From Political Power to Personal Wealth: Privatization, Elite Opportunity, and Social Stratification in Post-Reform China

HKUST IEMS Working Papers No. 2017-45


Duoduo Xu, Xiaogang Wu

The impact of market transition on the changing order of social stratification in postsocialist regimes has been a highly prominent topic in sociology in recent 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 economic opportunities available to former political elites have been shaped by the process of privatization. Based on firmlevel data from a national representative survey on Chinese private enterprises, we show that nomenclatures in some regions successfully converted their political power into personal wealth by acquiring privatized firms, and the extent to which they could exploit the opportunities available to them was contingent upon how the privatization process was structured and regulated in a local context. Further analysis reveals important institutionalized inequality among private entrepreneurs, with former nomenclatures at the top of the social hierarchy in post-reform China.

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