The report delivered by General Secretary Hu Jintao at the 17th National Congress of the Communist Party of China laid out the new objective of government reform to "accelerate the reform of the administrative system and build a service-oriented government". Hu said: "We will standardize the relationship between local departments directly under central government organs and local governments." Also called the "tiao kuai relationship", this has always been an important part of the central-regional government relationship.

Since China adopted its reform and opening up policies, the country has decentralized more and more power to regional governments, especially in the economic arena, to give full play to regional initiatives. The authority, financial power and even special privileges enjoyed by regional governments have expanded remarkably, which has promoted regional economic development.

However, the congenital defects endemic to regional power, such as partiality, shortsightedness and narrow-mindedness, have generated local protectionism and problems such as smuggling, draining of tax incomes, counterfeited products, fake statistics, environmental deterioration and work safety accidents.

The complicated financial problems facing the country's market economy should be dealt with comprehensively, and the national environment requires the cultivation of a unified market. Regional power is weak in resolving such problems and sometimes even becomes an obstacle for the central government to execute solutions.

Given this background, vertical management has emerged and been enhanced. It expands from traditional areas like customs and security organs to new fields like taxation and environmental protection departments. The latter were formerly controlled by regional governments.

Vertical management has taken various forms: vertical management by the central government, vertical management by the provincial-level governments and special vertical management. Security organizations, customs and national taxation organs, for example, are managed by the central government.

Industry and commerce, local taxes, land use, quality supervision, inspection and quarantine and food and drug administration are managed by provincial-level governments.

The national land inspection, audit, financial inspection, environmental protection enforcement supervision and inspection teams sent by the National Bureau of Statistics fall under the category of special vertical management, which is a new thing, appearing with just the past few years.

This all shows that vertical management is being increasingly intensified and expanded.

The relationship between local departments directly under central government organs and local governments is an issue of power distribution between central and regional governments.

The enhancement of vertical management will help break down local protectionism, guarantee the smooth implementation of policies and regulations, avoid intervention by regional governments, optimize the allocation of resources and ensure the maximum protection of national interests.

But vertical management is not a cure-all formula.

Vertical management departments cannot completely stamp out intervention by local governments as there are multiple interest relations and connections to consider. Vertical management will weaken the functions of regional governments and affect their initiatives. Vertical management departments may not cooperate with regional governments in their work, and regional governments may be slow to respond to centrally dictated initiatives. There will easily be situations when each does things in its own way without mutual coordination and both tend to shift responsibilities onto others.

Affected by the trend of vertical management, departments under regional governments may try to crowd themselves into vertical systems, which would affect the stability of regional governments and may result in some unpredictable problems in central-regional government relations.

Thus the relationship should be regulated according to the following principles:

First, all laws regulating the relationship between local departments directly under central government organs and local governments should be made within the framework of the Constitution.

Second, a complete legal system is a prerequisite for the rule of law. We need to complete our laws and regulations according to the Constitution to regulate the division of power.

Third, the opinions of local governments should be taken into consideration when the central government makes any adjustments. Democratic decision-making is needed.

Last but not least, vertical management will only be rational and practical when the functions are at the national or trans-regional levels. Power is not always more effective when wielded by the central government. Some regional functions can be more effective when executed by local governments.

A few systems can be established out of respect for these facts.

A scientific verification system, including expert and public verification, should be set up. The central government should conduct expert verifications before making decisions about establishing a vertical management department. The statistics, materials, process and results should be open to public questioning. And a feedback mechanism should be built.

The democratic decision-making system should be enhanced. The decision to set up vertical management departments by the central government should be approved by the National People's Congress or its Standing Committee before any concrete changes are made.

Xiong Wenzhao is a professor with Central University of Nationalities, Cao Xudong is a graduate student of the university

(China Daily December 21, 2007)