Policy Feedback Loop: Central-Local Interactions in China’s International Economic Policy

Abstract

ABSTRACT The authors propose the use of an interactive model to explain the way the central government and the local governments carry out the formulation and implementation of China’s foreign economic policies. Case studies on the Regional Comprehensive Economic Partnership (RCEP) and the China-Europe Railway Express (CERE) show a policy feedback loop between the central government and the local governments. While the local governments make adjustments to comply with the central government’s directive, their policies and measures also have a significant impact on the central government’s foreign policies. The findings suggest that neither the autonomy of local governments nor the authority of the central government in foreign economic affairs are eroded under Xi’s leadership despite notable recentralisation in the past decade. Instead, both the central government and local governments engage in a continuous, interactive partnership to formulate and execute China’s foreign economic policy.