China’s remarkable economic growth without commensurate political change has been a puzzle for many observers. The predominant explanation highlights the gradual and adaptive nature of the reform process characterized by decentralized policy experimentations. In this process, it is widely accepted that central policymakers provide vague guidelines to give local implementers discretion in developing creative approaches to problem solving. However, vague guidelines are not always accompanied by discretion, as vagueness can also make local implementers unsure about the boundaries of permitted actions, thereby inducing wait-and-see behavior. Incorporating both perspectives, this project will seek to explain why and under what conditions vague policy language functions one way or the other and how this contrasts with clear directives and their consequences.