PEASANT protest and violence were a major reason why the Party-state sought to solve the burden problems. Ever since the mid-1980s, central leaders have taken measures to curb excessive taxes and fees. Nonetheless, despite years of effort, the state was unable to solve the problem as of the year 2002. This chapter examines three state strategies adopted by the government to address the problem. First, the war on burdens was waged by means of exhortation, promulgation of rules and regulations, and campaigns. These were efforts to pressure and constrain local officials to reduce burdens. This approach was important. It served to call widespread attention to the problem and to indicate to lower-level officials that the issue was a core concern of the central leaders and that therefore it had to become part of their agendas. And it served to inform the peasants that the Center was on their side.

A second strategy was to allow peasants themselves to seek redress using these tactics: by the “letters and visits” system, which enabled peasants to lodge complaints with the local and higher authorities in the hope of enlisting their aid in curbing burdens; by making the legal system more accessible to villagers in the hope that legal intervention, including lawsuits, would remedy particular grievances; and by promoting village democracy to enhance the accountability of cadres (see Chapter 7).

A third strategy consisted of attempts to address some of the institutional roots of the burden problem in the financial and bureaucratic systems.

DESPITE this and similar regulations repeatedly issued by central agencies, peasant burdens continued to exceed their legal obligations. This chapter describes and analyzes just what the burden problem was. We make five major points: (1) Exactions were open-ended and often arbitrary; (2) excessive tax and fee burdens were a problem throughout most of the reform period and by all accounts rose over time; (3) taxes and fees were highly regressive both locally within townships and across the country; (4) the severity of burdens varied with the presence or absence of TVEs whose resources could be tapped to pay for services and development projects; and (5) tax burdens — their size, variability, and the often brutal collection methods – were a major source of peasant grievances.

Burdens have to be assessed against peasant incomes, hence, we begin with a brief discussion of this topic. Analysis is complicated by enormous intrarural disparities. In 1999, the per capita income of peasants nationwide was 2,210 yuan; it was 5,409 in rural Shanghai and 1,357 in Gansu.

WHY were many of China's farmers subjected to financial burdens to the point at which some were driven to suicide and others to violent protest? In this chapter, we look for the underlying causes in the institutions and structures of China's political–administrative system. We identify five structural sources of peasant financial burdens: the vertical and horizontal deconcentration of power; performance pressures on local cadres and officials; state sprawl–the costly expansion of the bureaucracies down to the townships; muddled finances at the township level; and deeply embedded opportunities to engage in corruption. Some of these were strongly influenced by Maoist legacies. Others were based more specifically in the financial system. This chapter demonstrates the extent to which inadequate state capacity rooted in changing and deteriorating institutions was at the heart of the burden problem.

DECONCENTRATION OF STATE POWER

The norms of the PRC's political–administrative system prized unity of purpose and action in accordance with the top leaders' policies and instructions. Functional ministries at the central level were responsible to the Party Central Committee and the State Council and to their coordinating groups. Below Beijing, there was a dual vertical chain of command of Party and government from province down to township. Government agencies reported to their respective superior agencies as well as horizontally to their corresponding Party and government leaders, and, most important, to the territorial Party committees.

EXCESSIVE taxes and fees combined with brutal collection methods have led to protest and violence. Forms of resistance fall into two categories, more or less legal efforts to seek redress of grievances, which are examined in Chapter 6, and those clearly illegal, the topic of this chapter. Legal and illegal protest overlapped if only because the rules were ambiguous. Illegal resistance occurred at both the individual and the more serious collective levels. Peasant strategies ranged from evasion of taxes or fees and attempts to delay and postpone payment, to demonstrations, sit-ins, and blockades of roads and railroads, to sacking Party-government compounds, and beating and killing cadres.

Acts of illegal protest and violence, both at the individual and collective levels, have occurred on numerous occasions. By all accounts, they rose in frequency as the 1990s progressed and into the twenty-first century. An author-itative analysis of both urban and rural protest published in 2001 by the Central Committee's Organization Department stated that “frequently hundreds and thousands and even up to ten thousand” have participated, adding:

THE financial and administrative reforms analyzed in the preceding chapter did not make much of a dent in the burden problem. They therefore did not end the crisis in state-peasant relations caused to a significant extent by the imposition of unreasonable financial levies. Attempting to control local officials only from above was simply inadequate. Pressure on cadres had to be exerted from below as well, that is, by the peasantry. Otherwise, as officials of the Ministry of Civil Affairs argued in seeking to convince central leaders of the necessity for village elections, it would not be possible to contain the explosive potential of peasant anger. Villagers needed legitimate institutionalized means through which to advance their claims and seek redress lest they be compelled to take to the street.

The regime recognized this. As shown in Chapter 6, it allowed the system of individual and collective petitioning to function and it fostered the establishment of legal institutions in the countryside. In addition, it promoted democratization, including elections of village leaders, village self-rule, and “open and transparent” conduct of village affairs (cunwu gongkai). The latter applied especially to finances, in which villagers had a keen and vital interest. Empowering villagers to defend themselves against illegal exactions and the abuses associated with them entailed alterations in the triangular relationship between the central state, the local state, and the peasants, essentially to the disadvantage of the local authorities.

NEARLY a century ago, Schumpeter wrote in his treatise on the relationship between the state and taxation: “Taxes not only helped to create the state. They helped to form it. The tax system was the organ the development of which entailed the other organs…. The tax brings money and calculating spirit into corners in which they do not dwell as yet, and thus becomes a formative factor in the very organism which has developed it.” The study of peasant burdens and rural taxation in China offers a glimpse into the direction in which Chinese reforms have been evolving. This conclusion recapitulates major empirical findings and discusses their theoretical import.

The Three Rural Chinas. Our first major finding is that to understand the complexities of the countryside, it is essential to differentiate between “industrializing rural China,” middle-income “agricultural China,” and low-income western China. China's unitary state designed policies at the Center for the entire country. Although lip service was paid to the principle of implementing policies according to local circumstances (yin di zhi yi), in fact performance demands on localities seem to have been quite uniform. (There were some exceptions, such as Tibet.) With regard to the rural sector, this greatly contributed to increased regional differentiation with respect to development. Policies of fiscal decentralization allowed localities to retain more revenues and thereby stimulate development. This worked well in some parts of the country but not so well in others.

In the late 1990s large parts of rural China were in a state of crisis. Households dependent on agriculture for their livelihood were enduring stagnant incomes and there was an increasingly tense relationship between peasants and local officials. Financial exactions to which village households were subject were a major cause. These included formal taxes, a bewildering variety of informally levied fees, and unregulated fund-raising among the households by local officials. Collecting these unpredictable and arbitrary levies often required severe coercion and was a major source of rural discontent. It elicited considerable peasant resistance, increasingly threatening rural stability. Beginning in the mid-l980s, when the problem first emerged into prominence, the leaders of the Chinese Communist Party and government made major efforts to ease “peasant burdens.” These efforts failed and the situation became more and more fraught with tension and conflict.

This study sheds light on the nature and extent of the burdens. They were an issue primarily in agricultural areas, rather than in those areas where rural industrialization had made significant progress. It sheds light on the repercussions of the burdens by examining peasant protest and peasant collective action. And it sheds light on the attempts made by the authorities to find effective remedies. In analyzing these issues, the study probes the institutional and behavioral sources of this concrete and practical problem, linking solutions to more deep-going reforms. The burdens were the product not simply of predatory or corrupt local officials.