How Natural Resources Affect Corruption in China

This study explores the effect of natural resource production on the corruption of local public officials in China. We introduce a novel, micro-level data set on the production of three major fuel resources in China—oil, natural gas, and coal (2000–2005)—and analyze alongside county-level statistics and individual-level survey data. Our analyses show that the effects of resource extraction on corruption vary substantially depending on the type of natural resources exploited. We find that coal production alone is robustly associated with corruption among local public officials in county governments. Moreover, citizens in coal-producing areas are more likely to perceive government officials as corrupt. We posit that the coal industry’s regulation-heavy and labor-intensive production process along with smaller firm sizes are the primary sources of this effect. Our findings suggest effective tackling of resource-related corruption requires careful attention to the type of resources and their link to local political economy.