Managing Chinese Bureaucrats: An Institutional Economics Perspective

Conventional analysis of government typically focuses on ‘politics’, that is, interests, conflicts or personalities. But governing a country is not only a task of successfully governing its people but also an administrative task of managing subordinate officials. This is a very relevant issue in a country such as China, with a massive bureaucracy. The top ‘managers’ of the country – some 30 national leaders – make policies but also manage a large number of bureaucratic personnel. As in business organizations, control problems occur when subordinates have different interests from those of the organization and when the behavior of subordinates is imperfectly monitored. Control mechanisms are designed to minimize such problems by either aligning interests or improving information. This article uses this framework to explain a wide variety of administrative phenomena in Chinese government organizations.