The Political Economy Consequences of China's Export Slowdown / Filipe R. Campante, Davin Chor, Bingjing Li.

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Campante, Filipe R

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w25925.Publication details: Cambridge, Mass. National Bureau of Economic Research 2019.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We study how adverse economic shocks influence political outcomes in authoritarian regimes in strong states, by examining the 2013-2015 export slowdown in China. We exploit detailed customs data and the variation they reveal about Chinese prefectures' underlying exposure to the global trade slowdown, in order to implement a shift-share instrumental variables strategy. Prefectures that experienced a more severe export slowdown witnessed a significant increase in incidents of labor strikes. This was accompanied by a heightened emphasis in such prefectures on upholding domestic stability, as evidenced from: (i) textual analysis measures we constructed from official annual work reports using machine-learning algorithms; and (ii) data we gathered on local fiscal expenditures channelled towards public security uses and social spending. The central government was subsequently more likely to replace the party secretary in prefectures that saw a high level of "excess strikes", above what could be predicted from the observed export slowdown, suggesting that local leaders were held to account on yardsticks related to political stability.

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Previous	nber w25922 Employee Costs of Corporate Bankruptcy /	nber w25923 Good Dispersion, Bad Dispersion /	nber w25924 Why Unions Survive: Understanding How Unions Overcome The Free-Rider Problem /	nber w25925 The Political Economy Consequences of China's Export Slowdown /	nber w25926 Should We Trust Clustered Standard Errors? A Comparison with Randomization-Based Methods /	nber w25927 Does Trade Reform Promote Economic Growth? A Review of Recent Evidence /	nber w25928 Scientific Education and Innovation: From Technical Diplomas to University STEM Degrees /	Next

June 2019.

We study how adverse economic shocks influence political outcomes in authoritarian regimes in strong states, by examining the 2013-2015 export slowdown in China. We exploit detailed customs data and the variation they reveal about Chinese prefectures' underlying exposure to the global trade slowdown, in order to implement a shift-share instrumental variables strategy. Prefectures that experienced a more severe export slowdown witnessed a significant increase in incidents of labor strikes. This was accompanied by a heightened emphasis in such prefectures on upholding domestic stability, as evidenced from: (i) textual analysis measures we constructed from official annual work reports using machine-learning algorithms; and (ii) data we gathered on local fiscal expenditures channelled towards public security uses and social spending. The central government was subsequently more likely to replace the party secretary in prefectures that saw a high level of "excess strikes", above what could be predicted from the observed export slowdown, suggesting that local leaders were held to account on yardsticks related to political stability.