Are Princelings Truly Busted? A Land Market Enigma

A meticulous replication of a landmark 2019 study on China’s land market has unearthed a startling finding: nearly one-third of all transactions in the dataset were perfect duplicates. The original work, published in The Quarterly Journal of Economics, had identified a significant “princeling effect”—where firms connected to politically elite families secured preferential land prices. However, the new analysis in the Journal of Applied Econometrics reveals that after removing 388,903 duplicate rows, the statistically significant princeling effect not only persists but is, in fact, extremely large.

Chinese scientists have found a critical discrepancy between the original paper’s text and its code: what was described as the “logarithm of area” was actually the raw area in square meters divided by one million. This miscommunication necessitates a fundamental reinterpretation of the economic magnitude of the elite discount. The study does not debunk the existence of preferential treatment for princeling-linked firms; instead, it amplifies it, suggesting that political connections in China’s vast land market yield far greater financial advantages than previously understood.

Why it matters:
This replication serves as a powerful methodological lesson for researchers and analysts. It demonstrates that raw data quality is paramount, and that routine checks can either dismantle or dramatically strengthen a widely cited finding. For those tracking economic governance in China, it reinforces the reality that political capital remains a potent, quantifiable force in local development.

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