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Study Shows Political Connections Give Chinese Companies Preferential Access to Money

Bloomberg reported that researchers at the University of Navarra in Spain and the University of Manchester in the U.K. conducted a study of the Chinese companies that have connections to top-level Chinese Communist Party (CCP) officials. The researchers found that those with connections received more government subsidies that those without such connections.

Between 2012 and 2017, private firms that were listed on Chinese stock exchanges and that had board members who attended college alongside a member of the CCP Politburo, which has the 25 highest-ranking Chinese officials, received  an average of 16 percent more in subsidies relative to their sales when compared with similar companies without those ties. However, these “connected” companies did not have faster sales growth than the others, indicating that the special favors given to them were not the best use of China’s resources.

Source: Bloomberg, February 18, 2022