Applying Western decision-making theory to the study of transport infrastructure development in China: The case of the Harbin metro

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Policy and Society 31 (2012) 73–85 www.elsevier.com/locate/polsoc

Applying Western decision-making theory to the study of transport infrastructure development in China: The case of the Harbin metro Martijn Groenleer a,*, Tingting Jiang a,b, Martin de Jong a,b, Hans de Bruijn a a

Delft University of Technology, The Netherlands b Harbin Institute of Technology, China

Abstract In recent decades, China has undergone massive urban transformation, an important component of which is transport infrastructure development. Although Western observers often hail China’s decision making on megaprojects as effective and efficient, this image deserves scrutiny. Political power and decision-making processes in China are not as centralized as many tend to believe, the field of policy actors can be diffuse and issues can be highly contested. Consequently, although some tremendous successes have been reported, not all large infrastructure projects have proceeded smoothly. This article unveils how decisionmaking processes on large infrastructure projects in China evolve, and why projects sometimes take much longer than might have been expected on the basis of the dominant image of Chinese decision making. It does so by presenting an in-depth study of a decision-making process that took much longer than initially foreseen: the design and construction of the Harbin metro system. # 2012 Policy and Society Associates (APSS). Elsevier Ltd. All rights reserved.

1. Introduction In recent decades, China has undergone massive urban transformation, an important component of which is transport infrastructure development. As De Jong (2012) underlines, Western observers (especially politicians and journalists) who complain about time delays and cost overruns in their own countries have often hailed China’s decision making on megaprojects, while lacking in quality and prone to corruption, as effective and efficient.1 In many ways, this picture is not unjustified given the breakneck speed at which metro projects in many metropolises in China have been developed, the construction of the High Speed Railway network, and the way that national, provincial and local governments rapidly expand their road linkages. Many megaprojects, especially those with high political profiles, appear to be completed on time and on budget, or at least close to these targets (De Jong, Mu, Stead, Ma, & Xi, 2010). In comparison to Western

* Corresponding author at: Delft University of Technology, Faculty of Technology, Policy and Management, PO Box 5015, 2600 GA Delft, The Netherlands. Tel.: +31 15 2783433. E-mail address: [email protected] (M. Groenleer). 1 See for instance International Herald Tribune, Chinese economic medicine: roads and rails, 23 January 2009; New York Times, China’s route forward, 23 January 2009. But see Financial Times, China’s skyscraper boom: next a bust? 10 June 2011; The Economist, Privatisation with Chinese characteristics, 3 September 2011. See also Phoenix Comments, How did China’s high-speed rails achieve the great leap forward? 25 February 2011, http://news.ifeng.com/opinion/special/gaotie/, last accessed 13 January 2011; Oriental Outlook, The ‘China speed’ of top-level decision-making, 13 May 2011, http://www.lwdf.cn/wwwroot/dfzk/Focuseast/251295.shtml, last accessed 13 January 2011; Dongfang Daily, Foreign scholars see China’s decision-making process, 18 July 2011, http://epaper.dfdaily.com/dfzb/html/2011-07/18/content_506253.htm, last accessed 13 January 2011. 1449-4035/$ – see front matter # 2012 Policy and Society Associates (APSS). Elsevier Ltd. All rights reserved. doi:10.1016/j.polsoc.2012.01.006

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countries, which struggle with the realization, maintenance and operation of infrastructures, China is often able to construct infrastructure much more quickly. However, this image deserves scrutiny, certainly given a number of recent accidents and the call for greater attention to safety. Political power and decision-making processes in China are not as centralized as many tend to believe. Despite its continuing grip on power, the Chinese Communist Party (CCP) is no longer able to dictate each and every decision, from the top down. Provincial and local governments have seen their share of budgetary spending increase dramatically at the expense of central government (Dumbaugh & Martin, 2009; Lieberthal, 2004). They currently enjoy a substantial level of discretion in the way they spend funds obtained through independent taxation sources. This allows them to establish priorities that are different from those of Beijing, and sometimes even to ignore national policies and regulations (Saich, 2004). Lower tiers of government can also rely on resources other than financial ones, as the voice of angry users and citizens has become increasingly loud in recent years, and civic associations operating at the grassroots level have gained greater autonomy from the state (Friedmann, 2005). Consequently, the field of policy actors regarding infrastructure projects can be diffuse and issues can be highly contested. Conclusions on the speed of China’s decision making are usually based on observations of very prestigious and highly visible projects that have apparently not taken long to accomplish, such as the Beijing Olympic metro and Shanghai Pudong International Airport. There are, however, also infrastructure projects that are not decided upon or completed for a long time. Previous empirical study has shown that not all large transport infrastructure projects have proceeded smoothly (De Jong et al., 2010; Ma, De Jong, Koppenjan, Xi, & Mu, 2012; Mu, De Jong, & Ten Heuvelhof, 2010). Tendering procedures are not followed in a professional manner and thus lead to delays, contractors are untrustworthy, estimates are inaccurate, approval from the national government fails to be forthcoming, speedy decision making comes at the expense of the robustness of the construction, the quality of the materials used is sometimes doubtful, and safety standards are compromised. Last but not least, officially provided data are not always reliable. Although research is far from complete, it is undeniable that not all large infrastructure projects have proceeded smoothly. These projects remain relatively hidden from foreign and even Chinese observers and are thus hardly reported on, whilst such projects could shed important light on the factors influencing Chinese decision making, particularly those factors that cause stalemates and breakthroughs. Apart from Beijing and Shanghai, China has many lesser known cities with millions of inhabitants, where the experiences may have been different and that therefore deserve careful study. This article unveils the decision-making process behind a large infrastructural project that is characterized by protracted struggle and the sclerosis of decade-long indecision. It may thus qualify the dominant image by highlighting how certain China-specific factors can also work against policy-making speed. It does so by presenting an in-depth study of a decision-making process that took much longer than initially foreseen: the design and construction of the metro in Harbin, a large metropolis in the north-east of the country and the capital of Heilongjiang province. The metropolis has over three million inhabitants in the immediate urban area alone and is China’s tenth largest city. This article provides an inventory of the factors that had an impact on the decision-making process, specifying the conditions that impede as well as expedite the construction of megaprojects in China. Hence, it focuses on the following questions: What factors influenced the duration of the decision-making process on Harbin’s first metro line and, more specifically, how can these factors explain the occurrence of stalemates and breakthroughs? The preparation process for Harbin’s metro network has already taken more than 35 years and it is still on-going, even though China is accelerating the construction of other infrastructural projects. So far, only the formal decision to construct one metro line in Harbin has been made. We focus in particular on the involvement of a variety of policy actors along the way and how their interdependence with regard to the control and utilization of the required financial, legal, informational and organizational resources caused delays. We build on work already done by Zheng, De Jong, and Koppenjan (2010), who applied Western policy network theory to the case of urban health insurance reform in China, and extend their findings to another case of decision making, viz. on large infrastructural projects. We also draw from other, but complementary theories on decision making in networks (De Bruijn & Ten Heuvelhof, 2008; De Bruijn, Ten Heuvelhof, & In´t Veld, 2010). These theories distinguish between project and process approaches, the former implying centralized decision making, the latter denoting more collaborative modes of governance without central steering. In Section 2, we lay bare the relevant decision-making theories that we use as our explanatory framework. We also explain how we applied them methodologically to our empirical case. In Section 3, we give an elaborate chronological

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overview of the Harbin metro case, including an overview of the key actors, which indispensable resources they had for the continuation of the decision-making process, which situations led to the temporary stalemates and how persistence on the part of some actors contributed to partial breakthroughs. In Section 4, we analyse the case in terms of our theoretical framework, identifying the factors that influenced the duration of the decision-making process. We conclude this article in Section 5, by answering the research questions and drafting a future research agenda on studying decision making in China, both theoretically and empirically. 2. Applying decision-making theory to the study of infrastructure development in China Academic research on the Chinese decision-making process, especially when it comes to large infrastructure projects, is scarce. To examine decision making in China, classic decision-making theories and relevant models, ranging from rational synoptic to incremental and other political models, that are used to analyse decision making in the Western world, are helpful. Zheng et al. (2010) found that the health insurance reform process in China largely resembles the features of policy processes as conceptualized by policy network theory. Despite the strongly hierarchical state system, stalemates and breakthroughs do occur and policy network theory helps to clarify such stalemates and breakthroughs. The use of Western theories may thus provide us not only with knowledge on decision making in China, but also with insights into the wider applicability of these theories and their possible shortcomings with regard to, for instance, the structural and cultural factors that affect the speed of the decision-making process. 2.1. Decision making in networks: actors, interactions, opportunities We apply policy network theory to the preparation of, the taking of decisions on and the implementation of large infrastructural projects. Policy network theory posits that decision-making processes have a number of characteristics. They can primarily be considered games, that is, ‘a series of interactions among actors focused on influencing public decision making on certain issues or on the implementation of policies’ (Allison, 1971; Axelrod, 1984; Crozier & Friedberg, 1980; Scharpf, 1997; Zheng, De Jong, & Koppenjan, 2010, p. 402). These games are played in one or more arenas, namely places where the interactions among actors take place and that include both formal and informal settings or occasions ranging from regular, public meetings to behind-the-scenes lobbying (Koppenjan & Klijn, 2004; Van Bueren, Klijn, & Koppenjan, 2003). Over time, the games played by actors in decision-making arenas may result in the development of networks, which are characterized by stable relations between autonomous yet mutually dependent actors (Kickert, Klijn, & Koppenjan, 1997; Rhodes, 1997). We also draw from other, yet complementary theories on decision making in networks, distinguishing between rather centralized project approaches and more decentralized process approaches (De Bruijn & Ten Heuvelhof, 2008; De Bruijn et al., 2010). Project-based decision making, which relies on command and control strategies, is often unsuccessful, given the fact that a project team for a large infrastructure project such as the Harbin metro operates in an inter-organizational environment with multiple actors of which the Harbin city government is only one. Given the interdependency among various actors, project managers cannot take decisions without consulting, in isolation from or without the support of the wider inter-organizational environment (Koppenjan & Klijn, 2004). Process-based decision making thus implies collaboration among actors within a network and goes beyond the formal decision moment. Decision making then becomes an on-going process that occurs in different rounds (Teisman, 2002). Given the characteristic features of these theories, how can we explain the duration of decision-making processes? We put forward a number of factors that possibly affect the duration of decision-making processes and briefly clarify how they may do so. These factors relate to the actors involved, the interaction among them and the opportunities they have for decision making. Since actors have relatively autonomous positions and engaging in cooperative relationships is usually assumed to lead to autonomy loss, not all of them may be inclined to cooperate. The more actors involved and the more diverse they are in terms of preferences and interests, the higher the degree of conflicts among them, which means that it probably takes them longer to reach a compromise or make a trade-off, and thus longer to complete the decision making process. While the incorporation of interested actors into decision-making processes may enable decision making, it may thus also take precious time and reduce the speed of the processes. The stability of the relations among actors – the network-like character of their interactions – may influence the speed of the decision-making process in both positive and negative ways. If a decision-making game takes place within

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an arena in which the level of stability is high (and parties thus know each other well), the reduced strategic uncertainty and decreased risk of opportunistic behaviour may increase the speed of decision making. By contrast, if a decisionmaking game takes place across various national and local arenas, and the level of stability is therefore low, the lack of a common frame of reference, common working methods and shared values may decrease the speed of decision making (De Bruijn & Ten Heuvelhof, 2008; Koppenjan & Klijn, 2004; Scharpf, 1997). Finally, the speed of decision making is not only influenced by the interactions among actors but also depends on the opportunities for decision making. The moment when a plan is put forward is a strategic choice. It is more likely that decision making will take place under some circumstances than under other circumstances. Actors thus have to wait for the window of opportunity to push their preferred policy solutions and accelerate decision making (Cohen, March and Olsen, 1972; De Bruijn & Ten Heuvelhof, 2008; Kingdon, 1995). Situations under which a decision has a great chance of being taken are economic growth (as this makes it less difficult to prioritize among competing issues) and technological development (as this makes it possible to solve certain problems in the first place). Situations under which a decision has a small chance of being made are when the sense of urgency among the actors in the network is limited (i.e. when actors do not perceive there to be a pressing need for decision making) or when there are too many other issues high on the agenda (which means not only that there is insufficient money to spend, but also that insufficient attention can be paid to the issue as compared with competing issues) (Jones & Baumgartner, 2005). 2.2. Understanding decision making in China These theories may not necessarily be attuned to the Chinese context, as the country’s sociocultural background and its political and administrative system are fundamentally different from those of Western countries. Zheng et al. (2010) point to the need to make certain adjustments in view of these structural and cultural differences and the consequences thereof for the Chinese decision-making process. We note four factors in particular: the role of the Chinese Communist Party (CCP), the centralized government structure, the limited role of the private sector and the public in decision making, and guanxi. First, decision making in China is hierarchically structured, with an important strategic role for the CCP, which establishes the future direction for government actions. Alongside the regular tiers of government, a parallel hierarchy of CCP representatives guides the public sector in the right ideological direction and monitors the correct implementation of that ideology (Lieberthal, 2004). To the outside world, the distinction between the influence that the CCP has had on a given policy and the influence that the government has had is often not so apparent, nor is it easy to reconstruct for policy researchers, as these administrative dynamics are clearly distinct from those in Western democratic systems. Second, the Chinese system is centralized, and lower tiers of government are supposed to comply with orders from above. In practice, this does not always happen, as Pye (1992, p. 237) notes when he describes ‘the great Chinese game of feigned compliance’: local authorities proclaim their obedience ‘even as they quietly proceed to do what they think best’. Furthermore, it is possible for provincial and local governments to adjust policies that have been established at higher levels or to develop their own policies if nothing has been stipulated from above, for instance policies on infrastructure development, as made by ministries at the national level (Lieberthal, 2004). Provincial governments also enjoy a substantial degree of financial freedom, which has arguably led to an increased variety in spending patterns and policy initiatives across the country (Pei, 2006; Saich, 2004). Third, in comparison to Western democracies and in accordance with Western standards, the role of the private sector and the public in Chinese decision making is limited, though growing. Interest groups and civic organizations are regularly involved in service delivery or practical implementation issues, but are not supposed to have a say in strategic matters. If they are involved, it is upon clear invitation. Moreover, a lot of NGOs in China are actually government-organized NGOs (GONGOs), which reduces their influence on the decision-making process (Bell, 2008; Lieberthal, 2004). That said, as in other countries around the world, the private sector is increasingly involved in the design, construction, maintenance and operation of large infrastructures, such as expressways, on the basis of long-term public–private partnerships (PPPs). And, perhaps even more so than in Western countries, PPPs often evoke strategic behaviour from both clients (governments) and contractors (state-owned enterprises or private parties), which negatively affects mutual relations, collaboration, quality and, eventually, the speed of the decision-making process. This is exacerbated by the low levels of trust among public and private partners, which is a more general feature of the Chinese cultural context (Mu et al., 2010). To add to this, in the Chinese administrative context the position of public

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sector actors vis-a`-vis private ones is relatively strong, making the former likely to behave strategically at the expense of the latter, rather than only the opposite, as is often observed in the West. Fourth, a key characteristic of the Chinese social and administrative system is the importance of guanxi: lasting, personalized and non-transferrable relationships and connections between individuals, whereby mutual favours and duties are exchanged with the aim of obtaining long-term benefits. Such relationships are developed throughout one’s life with people who are outside one’s family and need not be of equal status (Bond, 1986; Provis, 2008; Saich, 2004; Ying, 2002). As these networks cut across formal organizational boundaries, they render incomplete any analysis of policy networks that focuses only on official structures and arrangements. Guanxi potentially facilitates decision making across these boundaries and affects the effectiveness of the decision-making process, working as an informal lubricant when formal collaboration has failed and processes have stalled through interdepartmental stalemates. Such dynamics make the evolution of the decision-making process less predictable but more intriguing. 2.3. A case of infrastructure development: the Harbin metro project Policy network theory and the literature on decision making in networks provide us with useful theoretical notions to understand the development of decision-making processes, and notably the occurrence of stalemates and breakthroughs. We argue that these notions are increasingly helpful to understand decision making in China (if adjusted for structural and cultural differences), also when it comes to infrastructure development. In order to substantiate our argument, we apply the theoretical framework developed above and focus on a single case: the Harbin metro project. This case is illustrative of a much larger number of infrastructure projects that were developed by large cities in China over the past few decades, but that did not proceed as easily as foreseen. In addition, the Harbin metro is representative of the type of solution to severe mobility and sustainability problems that similar cities around the country experience (e.g. Tan, 2006; Xie & Ren, 2010), especially in recent years as a result of skyrocketing car ownership. Moreover, metro construction involves many different public sector players at various tiers of government, given the State Council’s nationwide transport planning schemes and procedures for applications and approvals. Since forms of (sometimes unsuccessful) PPPs have been established in many cities, including Harbin, to realize transport infrastructure, private contractors and lenders also are involved. Thus, multiple actors played a role in our case study. To investigate the Harbin metro case, we conducted desk study research on decision making in China in general and on large Chinese infrastructure projects in particular, notably metros. We mapped both primary sources, such as legal texts and policy documents, and secondary resources, such as newspaper articles and information available on the web. It should be noted, however, that even though we tried to make use of multiple sources, neither paper nor web-based documents were abundant and the information that was available may be biased. For important details of the case, we thus depended on interviews with officials. Through our institutional affiliations and personal networks, we were able to get in touch with potential interviewees. This led to semi-structured interviews with six key actors in the decision-making process on the Harbin metro project, namely a former director of the Harbin Subway Office, a vice-director and two project managers of the Harbin Subway Company, an official of the Harbin Development and Reform Committee, and a vice-director of the Harbin Environmental and Development Committee. We also interviewed two academics who have expertise in decision making on infrastructure development in China. We guaranteed the interviewees anonymity and, in view of their unfamiliarity with being interviewed for academic research, promised them not to quote directly from the interviews. 3. Harbin plans to build a metro line: an overview of decision-making rounds and the actors involved Harbin is the capital of Heilongjiang province, which is in the far northeast of China. It has an urban area of 7086 km2 and a total population of 3.1 million people (see Fig. 1). On 25 September 2008, construction of the first line of the Harbin metro system started (see Fig. 2). It is foreseen that by 2020, 143 km of metro will have been built. The budget for the entire project is estimated at 80 billion renminbi (RMB).2 These figures make the construction of the metro the largest infrastructure project in Harbin’s history. 2

Shanghai Tunnel Engineering & Rail Transit Design and Research Institute, Feasibility Study of Harbin Metro First Phase Construction, 2004.

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Fig. 1. Harbin and Heilongjiang.

It took a long time – and the involvement of a multitude of actors (see Table 1 for an overview) – before the decision to construct the metro system was made. The municipality first considered the project in the mid-1970s. Until 2008, when construction work started, the decision-making process was characterized by temporary stalemates and partial breakthroughs. We distinguish a number of rounds in the decision-making process. In 1973, Harbin municipality was instructed to build an air defence project (‘Project 7381’) in response to the military threat posed by the Soviet Union. The underground system was supposed to be further developed into a metro system.3 Even before Project 7381 was completed (1979), the metro project was cancelled because of a lack of funding at the municipal level. Construction of the metro system disappeared from the political agenda for the next decade.4 In 1986, the construction of a metro reappeared on the political agenda of Harbin’s municipal government. Harbin Electrical Car Company (HECC), led by Zhang Dianye, was made responsible for preparing the metro project. Preparation took much longer than expected, mainly due to a lack of available expertise. Even when technical experts were available, they were directed by political decision makers, many of whom had been appointed on the basis of their revolutionary background rather than their professional competence.5 From the mid-1990s onwards, the population of Harbin started to grow dramatically. Whereas congestion had not been much of a problem, traffic jams increased significantly, especially because of the exponential growth in the ownership of private cars. This increased the sense of urgency that local actors lent to the construction of the metro. Moreover, since the 1990s, more knowledge had become available, as a result of transfer from abroad (e.g. from France, Japan, Germany) and the construction of metros in other cities in China (e.g. Beijing, Shanghai, Tianjin,

3 As indicated by Bian Yandong, vice-president of the CIECC Railway Office, in Qin Fenghua, Harbin Subway Financing, China Investment, 2008. China Investment is the only central publication in the field of Chinese investment and construction. It is sponsored by the NDRC and the CIECC. 4 Interview with project manager of Harbin Subway Company, Harbin, December 2009. 5 Interview with vice-director of Harbin Subway Company, Harbin, January 2010.

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Fig. 2. Line 1 of the Harbin metro.

Table 1 Key actors and their roles in the decision-making process (in order of appearance). Actor

Role

Harbin municipality (local) Harbin Electrical Car Company (HECC)/reorganized in 1998 into: Harbin Subway Office/reorganized in 2007 into: Harbin Subway Company (local) National Development and Reform Commission (NDRC) (national) China International Engineering Consulting Corporation (CIECC) (national)

Proposes local infrastructure projects, such as the metro Prepares the reports required for the national application approval procedure

Ministry of Construction (national)

State Environmental Protection Administration (national) State Council (national) HIT Corporation (private sector) Heilongjiang provincial government (provincial) China Development Bank (state-owned enterprise)

Guides and approves major infrastructure investment projects, nationwide Prepares feasibility studies of key investment projects that require approval by NDRC. Provides its services mainly on commission from project sponsors including governments at all levels and enterprises Line ministry under direction of the State Council responsible for urban planning, urban development and construction, urban utilities, and urban transport. Approves infrastructure projects together with NDRC Responsible for environmental assessment of projects The administrative body of the central government, including the prime minister, vice-premiers, state councillors and heads of commissions Engages in manufacturing and commerce, and provides information services primarily in north and north-eastern China. Based in Harbin Responsible for approving local infrastructure projects and forwarding applications to the NDRC and providing financial support Implements state macroeconomic policy and reports to the State Council; heavily involved in infrastructure financing

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Guangzhou). In 1995, after almost ten years of preparation, the Harbin metro project was ready to be decided upon at the political level. However, the project had to compete with a newly proposed project intended to boost urban development on the north bank of the Songhua river. Harbin municipality decided to invest in the urban development project rather than the metro project.6 When the Songhua river bank project was delayed in 1998 because of lengthy negotiations with private developers, Zhang Dianye, the general manager of the HECC, seized the opportunity to promote the Harbin metro project with the local authorities. Harbin municipality decided to continue the metro project and to start preparing the application procedure for national funding. It reorganized the HECC into the Harbin Subway Office. The office’s main task was to draft reports for examination and approval by the National Development and Reform Commission (NDRC). However, once submitted by the office through the Harbin and Heilongjiang governments, the NDRC – acting on the advice of the China International Engineering Consulting Corporation (CIECC) and in close cooperation with the Ministry of Construction – rejected the application, along with all other infrastructure applications, in reaction to the Asian financial crisis.7 The early 21st century saw renewed commitment from the national government to stimulate economic growth. However, the government imposed additional requirements on the national application procedure. As of 2002, applications from local governments would be accepted only if local GDP had reached 100 billion RMB per year and if the municipality had a fiscal income of at least 10 billion RMB per year. Harbin met those criteria, which made the metro project eligible for national funding. In January 2003, the NDRC approved the Plan for the Harbin Rail Transit Network, which in June 2003 was approved by the Harbin Municipal Congress. The plan was subsequently integrated into Harbin’s Master Urban Plan.8 In September 2003, the national government published a document ‘to strengthen the management of local track transportation construction’. The document introduced further restrictions with regard to construction standards, the operation management system, and safety and emergency management on the application procedure for metro systems.9 In reaction, a number of cities (e.g. Hangzhou, Shenyang, Chengdu, Qingdao, Xian and Shanghai) decided to cancel their plans for metro construction. Harbin municipality, by contrast, pushed through its application. In November 2003, it drew up a detailed metro construction plan: the Plan for the Harbin Rapid Rail Transit Construction. Harbin became the first city to have had its metro project accepted by the NDRC since the introduction of the additional application requirements.10 By April 2004, the Harbin metro project had reached the final round of the appraisal and approval procedure. The municipality expected a positive result, given the support from the NDRC and the Ministry of Construction. However, the State Council published another announcement postponing all new infrastructure applications. The economy was said to be overheated and local infrastructure development had to be slowed down in order to prevent an increase in inflation.11 The Harbin metro project had to be stalled. Even though the national government postponed the project in both 1998 and 2004, the NDRC had positively assessed it on both occasions. In January 2005, when the economy was no longer overheated, Harbin municipality again applied to the national government for approval. In May 2005, the Harbin Subway Office submitted a complete design report for phase 1 of the project. The report was evaluated positively by the NDRC, as it did in the case of other metro plans, such as that of Hangzhou. The municipal government managed to convince the State Council that financing would not pose a problem because it would use a Built-Operate-Transfer (BOT) financing scheme. The State Council subsequently approved the project, which was passed on to the National Congress for a final decision. Finally, in July 2005, the Harbin metro project was officially approved. Harbin officials publicly announced that the first phase of the project would be finished in four years. On 5 December 2005, an official ceremony was held to celebrate the start of the Harbin metro construction.12

6

Interview with vice-director of Harbin Subway Company, Harbin, January 2010. Telephone interview with former director of Harbin Subway Office, January 2010. 8 Xinhua News, Harbin Metro Project Application experienced ups and downs, http://www.xinhuanet.com/chinanews/2005-07/08/content_4596763.htm, 8 July 2005, last accessed on 13 January 2012. 9 State Council Office, Notice on Strengthening Urban Rapid Railway Construction Management, Document No. 81. 10 Interview with vice-director of Harbin Subway Company, Harbin, January 2010. 11 Heilongjiang Xinhua Channel, Harbin Metro: three main tasks to be implemented this year, 7 August 2008. 12 Sina News, Harbin Metro Project eventually approved by NDRC, http://news.sina.com.cn/c/2005-12-06/00427627261s.shtml, 6 December 2005, last accessed on 13 January 2012. 7

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HIT Corporation (‘Gong Da’) – a private company that had been involved in the construction of other infrastructure projects in Harbin – was awarded the contract on the basis of a closed invitation. Under the BOT financing scheme, it would invest 5.89 billion RMB in building and operating the metro. HIT Corporation received a concession from the government to operate the metro system, which would enable it to recover its investment in the project. During the concession period, the corporation would receive all income from the project; after the concession period, ownership of the metro would be transferred to Harbin municipality.13 However, HIT Corporation withdrew from the PPP because of financial problems and difficulties in the cooperation with the municipality.14 Not much happened after that, until Zhang Xiaolian became mayor of Harbin in February 2007. Zhang transformed the Harbin Subway Office into the Harbin Subway Company, providing it with more staff from governmental agencies as well as experts with experience of metro construction. He chose to spearhead the project and made himself head of the reorganized body. In order not to have to use a BOT financing scheme, it was necessary to acquire financial support from other sources. Zhang lobbied the Heilongjiang provincial government, which had hitherto not shown much active interest in the project and had only been involved in the process of formally approving Harbin’s applications for national government funding.15 The lobby was effective, in that the provincial government decided to allocate 800 million RMB to the Harbin metro project. Financial support was also received from the China Development Bank. On 25 September 2008 – almost 35 years after the initial plans had been drawn up – construction work on the Harbin metro started. However, only one of the eight planned lines is currently under development and it is unknown whether more will follow.16 4. The case of the Harbin metro: analysing stalemates and breakthroughs On the basis of our theoretical framework and the empirical overview presented above, we identified a number of factors that resulted in stalemates as well as breakthroughs in the decision-making process on the Harbin metro. They concern both structural factors relating to the opportunities for decision making and factors concerning actors and their interaction. 4.1. Opportunities The case description shows that three factors affected the opportunity structure for decision making on the Harbin metro: the availability of knowledge and expertise; the availability of financial resources; and the sense of urgency concerning metro construction and the political attention and priority given to the project. 4.1.1. Availability of specialized knowledge and expertise In the 1970s and 1980s, the delays in the decision-making process on the Harbin metro were at least partly due to a lack of specialized knowledge and technical expertise. Since the 1990s, the availability of knowledge has increased rapidly, as a result of transfer from abroad and, more generally, the national government’s increased support for infrastructure development. Meanwhile, the Chinese civil service has become more professional as a result of, for instance, the introduction of education and training systems, enabling it to manage large infrastructure projects more effectively. 4.1.2. Availability of financial resources Until the mid-1980s, the financial resources to fund large-scale infrastructure projects at the local level were lacking. Municipal governments were dependent on the central government for financial resources. The impasses in the decision-making process in 1998 and 2004 can to a large extent be accounted for by the reaction of the State Council to economic conditions (i.e. the Asian financial crisis, the overheating of the economy). 13 14 15 16

Interview with project manager of Harbin Subway Company, Harbin, December 2009. Interview with project manager of Harbin Subway Company, Harbin, December 2009. Interview with vice-director of Harbin Subway Company, Harbin, January 2010. Most other Chinese cities of comparable size enjoy more extensive metro networks.

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4.1.3. Sense of urgency and political priority The decision-making process was delayed because key actors in the network did not see a pressing need for decision making. Only when local transport congestion became perceived as a problem did the chance of a decision being taken on the metro system increase. Although the construction of the metro was on the political agenda, the decision-making process was delayed because of other issues, notably the urban development project on the north bank of the Songhua river, with which it had to compete for attention and funding. 4.2. Actors and their interactions The Harbin metro case thus reveals not only the importance of the opportunity structure, but also that decisions are often still taken by the national government. Notwithstanding the predominance of centralized decision making by government actors at the national level, the decision in the Harbin metro case did not come about only as a result of the actions of central government. One important difference from the oft-reported successful projects mentioned at the beginning of this article (such as the Beijing Olympic metro and Shanghai International Airport) is that the Harbin metro project was driven not by national policy preferences, but by the preferences of local and provincial government actors. From a national point of view, the metro project in Harbin, a relatively remote city, was simply not a priority. Other actors, and their interactions, thus played an important role in increasing the duration of the decision-making process. Before 1979, when the country was under Mao’s leadership, power was highly concentrated in the central government. It was the central government that, in the interests of national security, decided on the construction of Project 7381. Since the reforms implemented under Deng’s regime at the beginning of the 1980s, power has gradually been decentralized to local and provincial governments. Furthermore, public companies have been privatized and markets have been opened up to foreign investment. As a consequence, the number of actors in the decision-making process, in general and in the specific case of infrastructure development, has increased substantially, and now includes not only national, provincial and local government actors but also construction companies, private investors and sometimes even local citizens. This has increased the potential for interaction between the various actors, which is reflected in the Harbin metro case. Here, we concentrate on four types of interaction, namely that: at the local level between mayors and civil servants; between the government and the private sector in PPPs; between local and provincial actors; and among individual officials in personal networks. 4.2.1. Interaction at the local level between mayors and civil servants Even though from the mid-1980s onwards technological and economic conditions were generally more favourable, the metro project was not on top of the municipal agenda until the mid-1990s. Between 1979 and 1994, Harbin had nine different mayors. To avoid being replaced, mayors preferred projects that were expected to generate short-term financial and GDP gains – such as the development of the north bank of Songhua river – to long-term projects, such as the construction of a metro. Moreover, hierarchical relations within public organizations meant that informal pressure exerted by lower level officials on higher level officials, such as mayors, for projects with long-term environmental or mobility advantages was unlikely to be effective. In fact, most civil servants were not keen to promote the construction of the metro, as they realized that mayors’ terms of office were short and that it was better to focus their efforts on projects that were expected to generate immediate GDP growth. 4.2.2. Interaction between the government and the private sector in PPPs The BOT financing scheme resulted in a breakthrough in the decision-making process at the national level because it secured the support of the State Council. However, it also led to another impasse in the carrying out of the project. HIT Corporation, the main constructor, had already completed some relatively small infrastructure projects in Harbin under a BOT financing scheme, and this had been profitable for the company. Even though metro construction required a massive investment, HIT assumed that it would be able to acquire such funding through the market. The metro project, however, was not like any of the other projects HIT had been involved in, and both HIT and the Harbin government lacked sufficient knowledge to pull off this PPP successfully. Apart from not raising enough money, the company did not manage to reach an agreement with the various departments within the Harbin city government. After a year of financial qualms and failing cooperation, HIT Corporation withdrew from the project. Since it was the only potential contractor, any follow-up PPP was doomed to fail.

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4.2.3. Interaction between local and provincial actors Even though the municipal government is formally subordinate to the provincial government, the relationship between the two levels is not strictly hierarchical. At times, municipal and provincial governments go their separate ways, while at other times their interests are complementary. In the case of the Harbin metro, Heilongjiang’s passive support implied supporting Harbin’s application to the NDRC, while its later active support comprised not only supporting the application but also making a financial contribution. Since Harbin is Heilongjiang’s capital and most wealthy city, their fates are strongly interwoven. The financial freedom of provincial governments made it possible for Harbin’s municipal government to negotiate a deal, enabling it to speed up decision making. 4.2.4. The role of officials and their interaction in personal networks The first important steps towards the construction of the Harbin metro were taken under the leadership of Zhang Dianye, general manager of the HECC. His efforts were eventually unsuccessful, because in reaction to the Asian financial crisis, the NDRC decided not to approve any large infrastructure projects. The leadership of Zhang Xiaolian, who was appointed mayor of Harbin in 2007, brought a new impetus to the project. He actively promoted the project and managed to rally all the relevant city departments behind it. Furthermore, funding was secured, notably from the province. The personal relationship between Mayor Zhang Xiaolian and the Heilongjiang governor, Zhang Zuoyi, seems to have been at least as important. Before his appointment as mayor, Zhang Xiaolian had been Zhang Zuoyi’s assistant. Although explicit evidence is hard to find, it is more than likely that their interpersonal relationship had an important and positive impact on the progress of the decision-making process. 5. Discussion and conclusions This article set out to answer the questions what factors influenced the duration of the decision-making process on Harbin’s first metro line and, more specifically, how these factors can explain the occurrence of stalemates and breakthroughs. 5.1. Decision making in China Whereas technological and structural economic circumstances were unfavourable for metro construction in the 1970s and 1980s, they were more favourable during the later rounds of the decision making on the Harbin metro project. This obviously increased the likelihood of the project generating support and funding. Nonetheless, 1998 and 2004 saw significant, conjunctive economic setbacks that jeopardized the project’s financial underpinnings. Although it appears that having more financial resources and technical knowledge contributed to the progress made towards the ultimate decision to construct, these contextual factors alone cannot explain the evolution of the decision-making process. They present necessary but not sufficient conditions for successful decision making. Until the 1990s, the influence on the Chinese decision-making process of actors other than party officials and the central state had been relatively limited. Throughout the 1990s and 2000s, however, there was a general trend from unilateral towards more multi-actor based decision making, with a greater variety of interests involved (see also Zheng et al., 2010). The emergence of new actors did not necessarily lead to more conflict, since their interests were not always opposed. It did, however, make the outcome of the decision-making process less predictable, because the process depended on interaction among a larger number of actors rather than just a few and one dominant core (the CCP at the national level). This interaction sometimes resulted in further delays (e.g. interaction between mayors and civil servants; between HIT Corporation and municipal departments), despite more favourable economic and technological circumstances, but it sometimes also led to breakthroughs (e.g. interaction between local and provincial actors). The duration of the decision-making process was influenced not by a single factor but by a combination of contextual opportunities (technological and economic factors) and interactions among actors (social and political factors). Inherent to this multi-actor, multi-level decision making in a continuously changing context is the unwieldy and capricious course of the decision making (De Bruijn & Ten Heuvelhof, 2008; Koppenjan & Klijn, 2004; Teisman, 2002). In one round, the competition from other projects frustrated Harbin’s ambitions; in a following round, the financial crisis (and then the overheated economy) was the show-stopper. But this unwieldy process also created the policy windows needed to get final approval. It is only the adequate and accurate action undertaken by project proponents – policy entrepreneurs, in Kingdon’s (1995) terms – when such windows of opportunity appear, that

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generates a sufficient condition for having a project approved. In that respect, decision making on infrastructure development in China displays features similar to those shown by leading policy scientists for decision-making processes in Western democracies. 5.2. Future research agenda on studying decision making in China This does not mean that Western theories of decision making and methods to study decision-making processes can simply be applied to decision-making processes in China. Our study of the Harbin metro project has provided useful knowledge of the wider applicability of Western decision-making theories and models and research methods to the study of decision making in China, and in particular their shortcomings with regard to structural and cultural factors. Under Mao’s regime, decision-making processes were highly centralized and dominated by the central government and at that level by the CCP. Since Deng’s decentralization and privatization process, institutional fragmentation and inter-organizational interdependence have come more to the fore. This has made Western decision-making theories and models more applicable to the Chinese situation, although the CCP continues to play a key role behind the scenes. This is a role that we were not able to uncover completely in this case and that certainly deserves more in-depth investigation. Interaction between actors within the public sector and those outside it, as is explicitly taken into account in Western decision-making theories, appears more limited in China, with the exception of the interaction with large state-owned enterprises and some large private enterprises. The sheer scale of large infrastructure projects implies that decision-making processes on these projects take place mainly among public organizations. This is not to say that societal forces are completely absent, only that the relative weakness of civil society does not (yet) necessitate their incorporation into the process. Decision making still primarily concerns government actors, albeit at different levels and now perhaps semi-privatized (and thus also striving for profit). As a result of new information and communication technologies such as Weibo (the Chinese version of Twitter), the influence of ordinary Chinese citizens seems to be increasing. This calls for their role to be taken into account in future research. It also appears that the type of project under examination is an important factor when it comes to explaining the duration of the decision-making process: if a project is promoted and championed by local government (especially if far removed from Beijing), decision making almost by default is less centralized and less controlled than when it comes to prestigious (‘face’) projects, such as the Bird’s Nest or Beijing Terminal 3. Although this means more relative freedom from national influence, it also seems to mean that delays become more likely, since such a project is often less strategically important and receives less attention and support from the national government, and is therefore less likely to receive funding. A promising avenue for further comparative research would thus be an investigation into the relevance of ‘distance from Beijing’ as a key factor explaining the evolution of Chinese decision-making processes. Furthermore, we studied the decision-making process on the Harbin metro from the first plans up to its construction. At the time of our investigation, the Harbin metro project had not been completed. Our findings about the speed of the decision-making process thus primarily concern the rounds during which decisions were taken about whether to construct the metro in the first place, and not so much the round during which decisions were made about the implementation of the project. It may very well be that – in contrast to infrastructure development in Western countries where construction is ‘just’ another round during which delays can occur – the actual construction of the Harbin metro will be swift. The evidence presented in the case of the Hangzhou metro construction disaster (Ma et al., 2012) and the practice of road construction through private contractors (Chen & Hubbard, 2012; Mu et al., 2010) indeed suggests that this may be the case, seemingly because of the incentives built into the contracts for construction to focus on time compression and cost minimization. Future studies will have to delve into the similarities and differences between China and Western countries regarding the duration of the decision-making process as a whole and the duration of the separate rounds (Teisman, 2002). Our expectation, however, is that cautious and secure implementation of projects will become more important, which may also render this decision-making round in China increasingly vulnerable to delays. In the Harbin metro case, the relocation of citizens, for instance, has become a contentious issue, causing delays in the construction of Line 1 and leading to the postponement of the construction of further lines. Finally, whereas we have moved beyond a simple understanding of Chinese decision-making processes as always being effective and efficient, our study, tracing such processes in a single case of infrastructure development, is necessarily limited in its detail and depth. We had to rely on only a limited amount of data. A lot of data is simply not publicly accessible and the data that is available is often politically or ideologically tainted. The triangulation of

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