ABSTRACT

Literature Review and Hypothesis

In the social science literature, state–business relations in China are commonly analyzed through two principal mechanisms of party-state control: co-optation and coercion. Coercion refers to both formal and informal measures through which the Chinese party-state compels private firms to align with the CCP’s political and strategic objectives, deters opposition, and extracts resources or compliance (Chen et al., 2018; Wang, 2014). Co-optation entails party-state control over private entrepreneurs, but operates by granting access, status, representation, and limited policy influence, thereby incentivizing support for the regime rather than opposition (Chen, 2026). To date, scholars have devoted more systematic theoretical attention to co-optation, while coercion of private entrepreneurs as a mechanism of mobilization remains comparatively undertheorized. In this section, I review existing research on co-optation and coercion in China’s private sector and develop my hypothesis based on this literature.

Co-optation of the Private Sector

Co-optation is a common strategy in authoritarian regimes, whereby leaders incorporate political elites and potential opposition actors to neutralize challenges, secure the selectorate, and gather information about individuals and society (Bueno de Mesquita, 2003; Geddes et al., 2018). In the Chinese context, co-optation of the private sector serves similar political functions, but is also closely tied to the state’s economic objectives. First, the party-state relies on private entrepreneurs and technocrats to sustain economic growth and modernization. Second, private firms possess resources, expertise, and organizational capacity that the state seeks to leverage. Finally, excluding entrepreneurs from political institutions could increase the risk that they emerge as autonomous political challengers (Dickson, 2008). Co-optation of the private sector occurs through several main mechanisms: (a) recruiting private entrepreneurs into the CCP and CCP-controlled bodies, (b) establishing Party branches within private enterprises, and (c) creating institutional links between the Party-state and the private sector through official business associations (Dickson, 2003, 2008, 2012).

Since the reform and opening-up period, the Chinese government has primarily relied on co-optation to manage the private sector, seeking to incorporate new economic elites who can “invigorate the party with new ideas and goals” while supporting economic growth (Dickson, 2000, p. 517). A central objective has been to transform entrepreneurs into politically embedded actors, specifically, businesspeople who join the CCP after achieving economic success. This incorporation has been facilitated through key political institutions, most notably the People’s Congresses and the People’s Political Consultative Conferences (Chen, 2026). By controlling access to these institutions while selectively including private entrepreneurs, the party-state creates channels through which potentially disruptive demands can be expressed, contained, and managed. As a result, these bodies function as arenas for incorporating business elites as “putative partners in governance” (Chen, 2026, p. 181). Another important mechanism of co-optation is the establishment of CCP branches within private firms. In exchange for accepting Party cells, entrepreneurs often receive preferential access to local governments, policy support, and regulatory benefits (Dickson, 2008; Chen, 2026). Together, these institutional and organizational strategies embed private actors within the party-state while aligning their interests with regime priorities.

A further mechanism of co-optation operates through official business associations organized along corporatist lines, including the Self-Employed Laborers Association, the Private Enterprises Association, and the Industrial and Commercial Federation. These organizations function as institutional “bridges” between the party-state and private firms, incorporating entrepreneurs into regime structures while facilitating oversight and information flows (Dickson, 2008). At the same time, they provide members with managerial, financial, and legal services, thereby supporting business development and signaling state backing for the private sector. In return, these associations mobilize entrepreneurs to participate in socially and politically valued activities, such as philanthropy, that reinforce alignment with regime priorities.

In sum, the existing literature provides a well-developed account of why and how the Chinese government co-opts the private sector. However, much of this scholarship predates recent shifts in state–business relations under Common Prosperity, suggesting that newer forms of co-optation may involve previously undertheorized mechanisms. In addition, the literature offers limited insight into when and under what conditions the party-state deploys specific co-optation strategies. Building on this literature, I hypothesize that in mobilizing the private sector to participate in Rural Revitalization, the Chinese government will rely on the co-optation mechanisms outlined above. These strategies enable the party-state to monitor and guide private firms while maintaining entrepreneurs’ contingent support for authoritarian rule.

Coercion of the Private Sector

As noted above, coercion of the private sector remains comparatively undertheorized in the literature on state–business relations in China. Existing research has instead focused more systematically on state repression of non-governmental organizations (NGOs) and ordinary citizens, offering important insights into coercive mechanisms and patterns that may extend to the private sector.In what follows, I draw on these bodies of scholarship to identify relevant forms of state coercion and develop hypotheses regarding how the Chinese government coerces private firms in the context of Common Prosperity.

Research on state coercion in China highlights a diverse repertoire of repressive strategies directed at non-state actors. In the NGO sector, the government employs both “rough” coercion—such as threats of violence, forced evictions, detention, and criminal punishment—and more “sophisticated” measures, including restrictive laws, burdensome registration requirements, and tighter control over funding sources (Franceschini & Nesossi, 2018, p. 115). Under Xi Jinping, these practices have intensified and become more institutionalized, contributing to NGO closures, reduced organizational scope, and the redirection of activities toward less politically sensitive areas. This shift is also reflected in official discourse, which has moved from Hu Jintao’s emphasis on “social stability” to a broader focus on “national security,” enabling more proactive forms of repression (Fu & Distelhorst, 2017, p. 120).

For ordinary citizens, the state similarly combines multiple coercive tools to deter collective action. Online, censorship and monitoring systems selectively delete posts, suppress information about protests, and prevent the formation of large-scale mobilization (King et al., 2013). At the same time, recent research shows that surveillance functions are increasingly outsourced to private firms and to commercial arms of state-owned enterprises, thereby extending the state’s monitoring capacity (Ong et al., 2026). Offline, coercion often operates through relational mechanisms that leverage personal networks rather than relying solely on formal state agents (Deng & O’Brien, 2013). Individuals with social ties to potential protesters, such as relatives, colleagues, or local officials, are mobilized to apply pressure and discourage participation. In addition, the state has expanded its coercive toolkit by relying on non-state brokers and hired agents to carry out intimidation, harassment, and, at times, violence, allowing for plausible deniability while maintaining effective control over dissent (Ong, 2022).

Regarding state–business relations, Leng’s (2025) recent book makes an important contribution by identifying two forms of “hidden” political services that officials extract from firms: visibility projects and societal control. Visibility projects refer to large-scale infrastructure and public works—such as bridges, stadiums, and industrial parks—undertaken not primarily for developmental purposes, but to signal officials’ competence to superiors within China’s non-electoral promotion system. Because these projects are often costly and unprofitable, officials shift the financial burden onto firms. While state-owned enterprises (SOEs) can absorb such costs due to soft budget constraints, private firms—operating under hard budget constraints—face greater financial strain. When such projects generate public opposition, officials confront a second imperative: managing unrest while avoiding direct responsibility. Firms are then deployed either as allies, to help suppress or appease protests, or as scapegoats, to absorb public blame for policy failures. Leng argues that SOEs are better suited for large-scale suppression due to their institutional authority, whereas private firms are more effective scapegoats because of their political vulnerability and dependence on state actors.

Beyond these functions, Leng identifies additional coercive instruments, including implicit threats of retaliation, such as tax audits and unannounced regulatory inspections, as well as more direct forms of economic pressure. These include the suspension of procurement contracts, the withdrawal of state support, and even the shutdown of entire sectors. Such measures are enabled by deliberately vague regulatory frameworks, which grant authorities substantial discretion in disciplining private actors and extracting compliance.

While Leng (2025) advances our understanding of how the state coerces firms, her analysis is empirically focused on specific sectors, particularly waste management and public transportation. This paper extends this line of inquiry by examining how coercive mechanisms operate in the context of major private corporations. In addition, existing research offers limited insight into the conditions under which different coercive tools are deployed. Building on this literature, I hypothesize that the Chinese government employs a range of coercive instruments, including regulatory pressure, tax investigations, contract suspensions, and targeted shutdowns, to compel private firms to align with state objectives.