Events

Professor Shaoda Wang
Assistant Professor
University of Chicago Harris School of Public Policy

Using a comprehensive collection of 3.7 million Chinese policy documents and government work reports spanning the past two decades, we identify 115,679 distinct policies and systematically trace their initiation and diffusion. Our analysis reveals three key findings. First, China’s policymaking has historically been highly decentralized, with local bureaucrats playing crucial roles in both creating new policies and spreading them. Second, since 2013, policymaking has become substantially more centralized, driven primarily by changing bureaucratic incentives: bottom-up innovation is no longer rewarded, while strict compliance with central directives is. Third, our analysis of industrial policies shows that centralization affects both policy suit-ability and effectiveness. Top-down industrial policies tend to align poorly with local conditions and are less effective at fostering industrial growth, underscoring the costs of centralization. At the same time, centralization provides offsetting benefits by mitigating distortions in decentralized policy diffusion that stem from strategic com-petition among local officials. Overall, our quantitative assessment indicates that the economic costs of centralization in China have substantially outweighed its benefits.