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 in China. Understanding that process can help foreign governments and companies to anticipate and influence 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.
Who is “the Party”?
The Communist Party of China (CCP) is the China’s only governing political party. While China technically has 8 other political parties besides the CCP, in practice, those parties do not hold any significant political power.
What is “the Party,” exactly?
The CCP is a hierarchical organization headed by the Politburo, which currently has 25 members. Its purpose is to guide the government and safeguard socialist ideology.
The seven senior-most Politburo members have their own inner circle, the Standing Committee, chaired by the general secretary, which is currently Xi Jinping.
These seven guys (and they are all guys) are the most powerful men in the land, and head China’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. 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 government, led by the Party, has five branches.
National Supervisory Commission (NSC) – The NSC is China’s anti-corruption agency, the government body that “watches the watchers.” Fun fact: The NSC is a relatively new branch of government, formed in 2018, during a major bureaucratic restructuring.
Supreme People’s Court (SPC) – The SPC oversees China’s courts and judicial system.
State Council – The State Council manages the government ministries that carry out the day-to-day tasks of running the government, such as the education, environment, tax and customs authorities.
National People’s Congress (NPC) – The NPC reviews and passes new laws, elects some state officials, and carries out other legislative tasks. It has close to 3,000 members.
Chinese People’s Political Consultative Conference (CPPCC) – A political advisory body. The members of the 8 minor political parties, as well as representatives from various delegations, minority groups, industry groups, and academia, are members of the CPPCC.
The Chinese government
How policy is made
Policies are structured in a clear hierarchy, from broad national plans that set broad goals, to specific to-do lists for achieving those goals.
Arguably the most important policy document in China is the National Five-Year Plan, released once every half-decade.
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 that China should focus on for the next half-decade.
The result of this plenary session is a strategic document outlining the committee’s recommendations on primary areas where China should concentrate its policy efforts. This document is 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, and paint a vision of China’s immediate future in broad, general terms.
For example, the Recommendations from 2015 promised to promote a low-carbon economy, increase innovation, and reduce poverty, but they didn’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 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 government ministry under the State Council.
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.
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 a bit 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 13th National FYP, for instance, states that China intends to move 55 million people out of poverty by 2020, but doesn’t specify how to make that happen.
Issue-based Five-Year Plans set more detailed goals
After the National FYP has been finalized, ministries under the State Council 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
Plans get increasingly specific as they move down the chain of command. 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, two more types of policies are drafted to map out strategies for reaching those targets.
Implementation notices and implementing measures spell out instructions for achieving goals set in the FYPs. 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.
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 opens 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.
Can policy be influenced?
There are multiple avenues of input into the policymaking process
Under China’s (effectively) one-party system, 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 can give outside stakeholders a channel through which to engage with the policymaking process directly.
2. Take advantage of promulgation periods
During policy commenting periods, the government explicitly asks for advice on its policies – from anyone. Companies with operations in China shouldn’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.