Research

This paper examines the relationship between kin-based institutions and the state in the modern Chinese economy, exploring how clans may manipulate or influence local governments. Using data from China’s primary land market and a nationwide genealogy dataset, we employ spatial matching to estimate clans’ causal impacts on land parcel prices, which are a crucial source of fiscal revenue for local government. We find that firms linked to local clans obtained 1.7%-3.4% lower prices than those without clanship connections. We show that clan firms get lower prices through collusion with bidders, a process facilitated by local government officials. This patron-client relationship can lead to a decline in economic growth at the county level, while China’s anti-corruption campaign suppressed clans’ negative economic impact.