Local government capacity and response strategies to central policy piloting goals: a case study of China’s new-type urbanization plan

Testing future policies at the localities before implementing them at the national level is a tool frequently adopted by the Chinese government for verifying whether new national policies can work on a national basis or not. This article examines how local government capacity influences their response strategies to central policy piloting goals in the absence of fiscal transfers and resource allocation within China’s hierarchical system. Using China’s National New-Type Urbanization Plan, enacted in 2014, as a case study, we interviewed 55 governmental departments across nine localities in provinces H and J to bring to light the different policy instruments adopted and the factors influencing them. We discovered that varying combinations of local government capacity and implementing pressure led to distinct response strategies, including creative, symbolic, and distorted instruments. We argue that local governments with weaker capacities and higher implementing pressure are more likely to adopt distorted forms of policy innovation, which may ultimately undermine local governance. This research contributes to the understanding of how local governments in China navigate central policy pilots and uncovers the potential hidden costs of experimental governance under a hierarchal system.