The Relationship Between The Communist Party And The Government: Principal And Agent

The relationship between the Communist Party and the government is at the core of any Leninist political system. The Party is "the organized expression of the will of society" (Schurmann 1968, 110). It leads the work of the government (usually called by Chinese the "state," guojia ), but remains distinct from the government.

Although the Chinese Communist Party (CCP) is intertwined with the state and with the society, it is a distinct political institution.^[1] The CCP is an elite membership organization with 47.75 million members, less than 5 percent of China's total population (Xinhua , 17 June 1988). Most Party members are employed as workers, farmers, professionals, and so forth and only participate in Party activities part-time. Yet they are required to obey the direction of Party committees within their work unit and at higher levels. When I talk about the "Party" I am referring to it as a formal bureaucratic institution with over 1 million professional, full-time staff called Party cadres and a permanent structure at all levels of the political system. At the apex of the CCP is the national Party organization headed by the Standing Committee of the Politburo, the Politburo, and

the Central Committee, which are served by a Secretariat and other departments. At provincial, municipal, and county levels there are similar leadership bodies (CCP committees) and staff offices. Every agency of the national, provincial, and county governments has within it a Party committee and, until recently, a Party leading group. Although some members of these Party oversight bodies play two roles, as both government and Party officials, these bodies are clearly defined as part of the Communist Party.

The language of Western institutional economics is useful for conceptualizing the formal authority relationship between Communist Party and government: It is an "agency relationship" in which the Communist Party is the "principal" and the government is the "agent." The Party has formal political authority over the government, which does the actual work of administering the country. The Party's authority over the government is based primarily on its authority to appoint and promote government officials (nomenklatura ) (Burns 1987).^[2] The Party also sets the general policy line (luxian ), which the government implements, and oversees the work of the government. Finally, it is responsible for the ideological remolding of government cadres and of all other members of society.^[3]

The relationship is analogous to the relationship between the ruling party and the government bureaucracy in a democratic system. (In a parliamentary democracy, the majority party in Parliament appoints the cabinet and directs the work of the bureaucracy. In a presidential democracy, two principals, the president and Congress, lead the bureaucracy.)^[4] The Party politicians oversee the work of the government bureaucracy. The bureaucrats may appear to work autonomously, because the politicians intervene infrequently. But the bureaucrats know that they cannot stray too far from the preferences of their principals. If they do, they will be publicly criticized and fired by their political masters, a lesson that Ann Burford (head of the U.S. Environmental Protection Agency) and Yang Zhong (PRC Minister of Forests) learned the hard way.

The crucial difference between communist and democratic systems is

the political accountability of the principals. In communist systems the Communist Party is not formally accountable to the citizenry; it claims to reflect the will of the people by leading them toward a communist future, but there is no institutional mechanism making them accountable to citizens' present preferences. In a democracy, the politicans are elected and therefore are the agents of their constituents. If they enact policies or allow their bureaucratic agents to take actions that violate their constituents' perceived interests, they will be voted out at the next election.

Although the Communist Party has the ultimate authority in a communist polity, it cannot administer the country on its own. Like any principal in a large organization, it has limited information. The only way for a principal to solve this problem of limited information is to delegate authority to agents. The Communist Party allows the government bureaucracy to make and implement policies because the bureaucrats have better information than Party leaders can possibly have. The bureaucrats have specialized information, while the Party leaders must know about everything; the bureaucrats are close to the problem, whereas the Party leaders are remote.

Once a principal has delegated authority to its agents, the problem of control arises. How does the Communist Party know whether government bureaucrats are carrying out policies that conform with the Party's preferences? Bureaucratic agents naturally distort the information they pass up to their political masters, in order to place themselves in a good light. In democracies, elected politicians manage the agency problems of "hidden action" and "hidden information" through various mechanisms (Arrow 1985). They require regular submission of reports, hold public hearings, or enfranchise interest groups to scrutinize administrative actions. By empowering concerned groups to oversee bureaucratic agencies, they reduce the costs of constant monitoring while guaranteeing that their influential constituents are satisfied. As elected politicians, they do not need to know about all actions of appointed officials, only those actions that might displease their constituents. As Mathew McCubbins and Tom Schwartz put it, democratic politicians prefer a "fire alarm" approach to the control of bureaucratic agents to the much more costly "police patrol" approach (McCubbins and Schwartz 1984). In communist political systems, however, the Communist Party is reluctant to enfranchise constituent groups to oversee government operations; the Party's political monopoly depends on the political demobilization of the population. Without the help of citizen groups, Party leaders have a particularly difficult time acquiring information about government actions. Despite their two-thousand-year tradition of bureaucratic authoritarianism, the

Chinese are no better than any other communist regime at monitoring bureaucratic behavior.^[5]

Faced with this structural problem (and the immediate practical problem of controlling bureaucrats who had served the pre-Communist regime), Soviet Communist Party leaders in 1919 developed a method that we now call "parallel rule." The Chinese system of Party control over the government is essentially identical to the Soviet system on which it was modeled. Communist Party members are appointed to the top positions in government agencies, and in each agency all Party members are organized under a Party committee (subordinate to the Party committee at the next level). The hierarchy of government organs is overlaid by a parallel hierarchy of Party committees that enables Party leaders to supervise Party members in the government and lead the work of the government.

The Communist parties in both the Soviet Union and China established specialized functional departments at central and provincial levels to oversee the work of government economic agencies. Staffed by specialists, these Party organs for agriculture, industry, finance, and so forth gradually took over the policy-making functions from the government, especially at the provincial level.^[6] The state administrative apparatus became redundant, a "duplicate administrative structure," as Lin Biao described it in 1969 (Harding 1981, 284). The Communist Party became the locus of bargaining over economic policies. A 1953 regulation, "The Decision on the Central Authorities' Leadership Over the Work of the Government," formalized this fact: "All the major and important general and specific government policies, and all major questions concerning the government's work, must first be submitted to the central authorities for examination and approval. And only after the relevant discussions are carried out by the central authorities, and the relevant decisions or approval given by the central authorities, can major and important general and specific government policies begin to be implemented" (Zhou 1987).

The Chinese Communist Party leaders, for reasons not yet entirely clear, took the method of parallel rule even further than the Soviets. As former Premier Zhao Ziyang said, "China is one of the socialist countries most seriously afflicted by lack of separation of party and government" (Zhao 1987c).^[7] The Chinese established in all government agencies Party "leading groups" or "fractions" (dang zu ) responsible for actually administering the work of the agency. Although these institutions originated in the Soviet Union, they came to play a more significant role in China.^[8] The Party leading group within a government agency is much more powerful than the Party committee (author's interviews). The Party committee only supervises the lives and thoughts of the Party members within that agency. But the Party leading group has authority over the non-Party bureaucrats as well as those who are Party members. The Party leading group plays a decision-making role, setting policy for the entire sector (xitong ), not just for the agency.^[9] For example, the Party leading group in the Ministry of Metallurgy leads the work, not only of the ministry, but also of subordinate provincial and municipal bureaus and even of steel mills run by the ministry and bureaus. It has the authority of appointment, removal, and transfer of officials for the entire sector (Burns 1987). The Party leading group is much smaller than a Party committee, consisting only of three to five people (usually the Party secretary, the minister, and several vice-ministers). The Party leading group essentially appropriated the authority of the official heads of the government agency, creating a confusing system of dual administrative leadership.^[10]

At the enterprise level, the Chinese Communist Party also went beyond the Soviet Party in playing an administrative role (Ma 1987; Zhao 1987c). Soviet Party committees have always limited their role to supervision of Party members in the enterprise while allowing the manager full responsibility for production. The Chinese, since the Eighth Party Congress (1956), have put the manager under the leadership of the Party

committee. As Zhao Ziyang himself said in 1987, the issue of Party control over factory management became a "yardstick for supporting or opposing party leadership. ... Every time we undertook a campaign, this setup was strengthened, to the extent that the Party committees monopolized many administrative matters" (Zhao 1987c).

Under this system the Chinese Communist Party not only controlled the government with a tight, constant "police patrol," it actually substituted itself for the government. The organizational lines between the Party and government blurred, and the delegation relationship disappeared almost entirely. For example, the head of the CCP committee overseeing all the Party leading groups and committees within the agencies of the central government sat (and still sits) in the government's State Council (author's interview). The Finance and Economics Leadership Small Group, five to seven top leaders who make most of the important economic policy decisions, although formally a Party unit, was located in the government section (Northern) of Zhongnanhai when Zhao Ziyang, as premier, was in charge of economic policy; when Zhao was transferred to Party secretary, the Finance and Economics Leading Group moved to the Party section (Southern) of Zhongnanhai (author's interview).^[11] Carol Hamrin in chapter 4 in this volume describes the extent to which Party and government functions merged in all of the leadership groups that make decisions in specialized policy domains.

Such tight control could only be achieved at a tremendous price. The informational advantages of bureaucratic delegation, that is, expertise and specialization, were lost. Poorly educated veteran Party officials made policy decisions on the basis of political instincts rather than technical knowledge. Party members serving in government agencies were promoted more for political loyalty than for professional accomplishment (Harding 1981).

No longer willing to pay the price of poor-quality decisions and inefficiency, the Party leaders moved to transform the relationship of Party and government in the 1980s. The Party delegated more responsibility to the government bureaucracy, especially in economic policy-making. The Standing Committee of the State Council, meeting twice a week, took charge of the economy (although it still received recommendations from the Finance and Economics Leadership Small Group). The Politburo, having earlier abolished its specialized economic units, limited itself to setting the overall political line of economic reform and ratifying

important economic policies made by the government. At the provincial level, specialized Party departments overlapping their counterpart government departments were abolished (Zhao 1987b). In enterprises, the Party's role was reduced, and administrative responsibility was restored to managers. The CCP Constitution was revised to gradually eliminate the Party leading groups within government agencies (Renmin Ribao , 2 November 1987).^[12] Civil service reforms were proposed to establish a dual structure within the bureaucracy, a cadre of professional civil servants, selected by meritocratic examination and promoted on professional criteria, alongside the administrative officials appointed and promoted by the Party organization departments (Zhao 1987b; Yan 1988; Xinhua , 18 November 1987; Burns 1988).

The expanded discretion of the government bureaucracy is illustrated by a recent example of conflict over agenda setting in the State Council. (Agenda setting is a prerogative of the bureaucracy typical of most political systems.) In February 1988, Bo Yibo, vice-chairman of the CCP Central Advisory Commission, came to a regular State Council meeting with a commission proposal on transportation safety, probably designed to embarrass the government bureaucracy for recent accidents. Wan Li, the vice-premier chairing the State Council meeting (the premier, Li Peng, had left to participate in a Politburo Standing Committee meeting) refused to alter the agenda to allow discussion of the issue. According to the unofficial report of the incident, the State Council leaders had learned in advance about Bo's intention and had obtained Deng Xiaoping's support for sticking to the original agenda. Bureaucratic authority has widened, but at this stage it still is fragile and dependent on the support of the preeminent leader, Deng Xiaoping (Lo 1988).

The widening of government's discretionary authority did not destroy the principal-agent relationship between Party and government. Zhao Ziyang emphasized that the CCP Central Committee should retain its leadership over the government "in political principles and orientation and in major policy decisions," and continue to appoint leading cadres for central state organs; and that the provincial Party committees also should retain political leadership and personnel appointment powers.

The 1984 reform of the nomenklatura system decentralized the authority to appoint, remove, and promote government personnel to lower-level Party organizations but still left it in Party hands. Chinese leaders promise that in the future the Party will supervise the work of the government but not substitute itself for the government. Separation of Party and government will actually strengthen Party leadership of the government. "Leaders must keep very cool; they must stand high and see far, consider things carefully, and avoid getting entangled in a pile of routine affairs. They cannot truly play a leading role if they are entangled in trivia all day long" (Zhao 1987c). Another commentator pointed out that while state organs "can choose either to accept or not accept the Party's policies," if a state organ refuses to follow the Party's policies, which are "absolutely correct," "then Party organizations and Party members within the state organs should supervise and ensure the correct implementation of the Party lines and the general and specific policies, by giving play to the exemplary role of the Party members within the state organs" (Zhou 1987). In other words, if the government does not agree with the preferences of the Party, then the Party should use its authority over Party members in the bureaucracy to impose these preferences on the government.

The Party's control over the government has made the economic reform drive possible. Party leaders have the power to propose new directions for reform and prod the bureaucracy to action. The government bureaucracy would never have taken such bold initiatives on its own. Deng Xiaoping and Zhao Ziyang were able to dominate a conservative minority within the CCP to promulgate a Party line of economic reform. By making support for economic reform the current political-ideological line, the Party has made it impossible for anyone, inside or outside the government, to publicly oppose the reform drive (although people's definitions of reform vary widely). And by replacing thousands of incompetent or conservative government officials at central and local levels, the Party has empowered a new cohort of officials, eager and able to promote economic reforms.

The delegation of greater discretion to the government bureaucracy also offered substantial advantages to a Party leadership intent on economic reform. Enhancing the independence of the bureaucracy gives government officials a greater incentive to be efficient and to take actions that are economically rational but politically risky. As Tang Tsou has observed, modernization requires that the Party grant all professionals, including government bureaucrats, greater autonomy (Tsou 1983). By shifting the locus of economic policy-making from the Party to the government, reformers made it more difficult for Party conservatives

(who until recently retained their power in the Politburo) to sabotage the reform drive.^[13] And by delegating policy-making to government commissions and ministries, they devised a reform package acceptable to key economic groups.

On the other hand, Party conservatives were obviously unhappy with moves to restrict the Party's powers. Party resistance to limiting its role was even stronger at the provincial and local levels, where Party officials continued to meddle in economic affairs. Some of the formal organizational reforms, such as eliminating Party leading groups within ministries or closing down specialized Party departments in provinces, were implemented only halfheartedly and were reversed by the conservatives after 1989. Nonetheless, the locus of bargaining over national economic-reform policies was moved over to the government side, where it remained even after 1989.