Policy Experimentation in China: The Political Economy of Policy Learning

Governments use policy experiments to facilitate learning, but the nature and effects of these experiments remain unclear. We analyze China's policy experimentation since 1980—among the most systematic in history—and document three facts. First, most experiments exhibit positive sample selection. Second, local politicians exert excessive efforts during experiments that are not replicable during policies’ national rollout. Third, the central government is not fully sophisticated when interpreting experimentation outcomes. These facts suggest that policy learning may be biased and national policies may be distorted. Thus, while China’s institutions enable experimentation at an unparalleled scale, the complex political environments can also limit effective policy learning.