During the 1980s, Chinese policy elites underwent a process of complex learning in economic policy that resulted in a shift from a revolutionary to a techno-economic paradigm that greatly reduced the control of the Chinese Communist Party over the economy. Spillover from the sectoral paradigm shift affected other policy sectors, which forced policy elites to experiment with religious policies that would complement the new economic paradigm. This experimentation fostered the growth of a civil society that could assume the social responsibilities cast off by the reforming state-owned enterprises. However, the experimentation also empowered distributional coalitions such as the Falungong, which threatened the party’s control. Policy elites thus implemented adaptations of religious policies formulated under the revolutionary paradigm. The study concludes that the current conflict between the Vatican and Beijing resembles an iterated prisoner’s dilemma and that the conflict will continue until Chinese policy elites realize that the failure of religious policy adaptations threaten the long-term goals of the techno-economic paradigm.