Intro to China’s policymaking process
From national plans to local directives.
The Chinese government isn’t particularly famous for its transparency. Leaders are elected in private meetings, and national policy is determined behind closed doors.
From the outside, policies and regulations can seem to be issued at random. But in actuality, there are well-worn procedures for drafting, issuing, and revising policies. Understanding that process can help foreign governments and companies to influence and anticipate policy shifts.
How is policy formulated in China? Who proposes it? How does it get refined or amended? With no campaigns and therefore no campaign contributions, how do outside stakeholders influence policy?
In this Trivium primer, we’ll examine all of those questions, walking step-by-step through the way policies are created in the People’s Republic.
Who sets the policy agenda?
Short answer: the Party does.
What is the Party?
Please excuse the quick digression into basics, but for the newbies: the Communist Party of China is the PRC’s only governing political party.
Who is “the Party,” exactly?
The Party consists of over 89 million members all across the country. It’s a hierarchical organization headed by the Politburo, which currently has 25 members. The seven more senior Politburo members have their own inner circle, the Standing Committee, chaired by the general secretary, which is currently Xi Jinping. These guys (and they are all guys) are the most powerful men in the land, and head the PRC’s major institutions such as the legislature and central government. The number of Standing Committee members has changed over the years, historically ranging from five to 11.
What’s the relationship between the Party and the government?
In theory, the government is responsible for the day-to-day tasks of running the country, while the Party acts as a conductor, guiding the government and safeguarding socialist ideology. In other words, if China was a person, the Party would be the brain and the government would be the body.
In reality, it can be difficult to draw a distinct line between the two, because most Party officials also hold concurrent government posts and vice versa.
The Party’s changing status
The Party’s status relative to the government has changed over the years. For the three and a half decades prior to Xi Jinping’s ascension, the Party had gradually loosened control over the government. But one of the hallmarks of Xi’s administration has been a focus on re-asserting the Party’s supreme authority over government. Under Xi, the Party is very clearly in charge.
The Chinese government
How policy is made
Policies are structured in a clear hierarchy, from broad national plans down to specific implementation measures for particular industries.
The Party Central Committee determines what should go in the Five-Year Plan.
Agenda-setting takes place on a rolling, five-year cycle. Every fifth year, the Party Central Committee holds a plenary session to determine key issue areas to focus on for the next half-decade. The result is a strategic document outlining the committee’s recommendations on primary areas where China should concentrate its efforts, and it’s typically called something like “Recommendations on the 13th Five-Year Plan.”
Recommendations on the 9th Five-Year Plan
Every five years, the Party sets a new policy agenda.
The Party’s recommendations on five-year plans lack specifics, instead painting a vision of China’s immediate future in broad, general terms. For example, the most recent Recommendations from 2015 promised to promote a low-carbon economy, increase innovation, and reduce poverty, but don’t set out any specific milestones or actions plans in terms of how to achieve those goals. It’s left up to successive lower-level policies to sort out the details.
The Party’s recommendations are codified into the National Five-Year Plan
The group responsible for fleshing out the Party’s goals is the National Development and Reform Commission (NDRC), a ministerial-level government body.
The NDRC takes the Party’s recommendations and gets input from many different stakeholders, including other central government bodies, local governments, government think tanks, academics, and titans of industry. That input is incorporated into the first draft of China’s most important policy document: the National Five-Year Plan (FYP).
When the draft is done, it’s presented to the premier and other top government officials, who then pass it on to the Party for final approval. Once the Party gives the go ahead, the plan is released.
As China goes, so goes the world, and the release of a National FYP is a big deal, both domestically and abroad. It sets off a flurry of commentary in the international community as pundits, governments and other China watchers analyze each clause, looking for clues to China’s shifting priorities.
Opinions on the Five-Year Plan
The NDRC translates the Party's vision into concrete goals.
What’s in the National Five-Year Plan?
The National FYP is more specific than the opinions released by the Central Committee. National FYPs set out general growth targets and milestones, but they are still far from detailed policy roadmaps – they don’t spell out exactly how to reach those targets. The current 13th National FYP, for instance, states that China intends to move 55 million people out of poverty by 2020, but doesn’t specify how that would happen.
Issue-based Five-Year Plans set more detailed goals
After the National FYP has been finalized, ministries and other government bodies are tasked with drafting dozens of issue-based five-year plans related to their areas of oversight. These are based on the direction of the national plan. For instance, the National 13th Five-Year Plan was split into smaller 13th Five-Year Plans for healthcare, science and technology, environment, and poverty alleviation, among many others.
Each Issue Plan sets more detailed targets than the national plan. For example, the 13th Five-Year Plan for Poverty Alleviation takes the national goal of moving 55 million people out of poverty by 2020, and breaks that out into 10 sub-targets.
The National Five-Year Plan
Ministries then split the National Five-Year Plan into Issue Plans.
Sub-issue plans set out even more granular targets
Some Issue Plans may be broken down further into sub-plans. For example, the 13th Five-Year Plan for Poverty Alleviation placed heavy emphasis on increasing access to water and improving access to education, so those focus areas were each given a five-year plan of their own.
National Five-Year Plan... for Poverty Alleviation
Issue Plans are then split into Sub-issue Plans.
Implementation Notices and Measures elaborate on “to-dos”
Up until this point, most of the focus has been on setting goals. Once all the target-setting has been done via the various plans, it’s time to map out strategies for reaching those targets.
There are two types of policies that spell out instructions for achieving goals set in the FYPs: implementation notices and implementing measures. There are some differences between the two policy types, but for the purposes of this primer, you can think of both as “to-do” lists. The scope of notices and measures are extremely narrow: they focus on a single task or goal.
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These policies represent the last phase of the policy cycle. Government bodies carry out their day-to-day work by following the directives set out in notices and measures.
Unlike five-year plans, which come with a built-in expiration date, notices and measures remain in effect until they’re overwritten by another policy sometime down the road.
Notices and Measures outline to-dos
The two policy types act as roadmaps to achieve the goals set out in Five-Year Plans.
Caveats: Naturally, it’s not quite so simple.
We’ve painted a picture of a highly disciplined and systematic policy process where all policies are perfectly coordinated and interlocking. While the Chinese system goes to great lengths to produce coordinated policies, the truth is that policies don’t always fit together, and may at times even be in conflict. Like governments everywhere, the different ministries and localities often have divergent, incompatible mandates, and individual officials may issue policies to advance their prerogatives that undermine other agencies and their goals.
Also worth a mention: five-year plans aren’t the only high-level policy documents. Instead, they’re best understood as an integral part of an ongoing policy cycle, where even longer-term plans inform five-year plans, which in turn inform those long-term plans and vice versa.
How policies are changed
There are three points in a policy’s lifecycle during which it may undergo revision.
1. While policies are being drafted
As part of the drafting process of any plan, notice or measure, the drafters at almost every level seek opinions and suggestions from a wide range of stakeholders, including other central government bodies, local governments, government think tanks, industry players, and academics.
2. During commenting periods
Once a policy draft is completed, the ministry in charge usually releases the draft and open up a brief window for public comment. During this window, anyone – from corporates to members of the public – can submit feedback on the policy. It will ultimately be up to the ministry which input will be taken under consideration and which will be ignored. Once the promulgation period is over, policies officially go into effect.
3. During dedicated review periods
Five-year plans and other high-level policies typically undergo official review and revision after they have been in effect for a while. Five-year plans, for example, are reviewed in the middle of their effectiveness period – around three years after being issued.
When it’s time to review a plan, the ministry responsible for the plan opens a bidding process, allowing academic institutions and industry groups to make proposals for conducting the review. During a review, the institutions that won those bids conduct extensive research to see how successful or effective a plan has been, and if major problems are found, the ministry may amend the plan or course-correct in some other way.
It’s worth noting that only plans have set review periods – notices and measures are reviewed on an ad hoc basis, if at all.
Policy Drafting & Revision Process
Can policy be influenced?
There are multiple avenues of input into the policymaking process
There are no lobbyists to engage, no campaigns that need contributions, and no elected representatives to write, so it can be difficult for companies or interest groups to know where to start when looking to influence policy in China. But there are well-marked avenues for engagement in the policy process. Two obvious ways are:
1. Get involved in industry associations and research institutes
Chinese ministries often commission industry associations and research
institutions to undertake relevant research and write policy drafts. Involvement in these groups is an obvious way to influence policy.
2. Take advantage of promulgation periods
During policy commenting periods, the government explicitly asks for advice on its policies – from anyone. Don’t miss these opportunities to make your voice heard.
Need a strategy? We can help.
Helping firms, funds and other orgs hammer out the best Chinese policy engagement plan is a large part of what we do at Trivium. We can also keep an eye on policy promulgation periods relevant to your sector, so you know when to take action. If you’re in the market, drop us a line.