Abstract
We examine how local officials’ GDP growth incentives shape the partial privatization of state-owned enterprises (SOEs) in China. Using a large sample of listed local SOEs, we find that stronger GDP growth incentives lead to greater privatization, with the effect more pronounced among commercially competitive SOEs, those positioned deeper in ownership pyramids, and those in more marketized provinces. The GDP growth incentive-driven privatization is economically effective: it improves firm performance and investment. By linking promotion-based political incentives to privatization outcomes, the study advances understanding of China’s political economy and offers insights for emerging economies pursuing privatization as a growth strategy.