Making Decentralization Work: The Party-State System and Economic Development in China (with Zhenhuan Lei )
Abstract: Effective decentralization faces a fundamental tension between local policy adaptation and central policy enforcement. We argue that China’s “party-state” structure manages this tension through a mechanism of bounded local flexibility, which grants local officials discretion to innovate while keeping their actions aligned with central priorities. Using original data on provincial party secretaries (PPSs) and governors from 1993 to 2019, we show that these two types of officials play systematically different roles. PPSs—often with central experience—prioritize enforcing Party mandates, whereas governors—with deeper local experience—focus on tailoring policies to local conditions. Provinces led by locally experienced governors exhibit faster economic growth, while PPSs’ central experience enhances compliance with central directives even at the cost of local economic performance and governors’ career stability. These findings reveal how the CCP’s organizational design sustains effective decentralization and economic development under single-party rule.