People everywhere struggle to make sure that government officials provide schools for their children, roads to bring their goods to market, and safe water to drink. Why are some people more successful than others? We have seen in the case of rural China that it is not always because they are richer. Economic growth is not necessarily correlated with better public goods provision and better government. Villages with higher levels of industrialization and economic development do not necessarily provide better roads and schools. Democratic reforms have not been a straightforward solution either. Even officials elected through free and fair procedures may fail to respond to citizens' needs when the rewards of office are low and getting voted out of office is not such a bad prospect.

This book argues that the key to explaining governmental performance and public goods provision when formal democratic and bureaucratic accountability is weak is to look more closely at informal institutions of accountability. When neither democratic institutions (such as elections) nor bureaucratic institutions (such as performance reviews) hold officials accountable for public goods provision, local governance may still be good when social groups enmesh local officials in community obligations. When officials are embedded in solidary groups such as temples or villagewide lineages that encompass everyone under their jurisdiction, obligations they have to contribute to the good of the group are synonymous with obligations to contribute to the public good. Under these conditions, social institutions can reinforce or substitute for state institutions.

In the winter of 2001, I boarded a bus that would wind its way westward from the sunny, prosperous city of Xiamen on the coast of Fujian province in southern China, through the mountains that make up 90 percent of Fujian and across the border into the only slightly less rugged terrain of Jiangxi province. After this fourteen hour trip, I disembarked in Ganzhou, a city of a quarter of a million people and Jiangxi's only major urban center in the south. From Ganzhou, I hopped on a minibus for the last seventy kilometers of my journey to the villages of High Mountain and Li Settlement. A friend in Xiamen, hearing that I wanted to investigate the performance of local governments in less developed areas of rural China, had suggested I visit her relatives in these two neighboring villages.

Both villages, she said, were poor and agricultural. Most families survived only by sending someone to nearby Guangdong province to find work, and even with the four thousand yuan (about U.S.$500) that a migrant worker might send home every year, the income per capita in these villages was still only half that of the national average. Most houses were still constructed from clay soil pounded into large blocks. Small windows cut into the walls of houses lacked glass panes to keep cold air out. Political reforms had been slow to take root in these areas.

Imagine the mayor of a small town in the United States with only one church. Church suppers and picnics are a major part of the town's social life, and the church hall might be the only place that people can rent or borrow for social gatherings. Even if not everyone goes to church regularly, everyone sees the church as representative of the town community. If the mayor does something exemplary such as bringing down the crime rate by strengthening the police force, the minister might very well mention his good work in front of the congregation during his Sunday sermon. Getting commended by the minister during services can give the mayor a measure of moral standing in addition to whatever status he might already possess as a public official or member of the social elite. The mayor benefits personally from this increased standing. People stop him on the street to praise his work, storekeepers treat him with more deference, the bank is more willing to give him a bigger mortgage, and his children receive more attention at school. Increased moral standing may also make his mayoral tasks easier to carry out. When he tries to implement a difficult state policy – a new requirement, for example, that students of a different ethnic group be bused into the town school – additional standing can help him elicit compliance from his constituents. Moral standing helps the local official by strengthening the belief of citizens in his good intentions.

Before we can evaluate the performance of local governments, we must first understand what their responsibilities are and how financial and administrative responsibilities are allocated among different levels of government. To provide a backdrop for the book's analysis of village governmental public goods provision, this chapter briefly sketches the broader institutional context in which local governments operate.

Examining these institutional arrangements inevitably brings us up against one of the central dilemmas of governance: what is the best way to divide up responsibilities for public goods provision among different levels of government? Proponents of decentralization argue that local governments should have primary responsibility for providing public goods for the citizens under their jurisdiction. They have more information about what citizens really need and want. When local governments are responsible for providing roads, schools, and other services, citizens know exactly whom to blame when something goes wrong. Competition for tax revenue, moreover, can keep local officials on their toes since taxpayers can always move to another locality that provides better public services more cheaply.

China's extraordinary economic growth over the last few decades seems to suggest that decentralization in this case has been a success story. But counter to what optimistic theories of decentralization predict, problems of local governmental accountability and fiscal mismanagement have also increased. Decentralization programs in China, as in many other countries, have increased unfunded mandates for public goods provision for all local levels – all levels below the central government but especially the lowest levels.

The model of informal accountability hypothesizes that in political systems with weak formal institutions of accountability, localities with encompassing and embedding solidary groups are likely to have better local governmental provision of public goods than localities without these groups, all other things being equal. To evaluate the plausibility of this hypothesis, this chapter derives its observable implications for two types of solidary groups common in rural China: village temples and village churches. If the hypothesis is correct, we should expect that village temples, which are usually encompassing and embedding, will be more likely to have a positive effect on village governmental provision of public goods. Village churches, on the other hand, are encompassing but not embedding, so they should be less likely to have a positive effect on village governmental provision of public goods.

The Structure of Temples and Churches in Rural China

As with most rural solidary groups, the state tolerates the existence of village temples and village churches as long as they limit their activities to the boundaries of the village. Within the village, temples and churches are typically open to everyone, temples because they have a strong historical association as symbols of the village community as a whole and churches because the forms of Christianity that are practiced in rural China are generally inclusive of and welcoming to new adherents. Thus, village temples and village churches are both generally encompassing solidary groups.

In this chapter, we turn to formal bureaucratic institutions of accountability. As we will see, serious problems of bureaucratic monitoring and accountability plague local governance. Current bureaucratic institutions intended to enable higher-level officials to hold lower-level officials accountable have little impact on the village governmental provision of public goods and services. Evidence from my fieldwork suggests that reforming these formal institutions of accountability will be very difficult without simultaneously creating effective new systems for intergovernmental transfers and information flow within the state.

Formal Accountability at the Village Level

State elites have two key formal institutions they can use to secure compliance from village officials: village Party organizations and the bureaucratic cadre responsibility system.

Formal Party Institutions of Accountability

In terms of formal Party institutions, higher-level Party officials at the township level and above exercise authority over village officials and over officials in the village Party branch. A more detailed description of the structure of village government is presented at the beginning of Chapter 2, but as a brief review, the village government is formally composed of two organizations: the village committee and the village Party branch. Each organization typically has three to five positions, depending on the population of the village. A village head chairs the village committee. State regulations require village committee members to be elected through direct, competitive popular elections, although, as we saw in the last chapter, the implementation of these elections varies a great deal across localities. A village Party secretary chairs the village Party branch.

Given the multitude of problems with local public finance and governmental accountability discussed in the last chapter, it is not surprising that the provision of local public goods and services is a major problem. Reliable aggregate data are scarce, but available statistics suggest that the level of public goods provision in China is low even compared to other developing countries. The total size of China's road network in 2002, for example, as estimated by the World Bank, was 1.7 million kilometers, roughly the same as that of Brazil. In China, however, this network served a territory of 9.6 million square kilometers, an area 13 percent larger than Brazil's 8.5 million square kilometers, and a population of 1.3 billion people, more than seven times the size of Brazil's population. Investment in education was comparatively low – about 2.1 percent of GDP in 2000 compared to 4.3 percent in Brazil, 4.1 percent in India, and 3.8 percent in Russia. Access to water “improved” for drinking was similarly problematic: as of 2002, 23 percent of China's population lacked access to improved water, as opposed to 14 percent in India and 11 percent in Brazil.

This book focuses on the provision of rural roads, schools, and water for a couple of reasons. First, these three categories of public goods have a profound impact on the quality of life everywhere and are the ones that villagers in China most often need and demand.