Prof. Xu is one of the first recipients of China Economics Prize for contributions in understanding government and enterprise incentive mechanisms for the transition economy of China. He introduced the concept of characterizing China’s institution, “regionally decentralized authoritarianism (RDA),” as a determinant factor of China’s past 30 years of successful reform. RDA regime provides a fundamental institutional condition for regional competition and experiments, as a mechanism for solving incentive problems in the bureaucracy. This is critically vital as even if the leader wants to have growth and reform, how to do it depends on millions of bureaucrats. His theory also predicts that regional competition as a solution of incentive problems is only transitional, and reforming the RDA institution is the key to China’s future. His study on RDA has a far-reaching impact and has become a necessary literature reference in the studies of China’s government governance.