The Chinese governance system: Its strengths and weaknesses in a comparative development perspective

Bardhan, Pranab

Abstract This is an overview paper focusing on the organizational aspects of the Chinese governance system and their relation to development. Compared to other developing countries like India, it has special positive features of career incentives promoting growth at the local level, the ability to take long-term decisions relatively quickly, and a unique blend of political centralization and decentralization of economic power and responsibility, that is conducive to central guidance and local business development. On the other hand, with a lack of sufficient downward (as opposed to upward) accountability and absence of institutionalized systems of scrutiny and challenge from below, mistakes or abuse of power are more difficult to check and correct quickly, political loyalty may often get a premium over performance at the upper levels, and there are insufficient checks on collusion between business and officials. The over-all organizational system is prone to over-reaction in times of crisis and thus only weakly resilient compared to systems where information flows from below are less controlled or choked.