Media Briefings

The Economic Benefits Of Being A Member Of The Chinese Communist Party

  • Published Date: October 2007


Membership of the Chinese Communist Party seems to have clear economic benefits
for individuals. But according to research by Hongbin Li, Pak Wai Liu, Junsen Zhang
and Ning Ma, party members fare well not because of their special political status per
se, but because of the superior ability that made them party members in the first place.
Their study, published in the October 2007 issue of the Economic Journal, suggests
that the fact that party members are China's elite in terms of their abilities as well as
their affiliation may be a key reason for the success of the party and of China's reforms.
There is a growing interest among economists in measuring the value of political status
and connections. In the context of China, social scientists have attempted to measure
the returns to being a member of the Chinese Communist Party.
Many find that party members have higher earnings than non-party members, and thus
claim that party membership has a positive value in terms of income in China. But these
estimates are subject to bias, because party members may have higher earnings due to
greater ability or a more advantageous family background.
This study empirically measures the value of Chinese Communist Party membership for
an individual's earnings. The main innovation is to control for the effects of unobserved
ability and family background by using unique data on twins collected in urban China.
As twins are genetically similar and have the same family background, they should
have similar ability or family background. Thus, by contrasting the earnings of twins with
and without party membership, it is possible to be more confident that any correlation
observed between party membership and earnings is not due to a correlation between
party membership and an individual's ability or family background.
The results using the sample of twins are in stark contrast to results using non-twin
samples. Comparing the earnings of a party member with a non-party member
randomly selected from the population, party members earn 10% more than non-party
members. But comparing the earnings of a pair of twins, one of whom is a party
member and the other is not, the earnings premium becomes zero.
This suggests that the party premium observed by previous studies is due to the high
ability and advantageous family background of party members. Party members fare
well not because of their special political status per se, but because of the superior
ability that made them party members in the first place. The hypothesis that party
members are of higher ability than the average Chinese could be well grounded, given
the party’s strict and merit-based mechanism for selecting members.
The survival of communism in China depends on the party, and the survival of the party
depends on the quality of its members. The high quality of party members could explain
why they have been able to come up with and implement market-based reforms
effectively, and why they are able to adapt constantly to the new environment but keep
the communist ideology alive.
In this sense, the fact that its members are China's elite may be an important reason for
the success of the party and of China's reforms. These elites have recently met in
Beijing for the Seventeenth National Congress of the Communist Party of China to set
another milestone for the country’s reforms.
ENDS
Notes for editors: ‘Economic Returns to Communist Party Membership: Evidence from
Urban Chinese Twins by Hongbin Li, Pak Wai Liu, Junsen Zhang and Ning Ma is
published in the October 2007 issue of the Economic Journal.
Hongbin Li is at the Chinese University of Hong Kong and Tsinghua University. Pak
Wai Liu and Junsen Zhang are at the Chinese University of Hong Kong. Ning Ma is at
Johns Hopkins University.
For further information: contact Hongbin Li on +852-2609-8185 (email:
lhongbin@cuhk.edu.hk; website: http://ihome.cuhk.edu.hk/~b104879/); Junsen Zhang
on +852-2609-8186 (email: jszhang@cuhk.edu.hk); or Romesh Vaitilingam on 07768-
661095 (email: romesh@compuserve.com).