The economic reform launched in 1978 resolved China's deep-seated legacy of soft budget constraints inherited from the planned economy.Footnote 1 However, it induced another problem: China transitioned from a shortage economy into one of overcapacity, a transformation which brought significant development challenges. In 2006, the National Development and Reform Commission (NDRC) asked for a solution to the problem. Responding to the request, in 2007 Hebei authorities pledged to dismantle a first batch of inefficient steel-making enterprises and, in the years ahead, China's Ministry of Industry and Information Technology further identified inefficient enterprises with excessive productive capacity.Footnote 2 In 2013, the Development Research Center of China's State Council reported that China had produced 720 million tons of steel in 2012, which was equivalent to 46 per cent of global production but only accounted for 72 per cent of China's total capacity. A similar pattern of overcapacity occurred within the cement production sector as well as the electrolytic aluminium and flat glass manufacturing industries.Footnote 3 In 2015, President Xi Jinping 习近平 formally acknowledged that industrial overcapacity was a bottleneck hindering further economic take-off and proposed “supply-side structural reform” to counter the problem.Footnote 4 However, the terms of the proposal were vague and offered no specifics on implementation.
Using an analysis of the development of the China Railway Express Delivery (Zhongtie kuaiyun 中铁快运, CRED hereafter) and China–Europe Rail Freight (Zhong–Ou banlie 中欧班列, CERF hereafter), this paper illustrates how such policy vagueness has decentralized and fragmented authority, giving local agents the opportunity and autonomy to engage in entrepreneurship and derive profit from the overcapacity (including idle assets), inadvertently embellishing the otherwise vague central policy with a rather pragmatic outcome. But the decentralization generated a re-centralization of control. This paper unpacks the superficiality of the initial policy, sheds light on the subnational entrepreneurial response and offers a refined theorization of fragmented authoritarianism. Although somewhat fragmented, China's authoritarian regime endures; more importantly, its policy outcomes, now influenced by the resulting central–local interplay, are often unexpected and unintended.
This paper first discusses the general conception of supply-side reform and China's fragmented authoritarianism. It then illustrates this fragmentation by tracing how subnational railway agents, in an effort to echo President Xi's Chinese dream, went above and beyond to build railways, causing capacity to exceed market demand. The subsequent CRED and CERF case studies illuminate the recurring subnational entrepreneurial response to the supply-side reform policy and also demonstrate the Chinese government's “charge ahead first, fix later” approach to development and expectation that if any policies lead to messy outcomes, subnational actors will be responsible for the clean-up. The paper concludes that during the process of decentralization, local railway agents were permitted enough autonomy to respond to the supply-side reform policy in line with their own interests; however, the centralized government maintained the flexibility to re-centralize authority. The cyclical process of decentralization and re-centralization, and the resulting unexpected and unintended outcomes, means that China's state governance can be considered a form of fragmented but enduring authoritarianism.
Supply-side Reform and Fragmented but Enduring Authoritarianism
The policy of “supply-side reform” was first used in the United States in the 1970s to tackle surging inflation rates and a stagnating economy.Footnote 5 Faced with a shortage of capital and production capacity, President Ronald Reagan, in lieu of a Keynesian approach to stimulate demand, opted to stimulate supply. For China, “supply-side reform” has a different connotation. President Xi aimed to boost development, which had been bottlenecked by overcapacity, by streamlining supply-side capacity.Footnote 6
As Xi's proposal lacked any specific guidelines on implementation, the Western media mostly considered it to be yet another empty slogan.Footnote 7 The West, accepting the Chinese government's proclivity for hollow slogans, had considered much of China's post-1978 governance as being piecemeal and lacking in coordination.Footnote 8 However, as much as the Chinese government may like to package policies inside catchy slogans, such policies are not always without substance. In fact, scholars have theorized a “fragmented authoritarian” model for Chinese governance: persistent authoritarian indoctrination coupled with decentralized local agents who allocate resources.Footnote 9
For some, the fragmentation of governance has increased the possibility of dissolving the entrenched authoritarianism, as the decentralization of policies and functional institutions supplies local cadres with extra-budgetary funding and resources for individual pursuits, allowing “many locales to become less sensitive to the policy demands from higher levels.”Footnote 10 The resulting asymmetric information structure is believed to offer subnational actors extra bargaining power with which to “blunt” the state leaders’ policy initiatives and “frustrate” the upper-level authorities.Footnote 11 A “fragmented authoritarianism 2.0” theorization thus arises, where the fragmentation and malleability of the state impact the media, non-governmental organizations as well as individual agents,Footnote 12 facilitating the market-oriented profit-seeking activities among China's state-owned enterprises.Footnote 13 In other words, fragmentation may have unintentionally fractured the authoritarian regime, promoting political pluralization and causing the state to retreat.Footnote 14
Scholars have, however, challenged this theorization as state intervention, as “top-level design” continued to be apparent in, for example, the locomotive manufacturing sectorFootnote 15 and rural medical cooperative scheme.Footnote 16 This paper argues that while China's local actors have time and again outmanoeuvred the central government's policy rhetoric, identifying opportunities and devising ways to profit from excess resources, the central government has also been tacitly accepting the subnational agents’ operations by continuing to issue fragmented authoritarian directives of sweeping visions that allow local agents to quickly identify and exploit any space in which they can operate autonomously. Patterns of flourishing local entrepreneurialism thus follow, although the threat of the central government taking back control always looms large. In essence, such fragmented authoritarianism has rendered the Chinese statehood more flexible and practical, but no less powerful.
The Authoritarian Railway Construction Plan and Fragmented Subnational Response
In the mid-1990s, the Chinese railway network coverage still lagged behind not only developed countries such as the UK, US and Japan but also developing countries with lower income per capita such as India.Footnote 17 However, China's total passenger product (passenger–km, i.e. the multiplicative product of the total number of passengers and total distance travelled) was greater than that of India, the UK and Japan.Footnote 18 In 2005, China's railway handled 3.6 million journeys per day while the daily carriage capacity was only 2.42 million.Footnote 19 This prompted the Chinese government to increase both passenger and cargo capacities.Footnote 20 In 2004, the State Council released the “Medium- to Long-term Railway Construction Plan 2004–2020” (2004–2020 Railway Plan hereafter), which proposed to expand the total rail tracks to 100,000 km for both passenger and freight transport, including more than 12,000 km dedicated to passenger transport.Footnote 21 In 2008, this ambitious goal was further revised up to a total route length reaching 120,000 km, 16,000 km of which was to be dedicated to passenger transport.Footnote 22
Before 2013, China's Ministry of Railways (MOR) had responsibility for formulating policies in line with the development objectives of the central government, maintaining national rail tracks and managing subnational railway agents, including 14 provincial and municipal railway administrations (responsible for daily railway operations) and numerous supporting institutions (focusing on railway construction, rolling stock manufacturing, material supplies and signalling and communications functions).Footnote 23 The MOR could be considered as a part of the central state, with some authority bestowed upon it by the State Council, and the ministerial subordinates as subnational actors. In the 2013 administrative reform, however, the MOR was dissolved and replaced by the China Railway Corporation (CRC), which shouldered the management of day-to-day passenger lines, and the Ministry of Transport (MOT), which took over the planning and administrative roles.Footnote 24 Both the CRC and the MOT headquarters assumed state roles, and the regional units remained subnational actors. These regional railway agents were quick to take up the centre's call to expand the railway network and to fulfil their construction targets based on pragmatic evaluations of local developmental needs as well as other non-economic considerations such as Party loyalty, political conformity and career advancement. For example, China operated its first high-speed train service between Beijing and Tianjin in 2008, but by 2020, the total length of high-speed rail tracks in China had reached 37,900 km.Footnote 25
The 2004–2020 Railway Plan's aim to boost both passenger and cargo handling capacities ended up creating excessive (i.e. idle) and uneven transport capacities. This paper focuses on the overcapacity, which comprises excessive space in both ordinary and high-speed passenger trains as well as transnational freight trains that have been returning to China cargo-less. Ordinary rail cargo transport is still under-developed because of uneven subnational efforts, which have focused on high-speed passenger transport despite the continuing high demand for ordinary rail freight transport and the pressure on the government to guarantee an adequate and continuous coal supply nationwide.Footnote 26 The under-capacity of ordinary rail transport, however, is outside the scope of this investigation, as the primary focus of China's supply-side reform is on overcapacity.
Local Entrepreneurialism Springing from Railway Overcapacity
This study adopted a process tracing methodology based on four field trips to Guangzhou, Beijing, Shanghai and Wuhan between September 2003 and November 2006; three recent follow-up visits to Beijing, Yiwu, Changsha, Chengdu, Chongqing and Almaty in Kazakhstan between November 2016 and June 2019; in-depth interviews with China's railway cadres, logistics practitioners and relevant stakeholders; and analysis of government reports, policy announcements and news articles. The aim was to identify the subnational entrepreneurial evolvements of the CRED and CERF, which are administered by the China Railway Parcel Express Company Limited (Zhongtie xingbao kuaidi youxian gongsi 中铁行包快递有限公司, CRPEC hereafter) and the China Railway Container Transport Corporation (Zhongtie jizhuangxiang yunshu gongsi 中铁集装箱运输公司, CRCTC hereafter), respectively.Footnote 27
The CRPEC and CRCTC were formed in 2003 as spin-off transport service companies of the MOR.Footnote 28 The initial objective was for the loss-making MOR to focus on regular passenger and freight services and rid itself of any off-shoot businesses. The two spin-off companies were put under the management of the State Assets Supervision and Administration Committee and would go on to capitalize on the business network that they had inherited from MOR, profiting from surplus capacity amid an otherwise highly state-monopolized railway sector. In the following sections, I explain the multiple occurrences of China's local entrepreneurialism, including how excess ordinary and high-speed passenger capacities have been refashioned to expedite parcel delivery, and how empty trains returning from Europe to China have driven various initiatives to explore and expand the range of commodities to be shipped to China by rail
The emergence of China Railway Express deliveries
Before the 2004–2020 Railway Plan, the MOR had followed a central “dual-track system” reform policy which allowed subnational railway agents to use idle state assets and sell the resulting extra-budgetary products in markets outside the planned system.Footnote 29 The goal was for the planned regime to survive the “shortage economy.”Footnote 30 However, it was unclear as to how local cadres would rekindle entrepreneurial innovation, which had dissipated amid inefficient production plans and the compulsory state purchasing system.Footnote 31 As measures to decentralize were vague, short-sighted local railways were quick to make money by charging arbitrary hidden fees for serving drinking water on passenger trains and for providing waiting rooms at the train stations.Footnote 32 Some, however, uncovered the true value of using idling assets to grow side-line businesses involving intermodal container transport,Footnote 33 collaborating with the mining industriesFootnote 34 or property development companies,Footnote 35 R&D business on electrification and automation,Footnote 36 recycling wasteland and food processing.Footnote 37
Railway express services exemplified the subnational entrepreneurial mechanism. As far back as 1993, observing that many passengers would rather carry bulky pieces of luggage than to check them in, and given the expansiveness of the nationwide network and regularity of train services, the China Railway Foreign Service Corporation (Zhongguo tielu duiwai fuwu gongsi 中国铁路对外服务公司, CRFSC), a MOR subsidiary, negotiated and obtained permission from the MOR to operate a railway express parcel business in Beijing, Shanghai, Tianjin, Guangzhou, Shenzhen, Shenyang and Zhengzhou. The CRFSC signed cooperative agreements with related regional railway administrations and research institutions,Footnote 38 and offered them 70 per cent of the total profit.Footnote 39 Regional railway partners mostly welcomed the idea, as they would bear no extra costs for mobilizing the empty luggage cars – the empty carriages would have to be moved with the rest of the trains as scheduled anyway. Moreover, any costs incurred could easily be offloaded onto the national budget, thus maximizing retainable profits.
By 1997, the railway express service covered 61 cities. That same year, the CRFSC formally registered the China Railway Express Company Ltd (Zhongtie kuaiyun gongsi 中铁快运公司, CRE) with the State Administration for Industry and Commerce to further enhance its business development, and established 41 regional subsidiaries.Footnote 40 These subsidiaries, comprising related regional railway administrations and subadministrations, would jointly buy 70 per cent of the shares and share 70 per cent of the profit. The subsidiaries were clearly managed by one working team disguised under two company names (yige banzi liangge paizi 一个板子，两个牌子). They operated both the regular national passenger and freight transport services and were familiar with all essential procedures, such as loading and unloading, customs clearance, security checks, luggage car allocation, transit arrangements and parcel tracking, for a seamless parcel express service.
To unify the service standard and enhance the competitiveness of the railway parcel express service in comparison to truck delivery, the CRE gradually consolidated the regional subsidiaries by first increasing its own share of ownership from 30 to 51 per cent and then by turning the subsidiaries into regional branches, designating each as a regional cost centre to minimize operating costs. The profit sharing between the CRE headquarters and the regional branches dropped to 51 and 49 per cent. To this end, the CRFSC, through the CRE, identified the idle capacity of empty luggage cars and undertook a market-oriented strategy to develop the railway parcel express service. However, in December 2003, the-then vice railway minister, Sun Rongfu 孫永福, announced the establishment of the China Railway Parcel Express Company Ltd (Zhongtie xingbao kuaidi youxian gongsi 中铁行包快递有限公司, CRPEC) to take over the railway express delivery business.Footnote 41 At the same time, two more MOR subsidiaries were spun off and recentralized: the China Railway Container Transport Company Ltd (Zhongtie jizhuangxiang yunshu youxian gongsi 中铁集装箱运输有限公司, CRCTC), which would focus on container transport, and the China Railway Special Cargo Company Ltd (Zhongtie tehuo yunshu youxian gongsi 中铁特货运输有限公司, CRSCC), which would focus on special transport, such as cold chain and shipments of certain special sizes.
Faced with losing its primary profit-making railway delivery business, the CRE began to develop other domestic express services. No longer able to use the empty luggage cars, it identified an alternative market niche and shifted to providing a door-to-door delivery service.Footnote 42 This new business model, however, was later seen as a threat to the CRPEC, which only provided a station-to-station service. In 2005, the central government merged the CRE with CRPEC, with the new entity retaining the name CRE (hereafter denoted as “nCRE”).Footnote 43 Although the central government was vague in terms of how to turn businesses around in the railway sector, it reserved the right to take back control if it saw fit.
Local entrepreneurialism in high-speed railway delivery
The massive railway construction under the 2004–2020 Railway Plan required huge upfront investment. In 2013, Sheng Guangzu 盛光祖, the-then minister of railways, admitted that the MOR had total assets amounting to 4,304 billion yuan but accumulative debts of 2,660 billion yuan; however, despite the alarming 62 per cent debt-to-asset ratio, Sheng contended that it was essential to build a high-speed railway network (HSR) ahead of social demand.Footnote 44 It is difficult to ascertain the outcome and effectiveness of such infrastructure investment. For example, usage of the HSR has been controversially inconsistent: the official figure in 2011 was 120 per cent for the Shanghai–Ningbo HSR,Footnote 45 but was much lower in 2014 during the non-peak season between Beijingxi 北京西 and Zhengzhoudong 郑州东;Footnote 46 other scholarly research later reported the HSR's passenger load factor to range between 40 and 70 per cent.Footnote 47 Additionally, analyses of the spill-over economic effects of HSR connection have ranged widely, from positive facilitation of market integrationFootnote 48 to negative association with GDP per capita in the peripheral prefectures.Footnote 49
Despite such incertitude, it was apparent that certain idle HSR capacities could be better and more innovatively utilized to help recover the huge upfront investment. For example, in 2013, between Wuhan and Guangzhou, of the possible 89 pairs of daily high-speed trains, only 57 were operated – the spare capacity could have been used for much more.Footnote 50 Before being dissolved, the MOR had recognized the potential and capacity to develop subnational market-oriented logistics businesses, as evidenced by the establishment of nCRE. In 2013, when the CRC took over the day-to-day operations of the MOR, it was tasked with ensuring financial efficiency by adopting a market-oriented modus operandi.Footnote 51 One of the measures was to announce the “Temporary method for transport management of high-speed train express delivery” (temporary method hereafter)Footnote 52 and expand parcel delivery services across the HSR network beginning in March 2013.Footnote 53
This directive again illustrates the typical “charge ahead first, fix later” model. The HSR express delivery stemmed from the Guangzhou Railway Corporation's (GRC) experiment in 2012 to use the morning inspection train between Guangzhou South and Changsha South for an express delivery service for Shunfeng Express. Inspired by the GRC, the CRC assigned nCRE to centralize the HSR express service. However, there were no clear plans on how to kick start the business. An informant at nCRE said that they had experience of operating an ordinary passenger train parcel delivery service but not HSR delivery: “We were asked to compete with those private logistics practitioners, yet China's HSR system was not designed for express delivery – there were no specific train cars to carry goods, nor handling facilities or space at the HSR platform for loading and unloading purposes.”Footnote 54 Many nCRE insiders shared similar sentiments: “We were like babies being thrown into the pool, expected to learn to swim on our own.”Footnote 55
Once again, the subnational entrepreneurial initiatives gradually overcame the operational challenges.Footnote 56 Specifically, the GRC's experiment of using an inspection train was problematic because it usually operated only once in the morning and did not travel across different regions. To better address market expectations for a more frequent and extensive service, the Beijing branch of the nCRE experimented with express delivery services using the regular HSR network trains between Beijing and Shanghai in April 2014.Footnote 57 Mailed parcels such as business documents, medical supplies, electronic samples and fresh food were stowed in the unused luggage racks located between carriages.Footnote 58 In October 2016, this service was rolled out to 505 Chinese cities. Moreover, different services, including “same-day,” “next-morning,” “next-day,” “day-after-the-next” and “special” deliveries, were offered to cater for different market segments.Footnote 59 These services were launched just before the 11 November Festival (shuang shiyi 双十一, double 11 hereafter), a popular nationwide electronic shopping day, in anticipation of an increase in shipment demands of 35 per cent year-on-year.Footnote 60
The HSR express delivery grew rapidly. In 2016, the annual operating income increased by 31 per cent on the previous year, bringing in 152 million yuan of revenue in total.Footnote 61 By 2018, more than 400 HSR routes were signed up to express delivery.Footnote 62 The nCRE further negotiated with China's top-ranked logistics company, Shunfeng Express, to form the China Railway Shunfeng International Express Co. (Zhongtie shunfeng guoji kuaiyun youxian gongsi 中铁顺丰国际快运有限公司, CRS hereafter) in August 2018.Footnote 63 A railway logistics practitioner expressed pride in such a trustful and comprehensive operational cooperation: “We were told by the central directive to compete with the private express delivery companies. However, years of frontline experience in providing seamless delivery service have taught us that the best possible option is to form a strategic alliance with the market leader.”Footnote 64 As such, the newly launched services, including the “HSR superfast delivery” (gaotie jisu da 高铁极速达) and “HSR handy delivery” (gaotie shunshou ji 高铁顺手寄), were to adapt the special loading and storing facilities on train carriages, at the stations and in rail yards according to specific operational needs arising from Shunfeng’s growing electronic businesses. During the double 11 shopping festival in 2018, 700 HSR carriages were used for express delivery.Footnote 65 By 2018, China Railway Shunfeng had deployed 254 trains on 161 routes for HSR superfast delivery services to 44 cities, completing around 1.51 million orders. The company also offered HSR handy delivery services in 69 HSR stations across 33 cities.Footnote 66
Leveraging the massive, nationwide HSR network and reliable train schedules, China Railway Shunfeng has managed to provide a competitive delivery service for small-sized, high-value goods. The nationwide transport capacity would otherwise be left idle if the subnational actors had not tapped into the recent surge in the e-commerce market and growing demand for household and commercial express delivery. Such a subnational entrepreneurial initiative not only maximizes the use of idle transport capacity but also gradually identifies the market demand and informs how to design pragmatic supply-side reform. For example, during the peak season for e-commerce shopping, some parts of the HSR network are temporarily used for transporting parcels only, paving the way for the development of dedicated HSR passenger trains in the future and adding freight vehicular access at the HSR stations.Footnote 67
With practical adaptations, HSR express delivery can offer a fast, eco-friendly and reliable alternative for transporting small commodities and parcels as well as time-sensitive goods such as fresh fruit, seafood, commercial documents and medical supplies. Strategic alliances with other express delivery companies such as Jingdong Express and China Post also take advantage of the network synergy for a seamless service.Footnote 68 In 2019, railway agents in Kunming and Hunan promoted the use of HSR express delivery to market indigenous produce such as flowers, vegetables and fruit through an emerging electronic shopping platform in poverty alleviation schemes.Footnote 69 Similar subnational initiatives soon spread to Henan, Shaanxi, Ningxia, Xinjiang, Shangdong and Gansu, transporting products such as rice dumplings, tea, honey, walnut, cherries and peaches from poor areas.Footnote 70 The market-driven logistics business has thus responded to another policy rhetoric: “targeted poverty alleviation.”Footnote 71 Seeing the promising results of the HSR logistics in alleviating rural poverty, the National Rural Revitalization Administration, despite not being the direct supervising entity for the CRED, began to promote collaboration between rural and non-rural sectors in general,Footnote 72 and cooperation with the railway in particular, for rural revitalization.Footnote 73 How this centralized initiative will further shape the development of HSR express services still remains to be seen.
Loading the CERF
With 2.2 billion yuan of registration capital, the CRCTC was the biggest of the MOR subsidiaries in 2003. Its shareholders included the China Railway Container Transport Centre (Zhongtie jizhuangxiang zhongxin 中铁集装箱中心), which owned 51 per cent of the company, and 14 local railway administrations, whose combined share totalled 49 per cent.Footnote 74 Time and again, the CRCTC helped the centralized leadership to resolve railway overcapacity. In the above case study, the CRPEC and the subsequent CRE and nCRE repurposed the idle capacity of both ordinary and high-speed passenger trains. Below, I show how the CRCTC and a group of subnational actors revived the partially empty China–Europe freight trains.
The China–Europe freight train initiative originated in Chongqing when the city's ex-mayor, Huang Qifan 黃奇帆, brokered a deal in 2011 with Hewlett Packard (HP) to offer the company a seamless rail-borne freight service to transport its products from Chongqing to Western Europe at a cost cheaper than air transport and 20 days faster than sea shipping.Footnote 75 Huang promised to subsidize half of the transport cost if HP agreed to move its production facility and Asian accounts settlement centre to Chongqing.Footnote 76 In 2012, the Chengdu government deployed a similar local state corporatism to convince Dell to move its overseas manufacturing base to Chengdu and export its products using transnational trains to Lodz, Poland.Footnote 77
Recognizing the symbolic implications for China's Belt and Road Initiative (BRI) of the growing number of dedicated freight trains running between China and Europe, in 2013 the NDRC centralized the subnational initiatives under the CRCTC as a signature BRI project and rebranded it as “China–Europe Rail Freight” (CERF).Footnote 78 As the top leadership forcefully stirred up subnational enthusiasm for transnational rail freight projects, many local governments operated freight trains just to demonstrate their political support. Many of these politically driven freight trains departed China with only partial loads, returning empty, as “ghost trains.”Footnote 79 As of 2019, the economically driven freight trains had gradually scaled up into a few flagship freight train schedules that ran frequently and shared roughly half of the total volume of the China–Europe rail freight. The politically motivated trains were typically less frequent, sometimes running only on an ad-hoc basis, taking in a wide range of points of departure and together making up the rest of the freight share.Footnote 80 In short, the state-led politicization of such freight trains triggered an enormous waste of transport capacity.Footnote 81
The growing number of empty returning trains is evidence of the type of imbalance in resource allocation that typifies an inefficient state project. To resolve the issue of unused capacity on the “ghost trains,” China again relied on subnational actors to streamline the freight capacity and come up with a more appealing tagline than just “faster than sea, cheaper than air.”Footnote 82 Once again, despite the politically driven initial rush to operate the transnational freight trains, a few subnational logistics actors in China and overseas have been trying to restructure and customize the freight trains for niche, high-value goods. For example, containers have been lined with foil and equipped with temperature control systems so that they can transport delicate, temperature-sensitive products such as sophisticated electronics, chilled meat, perishable agricultural goods, humidity-sensitive skincare and medical products, and fine wines.Footnote 83
Taking advantage of the willingness shown by many local governments to subsidize the empty returning trains,Footnote 84 the respective freight service operators have also sought to exploit the idle rail freight capacity.Footnote 85 For example, seeing the potential to transport agricultural goods from Kazakhstan to China, various local CRE regional agents soon established trade offices in cities along the freight routes. They also hired Chinese-speaking Kazakh representatives in Almaty to explore possible trade opportunities and to arrange exports using the empty China-bound trains.Footnote 86 Their entrepreneurial drive for survival and personal gain has unwittingly expanded the market for Kazakhstan's local agricultural and food-processing sectors.Footnote 87
The subnational actors who negotiated for favourable bilateral trade policies and logistics arrangements successfully exported the first batch of wheat from Kazakhstan to Jiangsu in China in August 2018. Chilled beef, live donkeys and barley began to make their way into China in 2019. In addition to identifying potential shippers, these subnational brokers have also endeavoured to secure reliable food testing laboratories, finalize the best packaging for rail transport and retail consumption, and get sanitary certification for various agricultural products such as rapeseed, hay, barley, wheat, sweet corn, wheat flour, flaxseed and dairy products. Finally, in 2019, lists of Kazakhstan enterprises were announced as registered suppliers of soybean, sweet corn, barley and wheat goods for China.Footnote 88 These potential shippers were expected to fill China's empty freight trains and help to resolve the issue of overcapacity.
Conclusion
This paper has examined the cycle of initial state-level policymaking, subnational response and subsequent state intervention and interaction with local actors to shape policy outcomes in an effort to fine-tune the theorization of “fragmented authoritarianism” in China. The Chinese leadership's “charge ahead first, fix later” mode of development seen in the railway sector has become a repeated pattern of policy implementation: while the state supplies “policy slogans,” there is tacit understanding between the state and the subnational actors that the policies are intentionally vague, signalling a process of policy decentralization that the subnational actors can exploit to innovate for personal profit while also helping to clean up any mess that the policies and mode of implementation might cause. On the one hand, the fragmented decentralization policy and implied autonomy elicit an entrepreneurial flair from certain local cadres and subnational market actors while the state still has the power to take back control of selected economic activities. Such alienated autonomy has driven the subnational actors to roll out their economic activities as quickly and as wide as they can. On the other hand, the recurring patterns of local responses empower the authoritarian state to continue fast-tracking economic development. Therefore, despite fragmentation, China's authoritarian governance endures, with outcomes shaped by cycles of central–local interplay.
The emergence of the CRED over the past two decades illuminates a cycle of politically driven over-expansion of capacity, and subnational, market-driven refashioning of excessive, idle and/or uneven capacity. In the case of the HSR express, for example, the CRC centralized the GRC's experimental HSR express service via nCRE, without any strategic directions on how to compete with private express services partitioners. Responding to the “temporary method,” subnational actors initiated a collaboration with Shenfeng Express and expanded the scope of the business from supporting e-commerce delivery to transporting indigenous agricultural produce. The successful business model involving the rural regions was soon picked up by the National Rural Revitalization Administration as a signature project of “targeted poverty alleviation.”
The recent development of the CERF further affirms that President Xi's government has learnt to set the nationalistic “China dream” ethos and boldly scale up economic activities.Footnote 89 Then, following previous developmental logic, the Chinese government has boosted production capacity as much as possible, expecting to rely on subnational market-oriented survival strategies to resolve the ensuing overcapacity by moulding economic activities to absorb any excess.
While the CERF has always been criticized for having an insignificant market share, the recent pandemic triggered a sudden switch in freight transport from sea and air to railway, adding pressure to the already congested Chinese borders.Footnote 90 In 2021, the number of China–Europe freight trains reached 15,000, a figure far surpassing the planned 5,000 between 2016 and 2020.Footnote 91 Another cycle of state-led over-capacity building and subnational capacity adjustment may be in the pipeline. Like it or not, the evolvement of China's “fragmented authoritarianism” tends to tilt towards the development of masterful authority rather than towards liberal fragmentation. Such patterns of entrepreneurial responses enrich the theorization of the long-studied fragmented authoritarianism. Despite the implementation of decentralization strategies, which have created fragments of space in which state agents can manoeuvre and survive, the state retains the power to re-centralize economic development. Both fragmented authoritarianism and subnational entrepreneurialism enable China to “grope for stones while crossing the river” of economic transformation.Footnote 92
Acknowledgements
The work described in this paper was supported by the Early Career Research Scheme, funded by the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. CityU 21606520) and the CityU Strategic Research Grant (Project No. 7005324). The author also thanks Huang Wenjie for her research assistance and the anonymous reviewers for their constructive comments.
Competing interests
None
Linda Yin-nor TJIA is an assistant professor at the department of public and international affairs, City University of Hong Kong, China. Her research interests include China's railway and logistics development as well as the political economy of China's international development and industrial projects.
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