Between the Formal and Informal: Institutions and Village Governance in Rural China

Official efforts to improve rural governance in China have been confronted with resistance not only from local leaders but, interestingly, from rural residents as well. Two problems have jointly prevented these efforts from being effective: agency problems associated with formal institutions that split the interests of village leaders against their community, and collective action problems facing rural residents who are unable to defend their interests through horizontal societal networks. These two problems, working in tandem, allow village leaders to, ironically, enhance their control without being subject to state supervision and popular pressure. Some recent progresses have helped bridge the formal and informal institutions for greater accountability of rural leaders, although persistent challenges suggest an uncertain future for rural governance.