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
- Export Spillovers of Target-Driven Overproduction in China
- The Political Economy of Zero-COVID: Evidence from County-Level Lockdown Implementation