Since 1988, between 11% and 16% of China’s adult population has belonged to the Chinese Communist Party (CCP). Obtaining CCP membership is widely viewed as an important step in becoming part of China’s elite. But how much wealth advantage does CCP membership confer? New research provides the first empirical account of the evolution of the wealth gap between CCP and non-CCP households in urban China from 1995 to 2017. 

The data. Researchers base their analysis on two nationally representative surveys: the 1995 and 2002 samples of the Urban Chinese Household Income Project (CHIP) and the 2011, 2013, 2015, and 2017 waves of the China Household Finance Survey (CHFS). Both surveys provide detailed information on household wealth, including financial assets and debts, housing wealth, assets for household production and business activities, as well as information on income and expenditure. The researchers calculate net household wealth by subtracting household debt from assets and adjust all data for inflation. Besides party membership, the researchers also control for gender, education, age, occupation, and employer. Together, the two surveys allow for detailed analysis of the wealth composition and distribution in urban China over a 20-year time span. 

CCP households consistently wealthier than non-CCP households. CCP households — those with at least one CCP member — accounted for 27% of all urban-registered households in 2017. Among the wealthiest decile of urban-registered households, 40% are CCP households. The share of CCP households at the bottom decile of the wealth distribution is much smaller (14%). The researchers find that between 1995 and 2017, CCP households were on average between 21% and 24% wealthier than non-CCP households.

Household wealth composition by decile

Privatization of urban real estate and rise of property-based wealth. Privately owned real estate today accounts for 84% of the gross total wealth across urban households — by far the largest component of private wealth. In the 1970s, however, virtually all urban housing stock in China was publicly owned. Through the 1990s, the central government gradually privatized urban housing. In 1995, when housing ownership was still in its infancy, CCP membership was only correlated with higher rates of ownership in the top half of the wealth distribution. By 2017, roughly 9 in 10 urban households in China owned housing property and CCP membership was correlated with increased rates of ownership mainly in the bottom half of the wealth distribution. 

CCP wealth premium rooted in 1990s housing privatization policies. Until 1998, housing privatization involved discounted sales of state-owned apartments to tenants, primarily people with public sector jobs or strong political ties, such as CCP members and government officials. These policies ended after 1998, but their impact on wealth persists. 

In the 1990s, CCP households enjoyed the greatest wealth premiums in the middle of the wealth distribution, but by 2013, the greatest premiums shifted to CCP households in the bottom 50%. This change is attributed to differences in how CCP and non-CCP households acquired housing. CCP households were 12 percentage points more likely to obtain houses at significant discounts through preferential policies that ended in 1998. Over time, these houses were on average 21% more valuable than houses purchased via the private market.

CCP households were less likely to self-build houses and more likely to either inherit or purchase homes through preferential policies, while non-CCP households invested more in self-built housing — typically the least profitable form of housing investment, especially for those at the lower end of the wealth spectrum. As a result, CCP households were better positioned to acquire high-value homes at lower prices, amplifying wealth disparities over time. 

CCP membership larger predictor of wealth growth than education. The researchers compared wealth accumulation between CCP and non-CCP households between 2013 and 2017, finding that the net wealth of CCP households grew 9 percentage points faster on average. The difference in growth rates widened at the top of the distribution, with a 9 percentage point difference in the bottom 50% versus a 27 percentage point difference in the top 5%. Wealth became increasingly concentrated among CCP households, especially at the top, where their share of net wealth rose from 41% to 47% in four years. At the lower end of the income distribution, the difference in growth is explained by savings (the difference between income and expenditures), while at the top, it is explained by capital gains (profits from the sale of investments or assets).

Wealth gap: CCP versus non-CCP households

Importantly, CCP membership predicts net wealth growth more than education levels, particularly for those at the top end of the wealth distribution, contributing 14 percentage points for the middle 40% and 24 percentage points for the top 5%. While education influences savings for the middle 40% and top 10%, it does not significantly affect capital gains, which are strongly associated with CCP membership in the upper wealth tiers. 

CCP membership has paid. The findings underscore the enduring wealth advantages CCP households enjoy compared to similar non-CCP households up and down the wealth distribution. The mechanisms identified in this research include preferential access to housing in the early phases of urban real estate privatization and faster wealth accumulation through capital gains in recent years.