China implements remarkable political meritocracy and decentralization, which solve many incentive problems and constitute the foundation of China's reform and growth. However, meritocracy and decentralization contradict the basic logic of autocracy, the loyalty-competence trade-off. How can China overcomes the dilemma and implements meritocracy and decentralization? In my dissertation, I propose that the appointment of both a party secretary and a governor to co-rule a province solves the problem. Using formal model, I show that how the “separation” of political and economic powers between secretary and governor works extremely well, especially when secretary sometimes dominates the governor but not always the case. The party-government relationship in China originates from similar institutions in Soviet Union and Imperial China. Using models of economic growth and contract theory, my dissertation discusses the difference between party-government relationships in China and Soviet Union, as well as the reason behind it. Imperial China also uses “checks between higher-ranked and lower-ranked” to constrain local officials. I am combining originally collected data and those from China Biographical Database to construct a comprehensive picture of political duality and meritocracy over two thousand years in Chinese history. The data is also being evaluated using modern econometric techniques to provide empirical support for my formal models. I am also writing another model to understand other key features in Chinese politics that strongly complements meritocracy.