PUBLIC PERFORMANCE & MANAGEMENT REVIEW

2021, VOL. 44, NO. 4, 817–841

https://doi.org/10.1080/15309576.2021.1905010

Improved Local Implementation under Central

Inspection? Evidence from Social Mandates in China
Yi Ma
University of Copenhagen

ABSTRACT KEYWORDS
While the principal-agent problem has been challenging to Central inspection; Chinese
public administration in general, it is particularly acute in local government;
China, where implementation gaps abound. This study exam- implementation gap;
implementation output;
ines whether central inspection, one important form of central principal-agent problem
monitoring in China, helps reduce implementation output
gaps at the provincial level. Based on an analysis of a unique
dataset of provincial governments’ documents formulated to
implement central mandates in social policy areas from 2003
to 2017, it finds mixed results. While central inspection does
help speed up provincial implementation outputs, it does not
improve the quality of provincial implementation outputs.

Introduction
The principal-agent model has been widely applied to the study of public
administration (McCubbins & Schwartz, 1984; Miller, 2005; Weingast &
Moran, 1983). Accordingly, the principal-agent problem, that is, how the
principal manages to reduce moral hazard of the agent(s) to minimize
shirking and agency costs (Miller, 2005), has been widely researched in
western democracies. For instance, in the US, since Pressman and
Wildavsky’s (1973) canonical investigation into “[H]ow great expectations
in Washington are dashed in Oakland,” many studies have looked into
how the US federal government manages to induce compliance1 from the
states (Brehm & Gates, 1997; Chubb, 1985; Terman et al., 2016). Beyond
the US, scholars have also investigated the principal-agent problem in pub-
lic administration in other countries, such as the Netherlands (Oosterwaal
& Torenvlied, 2012), the UK (Whynes, 1993), and Denmark (Binderkrantz
& Christensen, 2009).
This study looks beyond western democracies and focuses on the case of
authoritarian China, where the principal-agent problem has been especially
challenging for the central government.2 Indeed, “[T]he Chinese

CONTACT Yi Ma ym@hum.ku.dk Department of Cross-Cultural and Regional Studies, University of

Copenhagen, Copenhagen 1017, Denmark.
Supplemental data for this article can be accessed online at https://doi.org/10.1080/15309576.2021.1905010
ß 2021 Taylor & Francis Group, LLC
818 MA

government itself is simply a very (very!) large principal-agent problem”

(Minzner, 2009, p. 90). Implementation of central policies in China is often
an unending tug of war, which “entails a significant degree of contention,
adjustment, distortion, and non-compliance on the part of local
implementers” (Chung, 2017, p. 138). Consequently, selective implementa-
tion (O’Brien & Li, 1999) is widespread at China’s grassroots level, and
implementation gaps abound across different sectors (Anderson et al.,
2019; Minzner, 2009; Zhu, 2016).
To deal with this problem, classical principal-agent theory offers two
main options for the principal, namely an outcome-based incentive scheme
or monitoring (Brehm & Gates, 1997; Holmstrom, 1982; Miller &
Whitford, 2006; Moe, 1984). In line with the first option, many scholars
have investigated how the Chinese central government employs perform-
ance management via the Target Responsibility System to induce compli-
ance from the local government (Li, 2015; Liang, 2014; Liang & Langbein,
2015, 2019; Liu & Li, 2016; Minzner, 2009; O’Brien & Li, 1999; Whiting,
2004). However, the other mechanism, central monitoring, has not received
much attention (there are a few exceptions, though; see, for example,
Anderson et al., 2019; Tanner & Green, 2007; Zhang et al., 2018; Zhou,
2010). In addition, largely due to the focus on incentive-based schemes,
previous studies have looked mainly into implementation outcomes in
China. Consequently, implementation output, the other important dimen-
sion of policy implementation (Hill & Hupe, 2002; Winter, 2012), has been
rather overlooked. Lastly, most previous research addresses economic or
environmental policy implementation, while social policies have received
relatively less attention (see Shi, 2017; Zhu, 2016 for a discussion).
This study addresses these gaps by investigating central inspection, which
is one of the important types of central monitoring, together with vertical
management (Chung, 2017), and direct supervision (Zhang et al., 2018).
More specifically, it investigates whether central inspection helps solve the
principal-agent problem of social policy implementation in China. Based
on an analysis of a novel dataset of provincial documents as one type of
implementation outputs of central social policy opinions (yijian) from 2003
to 2017, this study finds mixed results for the effectiveness of central
inspection, which speeds up local agents’ implementation outputs, but does
not improve their quality.
This study makes three contributions. Firstly, by looking into central
inspection, it sheds light on the effectiveness of police-patrol (McCubbins
& Schwartz, 1984) in China, given the limited role of fire-alarms in
Chinese governance (O’Brien & Li, 1999). Secondly, based on a novel data-
set of provincial documents formulated to implement central social man-
dates, it contributes to an understanding of implementation outputs in
 PUBLIC PERFORMANCE & MANAGEMENT REVIEW 819

China, thus complementing previous studies on implementation outcomes.

Thirdly, with a focus on social policy, it also contributes to a better under-
standing of the dynamics of social policy implementation in China.
The article is organized as follows. Firstly, it reviews previous research
on the principal-agent problem as related to the implementation gap in
China and shows how the central government can deal with it accordingly.
Then it draws inspiration from the principal-agent literature and proposes
hypotheses on the ability of central inspection to mitigate the implementa-
tion output gap in China. Thirdly, it introduces its research design and the
dataset and all the variables. After that, it analyzes the results generated by
multilevel models. In the end it concludes and suggests implications for
future studies.

Dealing with the implementation gap in China

As several scholars have observed, China faces huge principal-agent prob-
lems (Minzner, 2009; Whiting, 2004). Lampton (1987, p. 18) noted in the
1980s that China is a “system in which central policies are always distorted
in ways advantageous to implementors.” Indeed, many local governments
frequently collude with each other in response to the central government,
leading to systematic deviation from the original intention behind central
policies (Zhou, 2010). Consequently, an implementation gap, often under-
stood as the divergence between the policy goals of the central government
and the implementation outcomes at the local level, widely exists in China
across policy spheres, such as the environmental sector (Anderson et al.,
2019; Kostka & Nahm, 2017; Liang & Langbein, 2019), public administra-
tion reform (Deng et al., 2013), legal enforcement (Minzner, 2009), and
social policies (Shi, 2017; Zhu, 2016).
There are many concrete ways to mitigate the agency problem, such as
replacing an agent (Shotts & Wiseman, 2010), co-optation (Sheng, 2009),
or through administrative procedures (McCubbins et al., 1987). Still, clas-
sical principal-agent theory offers two main options (see Holmstrom, 1982;
Miller & Whitford, 2006; Moe, 1984 for a discussion).3 On the one hand,
the principal can devise outcome-based incentive schemes to overcome the
problems of moral hazard, at least in part (Miller, 2005). Those incentives
require penalties and bonuses, and the principal needs to enforce the penal-
ties and finance the bonuses (Holmstrom, 1982). This is useful, because it
helps to limit one of the fundamental problems of the principal-agent
model, namely the asymmetry of preferences between the principal and the
agent (Miller, 2005). Accordingly, “if the principal gets the incentives right,
the organization will become a machine that runs by itself, fueled by an
adequate supply of self-interested behavior” (Miller & Whitford, 2006,
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p. 214). On the other hand, the principal can increase monitoring

(Holmstrom, 1979, 1982; Miller & Whitford, 2006). This can be helpful
because monitoring helps to reduce asymmetric information, and therefore
prevents agents from shirking. However, monitoring can be very costly
(Holmstrom, 1979; Miller & Whitford, 2006). Approaches to exercise moni-
toring can be centralized, active, and direct “police-patrol,” or less central-
ized, less active and indirect “fire-alarm” (McCubbins & Schwartz, 1984).
While both incentive schemes and monitoring may be effective, neither can
solve the agency problem completely. Indeed, the principal often finds it
prohibitively costly to eliminate agency loss, so it chooses to tolerate some
(Gailmard, 2014). And the principal may even benefit from the agency loss
by inducing higher levels of capacity investment (Turner, 2019) or expertise
development (Gailmard & Patty, 2007) from the agent.
In line with the first option, many researchers assessed the central gov-
ernment’s ability to use incentive-based schemes to narrow the implemen-
tation gap. Accordingly, performance management, or the Target
Responsibility System (TRS), has been much studied. The main purpose of
TRS is to improve implementation and enhance compliance by local gov-
ernments (Gao, 2020; O’Brien & Li, 1999). Through TRS, different scores
are assigned to different policy areas from higher-level government to sub-
ordinate government. Economic performance has long been dominant in
the whole evaluation (Whiting, 2004). Recently, however, the central gov-
ernment has been assigning more weight to welfare programs (Zhu, 2016).
Accordingly, local officials “successfully attaining their performance goals
are more likely to get promoted and earn more fiscal transfer from their
superiors, while those failing to meet key targets are prone to dismissal and
other punishments” (Ma, 2016, p. 454). TRS thus works as an outcome-
based incentive scheme from the central government (as the principal) to
induce greater compliance from the local government (the agent).4
However, the jury is still out regarding TRS, because some studies find it
effective (Ahlers & Schubert, 2015; Whiting, 2004), whilst others are more
skeptical (Li, 2015; Liang & Langbein, 2015, 2019). In particular, the local
government’s gaming behaviors are challenging for the performance man-
agement system (Gao, 2020; Gao et al., 2021; Liu et al., 2021).
In comparison to the first option, the mechanism of monitoring has
received much less attention in the case of China. A few studies have
assessed the role of monitoring and supervision there (Anderson et al.,
2019; Tanner & Green, 2007; Zhang et al., 2018; Zhou, 2010), but an espe-
cially important form of central monitoring has been ignored, namely cen-
tral inspection (Chung, 2017). Moreover, largely due to the focus on
incentive-based schemes, previous research often focuses on implementa-
tion outcomes at the local level. Accordingly, implementation outputs have
 PUBLIC PERFORMANCE & MANAGEMENT REVIEW 821

not been much researched. Public policy studies have long defined imple-
mentation both as an implementation output stage and an implementation
outcome stage (Hill & Hupe, 2002; Liang & Langbein, 2019; Winter, 2012).
In general, implementation outputs are understood in terms of behaviors
of implementers (Winter, 2012), such as government actions. For example,
to implement a general central policy, a provincial government often for-
mulates detailed guidelines or opinions for its citizens, so that the central
policy becomes implementable for localities at the lower runs of the admin-
istrative ladder within the specific province. All these policy contents
should be understood as implementation outputs. They come after the cen-
tral decision-makings, and they are part of the long implementation process
in China where the central policy is transformed step by step to suit the
local conditions at the specific administrative level or unit in charge.5 In
contrast, implementation outcomes are defined in terms of effects on target
population. More specifically, they denote change in the behavior or condi-
tions of target population, such as the economic growth rate of a region or
the level of annual income for a citizen. Thirdly, most previous studies
have concentrated on policy areas such as economic or environmental poli-
cies, while social policies have received relatively less attention (see Shi,
2017; Zhu, 2016 for a discussion).
To address these gaps, this study investigates whether central inspection
in China helps to reduce the implementation output gap of social policies.
Firstly, the central government, in general, distrusts the fire-alarm monitor-
ing from the masses (O’Brien & Li, 1999), largely due to the fear that it
might lead to collective action which could, in turn, undermine political
stability (Anderson et al., 2019). Thus, as an important form of central
monitoring (Chen, 2015; Chung, 2017; Li et al., 2020; Li & Qi, 2018; Liu
et al., 2018), a study of central inspection helps to shed light on the effect-
iveness of police-patrol that the central government largely relies upon to
rein in local agents. Secondly, the study builds a unique dataset based on
2,669 provincial documents formulated to implement 111 central social
policy opinions. This helps to enrich our understanding of implementation
outputs in China. Thirdly, with a focus on social policy, this study comple-
ments previous research on economic and environmental policies.

Central inspection and the implementation output gap: hypotheses

In China, there are normally two kinds of central inspection, namely rou-
tine inspection and special inspection (Li & Qi, 2018). Routine inspection
comprises those inspection tasks carried out by each central ministry as
part of its routine oversight of the local government. Some of the best
examples are the party discipline inspection (Yeo, 2016) and the
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environmental inspection (Li et al., 2020). The other type is special inspec-
tion, which has a more ad hoc status. For instance, since 2014 the State
Council has coordinated several rounds of central inspection across many
reform sectors (Li & Qi, 2018). This study focuses on the effectiveness of
routine inspection. According to the literature (Li et al., 2020; Yeo, 2016)
and available online information, central inspection often works as follows.
It starts with a central notice that proclaims a central inspection team has
been formed and that it will be concerned with specific issues. According
to the notice, all provincial governments are required to give an account of
their progress in implementing certain central policies, often including for-
mulating implementable policy documents. Then, based on these accounts
and other information, the central inspection team will strategically select a
few or all provinces to conduct field inspection, after which a report will be
prepared. According to the survey, provinces with problems of implementa-
tion can be sanctioned for noncompliance.
Before formulating relevant hypotheses on the effectiveness of central
inspection, the concept of implementation gap in China in terms of policy
outputs needs to be defined. Drawing inspiration from previous literature
on implementation outcomes in China, this study defines the implementa-
tion gap in terms of policy outputs as a time gap and a quality gap. The
time gap is the time that a province takes to formulate a policy document
to implement a central policy. This is in line with previous research that
emphasizes the timing of provincial policy implementation (Cheung, 1998;
Chung, 2017; Xue & Zhao, 2020). The quality gap is the extent to which
the content of a provincial document makes a central policy implement-
able. This upholds previous research focusing on the gap between the goals
of central policies and the implementation outcomes at the local level
(Kostka & Nahm, 2017; Ran, 2013; Zhou, 2010).
It is presumed that central inspection can help to reduce the implemen-
tation output gap because it facilitates the gathering of information about
the performance of local governments, which in turn alleviates the princi-
pal-agent problem by reducing asymmetric information. Indeed, Anderson
et al. (2019) found that, by rating municipal governments’ compliance with
central mandates to disclose information about the management of pollu-
tion, environmental NGOs in China help to reduce monitoring costs for
the central government, which in turn improves local compliance. Li et al.
(2020) also found that central environmental inspection helps to identify
environmental problems at the provincial level. Regarding the prevention
of corruption, one of the main goals of the central inspection groups is to
“collect reliable information by hearing as many voices as possible” (Yeo,
2016, p. 65),6 which is one of the promising institutional developments in
China in combatting corruption (Manion, 2016). Presumably, as a
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monitoring strategy, a central inspection team can help collect the informa-
tion about the timing of an implementation output, that is, whether a pro-
vincial government has formulated a relevant policy document by a given
deadline; as well as the information about the quality of an implementation
output, that is, to what extent the content of a provincial policy document
makes a central policy implementable. Accordingly, this study formulates
two hypotheses as the following:
H1: Central inspection facilitates the implementation of central mandates, thus
reducing the time gap of implementation outputs.
H2: Central inspection facilitates the implementation of central mandates, thus
reducing the quality gap of implementation outputs.

Methodology
Empirical context
To test the hypotheses on the effectiveness of central inspection on local
implementation outputs, this study investigates the implementation of cen-
tral opinions in social policy sectors at the provincial level from 2003 to
2017. More specifically, it focuses on how provincial governments formu-
late policy documents to implement those central opinions. There are sev-
eral reasons why opinions are a good type of central mandate to use for
studying the implementation output gap in China. Firstly, central opinions
often leave ample scope for local discretion. Therefore, the implementation
of opinions offers a great chance for studying the variation in local China.
Secondly, procedurally the implementation of opinion allows for building
up a unique dataset for implementation outputs. Because the contents of
central opinions are usually general and broad, the first step of implemen-
tation at the provincial level is often to formulate implementable policy
documents, followed by more concrete government actions (the second
step), and the involvement of the public (the third step) (Li, 2012). More
importantly, central opinions vary in terms of central inspection, with
some of them specifying it, while others do not.7 This offers an opportunity
to examine the effectiveness of central inspection by comparing opinions
under central inspection with those that are not in terms of their out-
put gaps.
This study focuses on social policy opinions for three main reasons.
Firstly, this is to minimize missing data. As social policy is usually relevant
for all provinces, in principle each province needs to formulate documents
to implement central social policy opinions. In comparison, other opinions,
such as economic policy opinions, may be just relevant for some provinces
but not others. For instance, a central opinion on the reform of coal
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industry will only be relevant for those provinces which have this industry.
Including central opinions across all sectors will create a number of missing
data, and one needs to make a strongly subjective judgment about whether
one central opinion is relevant for a given province. Secondly, in compari-
son to other policy sectors, such as fiscal and environmental policies, social
policies have been studied relatively less (see Shi, 2017 and Zhu, 2016 for a
discussion), and therefore, there is still a limited understanding of social
policy implementation gaps. Thirdly, the huge regional differences across
China simply entail that central social policies are often extremely broadly
and generally formulated. Consequently, the process of provincial govern-
ments producing their own corresponding policy documents becomes even
more important in social policy implementation than in other policy areas.

Sample and data

The dataset was based on the opinions published on the State Council
home page: http://www.gov.cn/zhengce/index.htm, between 2003 and 2017.
2003 was the year when the first record was available, while 2017 was the
end of the first term of the Xi-Li administration. Following Chan et al.
(2008) scope of social policies in China, opinions from the following five
sectors have been chosen: social security, labor, health, education, and
housing. In total, out of 435 central opinions, 111 focused on the five sec-
tors and were included in the dataset. These opinions were issued by either
the State Council or the General Office of the State Council, but they were
all addressed to the provinces for further implementation. To find corre-
sponding provincial documents formulated to implement these central
opinions, this study relies on manual searching on Google, Bing, Baidu,
and a law database (https://www.pkulaw.cn/). The main way was to use the
key terms of the title of central opinions and the name of the province. For
instance, one might search “Fujian” and “on the reform of higher educa-
tion.”8 In total, 2,669 observations were found with date information, while
2,653 observations were found with the content information of
the documents.9

Dependent variables
Time gap: implementation time
Inspired by Chung (2017), this study measures the time gap of provincial
implementation outputs by calculating the time (difference in terms of
days) between the formulation date of each central opinion and the formu-
lation date of the corresponding provincial policy document. The indicator
is in the natural logarithmic form in the estimating model because its
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distribution is heavily skewed to the right (model results without the loga-
rithmic form are available on Online Appendix 4).

Quality gap: degree of text similarity

Inspired by Li (2012) and Linder et al. (2020), this article uses the degree
of text similarity between each central opinion and the corresponding pro-
vincial document as an indicator for the quality gap of the provincial
implementation output. It is assumed that a lower degree of text similarity
indicates better quality of a provincial document (i.e., a more implement-
able policy document). To measure the degree of text similarity between
each pair of central opinion and provincial document, the function string-
sim from R package “stringdist” is used (van der Loo, 2019). This compares
two strings of characters, and gives a number between 0 to 1, with 1 mean-
ing 100% similar between them, while 0 meaning completely different. As
stringsim is mostly used for English, validation checks were performed, and
the results can be found in Online Appendix 1. Like the time gap measure-
ment, this indicator is also in the natural logarithmic form in the estimat-
ing model because its distribution is highly skewed to the right.
The rationale for this measurement is based on the prevalence of flexible
implementation in China (Zhou, 2010), which is called “implementation
according to local conditions” (yindi zhiyi). This entails that provincial gov-
ernments often need to make detailed changes to a central policy so that it
becomes implementable. While a lower degree of text similarity can be
either an indication of good flexibility (local adaptation) or of bad flexibil-
ity (willful deviation) (Zhou, 2010), this study assumes that a lower degree
of similarity is an indicator of good flexibility. Firstly, as Li (2012) finds in
his study of the local documents formulated to implement one central
opinion on the issue of food safety, provincial governments often use the
following three strategies to formulate relevant documents: through directly
transferring the central opinion to lower levels of government (so there is
no content change); or through copy-pasting large parts of the central
opinion without major changes (which turns out to be the most typical
way); or through detailed operationalization of the central opinion. Since
both transferring and copy-pasting will result in a higher degree of text
similarity, lower degrees of text similarity should be interpreted best as
detailed operationalization of central opinions, and thus, good quality of
provincial documents. Secondly, procedurally provincial documents are
subjected to central review by the State Council (bei’an) (Mo, 2012). If sig-
nificant deviation—bad flexibility—is present in the text, provincial govern-
ments will risk being accused of outright noncompliance. However, while
noncompliance is believed to be widespread in local China, it often hap-
pens in a hidden manner, such as local collusion (Zhou, 2010) or
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manipulation of data (Gao, 2020; Wallace, 2016). Outright and open dis-
obedience is rare, as this is considered a direct challenge to the authority of
the central government, and the local government is in general afraid of
being charged with noncompliance (Anderson et al., 2019). Therefore, a
lower degree of text similarity is unlikely to be a sign of willful dissent.
Here is one example of how the degree of text similarity can serve as
a meaningful indicator for the quality of a provincial document. In
2018, both Guangdong provincial government and Guangxi Autonomous
Regional Government formulated policy documents to implement
Opinion of the General Office of the State Council on enhancing the
building of safety risk prevention and control system in middle, elemen-
tary schools and in kindergartens. The measurement shows that
Guangdong’s policy document is only similar to the central opinion at a
0.12 level. In contrast, Guangxi’s policy document is similar to the cen-
tral opinion at a 0.67 level. It turns out that Guangdong’s policy docu-
ment makes many changes to the central opinion. Indeed, it has a
coherent strategy of safety risk prevention and control, instead of
designing a prevention strategy and a control strategy separately. It also
makes detailed guidelines for all provincial bureaus. Moreover, it high-
lights the role of education in safety risk prevention and control. In
comparison, Guangxi’s policy document follows the central opinion
strictly. Basically, it makes no major changes to the content. Instead,
there are only minor adjustments. According to the Notice of the
General Office of the State Council on strengthening the development and
supervisory administration of administrative regulatory documents, it is
clearly stated that it shall be prohibited to literally copy texts from a
superior document into a local policy document (The General Office of
the State Council, 2018). Therefore, Guangxi’s policy document is a
good example of a high degree of “literally copying” (i.e., a high degree
of text similarity), thus with worse quality. In contrast, Guangdong’s
document is a good example of formulating a more detailed and imple-
mentable policy document (i.e., a low degree of text similarity), thus
with better quality. More information on this example is available in
Online Appendix 2.
Still, although this quality measurement is novel, it is by no means a per-
fect one. The quality of an implementation output can be assessed from
many different perspectives. For instance, one may measure it by investi-
gating the actors who are formulating it (i.e., some actors may produce
documents with better quality). One can also assess the different types of
provincial documents (i.e., a regulation may have better quality than a
plan). Besides, one can assess the detailed content of each provincial docu-
ment to see if it specifies accountability mechanisms or other concrete
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incentive-schemes that help implementation. In this regard, there is cer-

tainly much room for improvement in future research.

Independent variable
Specified central inspection
The independent variable is a binary variable, namely whether the central
government uses central inspection to enforce an opinion. This is measured
by a proxy, namely whether in the text of each central opinion, it is speci-
fied that one or more central ministries are in charge of inspection. For
instance, Opinion of the General Office of the State Council on supporting
the entrepreneurship and innovation of migrant workers who come back to
the countryside, decrees that the Ministry of Agriculture was in charge of
inspection during its implementation. In June 2017, the General Office of
the Ministry of Agriculture issued a notice that it would start its inspection
work. According to the notice, one requirement was that each province
review its progress in formulating a relevant document to implement the
central opinion. However, this study does not verify whether the specified
inspection in the central opinion does happen, which is hard to establish
given the limited government transparency in China (Deng et al., 2013).
Still, since this study focuses on implementation outputs, it is plausible to
assume that a ministry in charge can carry out inspection of all provincial
documents without much cost. Besides this, another concern is whether
central inspection teams strategically select a few provinces. Since this study
focuses on implementation outputs, it is reasonable to assume that central
inspection teams can conduct inspection of all provincial documents with-
out making a strategic choice. In comparison, if they want to inspect
implementation outcomes, then the problem of strategic selection will be
more challenging, as the limit in resources may indicate that central inspec-
tion teams have to select a few provinces to conduct field inspection.10

Control variables
The first control variable is the political priority of central opinions. As has
been widely studied before, different central priorities have a huge influence
on local implementation (Chung, 2017; O’Brien & Li, 1999). To measure
the political priority of each central opinion, two indicators are used. The
first indicator is a binary variable indicating the central agency formulating
the central opinion. The central opinions are issued by two different central
agencies. One is the State Council (coded as 1), the other is the General
Office of the State Council (coded as 0). The State Council has a higher
administrative ranking than the General Office, so opinions of the State
828 MA

Council may be implemented better simply because the formulation of the

State Council signifies higher political priority. The second indicator for
political priority is another binary variable which measures whether in the
central opinion, there is a reference to the Chinese Communist Party
(CCP) in its introduction (coded as 1 or 0). The rationale behind this
measurement is that usually when issuing a central opinion, the central
agency needs to legitimize it in its introduction. Sometimes it refers to the
CCP as legitimation, other times it only points out a general domestic chal-
lenge and then argues for the need to deal with it. Since the CCP is the
most important political actor in China, references to its demands will
probably show that the central opinion is accorded precedence.
The second control variable is a categorical variable indicating the sector
of each central opinion, whether concerning policies for social security,
labor, health, education, or housing. Some sectors may be intrinsically
more difficult than others to formulate provincial policies. Moreover, policy
sector can also influence the likelihood of central inspection because some
sectors may have more established central inspection routines than others.
Therefore, sector needs to be controlled as a confounding variable.
The third control is the degree of complexity of each central opinion,
which is measured by the number of words of its content. The assumption
here is that the longer the text, the more complicated it is. More compli-
cated opinions might be implemented badly, simply because provincial gov-
ernments find it difficult to coordinate across the fragmented bureaus
(Lieberthal & Oksenberg, 1988). On the other hand, more complicated
opinions might be more likely to have central inspection, as the central
government might expect the difficulty and use inspection to push for
implementation. Therefore, complexity is also an important con-
founder here.
The fourth control variable is the degree of target specificity of each cen-
tral opinion. This variable serves as a proxy for measuring the likelihood of
a central opinion being enforced through TRS. It is assumed that the more
concrete (measurable) targets set in a central opinion, the higher likelihood
that it may be enforced by TRS (O’Brien & Li, 1999). This variable is coded
based on the content of a central opinion, in which there is often a section
specifying its overall targets. More specifically, this variable consists of three
categories, namely no targets (coded as 0), general targets (coded as 1), and
specific targets (coded as 2). In some central opinions, no target is set, and
only broad guidelines are offered. In contrast, some will specify a few gen-
eral targets, such as improving the employability of the migrant workers.
The third group of central opinions, however, will set specific targets, such
as doubling the income of rural population from 2010 to 2020. Those tar-
gets are specific because they are directly measurable. Presumably, the
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central government may employ both TRS and central inspection as ways
to improve a central opinion’s implementation. And a central opinion may
be implemented better due to TRS’ incentives, instead of the work of cen-
tral inspection. Therefore, this becomes an important control variable.
Examples of the three levels of target specificity are available on Online
Appendix 3.
Besides the control variables at the central opinion level, a list of controls
at the provincial level are also included. Firstly, different central govern-
ments might lead to different implementation outputs, especially given that
the Xi-Li administration has greatly recentralized power (Kostka & Nahm,
2017; Manion, 2016), whilst there was more decentralization during the
Hu-Wen administration (Mertha, 2005). This variable is measured with a
binary indicator, with 0 indicating the Hu-Wen administration from 2003
to 2012, while 1 indicates the Xi-Li administration from 2013 to 2017.
Secondly, government capacities can also influence implementation; the
Gross Domestic Product (GDP) of each province is used as the indicator.
Thirdly, the provincial government’s attitude toward social policies can also
influence implementation. This study uses the proportion of government
spending in the five social policy sectors (including education, healthcare,
social security and employment, agriculture, and housing) as a proxy to
measure the priority of social policies in each province. Fourthly, provincial
political power could also influence policy implementation. Bo’s (2010)
Provincial Central Committee Index is a suitable proxy here.11 Lastly, dem-
ography is also controlled, as provinces with larger population might find
it more challenging to formulate social policies. Data for GDP, the propor-
tion of social spending, and population come from the Statistical Year
Book, and the mean values of them during each term (Hu-Wen or Xi-Li)
are used as the measurement. Both GDP and population are in the natural
logarithmic form in the estimating model.

Analytic methods
A multilevel model (Gelman & Hill, 2006) has been adopted for testing
hypotheses.12 There are two main reasons for choosing this model. Firstly,
the data used in this article are structured in a multilevel way, in which the
provincial documents formulated to implement central opinions are nested
within the provincial governments in China. Accordingly, the individual
observations may not be independent from each other, and this violates the
ordinary least squares (OLS) model’s assumption of independence.
Secondly, the main interest of this article is to investigate the lower-level
direct effect (Aguinis et al., 2013), namely the influence of central inspec-
tion on the implementation output gap within each province, rather than
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to dig into between-province variations. The multilevel model effectively

achieves this goal by soaking up systematic between-province variations.
Indeed, the purpose of a multilevel model is often to find the best possible
estimate in each group, with appropriate accounting for uncertainty
(Gelman & Hill, 2006). In terms of model specification, this article uses
varying intercepts models (Gelman & Hill, 2006) or so-called random inter-
cept and fixed slope model (RIFSM) (Aguinis et al., 2013) to analyze
the data.

Results
Descriptive statistics and analyses
The descriptive statistics of the key variables are presented in Table 1. The
average time for a province to formulate a policy document to implement
a central social policy opinion is around 263 days, with a minimum of zero
and a maximum of 3,070. In terms of the degree of text similarity, on aver-
age provincial governments retain around 28% of the contents of the cen-
tral opinions, with a minimum of just 3% and maximum of 98%. In short,
both the time gap and the quality gap show great variations among all the
provincial documents.
More interestingly, Figure 1 presents the variations of the time gap and
quality gap across the 31 provincial governments. In terms of average
implementation time, Qinghai, Hebei, Fujian, and Anhui take fewer than
200 days to formulate a relevant provincial document to implement a cen-
tral opinion. In comparison, it takes Xinjiang, Tianjin, Shanghai, and Tibet
on average more than 350 days to do so. As for the quality gap, the picture
is quite different. Indeed, Beijing, Shanghai, Zhejiang, and Shandong retain
just around 20% central opinions’ content in their documents, while
Guangdong, Jiangxi, Neimenggu, and Xinjiang keep more than 34% of

Table 1. Descriptive Statistics of Variables.

Variable N Mean St. dev. Min Max
Implementation time 2,669 262.68 218.15 0.00 3,070.00
Degree of text similarity 2,653 0.28 0.18 0.03 0.98
Central inspection (specification ¼ 1) 111 0.56 0.50 0 1
CCP (reference ¼ 1) 111 0.53 0.50 0 1
Agency (state council ¼ 1) 111 0.43 0.50 0 1
Number of words 111 4,964.59 1,781.99 2,135 9,881
Sector (education ¼ 1) 111 2.93 1.38 1 5
Target specificity (No target ¼ 0) 111 0.83 0.77 0 2
Term (Xi-Li ¼ 1) 62 0.50 0.50 0 1
GDP 62 17,081.07 15,813.58 393.70 74,731.47
Proportion of social spending 62 62.04 13.08 37.53 89.92
Population 62 4,327.68 2,751.79 290.10 10,877.00
Provincial Central Committee Index 62 7.59 1.94 4 13
Note: Intercoder reliability between the author and a student assistant for Central inspection, CCP, and Sector
measured by Cohen’s kappa is 0.91, 0.91, and 0.9, respectively.
 PUBLIC PERFORMANCE & MANAGEMENT REVIEW 831

Figure 1. Provincial variations in terms of average implementation time and average degree of
text similarity.

central opinions’ text in their documents. People might suspect there is a

correlation between the quality gap and the time gap. However, there is
only a weak degree of correlation (around 0.16) between implementation
time and the degree of text similarity, suggesting that longer implementa-
tion time does not necessarily correlate with lower degrees of
text similarity.
832 MA

Model results and analyses

Table 2 presents estimates for the effects of central inspection on the imple-
mentation time and the degree of text similarity. The estimation is conducted
in two steps. The first step carries out two null models (Model 1 and Model 3),
which only include predictors at the provincial level, while omitting the inde-
pendent variable and other control variables. The Intra-Class Correlation
(ICC) values for Model 1 and Model 3 are 0.032 and 0.064, respectively, sug-
gesting that roughly 0.32% or 0.64% of total variance can be explained by pro-
vincial-level variance. Although those ICC values are rather small, the results of
Likelihood Ratio (LR) tests are both highly significant, justifying thereby the
use in this study of multilevel models rather than a pooled OLS regres-
sion model.
The second step includes all the variables in the models (Model 2 and
Model 4). In general, the results show that specified central inspection is
significantly negatively associated with the implementation time but is not
significantly associated with the degree of text similarity. According to
Model 2, it means that if one central opinion is under central inspection,
then provinces will on average reduce around 19% of the time in formulat-
ing a document to implement it, in comparison to where there is no speci-
fied inspection. Therefore, this demonstrates the effectiveness of central
inspection in speeding up provincial implementation outputs. As shown in
Model 4, however, there is no solid evidence that central inspection also
improves the quality of implementation outputs. While it does appear that
central inspection is correlated with a higher degree of text similarity, this
is not a statistically significant result. Therefore, hypothesis H1 is confirmed
by Model 2, while hypothesis H2 is disconfirmed by Model 4.
In terms of control variables, the results are mixed. Party reference is sig-
nificantly negatively correlated with both the implementation time and the
degree of text similarity, which shows that central opinions based on party
legitimation are implemented with faster and better provincial documents.
The State Council’s opinions take a longer time to implement, but also
result in better quality.13 The sector variable also shows that there is vari-
ation across policy areas. Besides, more complicated central opinions take a
longer time to implement, but also have a lower degree of text similarity.
Lastly, if a central opinion sets specific (measurable) targets, this helps
speed up the formulation of provincial documents but does not influence
their quality. As for the control variables at the provincial level, the results
show that opinions under the Xi-Li administration take a longer time to
implement.14 Provinces with more economic resources formulate better
documents to implement central opinions. And provinces with higher pri-
ority on social policies also see lower degrees of text similarity. Provinces
with larger population formulate documents with higher degrees of text
Table 2. Multilevel Model Estimates.
Implementation time Degree of text similarity
Model 1 Model 2 Model 3 Model 4
Central inspection (specification ¼ 1) 0.21 (0.04) 0.03 (0.02)
Control variables: opinion level
CCP (reference ¼ 1) 0.19 (0.04) 0.14 (0.02)
Agency (state council ¼ 1) 0.30 (0.05) 0.07 (0.03)
Sector (education ¼ base level)
Health 0.11 (0.07) 0.01 (0.04)
Labor 0.27 (0.07) 0.14 (0.04)
Housing 0.18 (0.11) 0.36 (0.07)
Social security 0.21 (0.07) 0.09 (0.04)
Number of words 0.17 (0.07) 0.10 (0.04)
Target specificity (No targets ¼ base level)
General targets 0.07 (0.05) 0.01 (0.03)
Specific targets 0.18 (0.06) 0.04 (0.03)
Control variables: Provincial level
Term (Xi-Li ¼ 1) 0.18 (0.11) 0.22 (0.11) 0.02 (0.07) 0.01 (0.07)
log(GDP) 0.07 (0.13) 0.06 (0.13) 0.43 (0.09) 0.43 (0.09)
log(population) 0.00 (0.15) 0.01 (0.15) 0.52 (0.10) 0.52 (0.10)
Proportion of social spending 0.01 (0.01) 0.01 (0.01) 0.02 (0.00) 0.02 (0.00)
Provincial Central Committee Index 0.00 (0.02) 0.01 (0.02) 0.00 (0.01) 0.00 (0.01)
Intercept: Individual document level 6.24 5.05 0.65 0.42
Intercept: provincial level 0.03 0.03 0.02 0.02
Log likelihood 3,892.42 3,843.19 2,410.75 2,362.10
Number of observations 2,669 2,669 2,653 2,653
Number of provinces 31 31 31 31
Note: Standard errors are in parentheses. p < 0.001, p < 0.01, p < 0.05 (two-tailed).
PUBLIC PERFORMANCE & MANAGEMENT REVIEW
833
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similarity. Lastly, provincial power doesn’t seem to influence the timing or

quality of provincial documents.

Discussion
While many studies have investigated how the central government can
employ outcome-based incentive schemes to reduce the implementation
gap in China, less attention has been paid to the effectiveness of central
monitoring on local implementation. Based on a novel dataset of the pro-
vincial documents formulated to implement 111 central opinions in social
policy areas from 2003 to 2017, this study applies multilevel models to
assess the effectiveness of central inspection, as an important form of cen-
tral monitoring, on both the time gap and the quality gap of provincial
implementation outputs.
The results are rather mixed. On the one hand, it does find support for
the effectiveness of central inspection. Central opinions under central
inspection tend to see faster implementation outputs than those without,
thus helping reduce the implementation time gap. In other words, provin-
cial governments take less time to formulate policy documents to imple-
ment a central social policy opinion, when central inspection is employed.
However, on the other hand, this study finds no solid evidence supporting
the notion that central inspection also reduces the quality gap. Provincial
documents formulated to implement central opinions retain similar levels
of text similarity irrespective of central inspection. In other words, they do
not formulate more implementable policy documents, even if central
inspection is present. Broadly, this finding supports those scholars who
contest the idea that central monitoring is an effective way to improve local
implementation (Kostka & Nahm, 2017; Liang & Langbein, 2015, 2019).
Therefore, one should be cautious about treating central monitoring as a
panacea for dealing with implementation gaps in China.
These results suggest that solving the principal-agent problem is chal-
lenging in China. The first finding indicates that central inspection can
help gather information about implementation delays because it helps to
reduce the asymmetric information problem. Plausibly, it is straightforward
for the central inspection team to verify whether a province has formulated
a policy document to implement a central opinion before a given date.
This could be the reason why central inspection helps to speed up the for-
mulation of provincial policy documents. However, the second finding sug-
gests that information asymmetry in terms of the quality of a provincial
document is more difficult to address. This is probably due to the fact the
provincial governments normally enjoy a high degree of discretion and
flexibility in policy implementation (Cheung, 1998; Shi, 2017). This local
 PUBLIC PERFORMANCE & MANAGEMENT REVIEW 835

discretion could help provincial governments to justify their policy formu-

lations against the monitoring of central inspection. It is also likely that
local governments can even collude (Zhou, 2010), or manipulate data
(Wallace, 2016), to discourage the efforts of central inspection to verify the
policy content of provincial documents. Either way, provincial governments
might not be pressured by central inspection to formulate more imple-
mentable policy documents.

Implications
These findings from this study have a few broader implications. Firstly,
while this study mainly focuses on central inspection, inspection carried
out by provincial governments can have similar effects on the lower-level
government. However, given that different provinces might have different
practices of local inspection, the effect of local inspection is likely to vary a
lot across provinces. Secondly, as presented in Figure 1, provinces vary a
lot in terms of both the time gap and the quality gap of implementation
outputs. This suggests that further research is needed to understand better
the reasons behind these differences. Thirdly, this study also finds that cen-
tral inspection is of limited utility in addressing the principal-agent prob-
lem in China. This suggests that perhaps one should look beyond a simple
police-patrol style of monitoring. Instead, future research should also look
for the possibility for fire-alarm monitoring. For instance, Anderson et al.
(2019) have found that NGOs can help to improve local compliance with
environmental policies. Another issue is whether social NGOs might play a
similar role in social policy implementation. Lastly, this study only focuses
on the influence of central inspection on implementation outputs, so it
would be helpful to test whether central inspection has similar effects on
implementation outcomes.

Notes
1. This article uses both the term “implementation” and “compliance.” However, there
are key differences between them. Implementation is a process of putting a policy into
practice. In contrast, compliance is a state of conformity between an implementor’s
behavior and a specified rule. Implementation is typically a critical step towards
compliance, but compliance can occur without implementation.
2. In western democracies, media and other forms of fire-alarm monitoring help reduce
asymmetric information, thus mitigating the agency problem. In comparison, those
forms of fire-alarm monitoring are relatively weak in China, because they face several
limitations in their activities (see Anderson et al., 2019 for a discussion).
3. Indeed, the previous solutions work largely via incentive schemes or monitoring.
Replacing an agent could be considered as an extremely harsh form of sanction that
the principal can use to shape the incentive structure. Co-optation helps reducing
836 MA

monitoring costs and achieving better alignment of the incentive structure of the agent
(Sheng, 2009, pp. 75–76). Similarly, administrative procedures also help lowering the
costs of monitoring and sharpening sanctions (McCubbins et al., 1987, p. 273).
4. Note however, the recent performance management reform in China aims not only to
induce more compliance from the local government, but also to improve citizen
satisfaction with government performance (see Zhang et al., 2021 for a discussion).
5. These implementation outputs are important for both citizens and lower-level
governments. For citizens, they often have direct influence on their lives. A good
example is the college matriculation policy for migrant children (yidi gaokao) reform.
Each province had to formulate its own reform plan, as required by Notice of the
General Office of the State Council on transferring the opinion of the Ministry of
Education and other ministries on children of migrant workers to enter senior high
schools and sit college entrance exams locally after receiving compulsory education.
These provincial reform plans attracted great attention from ordinary citizens, because
they have huge consequences for migrant children’s rights to education (Luo & Jin,
2013). For lower-level governments, these provincial-level implementation outputs
provide the needed guidance for them. This is because the provincial government is
the gatekeeper guarding and providing access to the local levels (Lieberthal &
Oksenberg, 1988, p. 350). In other words, these implementation outputs make the
provincial governments’ positions on a central policy known to the lower-level
governments, so that they can take actions accordingly (see O’Brien & Li, 1999, p. 71
for a discussion).
6. According to the Regulation on Government Inspection Work, central inspection
teams collect information mainly by themselves. However, this is a bit different in
the anti-corruption campaign, as the inspection teams rely not only on their own
efforts but also a certain degree of fire-alarm (that is, reports from the public).
Still, this is very contingent on the initiatives from the inspection teams, so it is
not like the independent fire-alarm proposed by McCubbins and Schwartz (1984).
7. The specification of central inspection clearly is not random, but the factors
determining it are extremely hard to assess. Therefore, the most plausible way is to
include relevant observable control variables in the data analysis, as will be
explained later.
8. When a provincial government formulates a document to implement a central
opinion, it normally refers to the central opinion in the introduction, using terms such
as “to implement (a specific central opinion),” or “according to (a specific central
opinion).” This is the criterion for finding the provincial document. In a very few
cases where there exist more than one provincial document referring to the central
opinion, then the most relevant one was chosen.
9. In total, there are around 22% of missing data. Those missing data can happen mainly
due to: (1) the central opinion is not relevant for a province, as this province has
already taken initiatives earlier; (2) the province is non-compliant and does not
formulate a document; (3) the document exists but is unavailable online. While
acknowledging that missing data can be a serious challenge, the author believes
nevertheless that it is still the best result one can get in the case of China.
10. A deeper investigation of the missing data shows the number of missing data on the
timing measurement is in total 772 (449 not under central inspection, 323 under
central inspection). Similarly, the number of missing data on the quality measurement
is in total 788 (454 not under central inspection, 334 under central inspection). It
seems that the distribution of missing data is rather balanced. If all missing data were
 PUBLIC PERFORMANCE & MANAGEMENT REVIEW 837

present in the group of observations under (or not under) central inspection, then this
might create more serious biases in the results.
11. Bo’s data only cover the period before 2012. For the period during the Xi-Li
administration, the data were coded manually based on Bo’s (2010, p. 99) system.
12. See Online Appendix 5 for results from a pooled and a non-pooled OLS model.
13. Despite higher political priority, the State Council’s opinions may also be more
difficult to implement, because they deal with more challenging problems. This might
be the reason why in comparison to the General Office’s opinions, the State Council’s
opinions are implemented with a longer time.
14. This may be because during the Xi-Li administration, there was in total a much larger
number of central opinions than the previous period. This might create delay in
formulating needed policy documents at the provincial level.

Acknowledgments
I want to thank Dorte Sindbjerg Martinsen, Kasper Ingeman Beck, Anders Woller Nielsen,
Wiebke Marie Junk, Jørgen Delman, Chunrong Liu and the three anonymous reviewers,
for their useful comments. I would also like to thank the Fudan-European Centre for
China Studies for its language support.

Notes on contributor
Yi Ma, Ph.D., holds a postdoctoral position at the Department of Cross-Cultural and
Regional Studies, University of Copenhagen. His research interests include policy design
and implementation, central-local relations, and soft law governance in China.

ORCID
Yi Ma http://orcid.org/0000-0003-1955-6853

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