development plan based on these designations. While county officials in the Urban Planning Bureau claim that the "basic direction" of development comes from the towns, the county looks at the issue from both the county's overall perspective and the needs of Nanjing city, whose Urban Planning Office has the ultimate decision-making authority. Tangquan town, a Nanjing test point for small-town planning since 1984, which had been earmarked for tourism (they had a beautiful reservoir), medicinal devel-


opment (because of their hot spring), and tree nurseries, could not get county permission to develop potentially polluting factories.[25]

But local perceptions do not mesh with the county's view.[26] Some Tangquan officials felt that their label restricted their entrepreneurial efforts; they could only seek funds for hotels, while other towns were developing industry. The county's assistance had been limited, and its plan undermined their development. The higher authorities want to bring in foreign tourism, but local officials feel that their lack of funds, equipment, and a decent road from the county seat make plans to bring in foreign tourists unrealistic.

Their plan is empty talk. We can't do it. We have our own plan which fits our reality. We put that plan forward, but the upper levels didn't agree. We want to proceed from the real situation, but they want to do it in a big way, to build a big hotel near the State Tree Farm. We have a contradiction with them, but they want to earn foreign currency. So the province, city, and county all helped draw the plan but it didn't work. There hasn't been any development.

Given that no foreign company appears willing to invest in this project, the local view appears justified. Moreover, the county planning commission is reconsidering its plan. Nevertheless, concern that the hospital and the public school were in the same building, making it easy to pass on diseases, led the county to donate over 300,000 yuan for a new school.

The degree of control incorporated in planning and labeling varies across counties. In Wujiang county, outside Suzhou, the wealth generated by township enterprises gave county-towns more autonomy (Wujiang 1987). However, in Jiangpu county, where the county-towns' weak industrial bases strengthen the county's role in the local political economy, labeling and planning were effective forces for county control, especially over county-towns needing development assistance. So long as towns depend on state budgets for construction funds and do not develop their own resources by promoting rural industries, they remain hostage to the decisions of the county government.

Nesting and Bureaucratic Authority

A widespread network of offices and enterprises owned and operated by the county government, but "nested" within the county-towns or township seats, increases the county's influence. These subbureaus or enterprises—


such as mines, forests, factories, or shops—support county-government interests when they conflict with those of the town. County-owned enterprises resist the county-towns' request for "contributions" to development funds in ways factories owned by county-towns cannot. In the cases to follow, local development efforts were undermined by the nested county bureaucracy.

In Tongli town, a county-town in Wujiang county, the county grain bureau wanted to construct two residential buildings for its staff in an area not designated as residential in the town's plan. After several months of wrangling, the town had to concede to county administrators, and the housing construction was allowed (Fei 1986, 338). Similarly, a running-water and drainage pipeline, built by Dongliu town, Dongzhi county, Anhui province, "crossed the doorway of the dormitory for the county's transportation station workers; the workers did not agree, so there was no choice but to halt the project" (Bai, Song, and Tang 1987, 57). We do not know the content of the negotiations process, but in both cases the issue was not one of political equality or negotiations among equals; rather, decisions were made in favor of the more powerful county administration.

County domination harmed development in the pre-1984 county-towns, which have been the clearest losers in the hierarchy of towns. Factories in those towns were often owned by the county government; yet, while they used local facilities and resources, the county invested little in the towns. Jobs in them were allocated by the County Labor Bureau, so county-town youths did not necessarily receive first access. County businesses such as supply and marketing co-ops in these towns were nominally led by both the county-government departments and the county-town administrators, but "they accept only the leadership of departments and ignore town leadership"; thus in 1986 county-towns that are not county seats experience the sharpest conflicts within the current administrative system (Fei 1986, 85). As county employees these nested county administrators respond to the hierarchical system (tiao-tiao ) rather than local (kuai-kuai ) leaders.

In Jiangpu county these county-towns developed poorly before 1979 (Jiangpu 1982, 139). Of the proportion of people living in all towns in the county, the proportion living in the county-towns, compared with the county seat and commune or market towns, decreased from 24.9 to 10.5 percent from 1953 to 1979, while the increase in these towns' actual population over twenty-six years was almost minimal (table 12.1). Unlike commune towns, which became the sites for commune or township enterprises, as well as of centers of political administration, these county-towns developed little industry and few administrative jobs, hence their limited population growth. Data from other parts of Jiangsu from 1984


TABLE 12.1. Urban Population Growth by Town Type, Jiangpu County, Jiangsu Province, 1953 and 1979






Rate of Increase

County seat






County-run towns






Market towns












SOURCE : "A County Directly Under the Administration of Nanjing City—A Preliminary Investigation of Small Town Construction and Development in Jiangpu County," Economic Geography , no. 2 (1982):139.

show why these towns declined. Within the older county-towns, the indigenous government owns the smallest percentage of enterprises (in output value terms) at 12.91 percent, almost 8 percent less than governments from surrounding townships and 33 percent less than the county government (see table 12.2). With little outside investment, such county-town governments have a weak tax base and little income for investment, making the county's authority dominant.

To resolve the nesting problem, county-run factories outside the county seat are expected to shift to the control of county-town governments (Zhao and Zhang 1986, 324). And nested officials in some towns and townships are to come under greater horizontal administrative (kuaikuai ) control, as county-town governments are empowered to hire, fire, transfer, reward, and penalize them (ZGNCJJ 1987a). But the nesting problem will persist. First, directors of these nested organizations will remain outside county-town and township control. Second, not only are county factories in some locations not shifting to county-town control, but some county officials are taking over lucrative former township factories after these newly designated towns come under their control.[27] Finally, because county seats have many county-government offices within them, county-government control over town development is imperative. County-level organizations in the county seat will not obey the county-seat government, which has no authority over them. Only a development committee of the county government has the authority to compel these county organizations to contribute to development projects in the county seat.

County officials have long been the most powerful institutional actors directing local development. And although market forces are decreasing the county's control over some aspects of the rural political economy,


TABLE 12.2. Ownership Composition of Industrial Enterprises in 190 Small Towns in Jiangsu Province, 1984 (by Industrial Output)


Location of Industrial Enterprises (%)

Level of Ownership

County Seats


Township Seats

County government








County-town government




Township government








Subvillage entity
















SOURCE: The Research Group on Small Towns in Jiangsu Province, "The Objectives and the Experience of Small Town Construction in Jiangsu Province," Shehuixue yanjiu (Research in Sociology), 1986, no. 4, p. 16.

NOTE : Percentages may not add up because of rounding.

patterns of authority established through forty years of economic planning continue to play a major role. In fact, as townships become county-towns, the county's formal right to dictate their development pattern increases. No doubt wealthy towns are more independent, and their ability to invest in their own future may expand under the "finance responsibility system." But for county-towns seeking to improve their urban infrastructure, county controls embodied in the labeling, nesting, and planning processes remain significant factors in their day-to-day existence.

Control Of Resources For Town Development

Small-town growth is critical for successful rural modernization (Rondinelli 1984). The almost 100 million rural laborers liberated by the rural reforms need to find work outside large urban centers. The commercialization of agriculture also increased the need for marketing centers (Tang and Ye 1986, 340).[28] Expanding rural enterprises need public services and infrastructural development, such as electricity, water, housing, and entertainment facilities. Thus the decision to expand rural towns has created a public-policy environment within which county and subcounty governments can allocate funds for expanding urban infra-


Fig. 12.1.
Sources of Funding for Town Construction


structure and industry. Figure 12.1 shows the sources of that investment. But does the county, the county-town, or the township seat control the new funds? Does the county use its influence over funds to its own benefit? What does the allocation of funds tell us about the distribution of authority in the countryside?

County-towns now receive development assistance from the county. In two county-towns in Jiangpu county the county helped build roads, drinking-water pipes, a new school, a new market, and a new housing project. Similar investments are occurring all over Jiangsu province (Tang and Ye 1986, 341). Some of these funds, such as those for schools or hospitals, originate from government ministries, such as education and public health, whose investments in the rural areas improve town life.

Yet funds for town construction are limited. A vice-minister of construction in Beijing stressed that "people's towns should be built by the people themselves."[29] Others have referred to "using the town to develop the town" (yi zhen yang zhen ) (Tang and Ye 1986, 343). But although local taxes and state budget assistance allow simply for "subsistence" governmental work (Byrd and Gelb 1988), the search for funding has


been decentralized, making the struggle over local taxes and funding a meaningful reflection of the distribution of authority in the countryside.

Taxes and Small-town Development

The county receives a variety of taxes, which it can use for rural urbanization. Although these taxes change constantly, in 1987 they included public-facility fees (gong yong shiye fei ), peasant income taxes, and local real estate or land use taxes. The income tax, paid by all rural enterprises, could take as much as 55 percent of their industrial income. Five percent of these funds are earmarked for urban construction. Recent findings show that a sales tax (or value-added tax applied to all goods produced in rural enterprises) supplies county governments with much of their funds (Walder 1989). However, it is not known for certain how this tax affects factories owned by county-towns or townships.

Still, because these funds are usually distributed to county authorities for investment in town construction, the county can invest the great majority of these funds in the county seat, not in county-towns. Although central and provincial governments stipulated that local industrial and commercial surtaxes, public utilities surtaxes, and real estate surtaxes should be used for small-town construction, "the funds they provide are too small to be of any help" (Fei 1986, 83–84). In Suzhou municipality, the sum from these three sources amounted to two million yuan, which was divided among eighteen county-towns. "But the greater part of the sum is spent on construction in county seats, while other towns get only a few tens of thousand yuan each. Many leaders of county-towns say their share is not enough even for repairing unsafe buildings in the town" (Fei 1986, 83–84). In other cases the county government keeps most of the funds for its own administrative costs. Factories in Qingyang town, a county seat, paid the county 13 million yuan in 1984 taxes, but between 1981 and 1984 county appropriations totaled only 380,000 yuan, less than 100,000 yuan a year. Although the county was expected to give the town the "three types of appropriations (san xiang bokuan ), for many years this has been empty talk" (Zhao and Zhang 1986, 325). Moreover, because the county wanted its taxes first, some of the town's projects could not get off the ground. In one instance, county officials refused to let two enterprises—which, as beneficiaries of a town-run bridge-building project, had to contribute to it—draw their 10,000 yuan contribution out of their pretax profits. State taxes had to be paid first, even though their after-tax profits were insufficient for completing the project. After three years of wrangling, the money had still not been appropriated nor had the bridge been completed (Zhao and Zhang 1986, 325). The county is extremely judicious in distributing this most popular of tax breaks.


Similarly, all enterprises owned by the county-seat government in Wujiang county pay the county government an urban-construction protection fee (chengshi jianshi weihu fei ) which is 7 percent of their pretax income. Before 1987 the county reinvested only 70 percent of these funds in the county seat, using the remaining 30 percent in other towns or projects. Thus the county used taxes and urban development to redistribute funds within the county. However, since 1987, when the county began a major project to expand the county seat, the county stopped investing in the building up of the other towns. Even in Jiangpu county, where the county government supplied the county seat with funds for administering the town—in 1985 the county gave 120,000 yuan and in 1986 it gave 260,000 yuan—much of this money came from taxes imposed on the county seat's own factories.

Yet the new "finance responsibility system," which is intended to make county-towns and townships collect taxes more aggressively and be fiscally more responsible and autonomous (ZGNCJJ 1987b), may increase county-town independence, particularly for wealthy towns that can meet their quotas. But in the case of Tangquan town, Jiangpu county officials appear to be holding onto 5 percent more funds than they should be. In summer 1988 a Tangquan official complained to a county cadre that the county had only returned 10 and not 15 percent of the expected funds. Even when the county official reminded him that the county had helped build the drinking-water system, the county-town manager argued that development assistance was separate from a policy that gave county-towns more funds for their own use. As we can see, the county was willing to invest in the town, but it tried to keep surplus funds in its own hands and thereby determine the locus of investment, rather than give the funds directly to the town. This way it could insure that most funds went to develop the county seat, where its bureaucrats live and work. Clearly the system of financial responsibility should put more taxes directly in the county-town governments' hands and help them invest in their own urban infrastructure. Yet one can feel confident that the county will use its authority to keep in its own hands as much as possible of the surplus taxes collected by the town.

Profits from Rural Industry and Small-town Development

Since township and village enterprises (TVEs) are the major source of new capital in the rural areas,[30] rural governments constantly try to control their fiscal activities (Oi 1987).[31] Poorly defined collective prop-


erty rights facilitate government interference. Although township governments, reestablished in 1984, were to separate economic and political power, they still control TVEs under their jurisdiction, making them both levels of government administration responsible for a community's development and owners of community-run enterprises (Song and Du 1990).

A major debate ensues on how much after-tax profits of TVEs should go to county-town and township governments for urban development and how much should be left in the factory. Under a 2:2:5:1 system, 20 percent of after-tax profits of TVEs goes to town development, with another 20 percent supplementing agriculture (yi gong bu nong ) (Tang and Ye 1986, 345).[32] A potentially inflated figure posits that 20–30 percent of the profits of locally controlled rural enterprises are going to develop educational and health services in small towns (Jin 1987, 34). Jiangpu county officials in the Rural Industry Bureau argued in 1986 that while 10 percent of the profits of TVEs went directly to the government that owned them, 30 percent went to these governments' industrial company (gongye gongsi ) for investment in agriculture, for building new factories, or for saving bankrupt ones. Forty percent of the funds are turned over to the local government (Jiangpu 1986).[33] According to Yok-shiu Lee's data, the percentage of after-tax profits of TVEs going to "collective welfare"—monies for rural highways, schools, theaters, and market-town infrastructure—tripled from 1978 to 1984, rising from 5.9 percent to 15.7 percent (see table 12.3).

Before 1985, when county-towns in Wujiang county did not control the surrounding rural areas, county-town leaders had difficulty in attaching the profits of township-owned enterprises that existed within their geographic domain, even though they had previously used these funds for repairing streets, roads, and bridges. Unlike the county government's superior status vis-à-vis the county seat, the legal status of county-towns


TABLE 12.3. Percentage Distribution of After-Tax Profits of Township and Village Enterprises, 1978–1984









Reinvest in TVEs








Assist agriculture








Purchase farm machinery








Farmland infrastructure








Aid to poor teams








Distribute to team membersa






Collective welfareb
















SOURCES: 1978–1979: ZGNYNJ 1980, 366.

1980–1981: ZGNCTJNJ 1985, 190.

1982: ZGNYNJ 1983, 83.

1983: ZGNYNJ 1984, 124.

1984: ZGNYNJ 1985, 181–82.

NOTE: This table was complied by Yok-shiu Lee and appeared in a draft chapter of his dissertation, Department of Urban Studies and Planning, MIT.

aTeam members here refer to those who have remained in farming jobs and not to the peasant workers.

b Collective welfare includes rural highways, schools, theaters, and market town infrastructure.

and township governments was formally the same, so leaders of township-owned enterprises simply refused funding requests from the county-town, accusing county-town officials of "levying contributions at random" (Fei 1986, 84). In fact, poorer towns in northern Jiangsu that took too much money from TVE profits for town development undermined industrial development (Tang and Ye 1986, 339–47). But the 1985 merger of county-towns and townships in Wujiang county has probably helped county-town officials raid factory profits for development projects. As a result, profits from TVEs are a critical source of funding for infrastructural development in county-towns and township seats, although the precise level of after-tax profits allocated for this investment remains unclear.

Banking and Small-town Development

While banking flexibility increased in some localities in the 1980s,[34] Jiangsu banks remained strongly influenced by county officials and were unlikely to invest in projects not approved by the county government.


Banks also became more responsible for their own profits and losses and became more independent of township or county-town officials than they had been of prereform commune officials, who took funds without authorization. So, without county guarantees or government prodding, they are unlikely to invest in such nonproductive projects as expanding urban infrastructure. Not surprisingly, banks are far more interested in investing in rural industries than in urban construction.[35]

In 1988, whether a settlement was a county seat, a county-town, or a township center affected its access to funds by determining the bank it could approach. Township governments and newly designated county-towns were to rely primarily on Agricultural Bank funds, but if the project called for capital construction, they could approach the Construction Bank for help. If the Agricultural Bank was short of funds, they could go elsewhere too, even though funds were constrained by the county's overall plan. But the county government had much more influence with the Construction Bank, which funds all large construction projects, than county-towns have, so county projects were more likely to find funding than were those of other towns.[36] In Jiangsu province, then, in the battle for bank loans, the county was likely to come out on top. County-towns that needed large funds for development projects must have their own funding or rely on the county to promote their case with the bank.

Migration Policy and Access to Towns

Town growth creates new opportunities, making access to town a scarce and valuable resource. As a result, some officials charge fees for access to town or for work permits, while others try to limit migration. In towns, peasants increase their wealth and improve their quality of life and their status. For many, work in town is more lucrative than work in the countryside. According to data from Yueyang district, Hunan province, the incomes of thirty specialized households still in their villages averaged 415 yuan per capita and 811 yuan per laborer, while incomes of specialized households who had moved to the town averaged 592 yuan per capita and 1,224 yuan per laborer (He and Zhang 1985, 31–35).

Since rural-urban migration is a contentious issue, social and legal limitations exist on peasant access to towns. Important social groups pressure


cadres to restrict peasant migration.[37] State laws allow cadres to redirect rural migrants away from the county seat and into lower-status market towns and county-towns (GWYGB 1984b, 919). Migrants must have (1) a permanent place to live in the town; (2) management skills or longtime jobs in a town enterprise or unit; (3) a license from the local Industrial and Commercial Bureau; (4) a sublease on their contracted farmland to another peasant (so land is not abandoned); and (5) an independent source of food.[38] To ensure that migrants meet these criteria, local officials in larger towns lacking public security offices (paichusuo ) were to set up "registration offices" (huqi dengji bangongshi ) (GWYGB 1984, 920) to control population flows. After migrants get to town, Industrial and Commercial Bureau officials still control the permits needed for access to marketing opportunities.[39] And in smaller towns illegal migrants probably find even fewer opportunities for illegal businesses or places to hide.

Many peasants who applied for permission to move were turned down. In Taishan county, Guangdong province, over a four-month period in late 1984, 15,000 peasants applied for permission to move to the county seat; 9,000 (60 percent) were not allowed to move (Lee 1985). In the first half of 1985, out of 4,000 prospective migrants to Longgang town, Jiangsu, only 515 (13 percent) were permitted to move (Lee 1988b). When 580 households applied to leave their villages in Changsanqiao county, Sichuan province, 369 (64 percent) failed to get permits (ZGNYNJ 1985, 101). In the town Helen Siu studied, only rural residents with immediate family members in town could register, and only as zili liang hu (households who supply their own grain).[40] In Jiangpu, as of May 1986, only 268 peasants had moved into Zhujiang town and none had changed their residence status, receiving only "residence permits"


(chang zhu hukou ).[41] Thus county-town officials still maintain serious controls over migration into town, although restraints on migration are breaking down year by year.[42]

Yet peasant migration can make county-town governments less dependent on county financial assistance. Migrants are a major funding source for new housing and buildings, particularly where rural industry is less developed. In Yueyang district, Hunan province, migrants built 62.2 percent of the floor space for new housing and shops (He and Zhang 1985, 34). In Chenggu county, Shaanxi province, peasants in 1984 contributed 5.02 million yuan toward town construction (People's Daily , 30 April 1985). And in Anhui province, average investment by each migrant household in the towns ranged from 4,700 to 15,500 yuan in 1984 (Almanac of Anhui's Economy 1985, 269–70; An Jian 1986, 25). They also pay taxes and fees for licenses, market management, land use, and construction (Tang and Ye 1986, 346).

Moreover, cadres can charge peasants fees or "rents" for access to income-increasing opportunities in these towns. Township and county-town governments charge aspiring factory workers an entrance fee, ranging from 1,000 to 7,500 yuan, calling them "workers bringing capital to factories" (gongren dai zi ru chang ). Tangquan's government, hungry for funds for industry but unable to secure bank loans, pressured peasants and village leaders to give the factory a loan. Although some villagers resisted, brigade officials persuaded them to agree (Jiangpu 1986).

A main reason for small-town development is to channel rural laborers away from big cities. But small towns have limited resources and economic opportunities, so local officials often restrict access to these towns. In the parts of Jiangsu province covered by this study, they continue to control the number of peasants moving to town. The resulting floating population in cities such as Shanghai has passed one million, making it uncertain if the small-town strategy will alleviate demands for rural-urban migration.

Conclusion: The Politics Of Rural Urbanization

Freedom at the lowest levels of rural society has expanded as both state and collective cadres have withdrawn from the daily management of


village life. But at the middle reaches of the rural hierarchy, the relationship between the county government and expanding rural settlements demonstrates the continuing role of bureaucratic authority as a determinant of resource allocations. Although one might assume that increased rural urbanization would weaken the county's control over the local political economy, I suggest that the distribution of authority has not changed as dramatically as one might have expected. County officials, through their bureaucratic positions, still control resources that either flow into these towns or are created within them. No doubt, modernization's demands for bureaucratic specialization has fragmented power within the county leadership. But findings here appear to confirm the control image offered by Lieberthal and Oksenberg and the argument that "vertical" (tiao-tiao ) authority remains more powerful than "horizontal" (kuai-kuai ) ties even under the reforms (Lieberthal and Oksenberg 1988).

Two factors affect the relationship between hierarchy and power. First, disparities in resource bases can increase or decrease the impact of hierarchy. If resource distribution is highly asymmetrical, relations between bureaucratic superiors and inferiors are even more likely to be based on a command model, leaving the inferior actor in the interaction with only obedient or supplicant behavior as his major options (unless he threatens bankruptcy, which his superior cannot accept). In the current policy environment, where expanding a town's social and economic infrastructure becomes a town official's major responsibility, officials in poorer towns could become more dependent on county officials for development assistance. And although counties also have political obligations to help towns grow, making county officials reliant on cooperation from town managers, planning, labeling, and investments have kept the county firmly in control of the development process. Even efforts to strengthen county-town and township financial bases may increase county-town officials' dependence on the county, particularly for poor towns. Under the "finance responsibility system," counties can lend funds to strengthen county-town and township governments, which the recipients must repay through judicious tax collection. While surpluses will benefit the county-town —especially wealthy county-towns with strong tax bases—shortages will be cumulative, making tax-poor county-towns, like state-owned firms, highly dependent on county government support. And even for wealthier county-towns, the county's control over the planning process allows them to set the county-town's development agenda. By financing only a part of the projects and pressuring the county-town to fund the remainder, the county may determine how the county-town invests its own funds. Such "conditional grants" are a powerful mechanism by which administrators can indirectly control lower-level governments.


The nesting process compounds the impact of hierarchy on the distribution of authority by giving county governments a core of allies who have directly penetrated these towns and who participate in county-town and township-seat government and Party meetings. County-affiliated firms and bureaus make profits and collect taxes and fees in the towns, which revert to the county government, all the while contributing little directly to the town's growth. And while new policies try to expand a town's control over county-level factories and offices within its physical domain, these units' county-level status may keep them beyond the town's political reach. As we have seen with the county seat, the new impetus for rural urbanization ensures even tighter control by the county government and undermines any devolution of authority over these nested units to the county-seat governments.

On the other hand, towns with strong industrial bases can undo some of the power disparity inherent in hierarchy. County-town and township governments that can draw on the profits of their own rural enterprises to strengthen their economic base are better able to negotiate with county officials. As in Wujiang county, unifying county-towns with neighboring townships, particularly if the latter have strong industrial bases, should weaken the county's influence. How different relations must be between county and town officials in poor counties—such as Shangrao county, Jiangxi province, where the county finances all township-level administration—and wealthy counties, such as Wuxi, where county-towns fund themselves and have a surplus that the county can tax. Though county-towns or townships in Wuxi are hierarchically subordinate to the county government, their wealth should make them stronger adversaries in the negotiations process.

Power relations among peasants and bureaucrats are affected in a similar way. Farmers who plant their land and market only small surpluses remain relatively free of state intrusions. Unlike lower-level bureaucrats who have no "exit" option, these peasants can withdraw in the face of abusive or unjust cadre demands. Clearly, independence is relative, since many resources needed for farming—such as seeds, fertilizer, pesticides, and land—remain locally controlled, making farmers dependent on local cadres (Oi 1987). But the asymmetry of power expands dramatically as common peasants, seeking access to new sources of wealth developing in and around the town, become subject to bureaucratic authority vested in town officials. As gatekeepers to the boundaries of income-enhancing opportunities—such as small shops, factories, or factory jobs—cadres are extremely powerful vis-à-vis China's common man. They can take peasant land to build their own homes, and there is little peasants can do. No doubt, wealthier peasants or those with strong family alliances possess resources to confront cadre authority. But atom-


ized individuals, stripped of their collective protection, remain in a highly vulnerable and inferior status in their confrontation with formidable bureaucratic forces.[43]

As of 1988, central control over local investment and development had decreased. Yet this devolution of central authority has not weakened bureaucratic control at the local level; in some ways it may have increased it. While forces unleashed by the commercialization of the rural economy—particularly the production and marketing of agricultural produce—no longer are monopolized by local officials, the county's control over development assistance and investment for expanding urban infrastructure at the county-town and township levels has ensured a continuing—in some locations an expanding—role for the local bureaucracy.

No doubt, rural urbanization is in its incipient stage, and the final distribution of authority derived from this process remains unclear. Efforts to reform both the financial relations between the county and the county-towns or townships and the authority relations between county-level nested units and the towns where they reside may weaken the county's authority. New resources, developing at all levels of rural society, create opportunities for redistributing authority. The prudent scholar must recognize that leaders in the emerging county-towns and townships, like their forebears in the communes, will use their political and economic authority over the countryside and their towns' critical point at the nexus between the rural and the urban economy to expand their financial and political resources. Yet a careful reading of past and current trends—tightening local finances in 1989 under the current retrenchment probably increased the county's influence—suggests that county officials through a multiplicity of channels will significantly influence the pattern of growth in the county-towns and townships and will remain the dominant force in the rural political economy in much of rural China.

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