In order to better understand the policy process in China, one cannot turn to liberal classical ideas of economics. Nor do we get enough adequate answers from institutional theory and it goes beyond the East Asian developmental state theories. Instead we have to turn to political economy and further to what Heilmann and Melton (2013) term: The principal-supervisor-agent model. At the same time, one needs to understand the context: A one-party state grounded in Mao ideology. When looking at policy processing from Mao to today, it is more of a linear process[1], more of the same, rather than sharp breaks and turns, with completely new ways of formulating and implementing policy, regulations and campaigns. Policy is coming from the top, as a broad set of ideas, and operationalized at the local level.

Even though we see a strong connection between the Mao-era and today´s policy processing methods, over time, incremental changes have a visible effect. With the succession of Deng, the goal of all policy changed, from class struggle to economic growth. From rural guerilla and mass movements, to urban institutionalism and market forces.Despite the fact that China opened up for market forces, privatized many of its industries and decentralized decision-making authority, the party has remained its political power and control, and the state´s ability to nationally guide the country with directives from the top (Heilmann and Melton, 2013). This includes, the control of strategic policy coordination, resource mobilization and macroeconomic control. From 1976 up to 1993, one can simplify the narrative by saying that a relaxation of the planned economy took place and the “…central government curtailed its commanding over economic administration to the local government…the non-command segments of the economy grew” (Heilmann and Melton, 2013, p. 582) After 1993 a shift occurred, the new socialist market economy was introduced. In Wen Jiao Bao´s terms, the role of planning was once again emphasized and became a central component in the economic and political policy work. This new type of planning was however not soviet style, but rather an adoption of the resource allocation to the market forces: “has been geared to identify and support the growth potential offered by domestic and global markets…” (p. 582)

In this paper, for the sake of the analysis, we consider the Chinese policy processing as universal. However, it is important to stress that big variations are to be found, which Unger (2002) explain by geography, in combination with the economy and history. In addition, big variety in fiscal resources of local governments also have a potentially huge impact on the process. The objective of the paper is threefold: Looking at the Chinese policy modelling process, the benefits and drawbacks with the system and then point to the challenges local officials are facing in their daily work.

An overview of Chinese policy modelling process

The most important policy work/process in China on national level, is the recurring five-year plan, or which should rather be seen as a cycle, since it contains a number of feed-back loops and revisions. It points out the direction, and these are then broken down into thousands of smaller sub-plans with detailed instructions for all levels of the government down to the towns and districts. The plans have multiplied functions. They serve as both a long term developmental strategy and at the same time, provides enough space for local officials to adjust the policy accordingly, experiment with often limited resources and come up with suitable solutions to sometimes complex policy issues (Heilmann and Melton, 2013). The Chinese planning system can be defined as “…planning and experimentation under hierarchy” (ibid, p. 590). It is about experimenting for reform, by “crossing the river by feeling the stones” in a “point to surface approach”. Seeing the specific policy initiative as a point, making it clear, and distinct, and ones its perfected, enlarge it and take it to the surface.

A theoretical lense to use is the principal-supervisor-agent model, where actually the agent, here, the local official has a say on the higher-level policy. The distance between the units, the local political networks in combination with: ”…the imperative for agents at all level to “get things done” with the limited resources that are available to them” (Smith, 2013, p. 1034) change the power structure and gives the local leeway to adjust and operationalize the policy directives from the top. Ahlers and Schubert (2013) express it like: “…policymaking at and below county level is very much agency-driven and quite autonomous from upper-level interference”(p. 840) and this becomes more clear in the implementation phase, in comparison to the earlier formulation phase. As mentioned above, the process is very much an experimentation for reform. Ahlers and Schubert (2013) finds that piloting and modelling are an essential part of local development strategies. In that they adhere to the requirements of upper levels. They are also vital for local cadres to keep their power position, by receiving positive feed-back from the more central authorities, to an extent increase the efficiency in carrying out policies and thus minimize local critique. There are small-scale modelling and piloting activities going on each day in China, most of them unnoticed for the bigger public.

There are different ways how the policy process is carried out: Some townships, counties to use the promotion of model villages as a strategy, where this model, serve as a blueprint for others. These villages then receive subsidies. However, this is not an universal practice. Other local governments have chosen not emphasized the use of model villages rather use a project based strategy, where projects are spread over a number of villages for a “homogeneous spatial development.” (Ahlers and Schubert, 2013, p.836) where villages can apply for a large number of projects where each project follows monetary benefits. These projects, called dian (点) are then handled by a new organ on village-level. Another way to operationalize policy initiatives from the top, is through a so called “project management model”. This approach doesn´t single out one village and lift that, rather focus on a project, implementing it in a number of villages. The projects could be of a wide variety, from tree planting efforts, focus on a specific crop, new sanitary systems etc. This modelling strategy doesn’t lead to the set-up of a new board, rather is administrated via a village committee.

Analysis of the benefits and downsides of the policymaking process


In order to implement local policies, the incentive structures for local officials and party members is one important parameter. When it comes to motivations for cadres, data seems to be pretty coherent: “The party trumps the government and everyone wants to live in town” (Smith, 2013, p. 1029). Also, the motivations differ weather you are government “staff” or politicians, where the former is more confined and concentrated within the county borders. Leading cadres, a form of politburo members but on the local level, is nowadays sitting five years, but the stress to be promoted is in part driven by the age limits for various positions, often leads to a shorter term (Smith, 2013). A problem arises when it is more of putting make-up on the pig: “…it was quite obvious that model villages served as showcases for successful policy implementation which would boost the cadres’ evaluation record. The same was true for a number of “beacon-like” project sites…” (Ahlers and Schubert, 2013, p. 844). Incentives could be better pay, as in many industries, but given the compressed nature of pay grades, cadres need to rely heavily on the promise of a future promotion to motivate their staff (Smith, 2013). Heilmann (2011) shows that the policies that were most successful, was the ones that aligned incentives for cadres’ political careers with market opportunities. The incentive structure is a complicated tool, correctly executed it can have a positive effect on the outcome of the policy implementation: For example: “…the targets set under the assessment system cannot be disregarded. Leading officials in the township or the county who hope to be promoted cannot afford to be found wanting by inspection teams from higher levels, particularly in key policy areas such as attracting investment, family planning or villagers petitioning higher levels of government. Resources and staff will be mobilized to achieve some of these targets, often very forcefully” (Smith, 2013, p. 1035)

Creating best practices

A challenge is how a best practice should be applied: “…given the differences in natural conditions, historical trajectories and economic development between the privileged few and all the other villages in the county” (Ahlers and Schubert, 2013, p. 839). Rather the idea was one of: “…stimulating competition between townships and villages for the scarce funding.” (ibid, p. 839) And the criteria for receiving funding for various projects was more of a personal matter, rather than objectively defined ones in the name of creating best practices.

At the same time,Heilmann and Melton (2013) argues that local knowledge that officials hold about policy instruments can be feed back into the planning process higher up in the hierarchy, thus contribute to a best practice down the line.

Funding and equality

A question in developmental literature, is weather resources should be concentrated or more evenly diverse. In the case of model villages, the already over-performing units have in many cases just been re-labeled, in that, not really bringing about new innovations or new ideas that can later on be transferred as best practice. On the other hand, in the project management model, new initiatives and also late comers may be subject of receiving funding and support, thus enable a greater heterogeneity in models and practices. (Ahlers and Schubert, 2013) Depending on how you see distribution effects, a challenge in the planning system is the built in difficulties to reach a fair redistribution of resources (Heilmann and Melton, 2013).

In the case of funding, in the village modelling, funds were allocated in a lump sum, to one identity, and from their channeled to the various departments.  In the case of the other examples, the channeling of funds either went directly to the project or was earmarked in the total budget. 

Guanxi trumps Kexue

In townships and counties were project management model was adopted, the selection criteria was said to rest more upon “favourable conditions” (Ahlers and Schubert, 2013, p. 841). Further funding was also favored to those who had developed a good relationships: “…clear advantage for villages and townships that have established a good working relationship with the county departments and the county 领导班子(ibid, p. 841).

Evaluation and inspection

The policy process shows a great amount of flexibility in the system of evaluation: “…county and township governments “cooperated” informally to work through an evaluation…eventual assessment of target fulfilment with the county government if they encounter certain unforeseeable hardships (for example, natural disasters or a financial crisis, as in 2008/2009) during the evaluation period” (Ahlers and Schubert, 2013, 844-845) For example, a suboptimal results in one project area can be outweighed by an excellent performance in others.

On the more negative side, the evaluation system, with humans on both ends of the isle, can be highly subjective. This opens up for corruption and a stronger emphasize on building personal networks rather than performing for the greater good or for the public whom they are there to serve. The many visits and inspections that this system bares can increase the inefficiency, which is something Smith (2010) finds as a result of the inspections: “…forcing township leaders to take staff away from their real jobs, a situation frequently described by interviewees as “not attending to one’s proper duties”(p. 607). Another potential problem with inspections is that work may also be concentrated to please the inspections rather than a tangible result. Smith (2010) continues:These “hanging sign work units” have no personnel assigned to them on a full-time basis. Whenthere is an inspection, the agencies…all bustle with activity…. As soon as the inspection team leaves, these agencies revert to what they really are: freshly painted black and white signs” (p. 607). Inspections can also have a heavy burden on the local budget, as “entertainment expenditure”.

Flexibility in the implementation

Experimental schemes are seen by Beijing as a way of correcting and optimizing planning processes and policies per se. Beijing do offer this flexibility intentionally, in order for local officials to try to overcome difficult policy problems. In the same way it encourages experimentation and competition among local initiatives and ideas (Heilmann and Melton, 2013) This is a beneficial trait in the process and can result in positive effects.

Model villages

The development of model villages can be both a blessing, and a curse. Once the model villages have been blessed by a higher-level authority, the model has to stay. The ultimate is if the state invests its prestige in the model village. Then it will never fail, on the other hand the local officials need to keep it alive and well despite the value it actually creates.

Key challenges for local implementers

Local cadres feel the pressure from above and from below. Their work is scrutinized as they receive scores at a large set of targets (Heilmann and Melton, 2013). The local level governments are like the middle manager at a larger company. Squeezed on one hand by the demands from the top to carry out sometimes tough and unpopular decisions/policy reforms and please the party secretary and the inspectors, continuously receiving inspection teams from higher levels of government (Smith, 2010). On the other hand, handling the complaints from the local citizens that the new reforms and policy may result in: “…county and township officials cooperate closely with village leaders to ensure smooth project implementation and are on high alert to avoid any problems that might lead to social instability… maintaining social stability is crucial for the positive evaluation of any government department or individual cadre” (Ahlers and Schubert, 2013, 842-843). A kind of bargaining and local adaptation takes place here, as realpolitik, when tweaking the commands from the central government to fit the local society (Heilmann 2017; Smith, 2010). Local government, and township governments are pretty much cash-strapped, especially after the tax reforms, and needs to rely to a large extent on funding from above and outside.  Further, local officials need to ground their ideas and work on a scientific approach 科学, at the same time hand show the spirit 情深. So the local government needs to deliver on many fronts. At the same time they lack real power:  “…the administrative system has imposed extremely heavy responsibilities on the township governments, including everything from the levying of taxes to speeding up economic development, from attracting foreign investment to increasing peasant incomes, from family planning to social stability, and even to writing slogans and hanging up placards in every village—all of which are assessed according to specific and fixed regulations” (Shukai, 2007, p. 15).


The point to surface approach is one way to see the formulation and implementation of policy in China. In that, the government creates the leeway for local experimentation which can then, be refined and create new policy instruments and policy as such.  In a corporate environment this approach would be entitled “continuous learning” which is a crucial dynamic capability for the firm to survive in the long run. The same can be said about a government administration. Not being afraid to question its methods and change them accordingly, very much in line with Deng´s idea of a scientific approach or Mao´s (1940) “seek truth from facts” which has been adopted by their successors, to various degrees.  Removing bad practices, curing the body and refining it, is also in line with the party’s pathology rhetoric’s: Emulation vs Elimination (Sorace, 2017)

Local officials are very much guided by performance targets, in a system which is lifted up by the assessments and inspections in the responsibility system (Smith, 2013). These targets are extracted from the single most important policy work – the centrally developed five-year plan. In that, China has proven that it is possible to top-down manage a huge country, a country of great variety both in terms of economy, culture and social development. But it has not been possible without giving great leeway to local adjustments, local experimentation and local political skills. Policy in China is created out of practice by local officials, in a combination of pragmatism and ideology, science and spirit.


Ahlers, A. L. and Schubert, G. (2013) ‘Strategic Modelling: “ Building a New Socialist Countryside ” in Three Chinese Counties’, The China Quarterly, 216(December), pp. 831–849.

Heilmann, S. and Melton, O. (2013) ‘The Reinvention of Development Planning in China”, 1993 – 2012’, Modern China, 39(6), pp. 580–628.

Smith, G. (2013) ‘Measurement , promotions and patterns of behavior in Chinese local government’, The Journal of Peasant Studies. Taylor & Francis, 40(6), pp. 1027–1050.

Sorace, C. (2016) “Communist Party Immunology,” In China Story Yearbook 2016: Control, eds. Jane Golley, Linda Jaivin, and Luigi Tomba, (2017), Canberra: ANU Press.

Unger, J. (2002). “The transformation of rural China.” Armonk: M.E. Sharpe.

Zhao, S. (2007). “The power System of Township Government.” Chinese sociology and Anthropology, 39, pp. 8-16

[1] For example, the evaluation forms from the Mao era, hasn’t changed that much if you compare with todays.