Title: Property over Loyalty
by Peiyuan Li, Ke Rong, Zhihao Xu and Sicheng Zhao
Abstract:
Can property rights shape loyalty? This paper addresses this question by examining how the Communist Party's land reform during the Chinese Civil War (1945–1950) influenced the decisions of senior Kuomingtang (KMT) or Nationalist military officers. Three main findings emerge. First, because senior KMT officers typically came from wealthy families, those whose hometowns underwent Communist land reform—and thus faced a high risk of expropriation—were 10% significantly more likely to remain loyal to the Nationalist than the others. Second, using former Japanese-occupied areas or those early taken over by the Communists at the end of the war as instrumental variables for the counties exposed to land reform early, the estimated effect exceeds 33%. Moreover, the effect is concentrated in areas with higher pre-reform wealth inequality, where land redistribution posed a greater threat to property owners. These findings provide new evidence linking the protection of property rights to political loyalty.