Autonomy or Privilege? Lobbying Intensity of Local Business Associations in China

RESEARCH ARTICLE

Autonomy or Privilege? Lobbying Intensity of LocalBusiness Associations in China

Jianxing Yu & Kenichiro Yashima & Yongdong Shen

Published online: 14 May 2014# Journal of Chinese Political Science/Association of Chinese Political Studies 2014

Abstract This article examines the relationship between the state and society incontemporary China by analyzing the lobbying behavior of business associations.Particularly, it asks whether and how autonomy and/or privileged access exert/sinfluence on their lobbying frequency. A formal model is developed that focuses onthe trade-off between lobbying intensity and the private provision of collective goods.The hypotheses are tested against the original survey data from Zhejiang and JiangsuProvinces. The research finds that self-established associations lobby less, and thosewith consultant status assigned by the government lobby the government more often. Incontrast, the impact of “autonomy” in a narrow sense is weaker than is commonlyclaimed in the Chinese lobbying literature.

Keywords Local Business Associations . Lobbying Intensity . Autonomy. PrivilegedAccess . China

Introduction

With the development of a market economy, China has experienced dramatic transfor-mation not only in its economy, but also in politics. Although China remains anauthoritarian state, lobbying has become part of the policy-making process [21].Business associations play important roles as bridges between the government andbusiness enterprises. On the one hand, they provide information to the state about the

J OF CHIN POLIT SCI (2014) 19:315–333DOI 10.1007/s11366-014-9301-7

J. Yu :Y. Shen (*)School of Public Affairs, Zhejiang University, 866 Yuhangtang Road, Hangzhou, Zhejiang Province,People’s Republic of China 310058e-mail: [email protected]

J. Yue-mail: [email protected]

K. YashimaDepartment of Political Science, Boston University, 232 Bay State Road, Boston, MA 02215, USAe-mail: [email protected]

private sector; on the other hand, they offer enterprises another channel to interact withthe state and society [45].

This article examines the determinants of the lobbying intensity of local businessassociations in China, based on the original survey data collected in 2012. Morespecifically, it assesses the impacts of two factors that are of great interest forChinese specialists: autonomy and privileged access.

The research contributes to the understanding of Chinese politics in several respects.First, it provides quantitative evidence on the lobbying behavior of business associa-tions in China. While the literature on this topic still primarily relies on descriptivestatistics, this study utilizes regression analysis, thus providing stronger evidence.Second, it presents results that cast some doubts on the conventional wisdom; amongthem, the research finds that self-established associations actually lobby less often. Incontrast, direct indicators of “autonomy” were not statistically significant. It alsoproposes privileged access as an important determinant of lobbying, which isoverlooked in the empirical research on lobbying in China. Third, this paper demon-strates the utility of examining Chinese business lobbying from an explicitly generalframework with a more rigorous micro-foundation. As the recent literature shows,China may and should be fruitfully analyzed from a comparative perspective [24, 44].In particular, a formal model developed in this paper highlights the trade-off ofresources allocation between lobbying and the private provision of collective goods,which produces a set of non-obvious and coherent hypotheses.1

The rest of this article is organized as follows. The next section reviews theliterature, and the third section develops a formal model based on the review. Thefourth section introduces the research design. The fifth section presents the results ofstatistical analysis. The final section discusses some concerns for generalizability,before summarizing the findings and highlighting theoretical implications.

Literature Review and Hypotheses

Policy Making and Lobbying of Business Associations

The literature has provided a nuanced picture of the contemporary Chinese policy-making [5, 21, 24, 32, 34, 39, 54]; the stereotypical view of isolated policy making hasbeen effectively destroyed. At the same time, researchers have found a wide variationamong regions, sectors, and issue areas over time; hence they have recognized thedifficulty and danger of a broad-brush generalization. In the face of this challenge,scholars seem to have reached a consensus that it is more fruitful to focus onaccumulating hard evidence than to engage in debates over the applicability of “bigconcepts.” In line with this research trend, this article focuses on the issue of lobbyingby business associations.

The concept of lobbying refers to any effort used to influence policy ([13], 6, [2],33–36). The literature on lobbying has explored a broad range of topics. Althoughresearchers lament the slow progress in the field [2, 31], it has produced a vast amount

1 For another recent example that applies formal modeling to an area-oriented question of village elections inChina, see Takeuchi [40].

316 J. Yu et al.

of research from a variety of methods (in-depth case studies, formal modeling such asBaron [1], and quantitative analysis) and has become equipped with a relativelycoherent analytical framework [13].

Turning the focus on China,2 experts generally agree that enterprises and businessassociations have increased in size [27, 35, 48, 49] and have become more active in thepolicy-making process [19]. However, most of the research agendas in the lobbyingliterature have been understudied. That said, several features stand out in theexisting literature. First, researchers have mainly approached the topic frommacro-concerns, particularly from theories of civil society, democratization,and a state-society relationship [7, 8, 11, 18, 42, 43, 46, 52, 53].3 It entailsthe danger of narrowing researchers’ attention if it is pursued exclusively. Withoutdenying the heuristic value of such a strategy, this article takes an alternative path ofemphasizing the micro-foundation. Second, researchers have so far concentrated on theissue of autonomy [6, 8, 25]; however, this study proposes privileged access as anotherimportant factor that affects lobbying intensity. Although privileged access has been acentral issue in the study of Chinese politics, it has not been addressed in the lobbyingliterature.

Autonomy and Lobbying

The issue of autonomy has been a central concern among China experts. Disagreementsremain over the actual degree of autonomy, but most empirical studies evaluate it asstill limited. Furthermore, Kennedy states that business associations “have yet tobecome dominant forces in industry’s self-regulation or in their interaction with thestate” ([23], 203).4

Still, variations exist, and researchers argue that autonomy does make a difference.Earlier studies tend to rely on holistic (and ad hoc) assessment [48], but recent researchis more self-conscious about the criteria. Kennedy ([22], 154), summarizes the currentdebate by proposing that the differences in autonomy may be measured according tofour dimensions: 1) origin, 2) affiliation (yewuzhuguandanwei), 3) staffing (personnel),and 4) financing.

First, Yu et al. [51] emphasize origin as an indicator of autonomy. Several empiricalresearches have examined the impact of origin, and generally they find the positiverelationship between origin and dependent variables of interest. Dickson ([8], 116–119)concludes from the cross-tabulation analysis that self-organized business associationsmay be effective vehicles for business-related issues, but not for exerting influence onlocal policy implementation.

Other indicators have also been proposed in the literature. Based on descriptivestatistics, Deng and Kennedy ([6], 119–120) argue that high-autonomy associationshave distinctive behavioral traits, such as targeting a wider range of government

2 Deng and Kennedy [6] confirm that the Chinese usage of the term “youshui” is consistent with the generaldefinition of lobbying in political science.3 Scholars often propose labels that they claim adequately capture the relevant characteristics: fragmentedauthoritarianism [34], authoritarian communitarianism [15], consultative authoritarianism [41], crony com-munism [8], guanxi capitalism [33], and fragmented corporatism [16], among others.4 He also quips that “associations are like ‘pedestrian overpasses’. Some people use the overpasses, but inChina most cross the road at street level” ([22], 173).

Lobbying Intensity of Local Business Associations in China 317

entities. After examining four indicators (origin, location of secretariat, budget, andaffiliation), they find that only affiliation is associated with lobbying behavior. Inanother article, Kennedy and Deng [25] use the affiliated unit as a proxy of autonomy.In the regression analysis of 73 business associations at the national level, they find thatif an association is affiliated with the All-China Federation of Industry & Commerce(ACFIC), it tends to lobby more often than those affiliated with government agencies([25], 154).5 Furthermore, Kojima and Tsujinaka [29] have examined bivariate relationsbetween lobbying frequency and four “autonomy” dummies, which refer to the exis-tence of assigned employees (shiye danwei bianzhi renyuan), selection of leaders by thegovernment, acceptance of ex-officials, and financial contribution from the govern-ment. Their dataset is not limited to business associations, but includes a wide range ofsocietal organizations. They find some evidence of negative correlation betweenautonomy and lobbying. However, they also emphasize that the size of the impactwas not large and conclude that there is no meaningful difference between autonomousand non-autonomous societal groups.

Privileged Access and Lobbying

In most countries, the issue of privileged access is highly relevant in the studyof interest group politics. In the United Kingdom, the “insider/outsider” dis-tinction has been discussed for decades [14]. In the United States, the centralissue in the literature has been whether and to what extent certain groups aremore privileged than others. In Denmark, Binderkrantz [3] finds that “privilegedposition” vis-à-vis decision makers significantly increases the level of lobbyingtargeting them.6 In the context of Latin America, Schneider [38] notes that theorganizational capacity of encompassing business associations is mainly shapedby selective incentives offered by state actors.

Schneider’s argument is particularly relevant when applied to China; the governmentmay well manipulate the costs and benefits of lobbying by offering selective benefits tobusiness associations.7 In particular, we focus on the consultation status assigned toassociations.

A Model: Beyond the Literature

As already discussed, previous research on business associations in China tends toclaim the unconditional positive relationship between “autonomy” and lobbying inten-sity. However, this argument suffers from two main problems. First, the theory isincomplete. It is not obvious why a more “autonomous” association should lobbymore often; they may well autonomously decide not to do so. Second, the concept of“autonomy” has to be operationalized more carefully. As previously mentioned, the

5 However, it is unclear which statistical method (linear or non-linear, for instance) they have applied.6 In fact, privileged access is a central trait of the concept of corporatism [4]. Although corporatism has alsobeen a key concept in China studies, scholars have mostly focused on the relationship between the governmentand the group, not between groups.7 After all, it was the government initiative that facilitated institutional separation between business associa-tions and governmental departments in the first place [16, 50].

318 J. Yu et al.

current literature on Chinese lobbying identifies origin, affiliation, financing, andpersonnel as major indicators of autonomy from the government. However, the actualcausal mechanisms through which these factors affect lobbying behavior may wellvary, because it is not clear whether and in what sense these indicators “measure”autonomy. In other words, the mechanisms that relate these observable attributes tolobbying behavior need to be specified.

Basic Setup

In order to address these problems, a simple formal model is developed. It focuses on atrade-off between two ways of producing collective goods: public policy (throughlobbying) and private (own) provision/production.8 The former refers to the provisionof pecuniary benefits and/or other favorable policies from the government. The latterincludes a wide range of actions, from enforcing quality standards on member compa-nies, to promoting products to foreign markets [10]. Service provision is an importantfunction of business associations in other countries too [36].

The basic idea is simple; lobbying is not necessarily the most lucrative way to investone’s resource. Indeed, public policy is critical for any business sector in China, but it isuncertain whether business associations can exert influence on it. Under certainconditions, an association may well choose not to lobby, but instead invest its resourceon producing collective goods and improve the business environment on its own.Subsequent formal modeling is a tool to express this idea in a more rigorous way.

Suppose that a business association tries to allocate its resources (total amountdenoted by r) to maximize its utility. The resource can be interpreted either as theassociation’s budget or the agent’s work hours. The utility of the association (denotedby U) may be written as the sum of benefits from lobbying and private provision:

U ¼ f x1ð Þ þ g x2ð Þ; x1 þ x2≡ar; ð1Þwhere x1∈[0,ar] and x2∈[0,ar] refer to the amount of resources allocated to lobbyingand private provision, respectively. The functions f(•) and g(•) represent the totalexpected benefits from lobbying and private provision, respectively. Marginalbenefits f ′(•) and g ′(•) are assumed to be nonnegative and weakly decreasing. Theparameter a∈[0,1] captures to what extent an agent (employee of the association)internalizes the interest of the principal (aka association). It can be regarded as the levelof “effort” of the agent; the rest (r−ar) is “wasted” from the association’s perspective.The agent chooses x1 and x2 that maximize U (denoted by bx1 and bx2 , respectively),given the constraint ar.

To proceed, the first derivatives can be approximated by straight lines: f′(x)=−k1x+β1,and g′(x)=−k2x+β2, where k1,k2,β1,β2>0. Assume β1<β2, or private provision is alwaysbeneficial as the first investment. Actually, a business association should organize itself tomake it possible to lobby. It also reflects the uncontroversial fact of uncertain return fromlobbying. For technical reasons, “moderate scarcity” of resources is also assumed, whichguarantees positive marginal benefits even under this linear specification.9

8 It is different from the distinction between inside and outside lobbying [30], which refers to two mainmethods of influencing public policy, or between private and collective lobbying [12, 20].9 Formally, it is assumed that x< ar < x�1 þ x�2 , where x ≡

β2−β1

k2, x�1≡

β1

k1, and x�2≡

β2

k2.


Figure 1 visualizes the setup.U is maximized when f ′(x1)=g ′(x2); i.e., when marginal benefits from lobbying and

private provision are equal. Therefore, the amount of resources allocated to lobbyingbx1ð Þ is:

bx1 ¼ k2k1 þ k2

ar − x̄� �

; x̄ ¼ β2 − β1

k2: ð2Þ

Deriving Hypotheses

Formula (2) enables examining the impacts of various indicators proposed in theliterature. Four indicators of “autonomy” and one indicator of privileged access arediscussed in turn. The question is to which parameter(s) in the formula an empiricalindicator corresponds. This is a critical link that connects theoretical concepts withempirical analysis, and thus it would be discussed carefully.

First, how would self-establishment affect the parameters? Departing from theexisting literature, this paper argues that self-establishment primarily reflects the higherinitial and total returns from self-provision, rather than the higher level of autonomy orthe difference in resources. Even if self-established, business associations often keepclose contact with the government, and they do not necessarily enjoy personnelindependence (aka larger a). There is also no strong reason to believe that self-established associations have either more or less resources (aka r). Rather, self-establishment signifies an economic attribute of the industry—larger initial return fromprivate provision (larger β2). They were voluntarily established just because of strongdemands for private provision of collective goods, high enough to overcome thecollective action problem. Formula (2) shows that a larger β2 always decreases bx1 ,other things being equal.10 Therefore, it is expected that self-established associationslobby less often (Hypothesis 1).

Second, how would “personnel autonomy” affect lobbying frequency? In thisregard, two indicators are discussed: response to the question of whether or not anassociation has “personnel autonomy” and the number of ex-officials in the association.The first indicator is closest to the conceptualization of a; it directly increases a, whichin turn increasesbx1 . Thus, it is anticipated that an association that answers this questionpositively would lobby more (Hypothesis 2-a). Regarding the second indicator, it issometimes claimed that a larger number of retired government officials in a businessassociation signifies a lower degree of autonomy. However, it is not necessarily thecase, because an autonomous association may voluntarily employ ex-officials in orderto obtain expertise or access to policy makers, as in the case of the United States. If thelatter interpretation is more appropriate, a larger number of ex-officials signifies moreresources (larger r) and/or a smaller cost of lobbying. Although the net impact of the

10 It might be the case that self-establishment is also related to a larger value of k2; that is, the marginal returndecreases more rapidly as a result of the larger initial return. However, under a relatively conservativeassumption that self-establishment does not decrease x2

∗, it can be shown that bx1 is always decreasing in

β2. The proof is as follows: substituting k2 ¼ β2

x�2into the formula for bx1 and differentiating with regard to β2

yield dbx1dβ2

¼ x�2 ar−x�2ð Þk1−β1f gβ2þx�

2k1ð Þ2 . The “moderate scarcity” constraint, ar<x1

*+x2∗, can also be rewritten as (ar−x2∗)k1

<β1 by substitution, which implies that the numerator is always negative. Since the denominator is alwayspositive, the first derivative is always negative.

320 J. Yu et al.

change in the cost of lobbying is uncertain,11 more resources (larger r) clearly increasebx1 . Thus, it is predicted that more ex-officials in an association increases, rather thandecreases, the frequency of lobbying (Hypothesis 2-b).

Third, how would affiliated units affect lobbying behavior? It may be speculated thatthe government is more responsive to lobbying if an association is affiliated withspecific policy-making departments, such as the Department of Construction (largerinitial return β1). While they have specific policy jurisdictions and may well have closerrelationships with affiliated business associations, the Economy and InformationCommittee (EIC) and the Federation of Industry and Commerce (FIC) are mandatedfor more general purposes and have a larger number of business associations.

The prediction depends on the assumption as to whether affiliation entails anincrease in total benefit. If the total benefit from the government remains the same,the direction of the impact of change in β1 is indeterminate.12 If it is assumed thataffiliation with a policy department is accompanied by a sufficient increase in totalbenefit, it may be shown that a larger β1 leads to a larger bx1 .13 Since there are no strongreasons to adopt either assumption, the “positive” prediction as a working hypothesis isarbitrarily adopted; it is expected that affiliation with a specific policy department ispositively associated with lobbying frequency (Hypothesis 3).

Fourth, how about the impact of “financial autonomy”? Two indicators are availableand will thus be discussed in this paper; the direct question of whether or not anassociation has financial autonomy and the proportion of money from the governmentout of the total budget. Regarding the former indicator, it may be thought that it alsomeasures a. Thus, as in the case of Hypothesis 2-a, it is expected that a positive

11 It is because the total benefit from lobbying might remain constant regardless of the initial responsiveness

(β1). Formally, if the total benefit is fixed (denoted by c2 ), then k1 ¼ β1

2

c . Substituting and differentiating with

regard to β1 yield dbx1dβ1

¼ −c β12þ2 k2ar−β2ð Þβ1−ck2ð Þ

β1þck2ð Þ2 , whose sign depends on the value of β1. In this case, a

prediction cannot be derived without knowing the actual value of β1.12 It can be shown by a similar process as appears in the footnote for Hypothesis 2-b.13 It can be shown by a similar process as appears in the footnote for Hypothesis 1.

Resource

Marginal benefit

0Fig. 1 Marginal returns and allocation of resources. Notes: Although it is assumed that β2>β1, neither k2>k1nor x1

∗>x2∗ is assumed, nor does it affect the hypotheses. These aspects in Fig. 1 are chosen only for illustrative

purposes. The areas of shaded trapezoids represent the total benefits from lobbying and private provision ofcollective goods. Source: Created by authors


response to this question is associated with more lobbying (Hypothesis 4-a). Regardingthe latter indicator, it is unclear whether a high ratio actually signifies less autonomy.Autonomous associations may have won subsidies from the government; a high ratiomight be a sign of success and influence. Rather, this ratio is interpreted as a proxy forthe total residual benefit from the government. If an industry association already receivesa large benefit from the government, the remaining potential benefit from lobbyingwould be smaller, other things being equal.14 In formal terms, it can be captured as asmaller β1,

15 which decreasesbx1 . Therefore, it is predicted that a higher ratio of “incomefrom the government” is associated with less lobbying (Hypothesis 4-b).16

Fifth, how does privileged access to the government affect lobbying frequency? Inthis research, we focus on the consultant status assigned by the government. Easieraccess increases the initial return (larger β1), which in turn decreases x. Moreover, itmay also be thought that the consultant status implies the government’s willingness toprovide a favorable policy. Thus, it is reasonable to assume that k1 does not change(which implies a higher total benefit).17 Therefore, in line with Binderkrantz’s position[3], it is expected that an association with privileged access lobbies more often,compared to the practice of those without (Hypothesis 5).

Research Design

Data

The hypotheses in the foregoing section were tested through the survey data collected by theauthors during the summer of 2012. The data was collected from two administrative levels:the Provincial and City Levels. The former is from the Zhejiang Province, and the latter arefromWuxi City in Jiangsu Province, andNingbo andWenzhou Cities in Zhejiang Province.By the end of 2011, there were 258 business associations at the Zhejiang provincial level,110 at the Ningbo city level, 145 in Wenzhou City, and 121 in Wuxi City.

In Zhejiang and Ningbo, questionnaires were handed out during annual conferencesorganized by the Bureau of Civil Affairs. A total of 178 business associations attendedthe annual conferences of Zhejiang and 68 in Ningbo. Questionnaires distributed inWenzhou and Wuxi were collected by the FIC in those cities; this procedure wasnecessitated by practical reasons.18 Either the directors or the general secretaries of

14 Here, it is assumed that the ratio is exogenous. Relaxing this assumption is an agenda for future research.15 In this case, it is more reasonable to think the government responsiveness (k1) is fixed.16 Differentiating with regard to β1 yields ∂bx1

∂β1¼ 1

k1þk2. It suggests potential interaction effects with the

indicators. For example, if self-establishment affects both β2 and k2 (larger), it may be predicted that theimpact of the ratio (income from the government) would be smaller if an association is self-established.17 Alternatively, a larger total benefit may be represented by constant β1 and smaller k1. It does not affect theprediction regarding the main effect.18 The majority of business associations are affiliated with FIC inWenzhou andWuxi, as two trial cities of reform inbusiness associations. A couple of associations in these cities are still affiliated with policy departments, since thegovernment could not force them. Meanwhile, in Zhejiang Province level and Ningbo City level, businessassociations are affiliated with EIC, FIC, and other government departments. However, all business associations inthe four places also must be separately registered in the Public Affairs Bureau. This is called the System of DualControl for all associations in China. However, the System of Dural Control may be repealed after 2013 since theProposal of the State Council Restructuring and Functional Transformation Plan was delivered at the First Session ofthe Twelfth National People’s Congress on March 5, 2013.

322 J. Yu et al.

business associations responded to the questionnaires; 34 valid questionnaires wereobtained from Zhejiang, 35 from Ningbo, 19 from Wenzhou, and 37 from Wuxi.Through interviews, data were also collected from eight business associations at theZhejiang provincial level. The sample adds up to a total of 133 respondents.

Table 1 summarizes the relevant statistics. The overall response rate is 20.9%,although the rates vary by jurisdiction, from 13.1% in Wenzhou to 31.8% in Ningbo.Examining how the response rates differ by affiliated units in each jurisdiction showsgenerally negligible differences, with a possible exception in Ningbo’s case. Thefindings suggest that some useful inferences can be drawn from the dataset. Still,caution is necessary when interpreting the estimation results.19

Variables and Measurement

Dependent Variable: Lobbying Frequency

The dependent variable is the frequency of lobbying local government agencies,measured as a five-category discrete variable. The questionnaire asked how manytimes the respondents “propose policies” (zhengce jianyi) to government agencies informal and informal ways. Two concepts of lobbying and zhengce jianyi may be safelyregarded as equivalent.20 The respondents had to choose one among five alternatives:never, once a year, twice a year, once a month, and once a week. Responses were thencoded from one to five, respectively.

Independent Variables: Autonomy and Privileged Access

As discussed so far, autonomy is a “big word,” and may only be fruitfully analyzed bypaying close attention to operationalization.

First, regarding the origin, a dummy variable was constructed. Although there aretwo types of government-created associations (those converted from governmentdepartments and those established by the government from the beginning), thesecategories were merged into one. “Official” business associations were coded as zero,while self-organized ones were designated as one.

Second, two indicators were tested regarding personnel autonomy. The first is adirect measure of the autonomy of the secretary general’s employment; the question-naire asked whether or not an association exercises autonomy in the employment of itssecretary general. It was coded one if the business association has the autonomy andzero otherwise. The second indicator is the number of ex-government officialsemployed by an association.

Third, relating to the affiliation, three main categories were identified in the ques-tionnaire: EIC, FIC, and policy-specific government departments, such as theDepartment of Construction of Zhejiang Province. Following the discussion in the

19 The possibility cannot be entirely excluded that some threats to internal validity, such as self-selection,existed in the data-generating process.20 We replaced lobbying with “proposing policies” (zhengce jianyi) in the questionnaire, because the term“lobbying (youshui)” is commonly associated with the corporate behavior in contemporary China [6]. Incontrast, “proposing policies” is more encompassing, politically neutral, and preserves the original conceptu-alization of lobbying.


previous section, associations affiliated with EICs and FICs were coded as zero, whilethose with policy-specific government departments were designated as one.

Fourth, concerning financial autonomy, two indicators were tested. First, the question-naire directly asked whether or not an association has autonomy in financial management.“Yes” was coded one, and “No” was coded zero. Second, the “ratio of income from thegovernment” indicator was constructed. The questionnaire asked percentages of (1) gov-ernment subsidy and (2) purchase of services by the government out of an association’sannual income. The indicator was constructed by adding these two responses.

Regarding privileged access, to our great chagrin we did not ask directly whether anassociation was assigned to government consultant. As a proxy, we used responses tothe question of whether a business association proposed policies (zhengce jianyi)through consultation in the past year. We may suppose that most associations takethe opportunity of consultation to propose their favored policies. It is a dummy variablein which “Yes” was coded one, and “No” was coded zero.

Control Variables

Several variables that may also affect lobbying frequency were included. The first wasthe year of establishment. Kennedy and Deng [25] find a significant positive relation-ship between the year of establishment and lobbying frequency. As another example,Kojima et al. [27, 28] have examined the determinants and impacts of the “autonomy”of societal organizations. They show that social organizations established later in theprocess of market reforms have achieved more autonomy from the party-state, but it

Table 1 Comparison between the composition of the samples and populations

Number of samples Total number Collection rate

Zhejiang EIC and FIC 21 (50.0%) 118a (45.7%) 17.8%

Departments 21 (50.0%) 140 (54.3%) 15.0%

Subtotal 42 (100%) 258 (100%) 16.3%

Ningbo EIC and FIC 20 (57.1%) 52b (47.3%) 38.5%

Departments 15 (42.9%) 58 (52.7%) 25.9%

Subtotal 35 (100%) 110 (100%) 31.8%

Wenzhou EIC and FIC 16 (84.2%) 122c (84.1%) 13.1%

Departments 3 (15.8%) 23 (15.9%) 13.0%

Subtotal 19 (100%) 145 (100%) 13.1%

Wuxi EIC and FIC 36 (97.3%) 121c (97.6%) 29.8%

Departments 1 (2.7%) 3 (2.4%) 33.3%

Subtotal 37 (100%) 124 (100%) 29.8%

Total 133 637 20.9%

aAmong them, 115 are affiliated with EIC and 3 with FICbAmong them, 44 are affiliated with EIC and 8 with FICc Among them, none is affiliated with EIC. Wenzhou and Wuxi are two of the pilot cities where affiliation isconcentrated in FIC with a few exceptions

Source: Created by authors

324 J. Yu et al.

only holds true for those established before 2000. Second, the ratio of small andmedium enterprises (SMEs) to a business association was controlled. Previous researchsuggests that the economic structure strongly shapes the prospect for lobbying activity[21, 23]. Third, the number of member companies of an association was included. Itmight be the case that associations with more members lobby more, thanks to theirlarger capacity and demand. The fourth is the number of full-time employees hired byan association, and the fifth variable is the amount of annual income. For the number ofmember companies and the amount of annual income, the natural log is taken, based onthe belief that their marginal impacts are decreasing. Sixth, the geographical coverageof an association was also controlled.

Empirical Analysis

Descriptive Statistics

Table 2 summarizes the main descriptive statistics of the variables, and Table 3 showsthe correlation among independent variables of interest. The majority of businessassociations reported autonomy in core functions: 82.9% for the secretary-general’semployment and 73.7% for financial management. The data confirm the observation inthe literature that the Chinese government has shifted to more indirect measures toregulate social organizations [41].

As observed in Table 3, the absolute values of the correlation coefficients are not thathigh (0.28 at most), including the one between self-establishment and autonomy in thesecretary’s employment (0.23). As for the consultation variable, correlations with“autonomy” indicators are generally very small, with the possible exception of affili-ation with policy departments. Moreover, each variable is regressed by one of each ofthe other variables. Only four of the dyads are found statistically significant.

Table 4 presents a cross-tabulation of the dependent variable and the geographicalscope of associations. It shows that the absolute intensity of lobbying is not high. Largemajority (69%) of associations lobby either once or twice a year although 89% of themlobby at least once a year. It also appears that associations at the provincial level aremore active than those at the city level; all business associations at the Zhejiangprovincial level lobby at least once a year.

Estimation

Since the dependent variable is a categorical variable, simple OLS is not appropriate inthis case. Among several types of ordered logistic models, the study adopts theconventional cumulative “proportional odds” model. Robust standard errors have beenused throughout the analysis to address potential heteroskedasticity.

To cope with the missing data problem, the multiple imputation (MI) procedure isadopted. The recent literature contends that MI almost always fares better than tradi-tional methods such as listwise deletion [26, 37].21 The AmeliaII package is used for

21 Eising [9] also utilizes MI. Although Victor [47] advocates mean substitution, it is not recommended by thestatistical community because it underestimates the variance and thus biases the inference.


imputation [17, 26]. Other responses in the survey (not shown) are used in theimputation model, and 30 imputed datasets have been created to be on the safeside.

First, the dependent variable is regressed by each independent variable at a time. Theresults are summarized in Table 5. Three variables turn out to be statistically significant:origin, number of ex-officials, and consultation. As expected, consultation and numberof retired officials are associated with more lobbying, and self-establishment is associ-ated with less lobbying. The signs for non-significant variables are generally consistentwith the predictions, with the exception of affiliation.

Next, all the main independent variables are included together, with and withoutcontrol variables. The results are summarized in Table 6. Two variables, origin andconsultation, are found to be robust to these alternative estimations.

Regarding Hypothesis 1 (self-establishment), significantly negative relations areindicated, in line with the hypothesis that self-established associations lobby less often.This study’s framework provides an interpretation for the persistence of the impact oforigin. Some researchers might interpret the result as evidence of disadvantaged accessto the government. However, there is no strong reason to believe that such politicaldifference at the time of establishment persist over time. Instead, the model suggeststhat origin reflects an economic characteristic of an industry (size of the demand forprivate provision) that may well remain relatively constant over time.

Table 2 Descriptive summary of the variables

Framework Indicators N Mean Standarddeviation

Minimum Maximum

Origin Self-establisheda 122 0.754 0.432 0 1

Personnel Autonomy in secretary-general’semploymenta

76 0.829 0.379 0 1

Number of ex-officials 117 1.197 1.149 0 10

Affiliation Policy departmenta 132 0.318 0.468 0 1

Financing Autonomy in financial managementa 76 0.737 0.443 0 1

Income from government (%) 95 14.008 25.603 0 100

Privileged access Consultationa 70 0.300 0.462 0 1

Dependent variable Frequency of lobbying local government 99 2.586 0.990 1 5

Control variables Number of employees 129 4.667 2.575 1 14

Number of member companies(logged)

129 4.920 0.880 0.693 8.189

Total income (ten thousand yuan,logged)

97 3.406 1.071 0.815 6.319

SMEb ratio (%) 91 69.890 25.033 0 100

Year of establishment 125 2000 7.693 1980 2012

Place (Zhejiang = 1; Ningbo = 2:Wenzhou = 3; Wuxi = 4)

133 − − 1 4

a Dummy variableb Small and medium enterprises


326 J. Yu et al.

Hypothesis 5 (consultant status) is also strongly supported by the data. The consul-tation variable remains positively significant across estimations. This result stronglysuggests that privileged access plays an important role in determining lobbying fre-quency in China, as in other countries.

In contrast, little support is found for Hypothesis 2-a (autonomy in the secretary-general’s employment) and Hypothesis 4-a (autonomy in financial management): twodirect indicators of a. Although the signs are consistent with the predictions, bothhypotheses are far from being statistically significant in all estimations. As a robustnesscheck, these variables have been replaced with the alternative indicator constructed byadding these two indicators (results not shown), but it has not affected the result.

This non-finding is interesting in its own regard. It implies that “autonomy”becomes less critical as a determinant of lobbying frequency if it was in the past.Since these variables are the most direct measurement of autonomy, their non-significance casts doubts on the relevance of the variables. Thus, the current emphasison autonomy in the literature should be reconsidered.

Table 4 Lobbying frequency by place

Never Annual Biannual Monthly Weekly Subtotal N/A Total

Zhejiang Province 0 9 13 4 2 28 14 42

Ningbo City 6 16 6 0 0 28 7 35

Wenzhou City 2 7 2 3 0 14 5 19

Wuxi City 3 9 7 9 1 29 8 37

Total 11 41 28 16 3 99 34 133


Table 3 Correlation among key independent variables

Framework Indicators Self-established

Secretary-general

Ex-officials

Policydepartment

Financialmanagement

Incomefromgovernment

Origin Self-establisheda 1

Personnel Secretary-generala **0.2323 1

Number ofex-officials

**−0.2840 −0.2573 1

Affiliation Policydepartmenta

**−0.1741 0.0273 0.0041 1

Financing Financialmanagementa

−0.0117 **0.2288 −0.0494 −0.0176 1

Income fromgovernment (%)

0.0462 −0.0724 0.0266 −0.0195 −0.2484 1

Privilegedaccess

Consultationa −0.0169 −0.0819 −0.0056 0.2445 0.0527 0.1330

a Dummy variable. *p<0.10; **p<0.05; ***p<0.01



Tab

le5

Bivariateregression

Type

Indicator

Predictio

n(1)

(2)

(3)

(4)

(5)

(6)

(7)

Origin

Self-established

−*−

0.806

(Hypothesis1)

(0.436)

Personnel

Secretary-generalem

p.+

0.215

(Hypothesis2-a)

(0.523)

Num

berof

ex-officials

+*0.360

(Hypothesis2-b)

(0.211)

Affiliation

Policydepartment

nonsig./+

−0.450

(Hypothesis3)

(0.395)

Financing

Financialmanagem

ent

+0.386

(Hypothesis4-a)

(0.571)

Incomefrom

govt.

−−0

.007

(Hypothesis4-b)

(0.010)

Privileged

Consultatio

n+

***1.514

access

(Hypothesis5)

(0.474)

Prob.>F

0.0654

0.6810

0.0895

0.2554

0.5001

0.4906

0.0019

N133

133

133

133

133

133

133

Imputatio

ns30

3030

3030

3030

Note:Robuststandard

errorsin

parentheses.*p

<0.10;**p<0.05;***p

<0.01

Source:Created

byauthors

328 J. Yu et al.

Table 6 Main estimation

Type Indicator Prediction (1) (2)

Origin Self-established − **−1.069 *−0.993(Hypothesis 1) (0.477) (0.571)

Personnel Secretary-general employment autonomy + 0.518 0.148

(Hypothesis 2-a) (0.632) (0.699)

Number of ex-officials + 0.256 0.139

(Hypothesis 2-b) (0.316) (0.405)

Affiliation Policy department nonsig./+ −0.707 −0.830(Hypothesis 3) (0.440) (0.518)

Financing Financial management autonomy + 0.349 0.365

(Hypothesis 4-a) (0.619) (0.675)

Income from government (%) − −0.012 −0.015(Hypothesis 4-b) (0.011) (0.014)

Privileged Consultation + ***1.602 ***1.814

access (Hypothesis 5) (0.490) (0.568)

Control Number of employees −0.006(0.013)

Number of member companies (logged) 0.491

(0.332)

Income (ten thousand yuan, logged) 0.041

(0.323)

SME ratio (%) 0.007

(0.013)

Year of establishment 0.006

(0.033)

Ningbo City [base: Zhejiang Province] **−1.385(0.555)

Wenzhou City [base: Zhejiang Province] −0.900(0.910)

Wuxi City [base: Zhejiang Province] −0.306(0.790)

Cutpoints Cutpoint 1 −1.886 12.766

(0.856) (65.903)

Cutpoint 2 0.218 15.145

(0.835) (65.934)

Cutpoint 3 1.859 17.003

(0.877) (65.965)

Cutpoint 4 4.105 19.410

(1.019) (66.045)

Prob. > F 0.0094 0.0170

N 133 133

Imputations 30 30

Note: Robust standard errors in parentheses. *p<0.10; **p<0.05; ***p<0.01



In terms of Hypothesis2-b (number of retired officials), some evidence is detectedfor a positive relationship, although it is not so robust. The result is no longerstatistically significant, once other variables are included. The prediction for the otherindicator of financial autonomy,Hypothesis 4-b (ratio of income from the government),is also not strongly supported, although the sign is consistent with this study’sexpectation. A possible reason is the small sample size.

Hypothesis 3 (affiliation with a policy department) is also not supported by the data.While the result is not statistically significant, the sign is negative, which is opposite towhat has been expected. Given this study’s framework, it could be interpretedthat the total benefit remains more or less constant; the larger initial return isfollowed by the rapid decrease in additional marginal returns. Another possi-bility is that the impact of affiliation might have been obscured by city-specificfactors. As already explained, most business associations in Wenzhou and Wuxiare forced to be affiliated with the FIC. In fact, estimations limited to Zhejiangand Ningbo (results are not shown) consistently show positive signs, consistentwith the hypothesis.

Discussions and Conclusions

This study is among the first to empirically examine the lobbying behavior of businessassociations in local China. Based on the original survey data of 133 business associ-ations in Zhejiang and Jiangsu Provinces, it finds that the absolute level of lobbyingintensity by business associations is moderate or not very high; 69% of associationslobby only once or twice a year. The regression analysis reveals that self-establishedbusiness associations lobby less and those with consultant status lobby more frequently.However, other indicators of associations’ “autonomy” show no significant relationswith lobbying frequency.

The research makes several important contributions to the existing literature. First, itreexamines the autonomy of business associations by taking notice of how the conceptmay (not) be operationalized. We have shown that various indicators, all commonlyregarded as loose proxies of “autonomy,” actually measure different aspects of reality.By recognizing the differentiated predictions of these indicators, this research enablesus to interpret the varied findings in a coherent manner.

Second, it contributes to deepening our understanding of business associa-tions’ lobbying behavior and the role that the government plays in lobbying incontemporary China. Specifically, it finds that the relationship between auton-omy and lobbying is not straightforward as the existing research claims. Weobserve that autonomy is not critical in their efforts to lobby, which may beattributable to the lack of institutional channels available for business associa-tions. The study also finds that the consultation status provided by the govern-ment serves as an important opportunity for associations to make their voicesheard. It might sound obvious in hindsight, but the impact of privileged accesshas been overlooked in the existing empirical research.

In addition, the study presents a general framework for understanding the lobbyingbehavior of business associations by introducing the formal model of trade-off betweenlobbying intensity and the private provision of collective goods. It has shown that the

330 J. Yu et al.

lobbying behavior of business associations in China can be fruitfully analyzed by sucha general framework, without resorting to Chinese exceptionalism. It also suggests away through which China’s case may contribute to theory development in politicalscience.

However, this research is not devoid of limitations. First, there remain someconcerns for internal validity. The sample size is not spectacular, only 133 in total.The response rate is also as low as 20.9%. In addition, the data is collected through theFIC in Wenzhou and Wuxi. It is a fact that may raise doubts about non-randomness,although we do not have strong reason to believe that FICs have any particularpreference to distort the representation of the survey regarding the topics analyzed inthis research. Second, the external validity of the finding cannot be assumed due to thediverse nature of China. Since the samples are limited to Zhejiang and JiangsuProvinces, which have two of the most developed private economies in China, businessassociations in other regions may well show different behavioral traits. We do notpreclude such possibility. Rather, we encourage other researchers to conduct similarresearch in cities and provinces under different conditions.

Being well aware of the preliminary nature of these findings, we believe the studyhas provided sufficient theory and evidence to effectively challenge some confusion inthe current literature. That said, more research on a broader range of business associ-ations and more nuanced measures of “privileged access” are still needed. The sampleof business associations needs to be expanded to those from different regions andadministrative levels in China, and more indicators should be explored to measure“privileged access” beyond the consultant position. Only then will we have a wholepicture of business associations’ lobbying in China.

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Jianxing Yu is Professor and Deputy Dean in the school of Public Affairs and Director of the Institute forCivil Society Development (ICSD) at Zhejiang University. He is the author of several books, such as A pathfor Chinese civil society: a case study on industrial associations in Wenzhou, China. His articles haveappeared in such journals as The China Review and The Journal of Contemporary China.

Kenichiro Yashima is a Ph.D. candidate at the Department of Political Science at Boston University. Hisbroad research interest lies in the linkages among interest groups, political parties, and the state in East Asiancountries.

Yongdong Shen is a Ph.D. candidate in the school of Public Affairs and research assistant of the Institute forCivil Society Development (ICSD) at Zhejiang University. His rencent research focuses on civil society andthe relationship between the state and society in China. Corresponding Author of this article.


Autonomy or Privilege? Lobbying Intensity of Local Business Associations in China

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