Making Decentralization Work: The Party-State System and Economic Development in China

Zhenhuan Lei is an Associate Professor at the School of International and Public Affairs at Shanghai Jiao Tong University. His research primarily focuses on political economy, law economics, and comparative politics, with a regional specialization in China. His work has been published or is forthcoming in leading journals such as Comparative Political Studies, The Journal of Comparative Economics, The Journal of Political Institutions and Political Economy, The Journal of Politics, and Studies in Comparative International Development. Before joining Shanghai Jiao Tong University, he was an Assistant Professor of Political Science and Public Policy at the University of Wisconsin-Madison from August 2020 to July 2024. He was also a Visiting Scholar at the National School of Development at Peking University from August 2022 to July 2023. He earned his Ph.D. in Political Science from New York University in 2020. 

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.