Reading China : Predicting Policy Change with Machine Learning

For the first time in the literature, we develop a quantitative indicator of the Chinese government's policy priorities over a long period of time, which we call the Policy Change Index (PCI) for China. The PCI is a leading indicator of policy changes that covers the period from 1951 to the first quarter of 2019, and it can be updated in the future. It is designed with two building blocks: the full text of the People's Daily — the official newspaper of the Communist Party of China — as input data and a set of machine learning techniques to detect changes in how this newspaper prioritizes policy issues. Due to the unique role of the People's Daily in China's propaganda system, detecting changes in this newspaper allows us to predict changes in China's policies. The construction of the PCI does not require the understanding of the Chinese text, which suggests a wide range of applications in other contexts