Local Policy Discretion in Social Welfare: Explaining Subnational Variations in China's De Facto Urban Poverty Line

Abstract How do subnational agents exercise policy discretion in the social welfare sphere? To what extent do they do so as a result of various bureaucratic and fiscal incentives? The literature has documented several explanatory frameworks in the context of China that predominantly focus on the realm of developmental policies. Owing to the salient characteristics of the social policy arena, local adaptation of centrally designed policies may operate on distinctive logics. This study synthesizes the recent scholarship on subnational social policymaking and explains the significant interregional disparities in China's de facto urban poverty line – the eligibility standard of the urban minimum livelihood guarantee scheme, or dibao . Five research hypotheses are formulated for empirical examination: fiscal power effect, population effect, fiscal dependency effect, province effect and neighbour effect. Quantitative analysis of provincial-level panel data largely endorses the hypotheses. The remarkable subnational variations in dibao standards are explained by a salient constellation of fiscal and political factors that are embedded within the country's complex intergovernmental relations and fiscal arrangements. Both a race-to-the-top and a race-to-the-bottom may be fostered by distinctive mechanisms. The unique role of provincial governments as intermediary agents within China's political apparatus is illuminated in the social policy arena.