The Impact of Authoritarian Aid on State Building: Evidence from China

• In Event: Historical Approaches to Comparative Politics

Abstract

Strong authoritarian institutions are the cornerstone of authoritarian durability. In particular, three sets of authoritarian institutions are important: parties, states, and militaries (Slater). Yet the origins of such institutions are less widely understood (Slater 2010, Levitsky and Way 2015). I examine the question of why some authoritarian regimes develop relatively strong authoritarian institutions, arguing that a subtype of authoritarian aid—communist economic aid—is particularly useful in building infrastructural power in recipient communist regimes. In particular, I argue that communist economic aid enhanced institutional capacity in communist regimes in three ways. First, aid extended state control over the economy and facilitated the construction of a centrally-planned economy dominated by state-owned enterprises (SOEs). Second, aid deepened state leverage over urban workers in the SOE sector. Third, aid enhanced state fiscal capacity by allowing regimes to extract rents from SOEs. I characterize the process of these three mechanisms as “resource-intensive state building.” This finding challenges the conventional wisdom that aid is useful primarily because it is a fungible source of patronage (Bueno de Mesquita, Smith et al.).
I illustrate this argument through a case study of China, which received significant aid from the Soviet Union and Eastern Europe in the 1950s. Through the “156 projects”—as the Soviet aid projects were known—economic aid financed SOEs in the heavy industry and national defense sectors. The projects allowed the construction of a modern SOE sector in inland areas that increased state domination of a new urban SOE workforce. The 156 projects, in turn, contributed to state fiscal capacity by generating rents that were captured by central planning. At the same time, this pattern of resource-intensive state building also challenged the personalist authority of Mao because it built up a powerful and resourceful planning apparatus. Concerned that his power was declining, Mao attacked the planning apparatus and set China on a path of “mobilization-intensive state building” that relied on ideological exhortations and political mobilization to build state institutions.
Because of their time-limited nature—Soviet aid halted in 1960 and never resumed—the 156 projects also offer an interesting opportunity to examine the long-term impact of aid projects. Based on an original city-level dataset of Soviet aid projects, this paper argues that Soviet aid generated durable increases in state infrastructural power, particularly state domination of the economy. Compared to cities that received no Soviet aid, cities that participated in the 156 projects even as late as the mid-1980s had higher levels of state domination of the economy. State sector employment in 156 projects cities also remained higher than in cities that received no aid even as late as 2012. In sum, far from functioning only as a source of patronage, communist economic aid to China resulted in durable increases in the state’s domination of both the economy and urban workers.

Author

• Christopher Heurlin, Bowdoin College