License Not Budgets: How Taxless Administrative Financing Isn't Corruption

Abstract

What happens when local bureaucracies in China fail to receive sufficient state budgeted funds? Focusing on Zouping, a county in Northern China, this essay examines the strategies that empower local agencies to self-finance personnel and administrative costs. The overarching logic of these strategies, which I label taxless administrative financing, can be summed up in a colloquial Chinese phrase: “license not budgets” (gei zhengce bu gei qian). Instead of allocating budgeted funds from tax revenue to fund public administration fully, the state enacts policies that “license” local bureaucracies to self-finance, such as by collecting fees or earning revenue through market activities. An account of taxless administrative financing has two important implications. First, it is distinguished from popular perceptions of local bureaucracies as corrupt agents who extract revenue arbitrarily and in defiance of state policies. Instead, it emphasizes that the state makes policies that license agencies to generate revenue for self-financing. Second, it highlights the continuity and adaptation of prebendal practices in pre-modern China in a contemporary context of market reform, placing the self-financing measures of local bureaucracies in historical and comparative light.