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The Political Economy Consequences of China's Export Slowdown

Filipe Campante (), Davin Chor () and Bingjing Li

No 25925, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how adverse economic shocks influence political outcomes in authoritarian regimes in strong states, by examining the 2013-2015 export slowdown in China. We exploit detailed customs data and the variation they reveal about Chinese prefectures’ underlying exposure to the global trade slowdown, in order to implement a shift-share instrumental variables strategy. Prefectures that experienced a more severe export slowdown witnessed a significant increase in incidents of labor strikes. This was accompanied by a heightened emphasis in such prefectures on upholding domestic stability, as evidenced from: (i) textual analysis measures we constructed from official annual work reports using machine-learning algorithms; and (ii) data we gathered on local fiscal expenditures channelled towards public security uses and social spending. The central government was subsequently more likely to replace the party secretary in prefectures that saw a high level of “excess strikes”, above what could be predicted from the observed export slowdown, suggesting that local leaders were held to account on yardsticks related to political stability.

JEL-codes: D73 D74 F10 F14 F16 H10 J52 P26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-big, nep-cna, nep-int, nep-pol and nep-tra
Date: 2019-06
Note: ITI POL
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