Laying off old guards to rebuild state capacity: Deng Xiaoping’s bloodless coup d’etat in post-Mao China, 1980-2000

This paper explores how changes in state capacity facilitates economic growth in an authoritarian system. This is the case of Deng Xiaoping’s systematic replacement of government officials with a new army of better-educated technocrats which uprooted Maoist revolutionary cadres. Our assumption is that post-Mao economic growth can be taken as a proxy for state capacity improvement. With a continuous treatment difference-in-differences strategy, this paper reveals that one percent increase in officials’ replacement intensity results in 1.3 percent increase in GDP in post-Mao China. Moreover, effects are robust across various technical concerns and maintain stable over a period of four decades. Furthermore, our results explain 18.05 percent of the contemporary economic disparity between China’s provinces (with intensity above and below the median). These effects can be associated with improvements in officials’ human capital which in turn rebuilt China’s fiscal capability, re-started a market-friendly industrialization, and resumed grassroots self-governing institutions. All these have been achieved without a regime change in the People’s Republic of China, hence, a ‘bloodless coup d’état’.