Mapping the Local State: Operationalizing Industrial Strategy through Policy Portfolios

Abstract

The political economy literature on China has long predicted that distinct local institutionallegacies should produce divergent models of development. However, empirically assessing these predictions has been hampered by a measurement gap: scholars often rely on simplistic proxies that treat the "black box" of policy design as opaque. This paper bridges this gap by simultaneously advancing policy measurement and unpacking the structural mechanisms of contemporary state intervention. First, using a novel LLM-assisted textual analysis of 1,123 provincial New Energy Vehicle (NEV) policy documents, I construct a high-resolution dataset of local policy portfolios. Second, I leverage this dataset to test the micro-behavioral logic driving local policy design. My analysis reveals a pattern of capacity-constrained convergence: while uniform central mandates drive rapid standardization in basic administrative tools, uneven local capacity drives stratification in high-complexity domains like R&D. Interrupted time series and network analyses demonstrate that this two-tier dynamic is governed by asymmetric political risk aversion and resource crowding-out, often resulting in symbolic compliance when mandates exceed local capabilities. Ultimately, this research reveals that contemporary local state agency has shifted from unrestrained fragmentation to tactically bounded diversity.