Friends with Benefits: Patronage Networks and Distributive Politics in China

Abstract: Existing research on distributive politics mainly focuses on the influence of electoral competition between political parties, but less is known about non-electoral mechanisms of resource allocation inside a dominant party. This study examines how informal patron–client networks within the ruling Communist Party shape the distribution of intergovernmental transfers in China, a major one-party regime. Using a new dataset on city-level fiscal transfers and a novel method to infer informal political connections through past promotions, we show that provincial leaders allocate significantly more transfers to localities governed by officials who are part of their networks. This bias persists even when we use a specification that only exploits variations in connection caused by exogenous turnovers of higher level leadership. We evaluate two plausible motivations behind this bias: collective corruption and network-based policy coordination. We find that favoritism does not increase with any measure of individual- or regional-level corruption. However, consistent with the second mechanism, transfers yield better economic performance and a higher degree of policy alignment when given to clients rather than non-clients. These findings underscore the role of private networks as an important, albeit costly, tool of mobilization in one-party systems.