Economic inequalities in contemporary rural China: How does political capital matter?

Abstract

To assess how the transition from state socialism to a market economy has impacted the social stratification order in China, some prior studies have debated whether the economic privileges of the political redistributors have declined relative to the emerging market elites, while others have examined the coevolution between the two in urban institutional contexts. This study provides new insights into how political capital influences economic inequalities in contemporary rural China by revisiting informal social institutions. Drawing upon a unique nationally representative household survey and using surname sharing with the village cadres to infer shared lineage membership, we find that lineage-based political ties help rural Chinese households to materialize income as well as asset advantages over fellow villagers bereft of such ties. Furthermore, the economic privileges of political connections are larger in villages with lineage groups than those without, and larger for villages of more frequent kin interactions than those of less frequent kin interactions. Our results extend prior findings on the coevolution between political and market elites by going beyond formal institutions and examining grassroots-level evidence in contemporary rural communities.