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How does the Chinese communist party embrace the private sector?

Author

Listed:
  • Jiang, Kun
  • Song, Frank M.
  • Zhou, Peng

Abstract

The expansion of private firms presents new dynamics for the leadership of the Chinese Communist Party (CCP) in the private sector. Utilizing data from 17,681 private firms spanning from 2006 to 2016, this study examines how the CCP reinforces its presence in the private sector by the extension of grassroots party branches into private firms. Our findings suggest that private firms with in-house party branches receive considerable financial support without facing increased government expropriation, which enhances the appeal of such branches to entrepreneurs. Furthermore, the presence of party branches has a greater impact in regions where the private sector plays a larger role and entrepreneurship is flourishing. We also find that in-house party branches tend to steer private firms to investments that generate higher social returns, potentially diverting resources away from their ongoing business activities. Such resource reallocation enhances the performance of private firms facing financing constraints.

Suggested Citation

  • Jiang, Kun & Song, Frank M. & Zhou, Peng, 2026. "How does the Chinese communist party embrace the private sector?," Journal of Comparative Economics, Elsevier, vol. 54(1), pages 229-247.
    • Handle: RePEc:eee:jcecon:v:54:y:2026:i:1:p:229-247
    DOI: 10.1016/j.jce.2025.10.002
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    Keywords

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    JEL classification:

    • H0 - Public Economics - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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