Political Connections of Chinese Firms

Academics study various measures of political connections, but mostly for robustness checks and endogeneity tests. Little attention has been given to whether these measures differ meaningfully. I argue that state–business relations adapt to changing political environments, and the forms of connections change. Studying Party branches in firms and Party-building adopted in corporate charters, I highlight three results. First, private firms are increasingly connected through Party branches and Party-building. Second, these forms of connections have increasingly dominated strategic industries. Third, many firms have become less reliant on lobbying. This study has implications for cronyism, state capitalism, Party-state capitalism, and Chinese politics.