Factional politics and foreign direct investment in China

This article uses quantitative analysis to discuss the effects of the Chinese Communist Party's factional politics on the regional distribution of foreign direct investment inflows from 1993 to 2017. Empirical evidence shows that provincial leaders' personal connections with the CCP's incumbent general secretary had positive and statistically significant effects on the annual growth rate of provincial foreign direct investment inflows. These effects were more salient in inland provinces and during Xi era. These findings challenge the conventional wisdom about the evolution of institutions under the leadership of the Chinese Communist Party and demonstrate the importance of informal politics in promoting China's economic reform and prosperity.