Leadership Rotations and the Convergence of Subnational Economic Policies in China: Evidence from Provincial Government Work Reports

This article examines the impact of China's subnational leadership rotations over the past two decades, with a focus on quantifying how such institutional arrangement has affected the country's political and economic integration. Taking advantage of the annual government work reports at the province level, which review the socioeconomic development in the last year and set economic targets for the coming year, I find that a shuffled provincial leader would choose similar economic policies across different provinces under his/her rule, and this has been driven mainly by convergence in which topics these reports cover, rather than by convergence in how the provincial leaders discuss a given policy issue. Nevertheless, such economic policy similarity would immediately disappear after the shuffled leader leaves office, thus implying that the convergence effect of provincial leadership rotations might not be permanent. One plausible explanation for these findings is that a leadership exchange indicates that a provincial leader is selected for further promotion in the future because of the success of the economic policies that person implemented in the origin province, so that shuffled leader would tend to choose similar economic policies in the destination province to maximize the chance of even higher promotions. I provide some suggestive empirical evidence in support of this explanation.