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higher position via the Communist Party’s internal promotion system,
or to seek private rents in a decentralized system. A number of studies
presented at the symposium empirically investigate the incentives of
local leaders and their consequential behaviors.
Prof. Yuen Yuen Ang (University of Michigan) used qualitative
and quantitative data on street-level bureaucrats to analyze the
paradoxical behavior of Chinese local officials, who aggressively
pursue economic growth but at the same time impose heavy burdens
on local firms. She argued that lower level officials in China face a
dual incentive scheme in which they are encouraged to seek local
development for promotion on the one hand, but also to extract
petty rents as “supplementary public compensation” on the other.
Prof. James Kung (HKUST) presented evidence that county leaders
who raise more land revenues are more likely to be promoted,
suggesting that discretionary opportunities to mobilize resources
through land sales do not necessarily undermine promotion
incentives but rather local leaders use such revenue to maximize their
chances of being promoted, for instance by investing in highly visible
infrastructure projects. These findings reinforce the fact that China’s
promotion system provides strong incentives for local leaders.
Prof. Shuo Chen (Fudan University) linked the career incentive of
city officials to the pace of urbanization in China in his presentation
on “The political economy of Chinese urbanization.” Analyzing data
on personnel changes at the city level, he showed that the career
incentives of officials are an important driving force for urbanization,
leading to the physical expansion of cities but without significant
increases in the urban population or urban residents’ income.
Competition for promotion also incentivizes local officials to extract
fiscal resources. Prof. Pierre Landry (University of Pittsburgh)
argued that inter-jurisdictional competition in authoritarian regimes
incentivizes greater fiscal extraction as promotion-seeking local
politicians desire to signal loyalty and competence. Excessive taxation
is constrained by the risks of political instability. Consistent with
theory, in most provinces there is an inverse U-shaped relationship
between the number of county-level jurisdictions within a prefecture/
municipality and the amount of fiscal extraction.
Prof. Monica Martinez-Bravos (Center for Monetary and Financial
Studies, Spain) also investigated the incentives of local Chinese
officials, focusing on a different institutional practice — village leader
elections in rural Chinese villages. Analyzing panel data on rural
households and detailed village election histories, she showed
that elections significantly increase public goods expenditures and
redistribution of income within villages.
Prof. Li-an Zhou (Peking University) studied the relationship between
the selection of leaders and economic performance from another
perspective, investigating how political turnover could impact the
local economy. He presented evidence that at prefectural level,
leadership turnover negatively affects economic growth, FDI,
investment and housing construction projects, reminding us of
the economic costs of too frequent leadership changes.
Prof. Daniel Treisman (University of California, Los Angeles)
tackled the issue of corruption in a presentation on
“Embezzlement versus Bribery”. He distinguished two types of
corruption: embezzlement and bribery, and argued that China’s
political leaders deliberately tolerate small-scale embezzlement to
avoid bribery extraction, because bribery is more economically
distortionary and costly for development.
A panel discussion featuring comments by Prof. Bardhan,
Prof. Park, Prof. Treisman and audience members concluded
the symposium. People shared their thoughts on the lessons
that could be drawn from the Symposium. Prof. Treisman
suggested that aside from institutional factors, other fundamental
advantages might better explain China’s incredible growth,
for example the massive transfer of labor and resources from
agriculture to industry during the marketization and globalization
process, which provided great opportunities for China to become
the “world factory”. Prof. Bardhan expressed concerns about
corruption, local political capture, and state capacity in solving
conflicts. In his opinion, researchers should pay attention to
the social costs, not just the economic costs, of corruption/
bribery, and its influence on social stability. He also stressed
the importance of environmental challenges, which require
coordinated actions among different stakeholders. Prof. Park
suggested that researchers studying China should be forward-
looking in asking research questions and bringing forth solutions,
because the institutional challenges facing China today are quite
different from the past.
Prof. Pranab Bardhan
