Agency problem and bureaucratic governance in the people's republic of china

This article argues that the Chinese idea of agency problem is misconstrued. The analysis provides an alternative approach to empirically reassess the nature of the problems, along the principal-agent models. The article demonstrates the relevance of using law to make the case for the profitability of examining the issues of bureaucratic governance from principal-agent perspectives. The analysis concludes by arguing that bureaucratic governance in China cannot be achieved by intensifying hierarchical domination. The concern about agents’ moral quality cannot sufficiently induce responsible bureaucratic behaviour. The key to reinventing the bureaucratic state in China lies mainly on the recognition of the agents’ need for protecting their own interests. Seen in this fashion, macro-level alternative methods of accountability should be introduced to reflect the interests of both principal and agents.