Events

Prof. Hanming Fang
JOSEPH M. COHEN TERM PROFESSOR OF ECONOMICS
University of Pennsylvania

We advance a novel hypothesis that China’s recent anti-corruption campaign may have contributed
to the recent resurgence of the state-owned enterprises (SOEs) in China as an unintended
consequence. We explore 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 rent-seeking 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 anti-corruption 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.