What determine turnovers of China’s provincial bosses? Evidence from historical data

It is widely believed that personnel decisions within China’s bureaucracy system are all based on connections, office politics, and dirty techniques. Serious examination of historic data reveals that the system is more sophisticated and meritocratic than it seems to be.

Professors Hongbin Li and Li-An Zhou at the Chinese University of Hong Kong study turnover data of top provincial chief in China between 1979 and 1996, and find that the likelihood of promotion of provincial leaders increases with their economic performance, while the likelihood of termination decreases with their economic performance.

Obviously, the central government uses such institutionalized rule to promote desirable local economic outcomes. They also find that the central government always evaluates the average performance over the provincial boss’s whole tenure rather than the performance in the year when the decisions were made.

GDP-based promotions have the negative side. The fastest way to push up GDP is through public investment, while the last thing you need to care is pollution. This is exactly why the central government is recently emphasizing the so-called "Green GDP".

They published the findings in the Journal of Public Economics, a top journal in the field.

Political Turnover and Economic Performance: The Incentive Role of Personnel Control in China
Abstract: In this paper, we provide empirical evidence on the incentive role of personnel control in post-reform China. Employing the turnover data of top provincial leaders in China between 1979 and 1995, we find that the likelihood of promotion of provincial leaders increases with their economic performance, while the likelihood of termination decreases with their economic performance. This finding is robust to various sensitivity tests. We also find that the turnover of provincial leaders is more sensitive to their average performance over their tenure than to their annual performance. We interpret these empirical findings as evidence that China uses personnel control to induce desirable economic outcomes. Our study adds some basic evidence to a growing theoretical literature emphasizing the role of political incentives of government officials in promoting local economic growth.