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Rapid economic growth in China with considerable market intervention has led to renewed interest in the efficacy of industrial policy. Have industrial policies helped Chinese firms overcome market failures and boosted productivity, or have they distorted markets and undermined creative destruction? This paper explores these questions in the specific context of local implementation by studying the targeting of financial favors and the relationship of such targeting to local political incentives. Using unique and largely unexplored quasi-census firm-level data from annual tax surveys in China from 2007 to 2015, this paper demonstrates that financial favors disproportionately target loss-making, larger, older, and less productive firms. It then argues that short-term career incentives facing local officials explain this sub-optimal targeting, showing that promotion likelihood for city leaders increases with higher levels of 'excess' financial favors to firms, particularly when these favors are provided to loss-making firms. Finally, the paper estimates costs to the Chinese economy from misallocated financial support by showing that financial favors are associated with lower levels of firm entry and lower productivity growth. The paper contributes to the literature on industrial policy, political incentives, and misallocation, and has important implications for China's future growth and transition. [ABSTRACT FROM AUTHOR]

Copyright of China Quarterly is the property of Cambridge University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In China, policy pilots are not about implementation; it is meant to establish new institutions, adopting new practices or finding new solutions that may not be officially endorsed or publicly recognized yet. Pilots are also not "experiments" in which interventions are clearly designed and executed under strict control. It is to some extent a form of muddling through with both central and local contributions. In this paper, we examine the local government's role in a land pilot scheme in Deqing County in Zhejiang Province since 2015 to examine the relationship between the central and local governments. [ABSTRACT FROM AUTHOR]

Why do provincial governments change policy, even when those policies have proven successful? This paper explores a debate regarding the determinants of provincial policy choice and the degree of discretion provinces are permitted in this area. It does so by scrutinizing the shift in Guizhou's development policy from a poverty reduction orientation to a wholehearted pursuit of economic growth, urbanization and industrialization. In contrast to those who argue that central experience, prospects for promotion or local conditions are key factors explaining policy choice, the paper concludes that Guizhou's shift in policy had more to do with the backgrounds and experiences of top provincial leaders. The result has implications for our understanding of central–local relations and local government decision making. [ABSTRACT FROM AUTHOR]

Land planning plays an important role in the economic and social development of a developing country, such as China. Studies have started to focus on the topic of central and local relations in land planning systems; however, the picture of central–local relations presented by different studies has not been classified and distinguished. From the perspectives of structure, process, and culture, this paper reviews recent studies on the relationship between central and local governments in land planning governance and summarizes the existing research status and shortcomings, aiming to point out directions for future research. The results indicate that (1) existing studies provide a simple sketch of central–local relations, focusing on the structural and process perspectives and paying less attention to the cultural perspective; (2) the points of view among these studies conflict, leading to a lack of systematic theory and consensus regarding central–local relations in land planning; and (3) the process perspective is currently a hot topic that involves issues of central and local behavior, such as land planning execution, planning policy innovation, and public goods provision, but studies do not adopt an in-depth methodology. Therefore, we suggest that future research should be developed in four dimensions, namely the construction of a conceptual model, the expansion of existing theories, the application of new methods, and the integration of research perspectives. [ABSTRACT FROM AUTHOR]

Three months into the Covid-19 crisis, lockdown has become a global response to the pandemic. Why have so many countries resorted to lockdown? How is it being implemented in different places? Why have some places had more success with lockdowns and others not? What does the effectiveness of lockdowns tell us about the local institutions entrusted with enforcing them? This paper compares how lockdown orders have been implemented in China, Italy, and the U.S. The analysis points to two major factors that have shaped the enforcement: tensions between national and local governments, and the strength of local territorial institutions. [ABSTRACT FROM AUTHOR]

The practice in Leninist political systems of assigning local leaders concurrent seats on higher-level leadership bodies presents a puzzle. In China, for example, a subset of provincial leaders hold seats in the central Politburo, while some city-level leaders hold seats in provincial party standing committees (PPSCs). While some scholars view these concurrent appointments as a form of top-down control or co-optation, others see these arrangements as a reflection of local power and a channel for the assertion of local interests. In this paper, we attempt to adjudicate between these different views empirically by analyzing the patterns and consequences of concurrent appointments of city leaders to China's PPSCs. We introduce a new typology that distinguishes between the political and economic functions of concurrent appointments to differentiate four possible intergovernmental dynamics of control, co-optation, compromise, and concession. Through analysis of an original dataset on PPSC appointments and case studies of three Chinese cities, we show that concurrent appointments in China's provinces can function as a means of concession, compromise, or co-optation, but we find little evidence that concurrent appointments allow higher-level authorities to firmly control or economically exploit localities. [ABSTRACT FROM AUTHOR]

Though China has characteristics of a developmental state like those of East Asia, there are evident differences due to China’s scale. Unlike the East Asian model, in which the central government takes charge of industrial policy directly, the Chinese central government formulates the policy and the local governments implement it. Thus, a multi-layered and complex policy structure has been the norm, and considered one of the Chinese characteristics. This paper examines several examples of Chinese industry, and finds that the effectiveness of this model mainly depends upon the way the central and local governments interact. For example, the 2004 automotive industrial policy was successful, because the central-local interactions demonstrated mutual accountability and thus brought policy innovation. After 2004, however, the auto industrial policy became ineffective, when the environment and the central-local relationship changed. It remains to be seen whether relevant parties could improve their coordination to produce a better result. [ABSTRACT FROM PUBLISHER]

This study examines the making of local climate governance in the Chinese setting where central-local inter-governmental relations continue to play critical part in almost every policy domain. Through analysing the climate responses of the three provincial-level governments at the Yangtze River Delta (YRD), the paper argues that the process of “experimentation under hierarchy” is relevant to understanding the evolving of the subnational climate regime in the YRD region. We find the preponderance of the central authorities in initiating national climate strategies and galvanising responses at the local level. Meanwhile, provincial governments have been able to leverage climate plans and actions to achieve their own gains. These findings suggest that any optimism about subnational climate activism in a Chinese setting has to be mixed with caution. In fact, the shadow of hierarchical authority structure lingers and plays important part in the initiation of subnational response and spurring climate responses and innovations from below. [ABSTRACT FROM AUTHOR]

Copyright of China Quarterly is the property of Cambridge University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper analyses Chinese sub-national governments' implementation strategies to meet national energy efficiency targets in the 11th Five-Year Plan (2006-2010). Previous research has focused on the ways governance practices and decision-making structures shape implementation outcomes, yet very little attention has been given to what strategies local leaders actually employ to bridge national priorities with local interests. To illustrate how local leaders work politically, this paper highlights specific implementation methods officials use to strengthen formal incentives and create effective informal incentives to comply with energy efficiency mandates. The analysis is drawn from 53 interviews conducted in June and July of 2010 in Shanxi, a major coal-producing and energy-intensive province. Findings suggest that local government leaders conform to national directives by "bundling" the energy efficiency policy with policies of more pressing local importance or by "bundling" their energy efficiency objectives with the interests of groups with significant political influence. Ultimately, sub-national government officials frame policies in ways that give them legitimacy at the local level. [ABSTRACT FROM AUTHOR]

ABSTRACT This paper brings together the key concepts of policy learning and central-local relations to examine how the efficacy of sustainability policies can be improved, with a particular reference to pricing policies for wind energy in China. Based on our comparative case studies of three provinces, Guangdong, Shanghai and Xinjiang, we critically examine how central-local relations may facilitate or impede policy learning. Our analysis focuses on policy changes at the national level, including the move away from the tendering policy to a fixed-price policy in 2009, and the diversity of local policy responses, which include a local fixed-price policy in Guangdong, a two-tiered model in Shanghai and a de facto fixed-price policy in Xinjiang. We have three major key findings. First, we found that technical and conceptual forms of policy learning have taken place in China, but the progression towards the highest form of policy learning, social learning, is limited. Secondly, we found that the established fabric of central-local relations has created facilitating conditions for as well as limitations to the advancements towards social learning. A national policy framework, a multi-level governance system, institutional arrangements for knowledge creation and learning, and a more participatory form of governance for civil society are some of the facilitating conditions. However, over-centralization, the inertia against institutional changes and the failure to recognize the need for a more deliberative decision-making process are identified as key barriers. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment [ABSTRACT FROM AUTHOR]

The provinces of Northeast China, known as China's "rustbelt," have been slow to implement reforms to reduce the role of the state in their heavily industrialized economies. With China's accession to the World Trade Organization (WTO) and the wider opening of China's economy to global forces that this move entails, however, the region must confront the exigencies of intensified market competition. This paper seeks to begin to understand the impact of China's WTO membership from a regional perspective by examining how Liaoning, the most populous and most heavily industrialized province in the region, has prepared for the country's WTO accession. This analysis evaluates the role that the central government (the authorities in Being) has played in this process in relationship to that of provincial authorities to date, and the analysis reflects on what this interaction suggests about the ways in which Liaoning will address the challenges and opportunities of economic globalization in this latest chapter of reform in China. As with other examinations of provincial issues seen through the lens of central-local relations in China, this paper is concerned with what this analysis suggests about evolving capacity and structure of the Chinese state. [ABSTRACT FROM AUTHOR]

This study presents an analytical framework integrating welfare developmentalism and interactive central–local relations to understand the underlying dynamics of the dramatic pension coverage expansion in China in the last decade. We empirically test the research hypotheses based on the analytical framework using data from the Chinese General Social Survey 2008–2017. The results show that various individual and institutional factors, including demographic profiles, socio‐economic status, institutional contexts, and regional economic development, are significant predictors of pension participation. Regions with more local capacity have higher pension participation rates; however, there has been a trend towards regional convergence in China's pension coverage expansion since 2012. This study contributes to the literature on the social policymaking process by revealing how the forces of top‐down pressure from the centre and bottom‐up motivations derived from the local conditions are embedded into the conceptual framework of welfare developmentalism. Our findings imply that the implementation of an inclusive pension scheme requires careful policy design and coordination among regions to address the interests of different parties. [ABSTRACT FROM AUTHOR]

Since 2000, China has undergone a "golden age" of livelihood security construction similar to that of the Western industrialized countries in the 1960s to 1980s. Nowadays, China has built up the world's largest social security and housing support systems; the coverage of compulsory education has reached the average level of high-income countries; and the main health indicators are generally better than the average of middle- and highincome countries. Obviously, China is no longer a "low-welfare" country. Livelihood expenditure, with a share of GDP close to the level of developed countries around 1980, has become the principal part of public expenditure, and the central government is also playing an increasingly prominent role in ensuring people's livelihoods. China is building a new livelihood security system with responsibility shared among multiple levels of government. [ABSTRACT FROM AUTHOR]

This paper aims to fill the void in the literature by answering the following research question: to what extent has the Chinese central government institutionalized public participation for addressing the challenge of agent control of local land use in China? Focusing on the stated purposes, specified actors, and installed mechanisms of public participation and government accountability, an institutional analysis was conducted on the national land use regulations and policies enacted between 1947 and 2012. It was found, without institutionalized input and surveillance from bottom-up by individual citizens and civil society organizations (CSOs), the top-down approaches remained ineffective and land use was mainly left for manipulation by local governments. The rural-urban dichotomy and lack of institutionalized public participation in land use decision-making have compromised equal economic and social opportunity for farmers, eroded public trust in local governments, and led to social unrest. Thus, the central government needs not only to directly control the discharge of discretionary power by local governments, but also to empower the public for holding the government accountable for land use decisions. [ABSTRACT FROM AUTHOR]

Not-in-my-backyard (NIMBY) protests have been on the rise in urban China over the past few years. Previous studies have focused on campaign strategies and outcomes, yet less attention has been paid to how the Chinese government at different levels has responded to NIMBY protests. This paper focuses on the controversies over three paraxylene (PX) chemical plant projects, which were considered as growth engines by local governments but as health and environmental threats by local residents. It adopts the analytical framework of divided state power to explain why local governments chose to make concessions to the public's demands to relocate or cancel these PX projects. The study finds that the mandate to maintain social stability incentivized local governments to address NIMBY concerns in an ad hoc manner, which tended to create more problems than solutions. The central government has introduced several institutional measures to formalize public participation in land use planning and to hold local governments more responsible for environmental decisions. The analysis of multi-level government responses to NIMBY protests provides a new insight into the power structure that enables or constrains public participation in facility siting in China. [ABSTRACT FROM AUTHOR]

This article examines food safety failures in China to cast light on how scale has deeply affected its regulatory politics. Contrary to studies that view China's food safety challenges as primarily resulting from corruption, local obstructionism or weak state capacity, I argue that China's massive production system, unwieldy bureaucracy, and geographic size pose regulators with a more fundamental policy challenge. As they attempt to build an integrated national regulatory regime, regulators must make difficult trade-offs in cost, policy design and applicability that emphasize the interests of certain stakeholders over others, resulting in a contentious “politics of scale.” The article assesses four failed scale management initiatives: food safety coordination bodies, campaigns, model production zones, and regulatory segmentation. As China transitions to scientifically assessed, risk-based forms of regulation, its pervasive food safety problem suggests the adaptive limits of China's unitary regulatory structure to manage scale and its ensuing politics effectively in a complex multilevel context. [ABSTRACT FROM PUBLISHER]

How do subnational agents exercise policy discretion in the social welfare sphere? To what extent do they do so as a result of various bureaucratic and fiscal incentives? The literature has documented several explanatory frameworks in the context of China that predominantly focus on the realm of developmental policies. Owing to the salient characteristics of the social policy arena, local adaptation of centrally designed policies may operate on distinctive logics. This study synthesizes the recent scholarship on subnational social policymaking and explains the significant interregional disparities in China's de facto urban poverty line – the eligibility standard of the urban minimum livelihood guarantee scheme, or dibao. Five research hypotheses are formulated for empirical examination: fiscal power effect, population effect, fiscal dependency effect, province effect and neighbour effect. Quantitative analysis of provincial-level panel data largely endorses the hypotheses. The remarkable subnational variations in dibao standards are explained by a salient constellation of fiscal and political factors that are embedded within the country's complex intergovernmental relations and fiscal arrangements. Both a race-to-the-top and a race-to-the-bottom may be fostered by distinctive mechanisms. The unique role of provincial governments as intermediary agents within China's political apparatus is illuminated in the social policy arena. [ABSTRACT FROM AUTHOR]

The Chinese Communist Party is consolidating one party rule under the leadership of Xi Jinping. Beijing seeks to rule by central mandate while limiting local autonomy. The central government response to the COVID‐19 public health emergency reinforces this view. In January 2020 Beijing established the Central Epidemic Response Leading Group to mobilise a comprehensive nationwide policy effort to contain the virus. The exceptional nature of the COVID‐19 national emergency allows the central government to project power over local authorities and leverage over citizens, but we argue that this is a short‐term phenomenon because local disease control initiatives remain important, with local authorities adapting national policies to meet constituent needs. There are degrees of policy discretion and divergence at the subnational level that enable context‐specific responses to the virus within China's strict bureaucratic hierarchy. Primary data derives from interviews and observations in Nancun village, Hebei Province, conducted from January to April 2020. Evidence from Nancun explains how local authorities interpret the edicts and mandates of the central government. [ABSTRACT FROM AUTHOR]

The local party-state has always been a major source of extrajudicial influence in China. Drawing on interviews with judges, this article examines the impact of Xi Jinping's ambitious judicial centralization reforms, which are aimed at enhancing judicial autonomy by transferring authority over local court personnel and finances from local to provincial level. It finds that the reforms have achieved limited results. Although many appointment and budgetary powers were formally transferred to the provincial level, the local party-state retains considerable influence in both areas owing to its superior manpower, local knowledge and, in the case of developed regions, financial resources. Moreover, the local party-state maintains significant informal influence over the courts, which require many forms of discretionary assistance from various state organs – ranging from appropriating land for new courthouses to providing police protection for remote tribunals – in order to function. This setback highlights the depth and complexity of the courts' political and economic embeddedness and serves as a reminder of the inherent difficulty of institutionalizing judicial autonomy, however limited, in a large and diverse party-state. [ABSTRACT FROM AUTHOR]

When post-Mao reforms began, few, if anyone, foresaw the rapidity and depth of China's economic liberalization. Using a model of competitive liberalization, this paper explicates the dynamics and consequences of induced policy disequilibrium, namely the introduction of preferential liberal policies in some regions of the country. The model accounts for the spatial extension of preferential policies, and its predications are empirically substantiated. Finally, the implications of competitive liberalization for macroeconomic control and interregional relations are discussed. [ABSTRACT FROM AUTHOR]

China's New-type Urbanisation Plan heralded a new phase of reform of the household registration (hukou) system and initiated a nation-wide reconfiguration of hukou policy in Chinese cities. This study reveals that the former localisation of hukou policymaking has been brought to greater uniformity under the current central guidelines. The liberalisation of hukou conversion has been expanded to many large cities that previously employed selective migrant integration policies. Mega-cities have recalibrated the selection criteria for new citizens, elevating the importance of settlement duration and moderating the importance of educational and professional qualifications. Case studies in Guangdong further reveal the dynamic interactions among different levels of government in the course of reform. Local policy experimentations set important precedents for central policymaking, and the central guidelines are enforcing new adjustments in local implementation. The provincial government plays a prominent role in coordinating top-down directives and local conditions. [ABSTRACT FROM AUTHOR]

In comparison with the dominant 'consideration model', the veto arrangement of environmental impact assessment (EIA) in China is a substantive regulatory feature that empowers environmental authorities to impinge on development activities. However, the anticipated efficacies thereof are compromised by the central–local division of EIA approval. The mismatch between high enforcement rates and prevalent non-compliance shows that EIA approval can be easily circumvented, especially at local levels. Recent mass, blanket devolution in a hasty manner, coupled with enthusiastic local responses in watering down EIA approval, raises serious concerns about its appropriateness and effectiveness. The tendency to deregulate by loosening environmental scrutiny and the reinvention of EIA procedures in light of project licensing processes impairs the veto effects of EIA approval. Without formal legislative empowerment in the central–local framework and individualised regulatory impact analysis, the current devolution approach is bound to endanger environmental quality and undermine the legitimacy of the veto arrangement. [ABSTRACT FROM AUTHOR]

Despite being known as “Asia's water tower,” Yunnan frequently experiences severe droughts which put pressure on local communities and state actors alike. This article examines the institutional arrangements that guide water governance strategies employed by local cadres in Yunnan province, showing how central control mechanisms in the Chinese administrative system undermine effective water governance at the local level. Findings obtained from field research in two counties in Yunnan with different levels of economic development and water resource access show that current institutional arrangements – including those regulating local cadre performance and the procedures to apply for project funding from higher-level governments – hinder the efficient use of infrastructure investment. Instead, provincial and prefectural water bureau officials use their authority to channel funding to those regions with an already positive track record of project applications. 摘要: 虽然被认为是 “亚洲的水塔”，但云南经常面临严重干旱，这给当地社区以及国家行为者带来了压力。本文探讨了指导云南省当地干部使用水治理策略的制度安排，显示了中国行政体制中中央控制机制如何阻碍了水治理在地方一级的有效实施。在云南省两个经济发展水平程度和水资源获取情况不同的县进行的实地调查结果显示，现行的制度安排—包括规范地方干部绩效以及向高一级政府申请项目资金的程序—阻碍了基建投资的有效利用。相反，省级以下 的水利局官员利用其权利向已经拥有良好项目申请记录的地区拨款。 [ABSTRACT FROM AUTHOR]

Unprecedented and highly visible degraded air quality in China's urban centres has prompted a step change in central government control efforts in recent years. This “War on Air Pollution” has included a mixture of administrative controls, regulatory clampdowns, economic incentives and public education campaigns. A critical constraint on how policies are designed and implemented is the central government's capacity to access accurate cost information, and monitor, evaluate and enforce the policies at subordinate levels of government. We examine in detail the directives and arrangements that underpin China's “War on Air Pollution” at the provincial level, taking Hebei province as a case study. Located upwind of Beijing, Hebei's heavy industries have been a particular focus of the environmental policies. The current approach, which requires highly specific and costly local actions, yet allocates funds centrally, suffers from misaligned incentives and does not address longstanding weaknesses in local policy monitoring, evaluation and enforcement. [ABSTRACT FROM PUBLISHER]

The scholarly work on China's environmental regulations in the context of “central–local” relations is dominated by the preference for a centralized approach. This article examines a centrally imposed and executed verification programme of locally reported pollution data, a rare and sustained central effort to enforce an environmental policy, namely the national pollution reduction target system. The programme was established in 2007 to curtail perceived widespread data falsification and to enhance the quality of emission data, the basis for assessing local compliance with targets. Based on an analysis of official documents and interviews with environmental officials and industry representatives, this article found that the verification programme appears to have reduced the overreporting problem with emission data, enhanced local monitoring and enforcement capacity, and to a certain degree deterred violations due to the increased frequency of national and local inspections. Nevertheless, significant challenges remain. Verification is highly resource intensive, it has involved little external oversight and public participation, the central authority has exerted significant yet unchecked discretionary powers, and poor data quality has remained an issue. Over time, the verification programme appears to have turned into essentially a “numbers game.” All those challenges indicate that a centralized enforcement approach is arguably ineffective in addressing China's long-standing problem of weak environmental policy implementation. This study also sheds lights on the classical “principal-agent” theory in the study of public bureaucracy. Not only does the principal distrust the agent, which is the main concern of the theory, but the agent also distrusts the principal. [ABSTRACT FROM PUBLISHER]

The trend of metropolitanization—rapid growth of the largest cities, horizontal sprawl, and pursuit of economic competitiveness—in China has attracted much attention from scholars. Whereas existing research generally portrays local governments as the key agents behind metropolitan-style development, this article emphasizes the active role higher-level governments play in shaping urban growth. I use the case of the Xi’an-Xianyang area in Shaanxi province to explore the political forces behind metropolitanization, tracing efforts since 2000 to build a larger, more integrated Greater Xi’an. I argue that provincial-level authorities in particular favor urban development that is focused on leading cities but crosses different jurisdictions, which helps them reap economic benefits from urban scale while limiting its political costs. Driving development from above is contentious, however, and requires significant clout on the part of provincial governments. In Xi’an, metropolitan growth has accelerated as Shaanxi has become economically and politically stronger, yet urban governance problems have persisted. [ABSTRACT FROM AUTHOR]

This article presents a large-scale, systematic study of politically connected firms in China. It was conducted by compiling a database of all the publicly traded firms in China in 1993, 2002 and 2012 that codes the biographies of hundreds of thousands of board members. I find that there has been a significant increase in the percentage of firms that are connected with the national government in the last 20 years. This casts doubt on a popular argument that businesses in China have primarily relied on “local protectionism.” I interpret this as a result of firms' need to connect with powerful and stable institutions. I test this by examining the impact of the fall of Chen Liangyu on firms in Shanghai. [ABSTRACT FROM PUBLISHER]

Reforms carried out by the Chinese Communist Party (CCP) have long followed a traditional model of “experimentation under hierarchy.” This article will attempt to develop this model further by building a framework to illustrate the influence of both the political dynamics of hierarchical central–local relations and local economic circumstances in the introduction of large-scale political reforms. The initiation and expansion of “experimental points” are only permitted in those select few provinces with both favourable political and economic local conditions, allowing the CCP to minimize risk and make informed decisions regarding possibilities for nationwide reform. This article proposes that the hierarchical interaction of central and local political elites, and in particular provincial secretaries, can explain the extent of reforms, whereas the type of reform is linked to distinct provincial economic conditions and the provincial secretary's interpretation of provincial priorities. Put succinctly, the CCP's model of political reform can be specifically characterized as “experimentation under hierarchy in local conditions.” This article presents a detailed discussion of both the political and economic considerations inherent in this concept, and provides examples of reform programmes in Guangdong and Sichuan to illustrate the model in practice. [ABSTRACT FROM PUBLISHER]

The article focuses on economic overheating in China and how it has become a recurring problem since economic liberalization in 1978. The concept of overheating is described as when asset and commodity prices rise as a result of supply and demand imbalances. The intermediate factors behind overheating are analyzed including what causes excessive bank lending, why real estate speculation occurs, and if the central government's austerity policies effectively combat overheating. The economic value of Chinese goods and services is discussed.

The article focuses on Chinese governmental extra-budgetary revenue (EBR) and how it provides funding for local governments. Information is provided on the high rate of growth in the Chinese economy since 1980, how the central government uses exaction when necessary to promote economic development and political stability, and the impacts that central government intervention has on the political atmosphere within local government and the public. An explanation of the principle-agent relationship between local government and central government is provided.