From Political Power to Personal Wealth: Privatization, Elite Opportunity, and

Social Stratification in Post-Reform China

ABSTRACT

The impact of market transition on the changing order of social stratification in post-socialist regimes has been a heated research topic in past decades. However, the debate has yielded no concrete conclusions, due in part to the lack of substantive institutional analysis. In this article, we aim to provide new answers to this age-old question by specifically examining how the privatization of China’s state-owned enterprises has created economic opportunities for the political elite. Based on firm-level data from a national representative survey on Chinese private enterprises and their owners, we show that the political elite in some regions successfully converted their control power into personal wealth by acquiring privatized firms. The extent to which they could exploit such opportunities was contingent on how the privatization process was structured and regulated locally. Auxiliary analysis reveals important structural inequality among China’s new managerial class, with those former nomenklatura still enjoying significantly better political connections and higher status than other private entrepreneurs.

Keywords: transition economies, privatization, political elites, economic reform, stratification, China

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