Chinese Politics Mini-Conference: The Political Economy of State-Business Relations

Session Submission Type: In-Person Created Panel

Part of Mini-Conference

• 2021 APSA Chinese Politics In-Person Mini-Conference

Session Description

This panel explores the changing relationship between local governments and firms before and after the start of the Xi Jinping administration. While the Xi administration has reduced local governments’ room for manoeuver, local political interests still shape and distort governance. The papers reveal how local politics systematically shape effective corporate tax rates, allocation of firm subsidies, local protectionism in the courts, and, finally, handling of public interest environmental litigation against local polluters. The papers that make up this panel apply rigorous analyses to an impressive array of datasets to explore the regulatory capacity of the local Chinese state in a rapidly changing political economy. Chen et al. employ panel data covering more than 700,000 firms to explain the counterintuitive finding that firms with more mobile capital pay higher effective tax rates, although that relationship has been moderated since the start of Xi Jinping’s anti-corruption campaign. Hou et al. combine firm-level and political appointment data to demonstrate that new provincial governors favor SOEs relative to private firms in the allocation of subsidies at the start of their terms, enhancing their own promotion prospects. Li et al. collect original litigation data for all publicly listed firms in China to assess the effect of recent court reforms, which reduced local protectionism; they show that local firms were less likely to win their cases but that enforcement of rulings against local firms was weaker. Liu et al. employ a dataset of city-level environmental investigation disclosures to measure the effect of new forms of public interest litigation. Litigation reduces disclosures in the following year, and those investigations disclosed tend to involve lower-profile cases. The authors conclude that local officials comply with policy but manipulate disclosure to avoid public monitoring.

Sub Unit

• Division 13: Politics of Communist and Former Communist Countries

Individual Presentations

• Capital Mobility & Taxation in Non-OECD Countries: Evidence from Chin - Ling Chen, Johns Hopkins University; Florian Hollenbach, Copenhagen Business School

• Local Leadership Turnover and Firm Subsidies in China - Yue Hou, University of Pennsylvania; Siyao Li, University of Pennsylvania

• The Authoritarian Rule of Law Through Centralization: Evidence from China - Yishuang Li, New York University; Zhenhuan Lei, New York University

• Resisting Public Monitoring in Autocracies: Evidence from China - Dongshu Liu, City University of Hong Kong

Chair

• Susan Whiting University of Washington

Discussants

• Iza Ding University of Pittsburgh

• Yuen Yuen Ang University of Michigan