The political economy of COVID-19 in China

This research examines the ramifications of the COVID-19 pandemic on Chinese economy by analyzing the divergent epidemic prevention policies adopted by local governments. We find that the emergence of COVID-19 outbreak cases correlates with a 0.95% reduction of quarterly municipal GDP growth. However, when the municipal party secretary has an informal work tie with the provincial party secretary, local GDP growth were much more resilient. Based on microlevel data, we observe that municipal party secretaries with informal upper-level work ties tended to adopt more flexible anti-contagion policy measures. This flexibility was due to more political protection from the upper-level governments. The protection was particularly significant if the incumbent provincial party secretaries shared work ties with the central leadership. Our research underscores the interplay of informal political networks in shaping localized economic responses to COVID.