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The Governor’s Gambit: Does government-business communication move private capital?

Author

Listed:
  • Shu, Shaowen
  • Pan, Yinghao
  • Liu, Hao
  • Zou, Jingxian

Abstract

Can government talk move private capital? We study this question using city-level private entrepreneur symposiums across 293 Chinese cities from 2009 to 2021. Exploiting variation in symposium timing, we find that hosting a symposium increases local private firm investment by 0.24 percentage points—a 5 percent rise relative to the mean. The effect operates through four channels: improved entrepreneurial expectations, expanded credit access, accelerated accounts receivable collection, and reduced transaction costs. Crucially, communication effectiveness depends on follow-through: cities enacting concrete post-symposium policies generate significant investment responses, while those offering only rhetoric see no measurable effect. Effects are strongest during economic downturns, in less-developed cities, and where the private sector is weakest. These findings demonstrate that government communication can coordinate private investment when backed by credible commitment.

Suggested Citation

  • Shu, Shaowen & Pan, Yinghao & Liu, Hao & Zou, Jingxian, 2026. "The Governor’s Gambit: Does government-business communication move private capital?," European Journal of Political Economy, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:poleco:v:93:y:2026:i:c:s0176268026000108
    DOI: 10.1016/j.ejpoleco.2026.102815
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