Short-Term Pain, Long-Term Stain: Political Trust After Privatization of State-Owned Enterprises in China

Xingchen LAN; Hongshen ZHU

doi:10.1007/s11109-026-10176-1

Short-Term Pain, Long-Term Stain: Political Trust After Privatization of State-Owned Enterprises in China

Xingchen LAN^*
, Hongshen ZHU

^*Corresponding author for this work

Department of Government and International Affairs

Research output: Journal Publications › Journal Article (refereed) › peer-review

Abstract

Mass opposition to governments implementing economic liberalization reforms remains a key puzzle in the political economy of transitions. This article investigates this puzzle by examining the political consequences of China’s large-scale privatization of state-owned enterprises in the late 1990s, which displaced over forty million workers while enriching politically connected elites. Combining firm-level layoff data with nationally representative surveys, we find that citizens in counties experiencing greater privatization layoffs exhibit persistently lower political trust and more contentious behavior more than a decade after the peak of privatization. This trust deficit does not dissipate even among laid-off workers whose material conditions substantially improved during China’s subsequent economic boom. Further analyses show that elite capture, social contract violation, and sociotropic anxiety jointly sustained this distrust. Short-term pain from economic reform can leave a lasting stain on political trust–even when the promised growth materializes.

Original language	English
Journal	Political Behavior
DOIs	https://doi.org/10.1007/s11109-026-10176-1
Publication status	E-pub ahead of print - 29 Jun 2026

Bibliographical note

For helpful comments and suggestions, we thank Arturas Rozenas, David Stasavage, Yiqing Xu, Junyan Jiang, Jonathan Rodden, Steve Haber, Mary Gallagher, Jerry Min, Xiuyu Li, Wenting Xu, Hong Song, Zejun Jin, Ziwen Zu, Qingjie Zeng, Yinxuan Wang, Erik H. Wang, Jean Oi, Peter Rosendorff, Munroe Kim, Bokai Qi, Daniel Ba quero, Luca Vitale, and participants at MPSA 2022, APSA 2021, Stanford, NYU, and Fudan University. Further thanks go to three anonymous reviewers and the Political Behavior editor, Jessica Preece, for their helpful comments that significantly improved this article. The data and replication materials supporting this study are available at: https://doi.org/10.7910/DVN/P1IZAT.

Publisher Copyright:
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2026.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 16 Peace, Justice and Strong Institutions

Keywords

Privatization
Political Economy of Transition
Political Trust
Chinese Politics

Access to Document

10.1007/s11109-026-10176-1

https://link.springer.com/10.1007/s11109-026-10176-1

Cite this

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title = "Short-Term Pain, Long-Term Stain: Political Trust After Privatization of State-Owned Enterprises in China",

abstract = "Mass opposition to governments implementing economic liberalization reforms remains a key puzzle in the political economy of transitions. This article investigates this puzzle by examining the political consequences of China{\textquoteright}s large-scale privatization of state-owned enterprises in the late 1990s, which displaced over forty million workers while enriching politically connected elites. Combining firm-level layoff data with nationally representative surveys, we find that citizens in counties experiencing greater privatization layoffs exhibit persistently lower political trust and more contentious behavior more than a decade after the peak of privatization. This trust deficit does not dissipate even among laid-off workers whose material conditions substantially improved during China{\textquoteright}s subsequent economic boom. Further analyses show that elite capture, social contract violation, and sociotropic anxiety jointly sustained this distrust. Short-term pain from economic reform can leave a lasting stain on political trust–even when the promised growth materializes.",

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N2 - Mass opposition to governments implementing economic liberalization reforms remains a key puzzle in the political economy of transitions. This article investigates this puzzle by examining the political consequences of China’s large-scale privatization of state-owned enterprises in the late 1990s, which displaced over forty million workers while enriching politically connected elites. Combining firm-level layoff data with nationally representative surveys, we find that citizens in counties experiencing greater privatization layoffs exhibit persistently lower political trust and more contentious behavior more than a decade after the peak of privatization. This trust deficit does not dissipate even among laid-off workers whose material conditions substantially improved during China’s subsequent economic boom. Further analyses show that elite capture, social contract violation, and sociotropic anxiety jointly sustained this distrust. Short-term pain from economic reform can leave a lasting stain on political trust–even when the promised growth materializes.

AB - Mass opposition to governments implementing economic liberalization reforms remains a key puzzle in the political economy of transitions. This article investigates this puzzle by examining the political consequences of China’s large-scale privatization of state-owned enterprises in the late 1990s, which displaced over forty million workers while enriching politically connected elites. Combining firm-level layoff data with nationally representative surveys, we find that citizens in counties experiencing greater privatization layoffs exhibit persistently lower political trust and more contentious behavior more than a decade after the peak of privatization. This trust deficit does not dissipate even among laid-off workers whose material conditions substantially improved during China’s subsequent economic boom. Further analyses show that elite capture, social contract violation, and sociotropic anxiety jointly sustained this distrust. Short-term pain from economic reform can leave a lasting stain on political trust–even when the promised growth materializes.

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Short-Term Pain, Long-Term Stain: Political Trust After Privatization of State-Owned Enterprises in China

Abstract

Bibliographical note

UN SDGs

Keywords

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