The Incentive to Innovate? The Behavior of Local Policymakers in China

Despite playing a key contributing role in China's economic reforms and the Party's regime durability, there has been a noted reduction in local policy experimentation. Using semi-structured interviews with policymakers in Beijing, Zhejiang and Shenzhen, we find that although recentralization efforts at the central-level are impacting local officials, a great deal of variation in policy experimentation outcomes still exists. Thus, the puzzle motivating this study is how do local officials react to these institutional changes to decide whether or not to engage in local policy innovation? Our study offers three potential explanations for why local officials vary in their willingness to continue policy experimentation: (1) the ineffectiveness of the vertical reward and punishment systems operated by the Party-state; (2) differing base preferences of local officials; and, (3) the presence of a cohort effect. These factors “filter” institutional changes to result in variation at the local level. As such, we find strong support for an evolutionary process predicated on individual preferences interacting with institutional incentives such as the evaluation system and the networked-structure of cadre knowledge. Although some officials are still conducting policy experimentation, the overall reduction in innovation strongly suggests that potential solutions to governance problems remain trapped at the local level, and that the central government might lose this “adaptable” governance mechanism that has contributed to its past economic and political successes