Challenges to China’s State Capacity

Conor Shand

Identify and describe two major and distinct challenges to state capacity faced by a country over the last decade. How has the state responded and with what success?

State-building and development is a long standing component of international politics, dating back several centuries. Ever since the concept of the “modern nation state” came to fruition, governments have sought to attain and maintain stability within their boundaries, aiming to maximise the capacity of the state. However, each state – with alternate institutions, environments and economies – will face a variety of challenges to their respective state capacity. China, despite being one of the most significant economic and military powers in the state-system, still faces challenges in optimising its state capacity. As it is formally regarded as a second-world developing country, China still faces numerous challenges to its state capacity despite its relatively high status. Among these challenges, two in particular emerge as the foremost barriers to the maximisation of China’s state capacity; environmental issues unemployment. As China is amongst the most notable pollutants in the contemporary state-system, with a heavily industrialised nation, its government has worked to counter detrimental environmental effects with varied success over the last decade. Likewise, in the case of unemployment, while China is one of the most powerful economies in the world, it still bears significant unemployment issues due to a number of factors, which the government has tried to address – again, with some results. Ultimately, these two issues have notably compromised China’s state capacity, and the Chinese government has responded – with some degree of success – to these two particular challenges.

In order to identify how it is that these two issues hamper state capacity, it is important to first identify what exactly state capacity is. Neil A. Englehart uses the relatively broad definition of state capacity in stating that state capacity “refers to the willingness and capability of the state apparatus to carry out government policy.” (Englehart, 2009, p. 166) This definition is particularly effective, as there are many existing definitions of state capacity which contradict each other, due to state capacity being a concept of perception and interpretation. This is because “state capacity” as a concept aggregates a number of ideas, including military and economic strength, centralization, bureaucratic and administrative ability. (Hanson & Sigman, 2013, pp. 1-3) Different governments within different states would prioritise alternate areas in order to ensure a maximised state capacity depending on what that particular government regards as important. For example, in New Zealand, there is a relatively minimal prioritization of military power, with 1% of gross domestic product spent on military costs annually. China on the other hand spends 2.1% of its GDP on military costs, hence it could be argued that China has a greater state capacity than New Zealand. (World Bank, 2014) However, as each state has a requirement for alternative prioritizations respective to their unique circumstances, it is impossible to measure a state’s capacity beyond the government’s ability to exert its policies on the state’s populace. (Kocher, 2010, p. 143)

One of the most significant barriers which China has faced in maximising its state capacity over the last decade lies in environmental deterioration. Over an extended period of economic reform, which began in the late 1970’s, China has become massively industrialised, with a consistently used maxim of “first development, then environment” actively used in the 1980-90’s. (Economy, 2011, pp. 18-19) This method of reform led to China becoming one of the most industrially profitable contemporary states, with a current estimate of 45.3% of its GDP being derived from the industrial sector. (Central Intelligence Agency, 2013) While the GDP boom born out of this industrialisation can in some ways be seen as positive, it has also caused significant detriment to the environment and quantity of resources consumed in China. Air and water pollution as well as energy efficiency and deforestation have caused numerous environmental complications, with one study finding the existence of a “long-run cointegration relationship between per capita emissions of three pollutants (waste gas, waste water, and solid wastes) and per capita GDP.” (Zhang, 2009, p. 2707) The inverse relationship between China’s economic growth and environmental wellbeing created a complex challenge to China’s state capacity in that it made it difficult for the Chinese government to execute policy favouring one option without causing adverse effect to the other.

In the last decade the Chinese government has sought to significantly reform the area of environmental law, with the aim of balancing out the quantity of attention given to environmental issues. A notable example of the government’s attempts to resolve the pollution/growth standoff can be seen in the 2002 Cleaner Production Promotion Law, which was introducedin the interest of advocating “cleaner production, increasing the utilization ratio of resources, reducing and preventing pollutant-generating, protecting and improving the environment, protecting human health, and promoting the sustainable development of the economy and society.” (gov.cn, 2002, p. Article 1) This law amongst others emerged in the 21^st century as the Chinese government sought to bring its industrial sector into line with its environmental goals, so as to give the Chinese government a greater ability to exert its state capacity over environmental issues. This significant industrial reforms has been accompanied by other significant ones in the last decade. The Chinese government sought to resolve the issue of air pollution created by its heavily coal-fuelled industrial sector, with a series of policies set to restrain air pollution in the future. (Zhao, Lei, Lei, & Cao , 2008, pp. 8442-8444) In addition to this, the government has also addressed excessive levels of energy consumption, enabling policies which would reduce carbon dioxide emissions whilst maintaining economic development by increasing energy efficiency. (Polenske & Lin, 1993, pp. 249-251)

While there were some significant attempts at reform, such as the aforementioned policy changes, it is still evident that China has not been able to exert the necessary quantity of state capacity so as to reduce environmental degradation. In the words of Han Shi and Lei Zhang“the relatively comprehensive environmental regulatory framework established since the late 1970s had failed to prevent the overall deterioration of environmental quality”. (Shi & Zhang, 2006, p. 277) One reason for this failure lies in the fact that while the central government formally introduced the policies, local governments regulated these policies, meaning that many reforms were loosely enforced so as to avoid significant economic detriment. (Blanchard & Stanway, 2014) This in turn reflects the lack of state capacity at the disposal of the central government, due to its inability to wholly implement its policies. In addition to this, some point at the lack of punitive measures employed to reduce pollution as a sign that the government is unwilling or unable to exert its desired policies, however ultimately it can be concluded that the Chinese government seems to lack the capacity on the whole to significantly curb environmental degradation.

A second unique issue which China has faced in the last decade is that of unemployment, which has increased – most significantly as a result of China’s period of economic reform – from 6.1% to 11% over a 6 year period. (Giles & Park, 2005, pp. 149-150 ) Previously a system of social welfare existed wherein the majority of China’s population were guaranteed incomes of some form. However this system was abandoned in the 1990’s, which led to significant increases in income inequality and unemployment in China. (Leung, 1994, p. 341) The economic reform meant that the state would become free of many previously financially draining public sector institutions, however at the same time it in turn proved a challenge as to whether China had the state capacity to either support those who were newly unemployed, or whether it could create replacement jobs for them.

In the last decade the Chinese government sought to lessen the impact of this economic reform, and introducing a series of aids and safeguards in order to ensure that those who found themselves unemployed would have a “soft landing”, as the government once again faced the dilemma of prioritizing unemployment – a previously secondary issue – over economic growth, the primary goal. (Angang & Xin, 2006, p. 45) These aids and safeguards included concepts such as unemployment insurance, the implementation of labour contract law and other forms of welfare to ensure that people would have some form of financial support. However the drafting and successful introduction of these policies was significantly hampered by a relatively weak level of state capacity. Jane Duckett and Athar Hussein outline three primary reasons as to why the Chinese state lacked the capacity to adequately address this unemployment. The initial reason that was raised lay in the fact that the state lacked the ability to adequately survey the nation as the degree and nature of the unemployment. Secondly, the state lacked the ability and infrastructure to enforce the participation of the people in any unemployment scheme. Thirdly, the state lacked the infrastructure to ensure that non-central government bodies holistically employed the scheme. (Duckett & Athar, 2008, pp. 211-213) While there have been some moves towards reducing this unemployment, the constraints on the central government’s ability to implement its policies serve as evidence that China has a distinct inability to exert its state capacity with near-maximum effectiveness.

The first, and most notable challenge which the capacity the Chinese state faced was that of environmental degradation, which additionally served to test as to whether the central government could successfully balance economic growth with environmental maintenance. While the government did implement many policies, they were only effective to a certain degree, as the lack of a wholly efficient centralized state power meant that many of the policies were not executed to the extent which had been intended by the central government. This issue again rose when the lesser-recognised issue of unemployment in China was countered by the government, as while the central government did introduce some economic reforms in order to support those who became unemployed, infrastructural issues in local governments weakened the effectiveness the Chinese government’s response, hence preventing the Chinese government from wholly exerting its full state capacity.

Bibliography

Angang, H., & Xin, S. (2006). Urban Unemployment in China – A Background Analysis. In G. Lee, & M. Garner, Unemployment in China: Economy, Human Resources and Labour Markets (pp. 36-62). Routledge.

Blanchard, B., & Stanway, D. (2014, March 4). China to ‘declare war’ on pollution, premier says. Retrieved from reuters.com: http://www.reuters.com/article/2014/03/05/us-china-parliament-pollution-idUSBREA2405W20140305

Central Intelligence Agency. (2013, August 22). The CIA World Factbook 2013. Retrieved from Central Intelligence Agency – World Factbook: https://www.cia.gov/library/publications/download/download-2013/index.html

Duckett, J., & Athar, H. (2008). Tackling unemployment in China: state capacity and governance issues. The Pacific Review Volume 21, Issue 2, 211-229.

Economy, E. C. (2011). The river runs black: the environmental challenge to China’s future. Cornell University Press.

Englehart, N. A. (2009). State Capacity, State Failure, and Human Rights . Journal of Peace Research, Vol. 46, No. 2 (March), 163-180.

Giles, J., & Park, A. (2005). What is China’s true unemployment rate? China Economic Review Volume 16, Issue 2, 149–170.

gov.cn. (2002, June 29). Law of the People’s Republic of China on Promotion of Cleaner Production (Order of the President No.72). Retrieved from gov.cn: http://english.gov.cn/laws/2005-10/08/content_75059.htm

Hanson, J., & Sigman, R. (2013, May 1). Leviathan’s Latent Dimensions: Measuring State Capacity for Comparative Political Research. APSA 2011 Annual Meeting Paper.

Kocher, M. A. (2010). State Capacity as a Conceptual Variable. Yale Journal of International Affairs 5 Yale J. Int’l Aff Issue 2 – Summer, 137-146.

Leung, J. C. (1994). Dismantling the ‘Iron Rice Bowl’: Welfare Reforms in the People’s Republic of China. Journal of Social Policy / Volume 23 / Issue 03 /, 341-361.

Polenske, K., & Lin, X. (1993). Conserving energy to reduce carbon dioxide emissions in China. Structural Change and Economic Dynamics Volume 4, Issue 2, December, 249–265.

Shi, H., & Zhang, L. (2006). China’s environmental governance of rapid industrialisation. Environmental Politics Vol. 15, No. 2,, 271-292.

World Bank. (2014, July 22). Data – Military expenditure (% of GDP). Retrieved from worldbank.org: http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS

Zhang, X.-P. (2009). Energy consumption, carbon emissions, and economic growth in China. Ecological Economics Volume 68, Issue 10, 2706–2712.

Zhao, Y., Lei, Lei, Y., & Cao , P. (2008). Primary air pollutant emissions of coal-fired power plants in China: Current status and future prediction. Atmospheric Environment Volume 42, Issue 36 November, 8442–8452.