Introduction

According to its Constitution, China is a unitary state; however, as part of economic reform in the 1980s and early 1990s, the central government delegated administrative authority to the provinces. Administrative delegation authorized local governments’ autonomy in governing and resulted in a de facto functional division between the central and local state.^[1] In order to to align the interests of local state agents in this decentralized system with over thirty-three provincial-level regions, 334 prefecture-level divisions, 2,862 county-level divisions, 41,034 township-level administrations, and 704,382 village-level divisions, the central government relies on a personnel management system linking evaluation to promotion. The national cadre evaluation system that developed in the reform era uses performance targets to create incentives for local officials to govern according to common priorities, resulting in fairly stable patterns of behavior.^[2] Under this system, the central party Organization Department appoints and reviews officials at the provincial level (one-level down), and then this same “one-level down” process occurs annually at the subnational level to assess cadre performance and determine promotions and raises.^[3] This competitive process creates a “political tournament” of performance-based promotion whereby local cadres endeavor to implement the central policy agenda to demonstrate merit.^[4] As Yongnian Zheng famously pointed out, the CCP became an “organizational emperor” during the reform era, and the strong personnel management system is the most important mechanism explaining regime durability.^[5] In fact, to the extent that there is a consensus understanding of Chinese politics, most scholars would agree that the cadre evaluation system best explains local officials’ behavior, including disregarding central policies to implement local interests resulting in “policy implementation gaps.”^[6]

Thus, over the reform era (1979–2012), China’s public-administration system developed both a strong central Party-state and extensive system of grassroots governance linking the two via achieving policy targets outlined in the annual cadre evaluations. However, as this centralized personnel management system interacted with the decentralized governance model (sometimes called “Fragmented Authoritarianism”^[7]) researchers observed challenges such as an inability to equally incentivize agents at lower levels of the system not being promoted out of home provinces, as well as the fact that performance goals are outcome-oriented, allowing varying tactics to achieve mandated goals. In addition to these challenges, scholars also identified problems applying negative incentives and in monitoring local agents, such that promotion decisions were often made without accurate information.^[8] Simply put, this system lacked enough “connective tissue” to seamlessly link policy ideas developed at the top with implementation and enforcement at the bottom. To achieve President Xi’s goal of “top-level design” and eliminate fragmentation and local discretion, he has been repurposing institutions to serve as this connective tissue linking central and local governments to eliminate policy implementation gaps and other problems caused by local discretion such as corruption. Local officials also recognized the structural problems in the Fragmented Authoritarianism system, especially policy competition and corruption, and many supported the institutional reforms championed by Xi.

President Xi has converted existing institutions and practices such as leading small groups (LSGs)^[9] and campaign-style policymaking to achieve new goals. The two main changes observed with top-level design are policy “conglomeration,” where policy authority is aggregated or consolidated via super-ministries, and merging Party-State responsibilities. This institutional reform unifies policy authority into one entity, from previously fragmented departments, with a high bureaucratic rank and also layers in Party leadership such that the Party is the policymaker and the State entity serves strictly as policy implementer. This reform removes policy discretion in implementation from both central state and local state to the Party. The other interconnected change is the creation of “coordinating institutions” where LSGs control the policy process directly through campaign-style policymaking tactics in many key policy areas, including national security and poverty alleviation. The enforcement mechanism is the ability to requisition local state agents and embed “key tasks” in annual evaluations,^[10] supported by new forms of digital monitoring of local officials.^[11] These reforms eliminate the vertical bargaining by local state agents and horizontal competition among central ministries normally observed in the Fragmented Authoritarianism model. However, as Thelen reminds us, endogenous institutional change is a process with both “rule-makers” and “rule-takers,”^[12] and rule-takers such as local officials may obstruct or reshape the process of institutional change.^[13] Tsai examines this very process occurring with new environmental regulations interacting with the “growth imperative” for local officials in promotion and finds that “friction” between rules or between formal and informal rules and norms results in unanticipated outcomes.^[14]

In this report, I examine how these institutional changes of policy conglomeration and coordination, coupled with the increasing use of punishment in the cadre evaluation system, increase political pressure on local officials while removing policy discretion, resulting in two main strategic adaptations: less policy experimentation and less active work styles (also described as bureaucratic slack or formalism). The strategic adaptations adopted by the “rule takers” explored in this chapter illustrate how extensive and deep these institutional changes are at the local level. I find that while these reforms do increase coordination and compliance, they also result in what Xiao and Jialei Ma call “policy implementation distortion” where local officials veer between overcompliance (“blunt force regulation”)^[15] and paralysis (bureaucratic slack).^[16] Moreover, the challenges identified in our survey of local officials highlight an overdependence on quantifiable targets, high levels of uncertainty, perceived risk for civil servants, and removing local discretion such that policies can be implemented quickly but lack local adaptation or feedback. The new role of strict policy implementation also means that local officials do not have as much latitude to adapt to local conditions or to design experiments to solve local issues. Additionally, the extremely hierarchical nature of top-level design and the proliferation of “key tasks” hampers the execution of everyday business while focusing resources on key policy goals and ignoring all others.^[17]

Moreover, the policy process in key areas (those with LSGs and/or campaigns) is designed at the top and swiftly implemented at the bottom as “top-level design” would conceive; however, this policy process loses mechanisms for feedback and reform other than citizen protest. For example, the collapse of the zero-COVID policy shows how these policies designed by top officials are enacted quickly and efficiently; however, they do not have formal mechanisms for evaluation or feedback through local bureaucracies. Local officials are forced to implement these policies regardless of harm, until local residents protest in enough numbers to be visible. At this late stage, the central government only has the choice to either use repression or drop the policy (or both). This policy process has rapid execution for signature policies but a high possibility of “unforced errors.”

The evidence referenced in this report derives from a survey of local officials conducted in 2022. Before Wenjuanxing, a professional online survey company in China, administered the survey, I calculated the distribution of local cadres by region, age, gender, and education, to ensure a representative sample of China’s local cadres. The survey had 1,500 respondents from twenty-eight provinces.

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^[1] Jianxing Yu and Xiang Gao, “The Behavioral Logic and Institutional Basis of Chinese Local Developmental Government,” in The Palgrave Handbook of Local Governance in Contemporary China, eds. Jianxing Yu and Sujian Guo (Singapore: Springer Singapore 2019), 195–221.

^[2] Hongbin Li and Li-An Zhou, “Political turnover and economic performance: the incentive role of personnel control in China.” Journal of Public Economics 89, no. 9-10 (2004): 1743–1762.

^[3] K. Y. Tsui and Y. Wang, “ Between separate stoves and a single menu: Fiscal decentralization in China,” The China Quarterly 177, (2004): 71–90.

^[4] Pierre Landry, “Decentralized authoritarianism in China,” Cambridge University Press, no. (2008): 4–76.

^[5] Yongnian Zheng, The Chinese Communist Party as Organizational Emperor: Culture, Reproduction and Transformation, (London: Routledge 2010) .

^[6] Genia Kostka and Arthur PJ Mol, “Implementation and participation in China’s local environmental politics: challenges and innovations,” Journal of Environmental Policy & Planning 15, no. 1 (2013): 3–16.

^[7] Kenneth G. Lieberthal and David M. Lampton, Bureaucracy, politics, and decision making in post-Mao China, (University of California Press, 2018).

^[8] Jeremy L. Wallace, “Juking the stats? Authoritarian information problems in China,” British Journal of Political Science 46, no. 1 (2016): 11–29.

^[9] Alice Miller, “The CCP Central Committee’s leading small groups,” China Leadership Monitor, (Brill 2017): 279–303. LSGs are an ad hoc executive committee staffed by high-ranking leaders and able to take command of a policy area.

^[10] W. Zhou, “Beyond deliberation and cooperation: Leading groups’ running logic and mode differentiation (Chinese),” Chinese Public Administration 3, (2018): 113–117.

^[11] Xiang Gao, “State-Society Relations in China’s State-Led Digitalization: Progress and Prospects,” China Review: An Interdisciplinary Journal on Greater China 20, no. 3 (2020): 1–11.

^[12] Kathleen Thelen, “Institutional change in advanced political economies,” British Journal of Industrial Relations 47, no. 3 (2009): 471–498.

^[13] Orion A. Lewis and Sven Steinmo, “How institutions evolve: Evolutionary theory and institutional change,” Polity 44, no. 3 (2012): 314–339.

^[14] Kellee S. Tsai, “Adaptive informal institutions and endogenous institutional change in China,” World Politics 59, no. 1 (2006): 116–141.

^[15] Denise S. Van der Kamp, “Blunt force regulation and bureaucratic control: Understanding China’s war on pollution,” Governance 34, no. 1 (2021): 19–209.

^[16] Xiao Ma and Jialei Ma, “The Phantom of Bureaucratic Incentive Structure: Types and Causes of Policy Implementation Deformation in Grassroots Governance [科层激励结构的魅影:基层治理中政策执行变形的类型与成因],” Peking University Political Science Review[北大政治学评]论,(2021), 146–164.

^[17] Wen-Hsuan Tsai and Wang Zhou, “Integrated fragmentation and the role of leading small groups in Chinese politics,” The China Journal 82, no. 1 (2019): 1–22.