20.10.2025 The Consequences of Policy Centralization in China

China’s rapid growth has long been characterized by local governments experimenting with new policies that later spread through the country, from the household responsibility system that decollectivized farming to free school lunch programs. Yet in recent years, Beijing has reasserted tighter control over local jurisdictions, raising the question: how much of local policymaking is driven by the center and does centralization in policymaking improve or undermine policy effectiveness? 

The data. The researchers build a dataset of all published policies in China from 2004 to 2020 by combining 3.7 million policy documents from the legal database PKULaw and prefectural government work reports, using keyword analysis to identify 115,679 unique policies. Using text matching, they trace each policy’s “life cycle” — where it began, how it spread, and whether it was later adopted by Beijing. They then link policies to outcomes in output, exports, and patents, focusing on industrial policies to test how centralization shapes both local fit and policy effectiveness. 

Most policymaking in China has been bottom-up, not top-down. From 2004 to 2020, China produced roughly 116,000 distinct policies — tech commercialization schemes, school lunch programs, water management protocols, and so forth. About 80% of these policies started at the local (prefectural) level rather than in Beijing. Of the locally initiated policies, 68% spread to an average of four other prefectures within three years, while 32% were never copied at all. Twenty-four percent of local initiatives eventually caught Beijing’s attention and were elevated to national pilots or directives. In any given year, about 63% of the policies in a locality’s portfolio were purely “bottom-up” — created or copied locally. And even when local governments adopted central directives, they often rewrote and tailored them rather than copying word for word. These patterns show that China’s policymaking has historically worked through local experimentation and adaptation rather than strict top-down control. 

Source: Stanford Center on China's Economy and Instiutions 
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