We test for the relative importance of guanxi (‘connections’) as a catalyst for entrepreneurship in urban China using survey data from five cities for the period 1996-2001. We find that guanxi with the Chinese Communist Party (CPC) is negatively correlated with the likelihood of being either...

Since the 1980s, the economic system in China has evolved into one that combines fiscal decentralization with political centralization. Local officials are successfully motivated to foster economic growth. One of the motivation and control mechanisms established in China's political and...