Development Discussion Papers Politics, Growth, and Inequality in Rural China: Does it Pay to Join the Party?

Economic reform is difficult to carry out because it often undercuts the status and economic advantage of the rank-and-file officials to whom authorities must turn to implement market-based changes. Drawing on new longitudinal data collected between 1991 and 1994 in a representative rural county in Northern China, we demonstrate that local officials have not in fact lost out. To the contrary, their incomes have risen and political rents have increased during a period when reforms accelerated. The data suggest that political rents have stemmed largely from control over and access to new wage jobs and collective land that allows high-value agricultural production. The benefits to joining the Communist Party are largely indirect and occur through increasing the probability of becoming an official with such access. This access functions as an implicit performance-based incentive contract that ties the household incomes of officials to increases in consumer demand and the provision of public goods. Political rents are for now tolerated by a population that is sharing fairly equitably in the fruits of growth, allowing implementation of this “win-win” reform process.