Autonomy and Performance: Decentralization Reforms in Zhejiang Province, China

Decentralization reforms rarely live up to the high hopes and expectations of the reformers for a variety of reasons rooted in actions and omissions of the governments pursuing it or in the context in which it is undertaken. The paper examines the experience of Zhejiang Province where decentralization was successful in achieving and indeed exceeding initial expectations. The remarkable feature of its reforms was ‘performance‐based’ decentralization wherein localities showing superior performance were awarded additional autonomy at a faster speed while the rest were given additional support to build their capacity for assuming more responsibility in the future. To understand the effects of this unique pattern of decentralization, the paper compares the performance of participating and non‐participating counties under five waves of reforms between 1992 and 2008, based on indicators such as gross domestic product, industrial output and local government revenue. It finds that performance‐based decentralization not only helped overcome the problem of capacity deficits but also fostered capacity in weaker counties to assume more autonomy in the future. The paper confirms that speed and sequence of transfer of autonomy and responsibilities to local governments are as important as the content of decentralization. Copyright © 2017 John Wiley & Sons, Ltd.