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Published in: Public Choice 3-4/2024

31-01-2024

The transfer of provincial officials and electricity transactions in China

Authors: Mian Yang, Ruofan He, Panbing Wan

Published in: Public Choice | Issue 3-4/2024

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Abstract

Administrative officials are often transferred during the course of their careers, yet little attention has been paid to how their transfer might affect energy transactions across regions. By employing data on the transfer of provincial leaders between provinces and inter-provincial electricity transactions in China, we examine the impact of local leaders’ transfer on electricity transactions and the underlying mechanisms. The findings show that the transfer of local leaders leads to an increase in inter-regional electricity transactions in the direction of the transfer. This effect disappears when the transferred leaders leave office. The boosts are more accessible when a leader’s previous and current jurisdictions are on the same regional grid, or at least adjacent to each other, or when the current jurisdiction embraces a heavier power load. Based on insights from political economy, these empirical findings can be attributed to the motivation of provincial leaders for career advancement and the absence of a fully competitive electricity market in China. Our study adds empirical evidence in support of the tournament theory of political promotion. It also provides novel insights into how developing countries might achieve a better allocation of their energy resources.

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Footnotes
1
They found that the median level of spatial misallocation of electricity in China was above 1 for each year between 1988 and 2017. In the article, spatial electricity allocation levels falling within the range of (0.8, 1.2) were considered reasonable, while levels below and above this range were considered under- and over-allocated.
 
2
On February 10, 2002, the State Council issued the ‘Electricity System Reform Program’ (Guo Fa [2002] No. 5). In March 2015, the Central Committee of the Communist Party of China and the State Council issued the ‘State Council promulgated Several Opinions on Further Deepening the Reform of the Electricity System’ (Zhongfa [2015] No. 9).
 
3
The specific formula is \({AsinShare}_{i,j,t}=ln(share+\sqrt{{share}^{2}+1})\). This transformation offers several advantages. Firstly, it eliminates the impact of extreme values of the variables on the results. Secondly, it prevents a loss of observation samples that take the value of 0 compared to taking the logarithm of the variables.
 
4
\({\theta }_{t}\) is a year fixed effect. The subscript P denotes the macroregion to which the leader’s previous jurisdiction i belongs, while the subscript C denotes the macroregion to which the leader’s current jurisdiction j belongs.
 
5
The National Development and Reform Commission has divided China into three major regions: the East, Central and West. These regions exhibit significant differences in terms of economic level, infrastructure, development direction and government goals. These differences could potentially result in varying effects of leader transfers on electricity transactions. Therefore, we have controlled for time specific trends in these three regions.
 
6
The specific model is \({AsinShare}_{i,j,t}={\beta }_{0}+{\beta }_{1}{AsinDistance}_{i,j}+{{\gamma }_{i}X}_{i,t}+{{r}_{j}X}_{j,t}+{\theta }_{t\times }{\eta }_{P,C}+{\alpha }_{t}+{\varepsilon }_{i,j,t}\), where \({AsinDistance}_{i,j}\) is the geographic distance of i—j provincial pairs and other variables are defined as in model (1).
 
7
The northern channel consists of thermal and wind power plants in Shanxi, Inner Mongolia, Ningxia, etc. These are mainly used to support Beijing, Tianjin and Hebei. Central channel: hydropower in Sichuan, Hubei and other parts of China supports China’s eastern region. Southern channel: hydropower in Yunnan and Guizhou, serving Guangdong, Guangxi and other provinces.
 
8
Source: ‘Interim Regulations for State Civil Servants’ adopted on August 14, 1993.
 
9
Source: In an article in the First Financial Daily titled Officials’ Promotion Roadmap, Zhang & Qin (2013) reported that an official in Hebei province stated that his or her promotion possibilities would be significantly increased if his or her jurisdiction could achieve higher GDP growth than other jurisdictions.
 
10
The representation of the central government varies across provinces with different population size. This representation is significantly and positively correlated with population size.
 
11
There are six regional power grids in China, namely the Northeast Power Grid, the North China Power Grid, the Central China Power Grid, the East China Power Grid, the Northwest Power Grid and the Southern Power Grid.
 
12
Based on the availability of data, this study covers the period from 2012 to 2017. From the China Procuratorial Yearbook, which is currently available only for 2017, we obtained the number of corruption and bribery cases opened yearly throughout provinces. From the China Statistical Yearbook, we obtained the number of public officials (in 10000 s) across provinces.
 
13
The ‘Opinions’ here are ‘Several Opinions on Further Deepening the Reform of the Electric Power System’ (Zhongfa [2015] No. 9), which marked the beginning of a new round of reforms of the Chinese electricity market.
 
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Metadata
Title
The transfer of provincial officials and electricity transactions in China
Authors
Mian Yang
Ruofan He
Panbing Wan
Publication date
31-01-2024
Publisher
Springer US
Published in
Public Choice / Issue 3-4/2024
Print ISSN: 0048-5829
Electronic ISSN: 1573-7101
DOI
https://doi.org/10.1007/s11127-023-01134-0

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