Position-Related Consumption and Corruption in the Chinese Government: An Institutional Analysis

Abstract

This study deals with position-related consumption and corruption in the Chinese government. Position-related consumption in government, which manifests itself in the so-called “three public expenditures” (hereafter TPEs), has attracted increased public attention in recent years. TPEs refer to public spending on official hospitality, government vehicles, and duty trips (both overseas and domestic) regardless of funding sources. TPEs are common in the Party and government organs, public service units and state-owned enterprises.
TPEs have become increasingly extravagant for the past three decades in China. For example, official receptions often involve luxurious wines and dishes; the abuse of government vehicles is rife; and sightseeing is conducted under the guise of duty visits. In the meantime, the central authorities have made intensified efforts to curb lavish TPEs by promulgating more about 151 anti-extravagance circulars, imposing strict regulations on public spending, and enhancing fiscal management. However, the increased endeavor has not been able to stop lavish TPEs. Government officials continue to spend extravagantly in more complex and hidden ways. This research seeks to explain how lavish TPEs have taken place and why intensified central efforts have not been able to reduce lavish TPEs. Using qualitative methods, this study collects empirical data from three major sources, including 67 interviews with government officials, more than 500 news accounts and about 151 official circulars.
Three existing theoretical perspectives concerning lavish TPEs are discussed. First, some scholars and critics attribute lavish TPEs to Chinese culture; Mianzi, renqing and reciprocity are believed to have contributed to lavish TPEs. Others contend that lavish TPEs are driven by self-interested and greedy officials, who have lost faith in serving the public and are instead more interested in seeking personal benefits from their current government posts. Still others argue that the poor implementation of the anti-extravagance rules and regulations is the cause. Explanations vary, but none of the existing perspectives places the issue in the context of the Chinese bureaucratic system to examine it in the complex web of official relationships and interactions.
Drawing on the theory of organizational isomorphism, this research argues that persistent lavish TPEs have institutional roots. Lavish TPEs are an isomorphic phenomenon, resulting from isomorphic pressures embedded in the bureaucratic system. Particularly, this study identifies and analyzes three isomorphic pressures: coercive, horizontal and normative. Coercive pressures are generated by the asymmetric relationships between upper and lower governments, which can be seen in some vertical institutional arrangements such as fiscal transfer, administrative approval, personnel management, and top-down inspections. Strong coercive pressures push lower governments to rely upon lavish TPEs to please superiors. Empirical evidence shows that lower governments often resort to luxurious official banquets to pass official inspections. It is also quite common that upper governments borrow vehicles from lower ones with no payment or force subordinates to bear the cost of their overseas trips.
Horizontal pressures denote intra-governmental competition and comparison and, hence, peer pressures. Competition for resources and preferential policies is often very keen among peer governments so that officials have to resort to lavish TPEs in order to obtain favorable treatment. For example, local governments hold lavish banquets for central officials in their competition for preferential policies. Besides, horizontal comparisons are often conducted by officials among themselves. For instance, they compare vehicle brands with each other to seek better ones or they organize luxurious official trips simply because others do.
While coercive and horizontal pressures contribute to lavish TPEs, normative pressures help maintain lavishness at three different organizational levels. At the macro level exists the organizational field where bureaucratic organizations share some organizational norms that consider lavish TPEs as acceptable. At the organizational level, government officials often claim that lavish TPEs lead to high returns for their organizations. For example, a luxurious banquet may help obtain administrative approval for a profit-driven project. Lavish TPEs are thus legitimized. Finally, leading officials play a crucial role in normalizing lavish TPEs. They not only participate in, but also allocate opportunities of TPEs to subordinates.
This research further discusses the interactive relationships among three isomorphic pressures. Coercive and horizontal pressures reinforce each other and cultivate normative pressures. Normative pressures in turn support coercive and horizontal pressures. As a result, lavish TPEs get institutionalized in the bureaucratic system. Although the current anti-extravagance campaign has taken tough measures, new forms of lavish TPEs continue to emerge and isomorphic pressures do not seem to fade away.
This research contributes to the understanding of an understudied phenomenon of corruption in China by examining lavish TPEs. Different from other studies, it links lavish TPEs to the characteristics of the Chinese bureaucratic system. It also contributes to the study of organizational isomorphism. In particular, it modifies the three traditional institutional isomorphic changes to better understand isomorphism in the context of the Chinese bureaucratic system. The study also has practical implications. The past and current anti-extravagance campaigns have not been effective in controlling lavish TPEs, indicating that the government cannot rectify official extravagance without profound institutional reform.

Date of Award	18 Aug 2015
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Ting GONG (Supervisor)