Research
Job Market Paper
Growth at the Margin: Political Incentives and Firm Behavior in China
Sole author, September 2025
Abstract: This paper examines how China’s annual GDP growth targets—an essential feature of its economic governance—shape incentives for city leaders and influence firm-level output and resource allocation. Using survival models, bunching analysis, and a threshold-based strategy, I find that a one-unit increase in a city leader’s performance score—defined as the gap between actual and target GDP growth—raises the probability of promotion by 9–10%. The analysis also reveals a significant clustering of performance scores just above the growth threshold, with observations at that margin occurring 1.5 to 2 times more frequently than what would be expected in the absence of such incentives. At the firm level, politically driven pressures produce positive discontinuities in GDP-related indicators, such as inventory accumulation, sales and output. This effect is more pronounced when cities are close to meeting their annual targets or face heightened pressure due to underperformance in the earlier quarters of the year. Using detailed firm-level data on energy consumption and pollution emissions as proxies for real output, the evidence suggests that much of the observed firm-level discontinuity reflects actual economic activity, not just statistical manipulation. These findings suggest that growth incentives contribute to changes in firm-level output and resource allocation through politically motivated production responses.
Latest version
Sole author, September 2025
Abstract: This paper examines how China’s annual GDP growth targets—an essential feature of its economic governance—shape incentives for city leaders and influence firm-level output and resource allocation. Using survival models, bunching analysis, and a threshold-based strategy, I find that a one-unit increase in a city leader’s performance score—defined as the gap between actual and target GDP growth—raises the probability of promotion by 9–10%. The analysis also reveals a significant clustering of performance scores just above the growth threshold, with observations at that margin occurring 1.5 to 2 times more frequently than what would be expected in the absence of such incentives. At the firm level, politically driven pressures produce positive discontinuities in GDP-related indicators, such as inventory accumulation, sales and output. This effect is more pronounced when cities are close to meeting their annual targets or face heightened pressure due to underperformance in the earlier quarters of the year. Using detailed firm-level data on energy consumption and pollution emissions as proxies for real output, the evidence suggests that much of the observed firm-level discontinuity reflects actual economic activity, not just statistical manipulation. These findings suggest that growth incentives contribute to changes in firm-level output and resource allocation through politically motivated production responses.
Latest version
Publications
Digital Revitalization or Useless Effort: The Impact of a Government-initiated E-commerce Platform on Local Specialty Sales
With Jan Victor Dee, Xintong Han, and Shaojia Wang
Journal of Development Economics, Forthcoming
Abstract: We examine how a government-initiated e-commerce platform (GEP) affects sales of a local specialty in China’s Pu’er tea market. Using a unique dataset from field experiments and surveys of 983 farmers, we examine changes in online and offline sales over time. We employ two-way fixed effects (TWFE) models to identify the causal impact of GEP access. The results reveal significant substitution effects: access to the GEP increases online sales by 16.649% and decreases offline sales by 15.549%, indicating an overall shift from offline to online sales. On the extensive margin, households that previously sold only offline become more likely to sell online. On the intensive margin, adopters expand their online channels and offer a wider range of tea qualities. The mediation analysis suggests that the increase in online sales channels and product variety accounts for the impact of GEP access on the shift to online transactions.
WP version | Online appendix
With Jan Victor Dee, Xintong Han, and Shaojia Wang
Journal of Development Economics, Forthcoming
Abstract: We examine how a government-initiated e-commerce platform (GEP) affects sales of a local specialty in China’s Pu’er tea market. Using a unique dataset from field experiments and surveys of 983 farmers, we examine changes in online and offline sales over time. We employ two-way fixed effects (TWFE) models to identify the causal impact of GEP access. The results reveal significant substitution effects: access to the GEP increases online sales by 16.649% and decreases offline sales by 15.549%, indicating an overall shift from offline to online sales. On the extensive margin, households that previously sold only offline become more likely to sell online. On the intensive margin, adopters expand their online channels and offer a wider range of tea qualities. The mediation analysis suggests that the increase in online sales channels and product variety accounts for the impact of GEP access on the shift to online transactions.
WP version | Online appendix
Working Papers
Market Access and Land Finance: The Growth of China's High-Speed Rail Expansion
Sole author
Abstract: This project investigates the interaction between China’s infrastructure expansion, local fiscal incentives, and land markets. To meet short-term growth targets, local governments rely heavily on land-based financing—leasing state-owned land to generate budgetary revenues. I examine whether the rapid expansion of high-speed rail (HSR)—a hallmark of China’s infrastructure-led growth—affects local land markets by improving market access and increasing land values. Using a newly compiled dataset of over 1.7 million land transactions from 2000–2023, I construct GDP-weighted market access indices at the county level, accounting for the minimum travel time across four transport modes (HSR, conventional rail, motorways, and waterways). Preliminary results show that increases in market access are strongly associated with higher unit prices of land transfers, suggesting that HSR expansion indirectly enhances local governments’ fiscal capacity. In further analysis, I exploit the geographic coordinates of land parcels and HSR stations to measure spatial proximity directly and quantify the local effects of station openings on land prices. The results show that land transfer prices rise significantly with shorter distances to HSR stations, and this effect holds across different land-use types, including residential development and commercial parcels. This setting provides a new lens to assess whether China’s infrastructure investment not only reduces trade costs but also operates as an instrument for political incentives, by boosting land revenues and facilitating the achievement of growth targets.
Sole author
Abstract: This project investigates the interaction between China’s infrastructure expansion, local fiscal incentives, and land markets. To meet short-term growth targets, local governments rely heavily on land-based financing—leasing state-owned land to generate budgetary revenues. I examine whether the rapid expansion of high-speed rail (HSR)—a hallmark of China’s infrastructure-led growth—affects local land markets by improving market access and increasing land values. Using a newly compiled dataset of over 1.7 million land transactions from 2000–2023, I construct GDP-weighted market access indices at the county level, accounting for the minimum travel time across four transport modes (HSR, conventional rail, motorways, and waterways). Preliminary results show that increases in market access are strongly associated with higher unit prices of land transfers, suggesting that HSR expansion indirectly enhances local governments’ fiscal capacity. In further analysis, I exploit the geographic coordinates of land parcels and HSR stations to measure spatial proximity directly and quantify the local effects of station openings on land prices. The results show that land transfer prices rise significantly with shorter distances to HSR stations, and this effect holds across different land-use types, including residential development and commercial parcels. This setting provides a new lens to assess whether China’s infrastructure investment not only reduces trade costs but also operates as an instrument for political incentives, by boosting land revenues and facilitating the achievement of growth targets.
Work in Progress
- Political Incentives and the Persistence of China’s Zero-COVID Policy
Abstract: This project extends the concept of target-based governance to China’s pandemic response. I hypothesize that the persistence and intensity of the Zero-COVID strategy were shaped by bureaucratic promotion incentives, with local officials interpreting epidemic-control metrics as political targets analogous to GDP benchmarks. Using county-level risk bulletins, government response indexes, and promotion records for 2,800 officials, I test whether politically ambitious leaders implemented stricter or longer-lasting lockdowns—especially near politically sensitive events such as the 20th Party Congress. Historically, I situate Zero-COVID within China’s long tradition of campaign-style governance and target-driven population-management policies. The project contributes a unified institutional framework that explains why certain public-health interventions evolve into rigid political mandates and how administrative hierarchies shape crisis policy responses. - Export Spillovers of Target-Driven Overproduction in China
Abstract: This project investigates whether politically induced overproduction in China translates into measurable export spillovers. Existing evidence shows that GDP growth targets induce local officials to pressure firms into boosting output during periods of heightened political scrutiny. I examine whether this excess production is subsequently redirected to foreign markets. Using matched Chinese Customs and Industrial Enterprise data, I test whether cities exhibiting stronger politically driven output surges experience disproportionate increases in export volumes, product-scope expansions, or shifts toward more competitive foreign destinations. I then trace which countries absorb these politically generated surpluses and evaluate whether such inflows affect partner-country production structures or price dynamics. This project provides a political-economy framework for understanding how internal governance incentives can propagate beyond national borders through trade channels, shaping global market outcomes. - An Institutional Political Economy of China’s Electric Vehicle Industrial Policy
Abstract: This project analyzes China’s electric vehicle (EV) sector as an institutional experiment in state-led industrial transformation. Despite massive subsidies and strong central–local incentive alignment, EV sales show signs of softening, raising questions about the sustainability of policy-driven growth. Using firm-level industrial data, subsidy records, and market outcomes, I examine which types of firms benefit most from political prioritization and how these incentives shape innovation, pricing strategies, and labor conditions. The project interprets the EV boom through the institutional and historical evolution of China’s industrial planning system—characterized by policy campaigns, fiscal incentives, and political signaling. By linking micro-firm behavior to broader governance structures, the project aims to understand when state-driven industrial acceleration can succeed and when political imperatives may outpace market fundamentals, generating long-run risks for technological upgrading and industrial policy design.