The Mayor's Office

The mayor's office is the ultimate source of authority for all decisions on investment and taxation. To be sure, there are regulations and guidelines regarding taxation and industrial investment issued by the Finance Ministry, Central Bureau of Taxation, State Planning Commission, and other central-government agencies. But these guidelines leave broad discretionary powers to local authorities, who have wide latitude in granting tax breaks and who have an abiding interest in directing investment to those sectors high on their development plans.

Unless the enterprise involved is substantially funded by a province or a central ministry, the mayor's office is the appeal of last resort in disputes over these issues. Usually it is only the largest or most controversial cases that are sent to the top for resolution. But such cases are brought to the top with enough frequency that in Dalian a "policy coordination group" (zhengce xietiao xiaozu ) has been established by the mayor's office, headed by the vice-mayor in charge of industry, to foster the prompt resolution of all of these questions; its members include the heads of the

[22] I suspect that Party bodies in each of these units play an important role in decision-making processes, but in my interviews I was unable to uncover their role. It is manifestly unclear, however, whether there is a meaningful distinction to be drawn between the leadership of a bank or a government agency and the Party committee of that unit, since Party committees and groups invariably include members of the top administrative leadership. I would suspect that especially in important and controversial decisions much of the influence exerted in these matters is actually brought to bear through this "shadow" network of committees. Some research on Hungary, for example, has documented the fact that a factory manager's membership in higher-level Party bodies, controlling for the size of the enterprise, is positively correlated with preferential credit and investment decisions (Maria Csánadi, "On the Structure of Political Decision-making," in The Hungarian Economy: Theoretical and Empirical Analyses , ed. M. Tardos, et al., London: Routledge and Kegan Paul, 1989). While this gives us additional detail about bargaining positions and influence processes, Party bodies still must operate within the institutional frameworks described here, because it is through these institutions, and not Party organs, that finances flow.

[23] In Shenyang, the planning and economic commission does not have the rank and power of its counterparts in Beijing. There the mayor's office still makes almost all of the decisions through a recently established economic-adjustment office (jingji tiaoji bangongshi ). It apparently uses the planning commission primarily as a planning bureau (interview 110, July 1986).

finance, taxation, price, and labor bureaus. When the mayor's office has spoken on such a matter, that is the end of the issue, at least for the current year.