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The politics of social spending in China : the role of career incentives

Abstract

How does an authoritarian regime like China's ensure social welfare provision at the local level when there is no democratic accountability? Moreover, when local politicians are granted discretion to administer social policy, why do some follow the Center and increase social spending, while others ignore the central directive and spend money on other types of programs instead? Based on quantitative and qualitative data collected during 14 months of field research, I find that there is still accountability in China, but it works indirectly through the Center based on politicians' career ambitions. Ambitious provincial officials--those who seek to advance their careers at the central level--comply with central government mandates with respect to social welfare provision in order to impress Beijing and increase their chances for promotion. The evidence also suggests that politicians in China provide social goods in response to the demands of labor and to prevent labor unrest. Local officials would rather provide social security and welfare than education or health because "almost all protests are triggered by laborers unhappy about social security and welfare" (city official). Finally, contrary to what we expect, a province does not necessarily increase social welfare provision as the resources available to the province increases. Data shows that a 10% annual growth rate only results in a 0.6% increase in the province's social spending (as a share of total budget), while a 10% increase in provincial tax revenue actually reduces the provincial social spending by 7.4%. But when there is an ambitious provincial leader in the province, he/she increases the social spending (as a share of total budget) by at least 12.5%. As a sharp comparison, the demography and unemployment rate in a province do not explain how much the province spends on social policy. These findings show that the decision on social spending is not based on the people's need or the economic capability of the government, but the career incentives of the politicians

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