The governance logic of primary-level China (book excerpt)

The new book of Nie Huihua with Renmin University of China on primary-level China governance

In case you missed the piece I shared a few months ago by Prof. Nie Huihua(聂辉华): he used hierarchy and incomplete contracts to explain why Chinese local governments often "ratchet up" enforcement by adding their own, stricter rules (层层加码). It's a sharp read and I highly recommend it.

Today I'm sharing the preface to Prof. Nie's new book, The Governance Logic of Primary-level China.

I'm deeply interested in China's primary-level government. Outside a handful of megacities, "local China" often looks quite different, and in many ways gives a truer sense of how the country operates day to day.

Moreover, center–local government bargaining has long sat at the heart of policy debates. I wrote about this previously.

Now, the book's chapters:
I. the tiao-kuai system 条块系统 as a core feature of China's national governance
II. Hierarchy as the main mechanism for allocating administrative resources
III. The power checklist of primary-level chiefs
IV. The "capillaries" of national governance
V. Challenges facing principal local officials
VI. Incentives for primary-level civil servants
VII. Dilemmas in primary-level governance
VIII. Paths to regional coordinated development

Prof. Nie has spent years studying China's primary-level government. He earned his degrees in China and completed a year of postdoctoral research at Harvard University under Nobel laureate Oliver Hart.

Below is my English translation of the book's preface, shared with kind permission from Prof. Nie and Shanghai People's Publishing House.

透过基层，理解中国——聂辉华《基层中国的运行逻辑》前言

Understanding China Through its Communities — Preface to Nie Huihua's "The Governance Logic of Primary-level China"

Author's note: The book officially goes on sale today. I hope it helps you better understand how power works and how governance operates at the primary-level China, and thus better understand China's tizhi体制 (or state apparatus). What follows is the preface. — Nie Huihua, 28 October 2025

Understanding China Through its Communities

I teach at a university and lecture every year to undergraduates and postgraduates from across the country. I truly admire these high-achieving students: they are young, full of vitality, and remarkably quick to learn, particularly adept at mastering cutting-edge digital technologies like Python and AI.

Yet I have also noticed a large gap: many students know little about the primary-level China and about the countryside. Their gaze often fixes on Beijing, Shanghai, Guangzhou and Shenzhen — the "first-tier" cities with China's most advanced industries and wealthiest residents.

But do not forget: over 90 percent of China's population does not live in these first-tier cities; do not forget that in 2023, China had 2,846 county-level administrative units, 38,700 townships or sub-districts, roughly 489,000 administrative villages and 2.332 million natural villages. Do not forget as well that China remains the world's largest developing country. Although China is the world's second-largest economy, it was not until 2021 that its per-capita GDP just edged above the global average.

Because most Chinese live and work at the community level, that level constitutes China’s fundamental reality. Put simply, to understand China, one must understand its primary level; understanding the primary level enables young people to grow more effectively.

The Chinese philosopher Han Feizi, who was a contemporary of Plato, once said: "Prime ministers must have served as local officials; great generals must have risen from the ranks." On 12 January 2015, General Secretary Xi Jinping quoted this very line while meeting with trainees from the Central Party School's program for county Party secretaries (county top leaders). The fact that the nation's top leader personally engaged in discussions with county Party secretaries underscores how crucial community-level governance is to national governance!

I hail from the primary level and am familiar with it. I was born in 1978 in a poor village in Chongren County, Fuzhou City, Jiangxi Province — the same year China's reform and opening-up began. I was fortunate enough to progress from a rural cowherd to a professor at a prestigious university. As someone who entered the city with little more than my education, I hold a deep, enduring connection to my native land. I follow developments back home, often speak with officials at village, township, and county level, listen to their voices, try to understand their circumstances, and follow their careers.

From my master's studies onward I joined my advisor on projects with local governments and enterprises; after earning my PhD and staying on to teach, I used every opportunity to conduct field research in government departments and firms. In 2023, I began serving as head of the "Beijing PhD Service Group" for Fuzhou, Jiangxi. My main task is to match high-end talent (PhDs) in the capital with the needs of local governments and enterprises. This role has also familiarized me with local investment promotion and talent attraction efforts.

As an economics professor, I dislike "blackboard economics" and prefer "real-world economics." In May 2013, I had the privilege of co-founding the National Academy of Development and Strategy (NADS) at Renmin University of China, one of the country's first high-end think tanks, positioned to provide counsel for Party and state decision-making. For the subsequent six years, I oversaw core internal policy memoranda and served as executive vice dean; many of the memos I authored received written instructions or comments from senior leaders.

Leading a think tank benefited me in several ways: first, I came to understand the state apparatus (tizhi) more deeply, especially how policy is made; second, I developed a sharper sense of identifying substantive issues, knowing what constitutes overarching and general problems; third, I gained far more opportunities to research governments and enterprises at different levels. As a university professor from the primary level, I therefore feel a responsibility, a duty, and the confidence to share the reality of community-level China, to explain the operation of power and the logic of governance there.

I launched a video series on Bilibili titled "The Operating Logic of Primary-Level China." After it proved popular, I added substantial content and materials and turned it into the book you now hold.

I approach the subject through political economy and organizational economics, drawing on two decades of teaching, research, think-tank work, government-enterprise fieldwork, and study abroad. Moving from state governance to primary-level governance to individual choices, I aim to build, step by step, a framework for understanding China's primary level.

Part I introduces the institutional backdrop of state governance.

Chapter 1 summarizes a fundamental feature of China's governing architecture — the tiao-kuai system 条块系统: The term tiáo条 refers to the vertical lines of authority over various sector reaching down from the ministries of the central government. Kuài块refers to the horizontal level of authority of the territorial government at the provincial or local level. In the final section of this chapter, I propose a "dual-equilibrium analytical framework of internal-external conflict," attempting to explain the fundamental logic of state governance throughout history.

My core thesis is: assuming the primary goal of state governance is maintaining regime stability, but the ruler faces a trade-off between internal stability and external stability, then the optimal institutional arrangement is decentralization when external threats outweigh internal threats, and centralization when the opposite is true. Both centralization and decentralization constitute internally consistent institutional systems encompassing official incentives, selection, policy implementation, and administrative divisions. A state should adjust the optimal arrangement as internal and external conditions change; if it does not, decline follows.

Building on this, I summarize the secret to China's successful state governance in four characters: shang-xia tongzhi(上下同治) — top and bottom governing together. In practice this means combining "top-level design" with "crossing the river by feeling for stones," a simple truth validated repeatedly over more than forty years of reform and opening.

Chapter 2 argues that hierarchy is a key mechanism for resource allocation in China. This runs counter to standard Western economics textbooks and much mainstream opinion, but it reflects how the real world here works. From city ranks to official ranks to policy design, one simple pattern appears: people follow resources, resources follow power, and power is fundamentally hierarchical. Outcomes of policy formulation and execution at the primary level are, in essence, the mapped result of bargaining between lower and higher levels within that hierarchy.

Part II examines the operation of power.

If power plays a major role in allocating resources, one must understand how, at different tiers of the primary level, power actually allocates those resources and how this affects individual career choices. I therefore lay out the lists of powers and responsibilities for county Party secretaries, township Party secretaries, subdistrict offices, and administrative villages, and then analyze how much discretionary authority each position entails.

With the institutional background and a working knowledge of how power operates, young people contemplating careers inside the state apparatus can match their goals and comparative advantages to make more rational choices, putting talent to its best use and reducing misallocation. This is especially relevant for civil servants or staff in public institutions working in townships, including university graduates serving as village-level officials.

Part III delves into the logic of primary-level governance.

Having set out the authority lists, this part explains how primary-level leaders use their powers to allocate resources and achieve governance outcomes. The part discuss the goals and instruments of county and township Party secretaries. In an era of urbanization and population aging, the governance logic at the primary level differs markedly from that of first-tier cities. For the primary level, maintaining stability often presents the greatest challenge, echoing the "dual-equilibrium analytical framework of internal-external conflict" mentioned earlier.

Beyond stability maintenance, the chapter examine how primary-level governments motivate officials to get things done; how they promote investment attraction; why land-based public finance emerged; and how localities manage debt risks. Finally, the chapter shift the lens from single jurisdictions to regional development, comparing urbanization strategies of "developing mega-cities in a large nation" versus "balanced development," and exploring how to optimize the regional business environment.

There are already many books on China's primary-level governance. Why read this one? I believe a primary distinguishing feature of this book is its integration of economics' methodological strengths with my extensive personal research experience, which I summarize as: Theoretical Framework + Empirical Analysis + Field Research. Economics is often called the "queen of the social sciences" because, on the one hand, it uses mathematical models to build a rigorous theoretical system, and on the other, it employs econometric methods and large-sample data to test theoretical claims.

First, the "dual-equilibrium analytical framework of internal-external conflict" proposed in Chapter 1 rests on rigorous modeling and runs throughout the book as a guiding thread, distinguishing this work from many in political science, sociology, or public administration. Second, many of the book's claims are backed by large-sample econometric analysis; sometimes a simple conclusion sits atop dozens of papers and hundreds of thousands of observations. Third, the book incorporates a wealth of vivid field cases. During my postdoctoral work at Harvard, my co-mentor, Professor Oliver Hart, the 2016 Nobel laureate in economics, repeatedly reminded me: in research, first ask good questions, then answer them clearly. To face the real world and avoid "blackboard economics," many chapters therefore pose the question directly and answer it concisely, while quoting the distinctive views of primary-level officials, including leading county and township figures. For ease of reading, I include no mathematical models or regression tables in the main text; technical notes and references appear, where needed, in the endnotes.

In summary, I hope that through my research and analysis, and through these lively materials, readers can glimpse a primary-level China that is real, full of everyday life, and different from what textbooks might suggest.