Chinese governance arrangements - main features

A complex, hierarchical local administrative system China’s administrative system has five levels (Figure 3.1):

• • Central government;
• • Provincial governments (provinces, autonomous regions and municipalities);
• • Prefecture-level governments (prefecture-level cities);
• • County governments (municipal districts, county-level cities and counties), and;
• • Township governments (townships, nationality townships and towns).³

At the sub-national level, China’s administrative system is extremely complex, both in structure and in the relationships it creates. It works as a nested hierarchy in which each level of government interacts only with the next level up or down. The central government directs only the provincial governments; provincial governments report to the central government above and direct the prefectural level below, and so on down the hierarchy. The central government also has the possibility of setting up special administrative regions.

In China, all levels of administration are subordinate to the central government. Governments of provinces and municipalities under the central government can decide on the establishment and geographic division of townships, ethnic townships and towns. However, the establishment of a new district, county or municipal government can only occur with the approval of the central State Council.

Figure 3.1. China’s structure of government

Source: Wong, C. (2014), Municipal Finance in China: Structure and Processes, background paper prepared for the OECD OECD Urban Policy Reviews: China 2015, unpublished, NBS (2013), China Statistical Yearbook 2013, China Statistics Press, Beijing and NBS (2012), China City Statistical Yearbook 2012, China Statistics Press, Beijing.

Under this system, cities higher in the hierarchy are favoured in important ways. They are given greater autonomy in decision making, more public finance resources, greater access to transport corridors and rail capacity, etc. Many small cities and rural areas, in comparison, have insufficient fiscal capacity to fund public services properly. Bigger cities appear to have greater access to “off-budget” revenues, and some enjoy conspicuously high levels of public infrastructure investment funded by the government (Henderson, 2009).

At present, the creation of a system of only four levels: central government, provincial governments, municipal and county governments, and township governments, is under discussion. Under this proposal, the prefecture-level cities (PLC) would be abolished. It is generally understood that the current number of administrative levels compromises the effective management and execution of the tax-sharing system and intergovernmental transfers. Under current arrangements, it is the higher levels rather than the lower levels of government that capture and use the largest part of the resources. Another issue under discussion is whether or not the standards for establishing cities are out of date and should be revised (Box 3.1)⁴

Provincial governments are the first-level local state administrative organs in China. These include the 22 provinces, five autonomous regions, four municipalities with provincial status (Beijing, Tianjin, Shanghai and Chongqing) and two special administrative regions (Hong Kong and Macau). They are under the direct leadership of the State Council, which decides on the division of responsibilities between the central government and the provincial administrative organs. Provincial governments implement local laws, regulations and decisions of the provincial people’s congresses and their standing committees, to which they also report on their work. They exercise leadership over the work of governments in cities, counties, townships and towns under their jurisdiction.⁵ Provincial-level governments are authorised to create agencies, called “administrative offices”, to provide guidance and co-ordinate the work of the counties and cities within the regions on their behalf.

In addition to the 32 provincial capital cities, five cities are specifically designated in the state plan: Dalian, Xiamen, Shenzhen, Qingdao and Ningbo. There are also “deputy provincial cities”: Changchun, Chengdu, Guangzhou, Hangzhou, Harbin, Jinan, Nanjing, Shenyang, Wuhan and Xian. The 15 cities have the deputy provincial title, but the first five are usually controlled by central government, while the remaining ten are controlled by provincial governments.

Generally speaking, prefectural-level cities (municipalities) are large and mediumsized cities, not included among the sub-provincial-level cities. In general, they are cities with a nonfarming population of more than a quarter of a million. They have a relatively advanced tertiary industry, whose production value is more than that of the primary sector, and makes up more than 35% of their GDP. County-level cities are established in relatively small areas, in conformity with national standards for setting up cities (Box 3.1).

Box 3.1. The Chinese municipal system

In China, talking about a city or town involves two concepts: population and administrative regions. Cities and towns are settlements where a certain number of non-agricultural population and non-agricultural industries are concentrated. Their residential and social organization is different from villages.’ According to this concept, the hierarchy of China’s urban and rural settlements consist of villages and townships collectively referred to as rural areas; while towns and cities are referred to as urban areas.

Administrative regions refer to administrative institutions: city, town, township and village. Their administrative borders are set according to certain criteria. For example, for an urban settlement to be classified as a county-level city (CLC):

• • the population density would need to be more than 400 people/square kilometre;
• • it should have no less than a population of 120 000 in the town where the county government is seated;
• • it should have a non-agricultural population of more than 80 000;
• • the ratio of nonagriculture would be about 30%;
• • the proportion of industrial production should be no less than 80% of the total value of industrial and agricultural output and no less than CNY 150 million in actual value;
• • urban public infrastructure has to meet certain standards, such as provision of a piped water supply for more than 65% of the households, more than 60% of roads paved, and adequate drainage systems;
• • other factors considered include: GDP of more than CNY 100 million, tertiary industry of more than 20% of GDP; local financial budgetary revenue of more than 100 CNY/person, total income of more than CNY 60 million, and some responsibility for expenditure.

In turn, for a county-level city to be classified as a prefecture-level city (PLC):

• • the non-agricultural urban population should be at least 250 000 people;
• • GDP must be over CNY 3 billion;
• • industry should account for over 80% of GDP;
• • tertiary industry must be developed, with a specific output ratio;
• • local financial budgetary revenue must equal more than CNY 200 million annually;
• • the city must be considered a “central city” among the county-level cities.

Applications are made and considered annually, and the number of PLCs can vary from year to year. The benefits of becoming a PLC include enhanced status for the governor (or mayor) in question and, potentially, greater resources.

Source'. IEAS, UNHABITAT, China’s Association of Mayors (2010/2011), The State of China’s Cities 2010/2011: Better City, Better Life, Foreign Language Press, Beijing; mission notes: OECD mission to China, January 2014.

Governments of county-level cities fall mainly into the following categories: i) in areas without an administrative office, they fall under the leadership of provincial or autonomous regional governments; ii) in areas under the leadership of prefectural-level cities, they fall under the jurisdiction of the prefectural government. Governments of county-level cities administer governments of townships and ethnic townships (both of which refer to rural areas) and towns (urban centres in rural China). District governments are urban governments established in districts within municipalities directly under the central government, sub-provincial level cities and prefectural cities. They consist of urban district and suburban district governments. Urban district governments are located within the urban districts and function as grassroots governments in urban areas. They may have agencies in the form of neighbourhood offices.

County governments are local governments established in rural areas. They administer the governments of townships, ethnic townships and towns. They also have the capacity to establish neighbourhood offices. Governments of townships, ethnic townships and towns are grassroots governments in rural areas under the leadership of counties, autonomous counties, county-level cities and districts.

Local “people’s congresses” as local organs of state power, and local “people’s governments ” as administrative organs of the State Council

“People’s congresses” and “people’s governments” are established in provinces, municipalities directly under the central government, counties, cities, municipal districts, townships, ethnic townships and towns. Local people’s congresses at different levels are the local organs of state power. The deputies to the people’s congresses of provinces, municipalities directly under the central government, and cities divided into districts are elected by the people’s congresses at the level below. Deputies to the people’s congresses of counties, cities not divided into districts, municipal districts, townships, nationality townships and towns are elected directly by their constituencies. The term of office of the people’s congresses of provinces, of municipalities directly under the central government and of cities divided into districts is in general five years. The term of office of county- level people’s congresses, cities not divided into districts, municipal districts, townships, nationality townships and towns is three years.

Local people’s governments are administrative organs under the direct leadership of the State Council. There are four types of local governments: i) the governments of ordinary local administration, which include: the people’s congresses, people’s governments, party body and the political consultative conference body established in provinces, municipalities directly under the central government, counties, cities, districts under cities, townships, ethnic townships and towns; ii) the organs of self-government of ethnic autonomies; iii) the local governments of special administrative regions; and, iv) special categories of local governments, such as governments of special economic zones, development zones, mining industrial zones and nature reserves, whose organisation differs from administrative organs of other local governments.

Local people’s governments are led by governors, mayors, county heads, district heads, township heads and town heads for a five-year term. A local people’s government at or above the county level implements the resolutions of the people’s congress and its standing committee, as well as decisions and orders of state administrative organs at higher levels; appoints or removes personnel in State administrative organs; and implements the plan for national economic and social development and the budget. It also conducts administrative work relating to the economy, education, science, culture, public health, physical culture, protection of the environment and natural resources, urban and rural development, finance, civil affairs, public security, nationality (ethnic) affairs, judicial administration, and family planning.

The people’s government of a township or town is responsible for the economy, education, science, culture, public health, physical culture, finance, civil affairs, public security, judicial administration and family planning in its administrative area.