Business Environment and Dual-Track Private Sector Development: China's Experience in Two Crucial Decades

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Political Connection and Disconnection: Still a Success Factor for Chinese Entrepreneurs

“…Using data on 2,324 private enterprises from a national survey 2 years later, Li et al (2008) show that ventures led by a party member (95% of whom were party members at the time the venture was founded) enjoy more access to bank and government loans, and higher business success measured by returns on assets and equity. Using data on private enterprises from multiple national surveys through 2012, Long et al (2019) report continuing higher returns on equity for ventures led by party members. In sum, there is scattered evidence relying on a range of different dependent variables and a whole range of signals of “political connection” suggesting the utility of political connections in China.…”