Political Connections and Trade Expansion: Evidence from Chinese Private Firms

This paper, by using a survey of Chinese private \u85rms in 2004, empirically studies the impacts of political connections (measured as the deputy to the Chinese Peoples Congress) on trade expansion. It is found that political connections lead to an increase of trade expansion. Meanwhile, the expansion into other administrative areas requires a high hierarchical level of political connections, i.e., at the correspond-ing administrative level or above. Furthermore, it is found that politi-cal connections a¤ect trade expansion by overcoming insecure property rights institutions and ine ¢ cient contracting institutions