Central coordination, regional competition, and local protectionism: Social decentralisation in China's long‐term care reform

Abstract Changing central‐local relations shape social policymaking and implementation in China. We develop a social decentralisation perspective to explore various inter‐governmental dimensions in the formulation and implementation of social policy, based on experimentation in the provision of long‐term care insurance starting in 2016. As localities devised new programmes, they initiated innovations in the context of central‐local relations with Chinese characteristics. Three areas are duly examined: central coordination, regional competition, and regional protectionism. Intending to develop a national programme but reluctant to provide support through tax revenues, central government coordination reflects in both the central government's selection of cities across regions and allowing room for local diversity—some with deliberate experimental purposes—a feature which generated regional competition between pilot cities. Furthermore, as additional contributions for pilot programmes in some cities are waived, this process entails resource extraction from existing funding surpluses, unleashing local protectionism contrary to central government interests. Our analysis finds that the central government faces a dilemma: either meeting new social needs at the cost of increased regional inequality or balancing social policy developments across regions by enacting necessary programmatic reforms that sap central resources and weaken the central government's coordination capacity. These dynamics of social decentralisation will shape the future development and impact of Chinese social policy.