Plunging into the Sea: Ideological Change, Institutional Environments and Private Entrepreneurship in China

46 Pages Posted: 21 Jul 2018

See all articles by Jin Yang

Jin Yang

Southwestern University of Finance and Economics (SWUFE)

Jian Huang

Southwestern University of Finance and Economics (SWUFE)

Yanhua Deng

Department of Sociology, Nanjing Universtiy

Massimo Bordignon

Universita Cattolica; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: June 04, 2018

Abstract

This paper examines the integration of Chinese Communist Party membership and private entrepreneurship in China after 2002, when the Party revised its constitution and officially removed ideological discrimination against private entrepreneurs. Using six waves of a nationwide survey of privately owned enterprises in China from 1997 to 2008, we find that the constitutional change led to an exodus of Party members, and particularly senior officials, into the private sector. On the contrary, very few private entrepreneurs were admitted to the Party. The exodus of Party members was more prominent in regions with weaker market-supporting institutions. After the reform, Party affiliation is also shown to provide considerable private benefits to entrepreneurs, in the form of easier access to loans from state owned banks, reduced government expropriation, improved firms’ performance. These political rents were larger in regions with weaker market-supporting institutions.

Keywords: party membership, private entrepreneur, ideology, market institutions, political rents.

JEL Classification: H190

Suggested Citation

Yang, Jin and Huang, Jian and Deng, Yanhua and Bordignon, Massimo, Plunging into the Sea: Ideological Change, Institutional Environments and Private Entrepreneurship in China (June 04, 2018). CESifo Working Paper Series No. 7077, Available at SSRN: https://ssrn.com/abstract=3212570

Jin Yang

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Jian Huang

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Yanhua Deng

Department of Sociology, Nanjing Universtiy ( email )

No. 163, Xianlin Avenue, Qixia
Nanjing, Jiangsu 210023
China

Massimo Bordignon (Contact Author)

Universita Cattolica ( email )

20123 Milano
Italy
+39-2-5836-3300/1 (Phone)
+39-2-5836-3302 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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