SUN WUKONG
Another plan goes up in smoke
By Wu Zhong, China Editor
HONG KONG - Battling hard against protectionism overseas while stimulating
domestic consumption are among China's key responses to the global financial
crisis. But a recent case vividly shows how Beijing's policies can be
creatively bent at the local level to serve a county authority's interests.
In early March, the government of Gong'an county in the central province of
Hubei issued a circular to include the purchase of locally produced cigarettes
into county government procurement. According to the circular, all the county
government's 102 departments and public organizations also needed this year to
buy and consume at least 4.6 million cigarettes that were manufactured in
Gong'an.
The Public Security Bureau was given the largest quota of 100,000 cigarettes.
Even the local women's association had a quota of 10,000. Gong'an county
government also set up a special task force led by the magistrate to make sure
the circular was carried out to the letter. About 4 million yuan (US$590,000)
was expected to be spent on the plan, with each carton priced at 170 yuan.
Members of the task force were told to check cigarette butts in ashtrays in
schools and offices to see if they were from the local brand, with fines
threatened for officials who "failed to meet their target" or who were caught
smoking rival brands manufactured in neighboring provinces.
According to the Shanghai Daily, Zhangtiansi Middle School swiftly fell foul of
the regulations. During an inspection of the school on April 2, two government
officials discovered three cigarette butts which were not locally produced.
After negotiations, the officials agreed not to fine the school, but they
published details of the case throughout the town.
A Hubei newspaper on May 3 exposed the Gong'an circular, arousing widespread
public outrage at the local government's "absurd" move. Other media, including
the state-run Xinhua News Agency, followed up with their own investigative
reports.
Under the pressure of public opinion, the Gong'an county government had to
withdraw the circular a couple of days later. After rescinding the order, it
sought to defend its motives, claiming the order was actually meant to rein in
the sale of smuggled or fake cigarettes - cigarette taxes form a major
component of China's annual tax income at the local level.
The case reveals much about the state of China's system of local governance.
Due to its vastness and long-standing traditions, the power structure in China
is very hierarchical, with the central government at the top of the pyramid and
county governments at the bottom. Gong'an's move highlights that despite the
highly centralized political system, a county government does enjoy some degree
of autonomy.
While some public funds could have been legitimately used by the Gong'an
authorities to buy cigarettes for officials to entertain their guests, spending
so much on buying cigarettes in such large quantities is a misuse of public
funds. This suggests that the Gong'an government did not need to seek approval
from the central government before it started its "smoke local" initiative.
The case also shows that some regions in China have distorted the center's
policy of boosting local demand into adopting protectionist measures to boost
consumption of "locally made products" through the use of public funds.
Regional protectionism is by no means an invention of Gong'an; long before
Gong'an, and even before the global financial crisis, many regions had taken
similar moves.
Two years ago, the government of Hanchuan city in Hubei province issued a
circular demanding that all government departments and public organizations
solely buy and consume a local brand of liquor, which did not sell well outside
the city. The total quota for buying the liquor that year was 2 million yuan
(US$293,000).
In late 2008, Dejaing county government in Guizhou province demanded all
government and public organs organize sight-seeing trips for their staff to a
newly cultivated local tourist spot that had attracted few visitors from
outside.
County governments play a crucial role in the country's governance, as they
deal directly with the rural grassroots and have the responsibility to put the
center's policies into practice. In this sense, the success or failure of a
central government policy is largely dependent on how it is implemented (or
distorted) by the county governments.
Well-known 20th-century Chinese sociology and educator Yen, YC James (Yan
Yangchu in pinyin) said in the 1930s that it was not important for ordinary
Chinese people to have a good emperor, but crucial for them to have a good
county magistrate.
His sentiment still rings true for communist China today, and it seems ironic
that the Chinese government is combating hard against protectionism overseas
while at home regional protectionism appears to be running wild.
The Gong'an government's move was also against the World Health Organization
(WHO) Framework Convention on Tobacco Control, which the Chinese government
signed in November 2003 and the National People's Congress (NPC) ratified in
2005. According to the convention, no government should ever cooperate with a
cigarette manufacturer. Gong'an government's move was clearly an attempt to
promote the sales of a local brand.
China has more smokers than any other country, with 350 million puffing away
regularly. A million die of smoking-related diseases every year.
The nation has signed and ratified many international conventions. But local
officials may know very little about their content or how they must abide by
them. With its fast economic growth, China aspires to become a world-class
power, but to become one it must follow adopted international norms and
standards.
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