From command economy to hollow state? decentralisation in Vietnam and China

In Vietnam and China, decentralisation is a by-product, both by default and design, of the transition to a state-managed market economy. A dual process of horizontal and vertical decentralisation is occurring simultaneously in both the economic and political arena. There is an increasingly high level of de facto political/fiscal decentralisation, much of it occurring by default as local governing units try to meet rising demand for services. This is accompanied by the marketisation and socialisation of services such as education and health. Accompanying both of these processes is a trend towards greater 'autonomisation' of service delivery units, including the emergence of new 'para-state' entities. Most of these decentralisation processes are the by-product of marketisation, rather than part of a process of deliberate state restructuring in pursuit of ideals of decentralised government. The cumulative effects include a significant fragmentation of the state, a high potential for informalisation and corruption, and a growing set of performance accountability problems in the delivery of public services. © 2008 National Council of the Institute of Public Administration Australia.