When the Market Fails to Serve Politics: De-privatization of Urban Buses for Officials’ Career Advancement in China

Abstract: Why do Chinese city governments take over private bus firms, which have successfully provided local transportation at low cost for more than thirty years? This is particularly puzzling considering how private bus services are considered more efficient, and how state provision of bus service aggravated the dire fiscal situation of Chinese local governments, going against the central government’s instruction for more private provision of public transportation. Drawing from in-depth interviews and a survival analysis on an original dataset of 233 cities, I provide a novel explanation for de-privatization in an authoritarian context. De-privatization of the bus sector is primarily a political measure whereby local officials remove resisting private bus firms when launching unsustainable projects in the sector. Subject to an ineffective cadre evaluation system, local officials seek other opportunities to signal capability to the upper level government. One popular strategy is to launch “high-visibility projects”—infrastructure projects that boast scale and looks that signal responsiveness to national development initiatives. To avoid blame for wasteful spending, local officials ask private firms to pay for these projects. Because these career-driven, often unsustainable projects cannot easily bring private firms returns, state-business relation deteriorates as a result, and sometimes ends up with de-privatization. This paper sheds light on the ongoing de-privatization of multiple other public service sectors across Chinese cities, including water, public infrastructure, and wastewater treatment.