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Oct. 5, 2022, 2:54 p.m.
What's Happened to China's Economy?
What's Happened to China's Economy?
['policy', 'government', 'local', 'China', 'economic']

Since Deng Xiaoping launched China's economic reform in 1978, policymakers have usually managed to strike a dynamic balance between local-government accountability and innovation. Today, however, centralization is encouraging local officials to keep their hea…

What's Happened to China's Economy?

Local-level innovation is not incompatible with the implementation of the national COVID-19 policy framework; on the contrary, failure to tailor policies to local conditions can weaken their impact. Most local governments have not adopted innovative approaches to implementing pandemic-related policies, and in many cases they have implemented such policies much more aggressively than required. Since April, after recognizing the huge economic cost imposed by its pandemic-control policy, the central government has introduced a series of policies aimed at easing the financial constraints on micro, small, and medium-size enterprises that have been hurt by COVID-19-containment measures, and it has worked to restore supply in specific sectors, including automobiles, electronics, and transportation. Since Deng Xiaoping launched his "Reform and opening-up" agenda in 1978, China has usually managed to strike a dynamic balance between local-government accountability and local policy innovation, thereby maximizing the benefits and minimizing the costs of both. Local governments have long served as a major source of policy innovation in China. While the central government drew up the main policy roadmap, local governments were encouraged and inspired to pursue policy innovation, experimentation, and adaptation. Because local governments were empowered to adapt policies and programs to their context, policy shocks became less likely.

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