The transfer of provincial officials and electricity transactions in China

Administrative officials are often transferred during the course of their careers, yet little attention has been paid to how their transfer might affect energy transactions across regions. By employing data on the transfer of provincial leaders between provinces and inter-provincial electricity transactions in China, we examine the impact of local leaders’ transfer on electricity transactions and the underlying mechanisms. The findings show that the transfer of local leaders leads to an increase in inter-regional electricity transactions in the direction of the transfer. This effect disappears when the transferred leaders leave office. The boosts are more accessible when a leader’s previous and current jurisdictions are on the same regional grid, or at least adjacent to each other, or when the current jurisdiction embraces a heavier power load. Based on insights from political economy, these empirical findings can be attributed to the motivation of provincial leaders for career advancement and the absence of a fully competitive electricity market in China. Our study adds empirical evidence in support of the tournament theory of political promotion. It also provides novel insights into how developing countries might achieve a better allocation of their energy resources.