Crony capitalism, the party-state, and the political boundaries of corruption

Weijia Li, Gérard Roland, Yang Xie

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1 Citation (Scopus)

Abstract

We build a model that puts together crony capitalism, the hierarchy of the Chinese communist party-state, and the decision-making process inside the Party Center. We show that inefficient economic institutions create local corruption that raises realized productivity, while generating rents that flow along the party-state hierarchy up to the provincial level, threatening the Center's control in potential crises. Although both stronger crisis control and higher economic performance help the Center's goal to stay in power, we show that given a general fat-tailed risk of crisis, the Center will maximize crisis control at the expense of the economy when choosing its tolerance of local corruption. Power structure and corruption within the Center and reciprocal accountability between central and provincial leaders are also analyzed. Our analysis suggests conditions under which China's communist regime will or will not deal with the existential threat presented by corruption.

Original languageEnglish
Pages (from-to)652-667
Number of pages16
JournalJournal of Comparative Economics
Volume50
Issue number3
DOIs
Publication statusPublished - Sept 2022

Keywords

  • Autocracy
  • Chinese Communist Party
  • Corruption control
  • Reciprocal accountability
  • State apparatus

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