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Anti-Corruption Campaign and the Resurgence of the SOEs in China:Evidence from the Real Estate Sector

Hanming Fang (), Jing Wu, Rongjie Zhang and Li-An Zhou
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Jing Wu: Tsinghua University
Rongjie Zhang: Tsinghua University

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We advance a novel hypothesis that China’s recent anti-corruption campaign may have contributed to the resurgence of the state-owned enterprises (SOEs) in China as an unintended consequence. Weexplore the nexus between the anti-corruption campaign and the SOE resurgence by presenting supporting evidence from the Chinese real estate sector, which is notorious for pervasive rentseeking and corruption. We use a unique data set of land parcel transactions merged with firm-level registration information and a difference-in-differences empirical design to show that, relative to the industrial land parcels which serve as the control, the fraction of residential land parcels purchased by SOEs increased significantly relative to that purchased by private developers after the anticorruption campaign. This finding is robust to a set of alternative specifications. We interpret the findings through the lens of a model where we show, since selling land to private developers carries the stereotype that the city official may have received bribes, even the “clean” local officials will become more willing to award land to SOEs despite the presence of more efficient competing private developers. We find evidence consistent with the model predictions.

Keywords: Anti-Corruption Campaign; Land Market; State-Owned Enterprises; State Capitalism (search for similar items in EconPapers)
JEL-codes: D73 R31 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2022-08-05
New Economics Papers: this item is included in nep-cna and nep-ure
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