CHina’s communists see themselves as an “avant-garde party” full of dedicated social warriors. According to figures released on June 30, less than 9% of the country’s adult population are members. Entry can take years. Even Xi Jinping, the head of the party, was only allowed in on the tenth attempt. Prospective members often have to take ideology classes, take written tests, submit “thought reports,” prove their worthiness through community service, and survive an interview with a panel of members. Is it worth the effort?
The answer may seem obvious. “Virtually every influential position in China is held by a party member,” noted Bruce Dickson of George Washington University. Leaks such as the Panama Papers have revealed the offshore fortunes amassed by party leaders’ families. And there has been an occasional outburst on Chinese social media over indiscreet displays of wealth or privilege by members, such as the boss of a PetroChina subsidiary, who was spotted in June with a fashionable younger employee who wasn’t his wife, holding hands, strolling through a shopping district in Chengdu. But changes in the party and the economy could erode the material benefits of membership.
Party members can be found at every rung of the economic ladder. According to Southwestern University of Finance and Economics’ China Household Finance Survey, about 14% of the poorest tenth of Chinese households have a party member. One third of the members are farmers and workers (compared to two thirds in 1994). Since Mr. Xi became party chairman in 2012, he has urged cadres to adopt a less hedonistic lifestyle. “Incorruptibility is a blessing and greed is a curse,” he advised in a recent speech.
In a paper published in 2019, Plamen Nikolov of Binghamton University and co-authors calculate a 20% wage premium for members over comparable workers. According to other research, one reason may be that card-carrying communists are more likely to get jobs in state-owned companies (sos) and official institutions. The figures published in May show urban soLast year, companies paid 89% more than private companies in cities. This gap has widened during Mr. Xi’s rule.
But as any well-educated communist knows, real economic influence is not based on labor but on capital. So how does party membership affect the assets people own, such as their stocks, bonds, and property?
Recent research by Matteo Targa from div Berlin and Li Yang from the Paris School of Economics come to a surprising conclusion. The two economists look at urban wealth distribution as documented in the China Household Finance Survey. In every wealth class there are party members in a proportion of the households. What would happen to the wealth of this group if that percentage increased by one percentage point? Messrs. Targa and Li calculated that party membership makes a significant difference at the lower levels of wealth distribution. For example, in the 10th percentile, a one percentage point increase in party membership would increase wealth by nearly 0.9% (see chart). But the higher you go, the weaker the financial benefits membership seems to offer. For households above the 93rd percentile, party affiliation makes no discernible difference at all.
One reason for this divergence is ownership. In the middle and upper classes of Chinese society, almost everyone now owns an apartment, regardless of whether they are party members or not. And so everyone in those asset classes benefited from the long housing boom that ended in 2021. Unsurprisingly, home ownership rates are more heterogeneous among people lower down the ladder. For these households, party affiliation can be a determining factor in whether or not they own a home.
In the five years since the Household Finance Survey began, homeownership rates in China have continued to rise. In cities, too, property prices have fallen recently, narrowing the gap between owner classes and everyone else. Both trends likely mean there are fewer material benefits from becoming a communist than five years ago, let alone 20 years ago. Thanks to these economic forces, Mr. Xi could get the more ascetic cadres he has been looking for. Its purge and rectification campaigns have eliminated some of the benefits of party membership. His mishandling of the Chinese real estate market may also have helped. ■
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