From the perspective of Government and Economics, this paper systematically examines the historical origins, institutional evolution, and economic development effects of China's incentive system for grassroots officials. It argues that the governance tradition of China's unified state has shaped an official incentive structure centered on performance evaluation: the central government transforms governance goals such as fiscal stability and social order into observable and measurable performance indicators and tightly links them to official promotions. After the reform and opening-up, the core indicators of this incentive tradition shifted from “tax revenues and public order” to economic growth. The fiscal contracting system, the tax-sharing reform, and the institutionalization of cadre evaluation jointly shaped a single-task incentive mechanism with economic growth as its core. Under this institutional arrangement, local governments engaged in a “promotion tournament” around economic growth, promoting local economic development through infrastructure construction, land-based investment attraction, and financial resource allocation, which significantly reduced institutional transaction costs and served as a key institutional foundation for China's rapid economic growth. However, single-task incentives also led to structural biases such as underinvestment in public services and environmental protection. In the era of high-quality development, the central government has gradually introduced multi-dimensional indicators including environmental protection and innovation, promoting a transition toward multi-task governance. The paper concludes that the incentive system for grassroots officials represents the institutional continuation of China's unified state governance tradition under modern economic growth conditions, and understanding this logic is of great significance for constructing China's independent economic knowledge system, and for the development of other developing and developed countries.
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Research in Government and Economics 2026, 2(2): 1-19
Published: 01 June 2026
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