Improving Policy Design and Building Capacity in Local Experiments: Equalization of Public Service in China's Urban†rural Integration Pilot

Policy design is important, and high policy capacity is necessary for social policy†making. Local experimentation is helpful in building capacity and therefore supporting policy design. Since 2007, China has initiated an ‘urban–rural integration’ reform to equalize the access to public services between urban and rural residents. This paper uses the Chongqing urban–rural integration pilot as a case to illustrate how and to what degree a local experiment can be useful in building policy capacity and improving policy design. Regarding the Chongqing pilot, policy capacity in administration and governance has been improved through mechanisms including coordinating government departments through a small leading group led by local leaders as well as incentivizing bureaucrats by linking quantified policy targets with officials' performance evaluations. Equalizing access to public services by facilitating the mobility of factors, including labour, credit, and land, is the key rationale in the policy design of the Chongqing pilot. Under this policy design, fiscal capacity has been enhanced significantly, and policy initiatives have been financed with an improved fiscal capacity. At the same time, however, unintended consequences in the Chongqing pilot have been observed, including misallocation of resources and underdevelopment of some dimensions of policy capacity. Institutional reforms might also have been undermined. Copyright © 2017 John Wiley & Sons, Ltd.