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China Informal Mechanisms of Exchange
In China formal exchanges of everything from goods and services
to information are expected to go through official channels, under
the supervision of bureaucrats. Administrative channels, however,
are widely acknowledged to be inadequate and subject to inordinate
delays. People respond by using and developing informal mechanisms
of exchange and coordination. The most general term for such
informal relations is guanxi (personal connections). Such
ties are the affair of individuals rather than institutions and
depend on the mutually beneficial exchange of favors, services,
introductions, and so on. In China such ties are created or
cultivated through invitations to meals and presentation of gifts.
Personal relations are morally and legally ambiguous, existing
in a gray and ill-defined zone. In some cases, personal connections
involve corruption and favoritism, as when powerful cadres "go
through the back door" to win admission to college or university
for their children or to place their relatives or clients in
secure, state-sector jobs. In other cases, though, the use of such
contacts is absolutely necessary for the survival of enterprises.
Most Chinese factories, for example, employ full-time "purchasing
agents," whose task is to procure essential supplies that are not
available through the cumbersome state allocation system. As the
economic reforms of the early 1980s have expanded the scope of
market exchanges and the ability of enterprises to make their own
decisions on what to produce, the role of brokers and agents of all
sorts has expanded. In the countryside, village and township cadres
often act as brokers, finding markets for the commodities produced
by specialized farming households and tracking down scarce inputs,
such as fertilizer or fuel or spare parts for agricultural
machinery.
Although the form and operation of guanxi networks
clearly has traditional roots, as well as parallels in
overseas Chinese (see Glossary)
societies and in Hong Kong and Taiwan, they
are not simply inheritances or holdovers from the traditional past.
Personal connections and informal exchanges are a basic part of
modern Chinese society, are essential to its regular functioning,
and are in many ways a response to the specific political and
economic structures of that society. They thrive in the absence of
formal, public, and overt means of exchange and may be considered
a response to scarcity and to blocked official channels of
communication. In modern China, those with the most extensive
networks of personal connections are cadres and party members, who
have both the opportunity to meet people outside their work units
and the power to do favors.
Data as of July 1987
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