Abstract: This study uses data on Chinese privately-owned enterprises (POEs) to analyze the effects of firms’ market capabilities on their adoption of political strategies. I argue that firms with greater market capabilities (i.e., the ability to succeed in market competition) will have a higher propensity to use political strategies to reduce the risks of expropriation by public and private entities. These hazards are created by a lack of market-supporting institutions and constraints on government power, which are common in emerging economies such as China. My argument contrasts with prior studies conducted in developed countries, as previous studies suggest that firms with lower market capabilities more actively pursue political strategies in order to obtain government intervention and insulation from competitive forces. Empirical analyses provide evidence that Chinese POEs with stronger market capabilities (as represented by greater efficiency, R&D intensity and marketing intensity) tend to more-actively pursue political strategies. This suggests that hazard-reducing political strategies are important in the Chinese private sector and that the benefits of political strategies depend on firms’ market capabilities as well as the quality of the institutional environment.