INTRODUCTION

The Soviet Union and China represent the largest and most strikingly different cases of communist resilience and collapse. In both countries, new leaders, Deng Xiaoping in 1978 and Mikhail Gorbachev in 1985, rose to power, having inherited crises of varying dimensions. Both leaders were determined to revitalize and reinvigorate the ruling parties and redirect their peoples’ energies in new, more productive directions. The Soviet regime failed; its transformative quest unleashed forces that led to the end of communist party rule, the partition of the USSR into its fifteen constituent union republics, and the loss of its superpower status. In contrast, Deng Xiaoping and his successors succeeded in transforming China into a world-class economic and rising military power by maintaining a remarkable growth rate averaging 10 percent for thirty years. Extraordinary social, economic, and cultural transformations took place. Communist rule survived, showing a remarkable capacity to adapt to new circumstances.

This chapter offers four explanations for these drastically different outcomes. The periods covered are 1985–1991 in the Soviet Union and 1978–1992 in China. First, collapse and resilience were largely due to decisions by leaders and their anticipated and unanticipated consequences. The most important difference in the roles of leaders pertains to Gorbachev’s support of political liberalization and Deng Xiaoping’s decision to suppress it. Political liberalization refers to the opening up of a dictatorship to free political participation, media, and the right to organize autonomous political groups. In the Soviet case, it was closely linked to democratization, meaning competitive elections in party and state. In sharp contrast, China’s dominant leader, Deng Xiaoping, restricted political reforms to repairing the damage suffered by political institutions during Mao Zedong’s Cultural Revolution and adapting authoritarian rule to the requirements of a modern state and of the gradually emerging market economy. The Chinese Communist Party’s (CCP’s) monopoly of power was preserved. Fending off demands for political liberalization has enabled the CCP to maintain its monopoly to this day.

Introduction

Contemporary China faces two fundamental challenges: building the administrative capacity appropriate for a ‘socialist market economy’, and accommodating the increasingly strong pressure for political participation and accountability. In rural China, where developmental policies coexist with predatory local state practices, both these challenges come into play. This chapter deals with burdensome irregular and unpredictable taxation, which has caused peasant resistance, confronting the central government with the task of constructing a system of revenue raising that would fund public goods while minimising abuses of taxpayers by local authorities.

There is a long history of conflict around rural taxation in China. Eighty years ago, Thomas Millard (1926) commented that, in China, ‘revolutions start with the tax collector’. Revolutions and violent resistance are at one end of a continuum of possible responses to abusive taxation and arbitrary imposition of fees. Coercive revenue collection may provide resources to the state, while creating perceptions of unfairness and arbitrariness. Yet fair and predictable behaviour on the part of public agents – and some kinds of clear benefits in return for tax contributions – matter a great deal in building viable states and fostering political participation and accountability. If revenue raising is to make a genuine and lasting contribution to increasing state capacity, governments need to curb extraction and secure societal cooperation.

HISTORICAL comparison can often yield telling clues about contemporary problems. To a remarkable extent, taxation as an issue in state–peasant relations in the 1990s echoes China's prerevolution past. Then as now, regimes appeared unable to devise, implement, and enforce a fair, equitable, and reasonably honest system of taxation. Then as now, regimes relied heavily on informal, ad hoc ways of funding governmental activities. Then as now, informal levies gave rise to widespread corruption. Then as now, the authorities had difficulty determining just how much households owed in terms of land and other taxes. Then as now, rural taxation was a major source of grievance and social instability.

The aim of this chapter is to illuminate the continuities and differences in the Chinese history of rural taxation by briefly examining the imperial and Republican periods as well as the Communist revolution and the Maoist era.

RURAL TAXATION IN IMPERIAL CHINA

China was an agrarian economy. Land taxes were the major source of revenue for the imperial government. As Table 2.1 indicates, the land tax plus surcharges (haoxian) together accounted for more than two-thirds of total revenue.

Because of their dependence on the agricultural population, most Chinese emperors adhered to a low-tax doctrine. They thought of themselves as Confucian benevolent rulers whose task it was to nourish the people. They feared that encroaching on peasant subsistence would threaten dynastic legitimacy and lead to disorder, if not rebellion.

FOR more than fifteen years China's top leaders called for the “lightening of the peasants' burden,” a term that referred to the imposition on villagers of “unreasonable” ad hoc fees, fines, local taxes, assessments on peasant households, or apportionment of governmental expenses among them. Some of these were authorized; many were not; most had at best a dubious basis in law and official regulations. Most were bitterly resented by the peasants for their unpredictability and open-endedness and the coercive manner in which they were collected. Year after year, central leaders and agencies sent edicts, directives, injunctions, exhortations, and pleas down the administrative hierarchy demanding that action be taken to lighten peasant burdens, but to no avail. In l985 the Central Committee (CC) of the Chinese Communist Party (CCP) and the government's State Council warned that excessive burdens were damaging the authority of the regime and were causing rural unrest and instability. Similar warnings, often in somber tones, have been issued in the years that followed. In the most recent period, rural disturbances arising from burdens and other abuses have become even more worrying to the central leadership. So impressive a record of ineffectuality calls for investigation, analysis, and explanation.

We believe that examination of peasant burdens illuminates two fundamental problems of contemporary Chinese political development. The state faces major challenges in building administrative capacities appropriate to governance in the post-Mao reform era.

PEASANT protest and violence were a major reason why the Party-state sought to solve the burden problems. Ever since the mid-1980s, central leaders have taken measures to curb excessive taxes and fees. Nonetheless, despite years of effort, the state was unable to solve the problem as of the year 2002. This chapter examines three state strategies adopted by the government to address the problem. First, the war on burdens was waged by means of exhortation, promulgation of rules and regulations, and campaigns. These were efforts to pressure and constrain local officials to reduce burdens. This approach was important. It served to call widespread attention to the problem and to indicate to lower-level officials that the issue was a core concern of the central leaders and that therefore it had to become part of their agendas. And it served to inform the peasants that the Center was on their side.

A second strategy was to allow peasants themselves to seek redress using these tactics: by the “letters and visits” system, which enabled peasants to lodge complaints with the local and higher authorities in the hope of enlisting their aid in curbing burdens; by making the legal system more accessible to villagers in the hope that legal intervention, including lawsuits, would remedy particular grievances; and by promoting village democracy to enhance the accountability of cadres (see Chapter 7).

A third strategy consisted of attempts to address some of the institutional roots of the burden problem in the financial and bureaucratic systems.

DESPITE this and similar regulations repeatedly issued by central agencies, peasant burdens continued to exceed their legal obligations. This chapter describes and analyzes just what the burden problem was. We make five major points: (1) Exactions were open-ended and often arbitrary; (2) excessive tax and fee burdens were a problem throughout most of the reform period and by all accounts rose over time; (3) taxes and fees were highly regressive both locally within townships and across the country; (4) the severity of burdens varied with the presence or absence of TVEs whose resources could be tapped to pay for services and development projects; and (5) tax burdens — their size, variability, and the often brutal collection methods – were a major source of peasant grievances.

Burdens have to be assessed against peasant incomes, hence, we begin with a brief discussion of this topic. Analysis is complicated by enormous intrarural disparities. In 1999, the per capita income of peasants nationwide was 2,210 yuan; it was 5,409 in rural Shanghai and 1,357 in Gansu.

WHY were many of China's farmers subjected to financial burdens to the point at which some were driven to suicide and others to violent protest? In this chapter, we look for the underlying causes in the institutions and structures of China's political–administrative system. We identify five structural sources of peasant financial burdens: the vertical and horizontal deconcentration of power; performance pressures on local cadres and officials; state sprawl–the costly expansion of the bureaucracies down to the townships; muddled finances at the township level; and deeply embedded opportunities to engage in corruption. Some of these were strongly influenced by Maoist legacies. Others were based more specifically in the financial system. This chapter demonstrates the extent to which inadequate state capacity rooted in changing and deteriorating institutions was at the heart of the burden problem.

DECONCENTRATION OF STATE POWER

The norms of the PRC's political–administrative system prized unity of purpose and action in accordance with the top leaders' policies and instructions. Functional ministries at the central level were responsible to the Party Central Committee and the State Council and to their coordinating groups. Below Beijing, there was a dual vertical chain of command of Party and government from province down to township. Government agencies reported to their respective superior agencies as well as horizontally to their corresponding Party and government leaders, and, most important, to the territorial Party committees.