PHYS.ORG: Businesses benefiting from political connections harm China's economic growth
Press/Media: Expert comment
Release date: 21/4/2022
Businesses benefiting from political connections harm China's economic growth
Researchers from The University of Manchester and University of Navarra have examined the value of politically connected firm directors to the Chinese elite, in terms of getting preferential access to resources.
The study found that being connected to the political elite in China brings advantages to firms, despite the launch of the Anti-Corruption Campaign (ACC) by president Xi Jinping in 2012. According to the paper, recently published in the Journal of Institutional Economics, private firms benefit from higher subsidies if at least one director in the boardroom has ties with the ruling Communist Party's Politburo. State-owned enterprises (SOE's) that have at least one connected director also enjoy privileges, such as paying lower interest rates.