Infrastructure Spending in China Increases Trust in Local Government

Following the 2008/9 financial crisis, China instituted a 4 trillion RMB stimulus package that was spent mostly on infrastructure, with a particular impact at local level. The goal was to sustain economic growth and preserve social stability. We use the Asian Barometer surveys from shortly before and after the stimulus to examine its impact on public trust in government, and find a reversal of a previous downward trend and a substantial increase in trust in local government post stimulus. We consider a number of alternative explanations for this increase in trust, and conclude that the stimulus package is the most convincing explanation. Both perceptions of corruption and experience of corruption increased over the stimulus period. Given the strong negative correlation between corruption and trust, this implies that trust would have increased even further if the level of corruption had remained the same. JEL Classification: E62, H41, H54, I3, O53, P25, R5