How Companies Perpetuate and Resist Chinese Government Censorship ∗

Jennifer Pan† Tongtong Zhang‡ February 11, 2020

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Abstract Given China’s growing market power, can firms operating in China resist government pressures to censor political dissent? Firms were once regarded as a potential catalyst for authoritarian breakdown, but recent research suggests they can bolster authoritarian rule. We theorize that the material incentives of firms can lead them to perpetuate government censorship but also to resist pressures to penalize dissent. We test this theory with two large-scale experiments that measure how diverse firms operating in China penalize job candidates for dissent. We find that despite the lure of the Chinese market, firms operating in China do not converge in their behavior. Although candidates who express dissent are less likely to receive a callback than those who express political loyalty, the largest proportion of employers do not penalize dissent, and some employers favor candidates who express dissent because they believe dissenters have valuable characteristics and knowledge.

Keywords: censorship, dissent, ﬁrms, experiment, China

Word Count: 9,078

∗Our thanks to Haotian Bu, Luchi He, Shixian Li, Lin Liu, Yongbo Liu, Beibei Tan, Xuewei Tian, Tianyi Wang, Yue Wang, Qiushi Yin, Ni Zeng, Kan Zhang, and many others for superb research assistance; David Broockman, Daniel Butler, Alex Coppock, Charles Crabtree, Ana De La O, Donald Green, Jens Hainmeuller, Gregory Huber, Shanto Iyengar, Holger Kern, Gary King, Peter Lorentzen, Eddy Malesky, Neil Malhotra, Kristin Michelitch, Brendan Nyhan, Jean Oi, Elizabeth Perry, Jonathan Rodden, Weiyi Shi, David Szakonyi, Georg Vanberg, Andrew Walder, Chenggang Xu, Yiqing Xu, Boliang Zhu for many helpful comments and suggestions; and to the Freeman Spogli Institute China Fund and Asia-Paciﬁc Scholars Fund for research support. †Assistant Professor, Department of Communication, Building 120, Room 110 450 Serra Mall, Stanford University, Stanford CA 94305-2050; jenpan.com, (650) 725-7326. ‡Ph.D. Candidate, Department of Political Science, Stanford University, Stanford CA 94305. 1 Introduction

China is the world’s fastest growing consumer market, the world’s second-largest importer of goods, and the world’s second largest economy by nominal GDP.1 China’s growing wealth and market power has raised questions of whether companies operating in China are beholden to the Chinese Communist Party (CCP) and perpetuate the political aims of this authoritarian regime. In October, 2019, the Actionvision Blizzard video game company issued a one-year suspension to a professional esports player for voicing support for protesters in Hong Kong in a post-match interview.2 In August 2019, the Hong Kong- based airline Cathay Pacific fired employees for supporting Hong Kong protests.3 In March 2018, the Marriott hotel chain fired a social media employee after he accidentally liked a tweet from a Tibetan group that praised Marriott for listing Tibet as a country independent from China.4 In all of these cases, private, for-profit firms are helping the Chinese government perpetuate censorship by penalizing employees who express opinions or who take actions that the Chinese regime deems objectionable. The role of firms in authoritarian survival and breakdown has been a long standing object of political science research. In an early wave of research on democratization, capital and firms were seen as crucial to the democratic development of industrializers such as Britain, France, and the United States (Deutsch 1961; Huntington and Moore 1970; Moore 1966). In the 1990s and 2000s, research focused on late industrializing countries showed that firms operating in authoritarian contexts will only press for regime change if their material interests are threatened by authoritarian rule (Bellin 2000; Dickson 2003; Payne 1994; Pearson 2000; Tsai 2007). More recent research on authoritarian politics and media censorship suggest that firms not only will avoid pressing for regime change but may help perpetuate authoritarian rule when access to a market under an authoritarian regime’s control is crucial to firms’ material interests (Crabtree et al. 2015; King et al.

1Consumer data based the World Bank Households and NPISHs consumption expenditures (https://bit.ly/2JqOFWC), import data from The World Factbook of the CIA (https://bit.ly/1k3Y7zu), and GDP data from the IMF (https://bit.ly/2MRXElp), all accessed Oct 18, 2019. 2See company announcement at https://playhearthstone.com/en-us/blog/23179289/; more detailed cov- erage at https://bit.ly/2oZjz1M and https://bit.ly/2Voh5pG (accessed Cot. 8, 2019). 3See https://bit.ly/2MQycMY (accessed Oct 18. 2019). 4See reporting at https://bit.ly/2AXsEvh and https://bit.ly/2Ov8Wyh (accessed Oct. 8, 2019).

1 2013; Miller 2018; Pan 2017). In this paper, we theorize that firms’ material incentives—to hire and retain productive workers—can lead firms to perpetuate and to resist the political goals of authoritarian regimes. The crucial implication of this theory is that we do not expect the behavior of firms with regard to political censorship to converge in authoritarian regimes, even if the markets under authoritarian control are highly attractive. Firms can take three actions with respect to censorship of employees’ speech and behavior. First, companies can perpetuate government censorship, avoiding employees who express dissenting views and rewarding employees who express politically loyal views.5 Second, companies can actively resist censorship, prioritizing and rewarding employees who express dissent over those who are politically conformist. Third, companies can passively resist the impulse to perpetuate government censorship by not penalizing expression of dissent and treating employees who express dissenting and conformist political views in similar ways. The material incentive of firms to hire and retain the most productive workers can lead to all three actions. We expect these incentives to be specific to the firm or even the individuals making hiring decisions rather than be based on general characteristics such as the ownership structure or industry of the firm. We test the observable implications of this theory by conducting two large-scale experiments that measure the extent to which firms operating in China—including foreign firms, private firms, state-owned enterprises, and public institutions6—penalize job candidates for expressing politically dissenting views. In 2016, we measured employer callbacks to 19,221 resumes we submitted containing speech signaling political dissent, political conformity, and an apolitical orientation to job openings in cities throughout China. In 2018, we asked 506 hiring managers to evaluate these same resumes in a conjoint survey experiment in order to capture the rationale behind their evaluations of job seekers. We find that despite the lure of the Chinese market, firms operating in China do not converge in their behavior to perpetuate government censorship. On average, job candidates who express dissent are less likely to receive a callback from employers than

5We use political “loyalty” and “conformity” interchangeably. 6Public institutions refer to organizations with government-appointed personnel and/or government funding such as public hospital and public schools.

2 candidates who express conformity and are evaluated more critically by hiring managers. However, the largest proportion of employers (41%) passively resist the political preferences of the CCP, calling back candidates who express politically dissenting views as well as those who express politically conformist views. Slightly over one third of firms (32%) perpetuated government censorship by rejecting candidates expressing dissent in favor of candidates who proclaimed their loyalty to the Communist regime. Slightly less than one third of firms (27%) actively resisted government censorship, calling back candidates who expressed political dissent and rejecting political loyalists. This pattern holds for firms with different ownership structures, including foreign firms operating in China, private Chinese firms, Chinese state-owned enterprises, as well as public Chinese institutions. Our conjoint experiment among hiring managers shows how firms’ material interests generate incentives to resist and cave to government pressures to censor. Hiring managers who reject job seekers expressing political dissent do so because they believe such employees’ grievances against the government would prevent them from focusing on their work, demoralize their coworkers, and decrease the effectiveness of these employees in a context where government relations are crucial for business success. Hiring managers who prioritize job seekers expressing political dissent do so because they believe these individuals will be more innovative, and because they believe these applicants will have valuable knowledge about the West. Hiring managers who call back candidates who express dissent and those who express political conformity regard other candidate characteristics such as academic performance and work experience as more relevant to hiring and believe political views to be irrelevant to worker productivity. Based on an exploratory analysis of heterogeneous effects by firm, job vacancy, and hiring manager characteristics, we do not in general see systematic difference in behavior among sub-groups. The only statistically significant differences we find are that firms in the technology sector are more likely to penalize political dissent, and hiring managers who have direct reports are less likely to penalize political dissent. Open-ended responses from hiring managers suggest that technology firms penalize dissent because they operate

3 in an environment with more complex and rapidly changing regulations related to censorship. Hiring managers with direct reports are more likely to believe that dissenters’ knowledge of the West can bring value to the firm. The role of firms in authoritarian politics is not only theoretically important but substantively relevant. There is a growing concern among politicians, policymakers, and people around the world that China’s growing economic power will strengthen its illib- eral political trajectory and its global influence.7 This research shows that in recurrent, commonplace, yet crucial company decisions such as hiring, the majority of firms operating in China are actively or passively resisting pressures to censor political expression. This paper also provides a new approach for developing treatments with high construct validity in audit experiments. Most audit experiments rely on ad hoc approaches such as focus groups or an experimenter’s personal knowledge to construct treatment conditions. Our experiment uses analysis of large-scale observational data, interviews, and two conjoint experiments to design treatments with strong construct validity. This provides an approach to refining treatment proxies that quantifies the measurement bias of potential proxies and measures the extent to which research participants are likely to interpret treatment proxies as experimenters intend. Our paper proceeds in six sections. Section2 lays out a theory for the behavior of firms. Section3 describes the audit and hiring manager experiments. Section4 provides our main experimental results, showing how firms diverge in their behavior. Section5 shows how material interests motivate employers’ decisions, and Section6 explores how outcomes vary by firms, job vacancy, and hiring manager characteristics. Section7 con- cludes by discussing the scope conditions and implications of this study.

2 Thoery of Firms and Censorship

Classic theories of regime change based on the British, French, and American experience identiﬁed capital—ﬁrms, capitalists, entrepreneurs—as a catalyst for democratization (Deutsch 1961; Huntington and Moore 1970; Inglehart and Welzel 2005; Moore

7See https://nbcnews.to/2qJTDIe, https://cbsn.ws/2rFV1MF (accessed November 12, 2019).

4 1966). Capitalists demanded more liberal political institutions in order to gain better property rights protection. A subsequent generation of scholars found that outside of the experience of early industrializers, capitalists were unlikely to press for democratic change unless their material interests are threatened by authoritarian rule (Bellin 2000; Dickson 2003; Payne 1994; Pearson 2000; Tsai 2007). More recent research suggests that as authoritarian countries gain market power, firms and capitalists not only have a low likelihood of pressing for regime change, they have strong incentives to act in ways that perpetuate authoritarian rule. For example, despite commercialization of newspapers in China, newspapers censor content and spread government propaganda in line with the preferences of the Chinese regime (Stockmann 2010; Stockmann and Gallagher 2011; Stockmann 2013). Social media companies carry out online censorship at the behest of the government in China and Russia (Crabtree et al. 2015; King et al. 2014; MacKinnon 2009, 2012; Miller 2018; Pan 2017). The most recent research, showing how companies perpetuate authoritarian censorship, has focused on media companies and media censorship. Beyond media firms, do companies more generally strengthen authoritarian rule by complying with the regime demands to censor? According to the Oxford English Dictionary, a censor is “one who exercises official or officious supervision over morals and conduct.” This means that in an authoritarian context, a company that fires employees for endorsing or expressing certain political views is engaging in censorship. This form of censorship by a firm is much less visible than newspaper and internet censorship, but it nonetheless is an act of officious supervision over conduct, which serves to reinforce authoritarian rule. We theorize that firms operating in authoritarian regimes may take one of three actions with respect to censorship of employees’ political conduct in semi-private setting such as hiring and firing. This semi-private setting differs from media censorship which is public, highly visible, and relatively easy for the regime to monitor. In the highly visible setting, firms may have little choice but to conform to the political preferences of the regime, but in a semi-private setting firms have more room to maneuver and more potential actions they can take. Importantly, all three actions employers may take are motivated by the

5 material interest and incentives of firm to hire and retain the most productive employees. The first possible action is that the firm perpetuates the authoritarian regime’s political preferences. Under totalitarian rule, firms and other organizations shaped the actions of their employees and members in line with the regime’s desires (Schurmann 1966; Whyte 1975; Walder 1988). Firms rewarded employees for expressing conformity to the regime and punished employees for dissent (Vogel 1965; Walder 1983; Phillips 2015). Firms also avoided hiring any employees who expressed dissent or showed sympathy for dissenting views (Shirk 1982). Firms serve the political interests of the regime for material gain. When the state controls access to resources and markets, firms may fear that employees who engage in public dissent will generate penalties such as loss of market access, loss of customers, and loss of commercial partners and suppliers. In October 2019, in response to a NBA employee expressing support for Hong Kong protesters, several Chinese companies suspended their sponsorship of the NBA, and Tencent stopped streaming NBA games. Alternatively, firms may fear that even if political dissenters do not engage highly visible dissent, they lack the skill or will to successfully fulfill tasks related to the government— e.g., carrying out government orders, complying with government directives—which are abundant and often crucial to businesses in authoritarian contexts. Firms may worry that those who express politically dissenting views are preoccupied by their discontent, and will be less productive as a result of their preoccupation. Finally, firms may also fear that such discontent will spread to other employees, distracting co-workers and lowering others’ productivity. The more ingrained a regime’s political preferences are in a country’s social norms, the more salient these concerns may be among employers. This can happen because decision-makers at firms have internalized the regime’s preferences and truly believe that dissent is problematic. This can also happen even if firm decision-makers are sympathetic to dissenting views but will not tolerate these views out of fear that strong social pressures for conformity will generate downside or risk for the firm if the firm deviates from the norm. The second possible action is that firms actively resist the regime preferences for cen-

6 soring dissent—for example, by prioritizing and rewarding employees who express political dissent. One reason for why firms would actively resist is that their owners—the entrepreneurs and capitalists—want to pursue a political agenda at odds with the authoritarian status quo (Gause III 2011; White et al. 1996; Gilley 2004; He 2016). Given the strong incentives for profit-seeking among firms and a competitive market, we would expect such instances of active dissent to be rare. A more common rationale, and one motivated by firms’ material interests, may be that employers believe employees who express dissent have knowledge or other characteristics—such as critical thinking or creativity— that are valuable to the firm because workers who have these characteristics are more productive (Sibley et al. 2012; Verhulst et al. 2012; Otken¨ and Cenkci 2015). Note that the association of other characteristics with dissent does not mean that the firm’s decision is apolitical. Rather, it means that firms are willing to incur the political risk of taking actions—hiring and retaining workers who are willing to express political dissent—that deviate from the expectations of the regime because of the value of these types of workers. Finally, the material incentives of firms may lead them to take the third action of passively resisting pressures to conform to the political preferences of an authoritarian regime by taking a stance that does not penalize or reward the political views, expression, and behavior of employees. Such an stance would involve hiring and rewarding employees without regard for their political views. The main rationale is that firms value other characteristics—education, experience—and believe the addition of political factors would introduce economic inefficiency. Many scholars have argued that China’s current labor market is non-political, that most firms reward human capital (education and professional experience) over political factors (Chan et al. 1992; Li and Zhang 2010; Meng et al. 2013; Nee 1992; Dickson 2017). Again, what is important here is not only that firms value non-political characteristics, but that firms are willing to disregard political characteristics in a context where the regime wants politics to permeate the workplace and where there may be risks to non-compliance. At first glance, we may expect certain types of companies to take one action over another. For example, we may expect state-owned companies, which have closer ties to

7 the government, to be more likely to punish political dissent and perpetuate authoritarian rule. We may expect companies in industries more closely related to national interest such as energy and natural resources to be more likely to perpetuate censorship. We may also expect companies to take one action over another depending on the specific job. We could imagine that companies are more likely to perpetuate government censorship hiring hiring for jobs that have a public-facing component—e.g., teachers—than for jobs where employees do not take visible public actions—e.g., factory workers. However, upon closer examination, it is more likely that the actions selected by a company is unique to the company, job position, hiring decision-maker, and/or time period. For example, the government ties that a state-owned enterprise has may give it more political leeway and protection to hire political dissenters (Naoi et al. 2017). Companies crucial to national interest may need political dissenters who have valuable knowledge of and experiences from the West in order to pursue those interests, and firms may worry that employees in a non-public facing position express political dissent publicly outside of work. Because hiring by firms is, for the most part, an action that is opaque to the political regime, individual employers have more room to make their own decisions, based on their unique experiences and beliefs, about what job candidates are likely to be more productive and valuable. The observable implication of this theory is that all three actions should be taken by a non-trivial proportion of firms in authoritarian contexts, even contexts with highly lucrative and attractive markets for firms. In the same authoritarian regime, we expect some firms to penalize dissent and perpetuate government censorship, other firms to passively resist and put aside political considerations, and still other firms to actively resist government censorship. In addition, we would not expect to see systematic differences in these three types of actions by firm characteristics, such ownership type and industry, or by job characteristics, such as the skill level required for the job.

8 3 Experimental Design

What constitutes political dissent? The answer depends on context. In our experimental context, mainland China, there is no organized political opposition or social movement organizations.8 However, the ruling regime has made clear that expressing support for ideas that deviate from official ideology—specifically, support for Western-style democratic political institutions—represents dissent that should be suppressed. Official ideology functions as a way for the authoritarian regimes to create shared norms of behaviors (Freeden 2004; Garrick and Bennett 2018; Knight 2006). The Chinese Communist Party’s ruling ideology is “Socialism with Chinese Characteristics.” The current iteration of this ideology, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” was added to the Chinese constitution in 2017, and has been heavily promoted all over China through media, the education system, and the workplace (Cantoni et al. 2017; Jaros and Pan 2016; Zhao 2016; Connor 2017; Taber 2018; Wu 2017; Zhong and Mozur 2018) in ways that reminiscent of state demands for political “show” (表现) from the Maoist era (Vogel 1965; Schurmann 1966; Whyte 1975; Stanfield and Fuchs-Schundeln¨ 2007; Ockenfels and Weimann 1999; Walder 1988; Shirk 1982; Walder 1983; Yang 2014). Im- portantly, the CCP has made clear that support for Western institutions such as multiparty democracy and Western values such as free media is antithetical to this official ideology, censoring and penalizing individuals who support these ideas (Mei and Yang 2014; Li 2012; Ministry of Education 2003; Huang 2014; Xu 2015).

3.1 Resume Audit Experiment

We test the theory by measuring employer callbacks to job seekers who express political dissent on their resumes. Using a resume audit experiment design, we submitted three resumes to each of 6,407 job vacancies found on one national-level job posting site between November 27, 2016 and February 24, 2017 (a total of 19,221 unique resumes).9 Each

8Hong Kong and other special administrative regions are not part of our analysis 9This website contains a nearly comprehensive database of job advertisements from all 31 of China’s provinces aimed at recent college graduates. It is one of the most widely used job websites among current college students and recent graduates in China. Using vacancies on this website allows us to reduce over- qualiﬁcation and under-qualiﬁcation problems while applying to a large number of jobs that are unlikely

9 resume signaled a different political position—political dissent, political conformity, and non-political orientation—and most other features on the resume were randomly varied. The three resumes were submitted in randomized order to the job vacancy on different days within one week of when job vacancy was posted. The job vacancies we applied to were focused on jobs for recent college graduates that covered a diverse range of ge- ographies, ownership structures (including public institutions, state-owned enterprises or SOEs, private firms, and foreign / joint venture firms), industries, and types of job positions (for details, See Appendix, Section 2.1). We say that a firm perpetuates censorship if it calls back the candidate expressing political loyalty but not political dissent. We say that a firm actively resists censorship if it calls back the candidate expressing political dissent but not political loyalty. We say that a firm passively resists censorship if it calls back both the politically dissenting and conformity candidates. We also include a third, apolitical treatment condition to serve as a baseline and manipulation check. A “callback” is a personalized phone or email contact by a potential employer, usually requesting that the applicant advances to the next stage of the application process (For our detailed protocol for recording callbacks, see Appendix Section 2.2.). Similar to other resume audit studies (Bertrand and Mullainathan 2004; Deming et al. 2016; Riach and Rich 2002; Kroft et al. 2013; Gift and Gift 2015), this study utilized deception and waived informed consent. The decision to conduct such an experiment was not made lightly. We used an audit experiment because other methods were unlikely to provide valid and reliable results and yet there are benefits to conducting this research (Hatemi and McDermott 2011). For example, this research shows firms that do not penalize dissent that they are in the majority, and it reveals the limits of China’s ideological push. Hypothetically, we could study the response of firms to political dissent by gathering to be biased toward particular sectors, industries, or regions. To keep the names of firms we applied to confidential, we cannot disclose the name of this website. We applied only to jobs that allowed application via email and did not require additional materials beyond a resume (e.g., a cover letter). We never applied to more than one job vacancy per regional branch of a single employer. For example, if a large firm has regional offices in three cities, and each regional office has two job vacancies, we only applied to one job vacancy in each regional office.

10 hiring and/or promotion data from firms and using surveys to measure employee dissent. In an authoritarian context, survey-based measures of dissent are often biased (we conduct a conjoint survey experiment, which reveal these biases; see Section6). Responses could be biased toward over-estimating the share of firm that perpetuate censorship because repression of political dissent generates incentives to hide and falsify dissenting views. Responses could also be biased toward over-estimating the share of firms that resist censorship because the cost of “advancing” a dissenting candidate is much less tangible in an anonymous survey than in real life hiring. Behavioral measures such as expression of dissent on social media or participation in protest are extremely difficult to obtain. Even when this data can be found, linking online behavior to employment is often impossible, and even if there is some data that can be linked, the resulting dataset would be a highly biased sample of employees and firms because most people do not participate in protests or openly express dissent on social media (Zhang and Pan 2019). We took steps to minimize risks and costs to firms as well as to future Chinese job applicants. We did not record personally identifying information about the individuals who made callbacks, and will not make public any names of the firms involved in this study. We strove to minimize burdens on the firms’ time by limiting our interactions with them in four ways. First, unlike previous resume audit studies that submitted two resumes to each firm for each treatment (Bertrand and Mullainathan 2004; Deming et al. 2016), we only submitted one resume for each treatment for each firm. Second, we limited our study to the first phase of the recruitment process. Third, for employers who called back offering to move the applicant to the next stage of the interview process, we called each employer back within 24 hours to inform them that the candidate was no longer interested. This pre- vented employers from continuing to spend time on our fictitious applicant, and increased the chances of employers moving to other, real applicants for the position. Finally, we did not debrief employers to protect future job applicants.10 We secured approval from our university IRB for all elements of the resume audit experiment, including research conducted to design the experiment, as well as the hiring manager conjoint survey exper-

10We only encountered one employer, out of the 6,407 in the audit experiment, who asked if this was a research project.

11 iment described in Section 3.2. For the hiring manager survey experiment, we obtained consent from participants, no deception was used, and no personally identifying information was collected. Before conducting any experiments, we consulted with legal scholars and lawyers in China to ensure that our study did not violate any local laws or regulations. We also conducted extensive training to protect the safety of the research team.

3.1.1 Mixed methods approach to resume construction

We devoted substantial effort to constructing ﬁctitious, but realistic, resumes with high construct validity. We analyzed 30,409 job postings and nearly 100 actual student resumes to determine what features (e.g. name, university, internship, extracurricular experience) our resumes should include, and create a pool of elements for each feature that we could randomly sample from.11 To maximize callbacks, we also block-randomized majors and internships by job vacancy to align the major and internship experiences of our submitted resume with the requirements of the job posting (for details, see Appendix, Section 1.1). Support for Socialism with Chinese characteristics is our signal of political loyalty, while support for Western democracy and multi-party competition is our signal of political dissent. We interviewed 40 students and 12 employers to identify three attributes that can potentially signal these political orientations on a resume: the applicant’s major, courses highlighted in the resume, and extracurricular study group. We then conducted an online conjoint survey experiment to select the attribute with the best construct validity. Conjoint experiments are widely used in political science to measure the causal effects of multiple attributes in a proﬁle (Hainmeuller et al. 2014). We asked 121 respondents to review resumes side-by-side and assess political conformity to the CCP, academic merit, political connections (a total of 1,210 resumes were assessed). Extracurricular study group emerged as the attribute with the strongest impact on assess- ments of political conformity in the expected direction (treatment is effective) and with the smallest impact on merit and connections (treatment is clean). For details, see Appendix,

11The three resumes submitted to each job vacancy had different names, different universities, different internship experiences, different extracurricular activities, different certiﬁcates, and different formats by randomly selecting elements from their respective pools without replacement. For the remaining compo- nents on the resume (e.g. gender and CCP membership), we selected an element from the corresponding pool with replacement.

12 Section 1.2. Participation in a “Socialism with Chinese Characteristics Study Group” is used to signal political loyalty, participation in a “Western Political Philosophy Study Group” is used to signal political dissent, and participation in a “Comic Book Club” is included as an apolitical control (Table1). This apolitical control serves as a neutral comparison group in our ﬁnal manipulation check of treatment validity (more details below), and serves as a measure of the baseline callback rate in the audit experiment. Such a baseline allows us to determine whether differences in callback rates between the dissent and loyalty treatments derive from a penalty on dissent or a reward for conformity. Each extracurricular is

Table 1: Treatments

Treatment Details of Treatment in Resume Political XX University Socialism with Chinese Characteristics Study Group conformity - Lead group members in reading articles, such as “Blacksmiths Need their Own Hardware” from General Secretary Xi Jinping’s Major Speeches Reader Series - Organize weekly meetings to discuss impressions of work on socialism with Chinese characteristics - Through my activities in the Study Group, I believe that the only way China can develop is through socialism with Chinese characteristics Political dissent XX University Western Political Philosophy Study Group - Lead group members in reading classics of western philosophy, such as the works by Locke and Rousseau - Organize weekly meetings to discuss impressions of classics of western political philosophy - Through my activities in the Study Group, I believe that adopting Western style democracy and multi-party system can help China develop Apolitical XX University Comic Book Club (control) - Lead group members in reading Chinese and Foreign comics, such as Phoenix and Basara - Organize weekly meetings to discuss impressions of comic books - Through my activities in the Comic Book Club, I have found that comics enrich my life and cultivate my mind described with up to three bullet points. The ﬁrst bullet highlights leadership capabilities, the second emphasizes organizational capabilities, and the third describes what the appli-

13 cant has learned from the activity, which is an overt statement of the applicant’s political position. These bullet points were randomly selected to be included in the submitted resumes,12 making it less likely that particularities of the extracurricular activity description, rather than the political orientation, drive employer callbacks.

3.1.2 Multi-dimensional Construct

Any treatment construct used in an audit experiment will be multi-dimensional, and our treatment conditions may signal other job seeker characteristics besides political orientation. To measure what other characteristics are conveyed by the experimental treatments and to compare the extent to which these treatments convey these other characteristics as oppose to political orientation, we conducted another conjoint survey experiment. We recruited 320 online respondents with work experience in mainland China and asked them to assume the role of a HR manager, compare two job candidate profiles side by side, and rate each candidate on political dissent/loyalty as well as 17 other characteristics that hypothetically can be associated with our treatment and influence employer callbacks. The results of this conjoint experiment (see Figure1) show that our proxy for political orientation signals political conformity and political dissent in the expected direction and that our treatment is a much stronger signal of political orientation than of other applicant characteristics. The y-axis of Figure1 lists all 18 characteristics, starting with political loyalty to the CCP. The x-axis shows the difference in ratings between applicants in the Socialism with Chinese Characteristics treatment group and applicants in the apolitical Ideological loyalty w control (denoted by s ), as well as the difference in ratings between applicants in the Western Political Western PoliticalSocialism Philosophy with Chinese treatment control and those in the control group (denoted Philosophy Study Group Characteristics Study Group Ideological loyalty by w ). The estimate for an applicant characteristics will appear to the right of the zero Politically active w s Creative s wWesternvertical Political line if a treatment increasesSocialism rating with Chinese on that characteristic compared to the apolitical Conservative Philosophyw Study Group s Characteristics Study Group Critical control and appears tow the left of the zero line if a treatment decreases ratings. Bookish Politically active w s w s Patriotic Creative swOur treatmentsw s for political dissent and conformity do not differ significantly from Obedient Conservative w s w s Collaborative Critical w s the apolitical control group ons 11 applicantw characteristics: academic merit, leadership, Dedicated Bookish w s w s Risk taking Patriotic s 12Thew name of the extracurricularw activitys and the third bullet point were always included in the resume Independent Obedient s auditw study. w s Strategic Collaborative s w w s Problem solving Dedicated s w w s Connections Risk taking sw s w Productive Independent ws s w 14 Influential Strategic sw s w Academic merit Problem solving ws s w LowerConnections rating than sw Higher rating than Comic BookProductive Club ws Comic Book Club Influential sw Academic−2 merit −1 0 1 ws 2 Lower rating than Higher rating than Rating ofComic Applicant Book Club Compared to Comic Book Club Comic Book Club

−2 −1 0 1 2 Rating of Applicant Compared to Comic Book Club Political loyalty w s

Western Political Socialism with Chinese Philosophy Study Group Characteristics Study Group

Politically active w s Creative s w Conservative w s Critical thinking s w Bookish w s Patriotic w s Obedient w s Collaborative w s Dedicated w s Risk taking s w Independent s w Strategic s w Problem solving sw Social connections sw Work efficiency ws Leadership sw Academic merit ws Lower rating than Higher rating than Comic Book Club Comic Book Club

−2 −1 0 1 2 Rating of Applicant Compared to Comic Book Club

Figure 1: Ratings of applicants who participate in Socialism with Chinese Characteris- tics Study Group and Western Political Philosophy Study Group compared with rating of applicants who participate in the Comic Book Club on political loyalty as well as 17 other characteristics that may affect hiring decisions; coefﬁcient estimate as well as 95% conﬁdence interval for each rating comparison is shown.

work efficiency, social connections, problem solving ability, strategic behavior, indepen- dence, dedication, obedience, patriotism, and attitude toward risk. There are three characteristics where ratings for both treatments differed from the control—political activism, collaborative ability, bookish-ness—but ratings between the two treatment groups were not distinguishable. For example, participants in the Socialism with Chinese Character- istics Study Group and the Western Political Philosophy Study Group were both rated as more politically active than the apolitical control group, but the levels of political activism between participants in the Socialism study group and the Western study group were in- distinguishable. For the final three characteristics—creativity, conservatism, and critical thinking—ratings for both treatments differed significantly from the control and differed

15 from each other. The Western Political Philosophy Study Group is associated with more creativity, less conservatism, and more critical thinking than the Socialism with Chinese Characteristics Study Group. However, the effect of our treatment constructs on ratings of these characteristics is much smaller in magnitude than the effect of the constructs on ratings of political orientation. This conjoint experiment shows that our treatments strongly signal political orientation in the expected direction. A person who includes participation in a Western Political Philosophy Study Group on his/her resume is perceived as a political dissenter while someone who includes Socialism with Chinese Characteristics Study Group is perceived as politically loyal. Our treatments do convey other job seeker characteristics, but political orientation has primacy. This means that even if ﬁrms hire a candidate in the political dissent treatment group for this candidate’s critical thinking abilities, those engage in hiring decisions are likely to recognize that they are hiring someone who expresses politically dissenting views.

3.2 Conjoint Survey Experiment with Hiring Managers

To gain a better understanding of the rationale behind the choices companies make, we conducted a conjoint survey experiment with 506 hiring managers across China between December 14, 2018 and January 6, 2019. Participants were recruited nationally through a domestic survey ﬁrm in China. All the 506 respondents had at least one year of experience in hiring, and we sampled respondents working in the same provinces and in the same ownership sectors as the job vacancies in our resume audit experiment (for characteristics of the hiring manager sample, see Appendix, Section 4.1).13 We showed three resumes, randomly selected from the resumes we used in the audit experiment and each signaling a different political orientation, to each hiring manager, in randomized order.14 After reviewing each resume, the hiring managers are asked whether or not they would advance the applicant to the next stage of the hiring process.15 Subse-

13All results from the conjoint survey experiment with hiring managers are adjusted using weights so the distribution of ownership sectors in the survey responses matches that of the resume audit experiment. 14The three bullet points under the extracurricular study group have equal probability to be included on a resume in this experiment. 15We ask hiring managers to assume the candidate is applying for a entry-level position that matches

16 quently, hiring managers were speciﬁcally asked how the extracurricular study group in the resume affected their callback decision and were asked to provide a reason for their response in an open-ended question. Hiring managers may not all be truthful in their evaluation of the political extracurricular activity because of preference falsiﬁcation or because of the cost of “advancing” candidates is much less tangible in a survey. This is a concern if we were using the conjoint experiment to estimate the prevalence of behaviors. However, we use the conjoint experiment to elucidate the rationale behind hiring practices, and we can do this as long as we have variation in hiring manager responses.

4 The Penalties and Rewards of Political Dissent

We first check and confirm that other resume characteristics—such as level of academic achievement, gender, CCP membership, and quality of the university—are balanced across treatment groups (see Table 4, Appendix Section 3.1). We then check and confirm that callbacks vary in expected ways. For example, all other characteristics being equal, applicants from top-tier universities get more callbacks than applicants from lower-tier universities, applicants who are geographically more proximate to the job receive more callbacks than those who live further away, and men receive more callbacks than women (see Table 6, Appendix Section 3.3).16

Non-convergence: Among the 6,407 jobs we applied to in the resume audit experiment, we did not receive callbacks from 4,703 (73%). Although no callback represents equal treatment of loyalty and dissent, it may be due to other characteristics of the resume. For example, jobs where a Ph.D. was preferred may not call back any of our applicants, who at most had a master’s degree. We focus on the 1,704 jobs where we received at least one callback. As predicted by the theory, among these employers, there is no convergence in terms of response to political dissent. Table2 shows that among the 1,704 employers his/her major. This increases the level of comparability with the resume audit study where college major is matched to the job vacancy, and where jobs were entry-level positions. 16Discrimination against women is a well-documented problem in China’s labor market (Dong and Bowles 2002; Kuhn and Shen 2009; Magnani and Zhu 2012; Zhang et al. 2004).

17 Table 2: Distribution of Actions at Vacancy level between Loyalty (L) and Dissent (D)

Number of % of vacancies Actions vacancies with callbacks Equal treatment, no callbacks (0D + 0L) 4,703 - Equal treatment, both called back (1D + 1L) 700 41% Loyalty favored, dissenter not called back (0D + 1L) 551 32% Dissent favored, loyalist not called back (1D + 0L) 453 27%

that called back, the largest proportion, 700 (41%), engaged in passive resistance, calling back the resume expressing political dissent as well as the one expressing loyalty (1D + 1L). The next largest proportion of ﬁrms, 551 (32%), perpetuated government censorship, calling back the loyalist but not the dissenting candidate (0D + 1L). Finally, 453 (27%) ﬁrms engaged in active resistance, calling back the dissenting but not conformist candidate (1D + 0L).

Penalty on Dissent: While the majority of ﬁrms engage in passive or active resistance, there is a penalty on dissent. First, we conduct a non-parametric analysis of callbacks at the job vacancy level. As Table2 shows, the proportion of employers that favor loyalty is higher than the proportion of employers that favor dissent by 5 percentage points (18.5 percent). A t-test between these two groups shows that we can reject the null hypothesis of no difference between favoring loyalty and favoring dissent (0D + 1L = 1D + 0L).17 Second, we estimate the effect of our randomly assigned treatment groups on employer callbacks at the resume level. The dependent variable is a dummy variable for whether a resume received a callback. Results are based on logistic regression, but re- main substantively unchanged if other parametric models are used. To disaggregate the difference in callbacks due to dissent vs. loyalty, we use the apolitical condition, participation in the Comic Book Club, as the comparison group. The callback rate of applicants participating in the Comic Book Club was 19.7%. The overall callback rate, based on the

17The p-value of a two-tailed test among employers with at least one callback is 0.0002.

18 19,221 resumes submitted, was 19.1%. Table3 shows that political dissent decreases callbacks across all model specifica- tions while political loyalty does not have any statistically significant effects on callback rates. In the first column, the only variables are dummy variables for political loyalty and

Table 3: Effect of Loyalty and Dissent on Callback Rates

(1) (2) (3) Loyalty −0.010 −0.030 −0.006 (0.045) (0.078) (0.046) Dissent −0.110∗∗ −0.330∗∗∗ −0.118∗∗ (0.045) (0.078) (0.047) Observations 19,221 19,221 19,221 Vacancy ﬁxed effects No Yes No Controls No No Yes

Notes: The dependent variable is a dummy variable for whether the employer called back. All columns use logistic regression. ∗p<0.1; ∗∗p<0.05; ∗∗∗p<0.01 dissent. Columns (2) adds vacancy ﬁxed effects, and column (3) includes demeaned covariates and their interactions with the treatment dummies (Lin 2013). Covariates include resume characteristics (gender, prestige of university, geographic region of university, CCP membership, major, other skills and activities, and hobbies), the ownership sector of the job vacancy, and the applicant’s geographic proximity to the job vacancy.18 Ex- pressing political dissent on the resume decreases callback rates by 9% (1.7 percentage points) when compared to the apolitical condition and decreases callback rates by 8% (1.5 percentage points) when compared to the political loyalty treatment.19

18Geographic proximity equals 1 if the candidate’s university is in the same province as the job vacancy, and equals 0 otherwise. Other than the applicant’s university, the resume does not include any other signal of the applicant’s geographic location or preference. Robust standard errors are clustered at the vacancy level, but substantive results do not change if standard errors are not clustered or if robust standard errors are not used. 19The percentage decrease in callback rates = decrease in callback rates in percentage points / callback rates in the apolitical control. For example, (19.7% − 18.0%)/19.7% = 9%.

19 5 Why Employers Penalize and Reward Dissent

In the conjoint survey experiment of hiring managers, 485 out of 506 hiring managers gave at least one “callback,” Among the 485, 73% said they would advance both politically loyal and dissenting candidates to the next round of the application process, 15% said they would advance a politically loyal candidate but not a dissenting one, and 11% said they would advance a candidate who supports Western democracy and institutions but not a candidate who expresses political loyalty. Overall, hiring managers were 7% less likely to call back politically dissenting candidates than politically loyal ones.20 The size of the penalty on dissent, comparing callbacks for dissenting vs. loyal candidates, is similar between the 2016 audit experiment (8%) and the 2018/2019 hiring manager conjoint experiment (7%). This provides suggestive evidence that ideological conformity did not increase from 2016 to 2018 in China’s labor market despite the CCP’s intensifying ideological push during this time period. However, the resume-level “callback” rate of the conjoint experiment was, at 81.3%, much higher than the resume-level callback rate of the audit experiment, which was 19.1%. In addition, among callbacks, a much larger share of hiring managers passively resisted censorship in the conjoint experiment (73%) than firms did in the audit experiment (41%). We expected there to be differences between the two types of experiments, which is why we conducted an audit experiment despite its costs and risks. We do not rely on the conjoint experiment to estimate the distribution of firm behaviors, but instead use open-ended responses that follow the conjoint treatment to illuminate hiring managers’ rationale for perpetuating and resisting government censorship. After hiring managers say whether they would advance the applicant to the next stage of hiring process, they are specifically asked how the political extracurricular group in the resume affected their callback decisions. In line with the theory, employers’ divergent treatments of political dissent are all motivated by the material incentive to hire the most productive

20In the audit experiment, an overt statement of the applicant’s political position is always included as a bullet point in the extracurricular study group entry of the resume (third bullet point of Table1), but in the conjoint experiment, the bullet points are fully randomized. Subsetting responses in the conjoint experiment to those with an explicit political position does not substantially change any results—here, hiring managers are 8 percent (6.9 percentage points) less likely to callback dissenters than loyalists.

20 workers.

Perpetuating government censorship: We find that hiring managers who perpetuate government censorship—who call back candidates that express political loyalty and reject candidates that express dissent—do so for two reasons. The first reason relates to the general productivity of a worker who’s willing to express political dissent and the influence of this worker on his or her colleagues’ productivity. Hiring managers believed that dissenters’ grievances against the government would distract the employee and would negatively affect coworkers. One hiring explained that political dissenters:

are likely to feel discontent with the status quo in China. This may bring negativity into his/her work over time, and his/her discourse may adversely affect the working environment.

This contrasts to hiring managers who believe that loyal candidates will be more focused and a source of positive inﬂuence:

This student studied Socialism with Chinese characteristics carefully so has a deep understanding of the spirit of the [Chinese Communist] Party; I believe the candidate will be fully devoted to work and can positively inﬂuence coworkers.

The second reason for penalizing dissent relates to the ability to work effectively with the government. Hiring managers wrote that individuals willing to express political dissent would be less effective in a context where government relations are crucial for business success. Hiring managers worried that dissenters would be unwilling to or incapable of helping the ﬁrm execute state-assigned tasks. This rationale leads hiring managers to reject political dissenters even when they are sympathetic to the candidate. For example, one hiring manager wrote:

This student’s values do not fit with China’s circumstances, making it more likely s/he will come into conflict with what the firm requires for productivity, and creating unseen dangers down the road. That said, it’s worth affirming the fact that this student has unique, independent thinking.

21 Another hiring manager wrote that a candidate who expresses political dissent may not “comply with some tasks assigned by the government to the work unit” In contrast, hiring managers believed that candidates expressing political loyalty to the CCP were more likely to be effective in working on tasks that required compliance or cooperation with the regime and working in an environment where business success often hinges on government relations. One hiring manager wrote that a politically conformist candidate “can comply with the relevant requirements of government bureaus and changing policies.” Another hiring manager saw business value in a politically loyal candidate, writing that such candidate “understands China’s political and economic environment and can add value to my company’s developmental strategy in this contemporary context. Both reasons hiring managers have for favoring political conformity while rejecting political dissent relate to productivity and the ﬁrm’s material interests. Hiring managers reject those who express political dissent because they think it is bad for business.

Active resistance to government censorship: However, concerns about worker effectiveness and productivity do not always lead hiring managers to reject candidates who express political dissent. In fact, hiring managers who actively resist government censorship by favoring candidates who express political dissent and rejecting those who express political conformity also do so because they believe those who express political dissent will be more productive and effective. The most frequent reason hiring managers give for preferring candidates who express dissent is that exposure to Western ideas produces more creative and open-minded thinkers. One hiring manager from a Chinese public institute wrote that a politically dissenting candidate “can bring new ideas and open minds in our work unit.” A hiring manager from a private Chinese ﬁrm wrote that a candidate who expresses politically dissenting views is preferred because “ Western ideology is more open, which helps one think more broadly about questions.” Finally, a hiring manager working for a foreign ﬁrm operating in China wrote that familiarity with Western ideology “helps the applicant be more collaborative and innovative on the job” Relatedly, the rationale hiring managers provide for rejecting candidates who express political loyalty is that loyalists are more likely to be

22 rigid in their thinking. One hiring manager from a Chinese state-owned enterprise wrote:

My work unit needs creative, thoughtful, and open-minded talent. Studying Socialism with Chinese Characteristics from childhood [until college] ossiﬁes thinking, making it hard to generate innovative ideas.

A second reason given by hiring managers for preferring candidates who express politically dissenting views is that these candidates bring valuable knowledge of and from the West. One hiring manager from a Chinese state-owned enterprise said that the politically dissenting candidate is more likely to have “international vision and broad knowledge” Another hiring manager made this more explicit by writing:

To a certain extent, western political ideology reﬂects the economy and cul- ture of the West. We can learn from and improve our technologies from the Western development experience.

Both reasons hiring manager have for favoring politically dissenting candidates while rejecting candidates who express political conformity relate to productivity and the ﬁrm’s material interests. Hiring managers favor those who express politically dissenting views because they think it is good for business, because these candidate are more likely to be innovative and bring valuable knowledge to the ﬁrm.

Passive resistance to government censorship: Hiring managers willing to advance both loyal and dissenting candidates to the next stage of the hiring process do so because they believe political expression is a personal preference and that other resume characteristics are more relevant for hiring decisions. One hiring manager explained that:

Socialism with Chinese Characteristics is something associated with one’s personal value system and one’s personal interests. It has relatively little to do with professional life

A different hiring manager wrote that “Studying Western political thought is a personal value and does not have much impact on work.” These hiring managers regard other resumes characteristics as more indicative of the quality of the candidate. One hiring manager from a private sector ﬁrm said: “We put more value on internship experience and the

23 alignment between the major and the job position. Other factors do not matter much.” A hiring manager from a state-owned enterprise echoed this view:

As an enterprise, we pay more attention to the student’s major and internship experience. Experience in political study groups has no impact on employment at our company.

Finally a hiring manager at a Chinese public institution wrote that “Our work unit cares about capabilities rather than political beliefs.” What is striking about these responses is that hiring managers are knowingly putting aside political expression and political orientation when evaluating job applicants. We consider these actions a form of passive resistance rather than a politically neutral action because hiring managers are aware of the political implications of their action, because they are knowingly making the choice to disregard politics in a context where the CCP has tried to push ideological conformity and sanction ideological dissent in workplace.

6 Exploring Heterogeneous Effects

After seeing the different rationales provided by hiring managers, one of the first questions that comes to mind is whether there are systematic differences between sub-groups in penalties on dissent. Our prior—based on our theory and anecdotal examples of companies that have perpetuated government censorship in China—is there should not be differences in firm behavior by sub-groups such as ownership sector, industry, region, type of job position or hiring managers characteristics. Instead, we expect differences to be unique to the individual firms based on the background and experiences of the firm, its executives, its hiring team, and other employees. To explore whether or not this is the case, we systematically code information about the job position and we gather information on the ownership sector and industry of the company from the job posting and the firm’s registration record with the Chinese State Administration for Market Regulation.21 We analyze heterogeneous effects on callback

21We obtained each ﬁrm’s registration record from a publicly accessible database run by the State Ad- ministration for Market Regulation: http://gsxt.saic.gov.cn. Ideally, we would like to gather other ﬁrm

24 rates based on ﬁrm and job vacancy characteristics using data from the resume audit experiment and heterogeneous effects on “callback” rates based on hiring manager characteristics from the conjoint survey experiment.

Firm and Job Vacancy Characteristics: Overall, we do not see statistically significant differences in the effect of political dissent vs. loyalty based on firm or job vacancy characteristics. Figure2 shows the heterogeneous effects by job vacancy characteristics, with 95% confidence intervals and robust standard errors clustered at the job vacancy level (for regression results, see Appendix, Section 5.1). For each job vacancy characteristic, the comparison group is all other job vacancies without that characteristic. For example, the top estimate in Figure2 represents the difference in callback rate between politically dissenting and politically conformist candidates in job positing made by public institutions vs. job positing made by firms of all other ownership types. We see that there is virtually no difference in the effect of dissent vs. loyalty when comparing job vacancies posted by Chinese public institutions, such as public schools and hospitals, and job vacancies posted by other types of firms. Similarly, the penalty on dissent when compared to loyalty is not significantly different for state-owned enterprises, private Chinese firms, or foreign / joint venture firms operating in China. The story is largely the same by industry. Industries that we may consider politically important such as energy and natural resources do not impose a larger penalty on dissent. We also do not see statistically significant differences in the effect of dissent vs. loyalty by whether the job is full time or part time or by geographic location of the job. Research on public preferences show that Eastern coastal areas typically have more politically liberal views (Pan and Xu 2017); however, there are no statistically significant differences in penalties on dissent for jobs in any one region, including the Eastern seaboard, compared to other regions. Finally, the penalty on dissent does not differ by the type of job position. We code all job positions into one of six mutually exclusive types. Technical jobs are high-skilled jobs requiring specialized technical training (e.g. computer pro- characteristics—such as revenue, profit margin, number of employees, its competitiveness—but existing databases do not have these information for the majority of the 6,407 firms in our resume experiment. As a result, analysis based on other firm characteristics would be subject to large amounts of bias.

25 Ownership sector: Public institution ● SOE ● Private ● Foreign ● Industry: Technology ● Non−profit ● Media & Education ● Energy & Resource ● Real Estate ● Finance ● Auto & Manufacturing ● Health ● Consumer ● Agriculture ● Other(Service) ● Full/part time of position: Full−time ● Region of position: East China ● Middle China ● West China ● Cross regions in China ● Type of position: Technical job ● Professionals ● Teacher ● Secretarial ● Blue collar service ● Blue collar worker ●

More penalty Less penalty on dissent on dissent

−0.2 −0.1 0.0 0.1 0.2 Effect of Dissent vs. Loyalty Compared to Rest of Sample Figure 2: Heterogeneous effects on callbacks from audit experiment for dissent vs. loyalty by job vacancy characteristics, with 95% conﬁdence intervals and robust standard errors are clustered at the job vacancy level. grammers and electrical engineers); professional jobs are all other white collar jobs (e.g. lawyer, doctor, accountant); teacher jobs are teaching positions at all levels, secretarial positions are administrative and clerical positions; blue collar service jobs are positions for telephone operators, servers at restaurants, sales clerks, and toll collectors; blue collar worker positions are low-skilled jobs requiring physical labor in factories or construction sites. Because China’s education curriculum has been reformed to emphasize ideological indoctrination (Cantoni et al. 2017), we might expect employers of teachers to impose greater penalties on dissent, but we do not ﬁnd this to be the case.

26 The only statistically significant difference in the effect of dissent vs. loyalty is between firms in the technology industry and all other firms. Employers in the technology industry, which includes Internet, telecommunications, and computer hardware/software companies, penalize dissent more than firms in other industries by 2.6 percentage points, and this difference is significant at 0.05 level. None of technology industry positions we applied to were jobs related to content censorship; instead, they were technical positions such as computer programmer and database administrator as well as professional positions in marketing and finance. However, open-ended responses from technology firm hiring managers in the conjoint survey show that tech firms are more likely to fear that candidates who express dissent will be less effective in a business context where understanding and executing rapidly evolving government directives on content censorship are crucial, even compared to related sectors such as education and media. Table4 shows the percentage of hiring managers, by industry, who penalize dissent in the conjoint survey and shows the proportion associated with the two rationales described in Section5: lower general productivity, and lower effectiveness in a context where complying with the government is critical. While the percentage of hiring managers who believe that politi-

Table 4: Rationale for Penalizing Dissent by Industry (Percent of Hiring Managers)

Rationale for penalizing dissent Tech Non-Tech Media & Education

Lower general productivity 24% 27% 26% Ineffective in gov’t compliance 23% 13% 12%

Total Percent 47% 40% 38%

cal dissent lowers general productivity is similar across industries (24% to 27%), hiring managers in the tech industry are substantially more likely to worry that dissenters will be ineffective in carrying out and complying with government policies (23%) than hiring managers in media and education (12%), or the average for all non-tech ﬁrms (13%). One possible reason for the greater penalty on dissent on tech is that in education and media, the government provides more structured and stable guidance—e.g., textbooks are pre- approved by the government— whereas technology ﬁrms have relatively more discretion

27 over what content to censor and face a large-number of ambiguous regulations, which may make them more cautious (Stern and Hassid 2012).

Hiring Manager Characteristics: Overall, we also do not see statistically signiﬁcant differences in the penalty on political dissent based on hiring manager characteristics. Figure3 shows the heterogeneous effects of dissent vs. loyalty on reported callbacks in

Female ● Ethnic minorities (non−Han) ● Urban Hukou ● CCP member ● Have direct reports ● Age group: <=24 years old ● 25−34 years old ● 35−44 years old ● >=45 years old ● Work experience: 1−3 years ● 4−7 years ● >=8 years ● Hiring experience: 1−3 years ● 4−7 years ● >=8 years ● Hukou region: East China ● Middle China ● West China ● Education level: High school or below ● College ● Graduate ● Monthly income (RMB): Low (<=5,000) ● Middle (5,001−8,000) ● Upper Middle (8,001−20,000) ● High (>=20,001) ●

More penalty Less penalty on dissent on dissent

−0.6 −0.4 −0.2 0.0 0.2 0.4 0.6 Effect of Dissent vs. Loyalty Compared to Rest of Sample Figure 3: Heterogeneous effects on reported callback rates from conjoint survey experiment for dissent vs. loyalty by hiring manager characteristics, with 95% conﬁdence intervals and robust standard errors are clustered at the respondent level. the conjoint survey experiment by hiring manager characteristics, with 95% conﬁdence intervals and robust standard errors clustered at the respondent level (for regression re-

28 sults, see Appendix, Section 5.2). We do not see statistically significant differences in the penalty on candidates who express political dissent based on respondent characteristics such as gender, ethnicity, urban residential permit, region, CCP membership, age, years of work experience, years of work experience in hiring, level of education, and income. The only statistically significant difference we see is that hiring managers in the conjoint survey who have direct reports are less likely to penalize candidates expressing political dissent by 13.5 percentage points than hiring managers without direct reports, and this difference is significant at 0.05 level. Open-ended responses suggest that hiring managers who believe politically dissenting candidates can bring valuable knowledge of the West to their firms is higher among hiring managers who have direct reports (11%) than among those without (4%). The percentage of hiring managers who view politically dissenting candidates as creative and open-minded is similar between those with direct reports (36%) and those without (38%).

7 Conclusion

Despite China’s economic power, we do not find that companies operating in China are as a whole actively perpetuating government censorship in the semi-private setting of employee hiring. The largest proportion of employers passively resist government pressures to censor dissent by putting aside expressions of political dissent and focusing on other job candidate characteristics. Slightly over one third of employers reject candidates who express political dissent because they believe these candidates are less likely than candidates expressing political conformity to work in a productive and effective manner in a context where government relations are crucial. Slightly less than one third of employers prefer candidates that express political dissent because they believe these candidates will be more creative and more likely to have valuable knowledge of the West. Our theory and these results have implications for our understanding of the role of firms in China and of firms operating in authoritarian regimes. The actions of profit- seeking firms do not converge, even when they are operating in highly lucrative markets controlled by a high-capacity authoritarian regime interested in suppressing political dis-

29 sent. Just as past research has shown that it is not necessarily in the interest of ﬁrms to push for democratization, it is also not necessarily in the interest of ﬁrms to adhere to political demands of autocrats.

Scope Conditions: These results are subject to important scope conditions. First, we focus on a type of behavior by firms—hiring—that has relatively low visibility. As a result, it is difficult and costly for the regime to monitor and sanction these actions, especially since the majority of companies do not comply. Firms may behave differently and there may be more convergence in behavior when they engage in more visible actions such as product launches and new commercial partnerships; however, we should keep in mind that the vast majority of actions firms take on a day-to-day basis are of low visibility. Sec- ond, we focus on a class of firm behavior that is relatively low-stakes. Our experiments focus on hiring decisions for entry-level jobs for college graduates. There may be more convergence in firm’s hiring behavior for some other segments of the labor market, e.g., higher-stakes positions such as top-level executives. Finally, the results of this study are relevant to authoritarian regimes where despite heavy government intervention in the economy, there is some level of market competition. An important assumption of the theory is that firms care about the performance and productivity of its employees. It is debatable whether this assumption holds in authoritarian settings where firms operating domestically are wholly state-controlled and whether these results extend. However, authoritarian regimes are increasing embedded in the global economy, and with few exceptions, even when firms operating in the country are state-controlled, the quality of employees may matter for firms.

Broader Implications: These results add nuance to our understanding of the factors that shape China’s labor market. Some scholars argue that China has developed a full-blown labor market where ﬁrms reward human capital (education and professional experience) over political factors (Chan et al. 1992; Li and Zhang 2010; Meng et al. 2013; Nee 1992). Other scholars contend that political factors retain primacy in China’s labor market due to continued bureaucratic and collective control of enterprises (Fan et al. 2007; Walder

30 1995; Walder et al. 2000; Li et al. 2008; Liu 2012; Lin 1995; Oi 1992; You and Du 2012). Previous scholarship has generally focused on political connections. We identify another factor, political expression, that affects job prospects in contemporary China. These results also provide a characterization of the Xi Jinping era that does not emphasize ideological conformity. The CCP, under the leadership of Xi, has been pushing ideology to a prominence unseen since the Maoist era, especially since the fall of 2017. However, our results suggest that the penalty on dissent imposed by firms—8% in the 2016 audit experiment and 7% in the 2018/19 hiring manager conjoint survey—has not increased in any way commiserate with the regime’s renewed emphasis on ideology. It is possible that conformity simply lags behind the state’s effort and perhaps we will see more conformity as the state’s ideological push continues.22 In addition, a conjoint experiment is not directly comparable to resume audit experiment. We hope future research continues to delve into questions of dissent and conformity in firm’s hiring behavior. One benefit experimental methods can bring to future studies is that experiments can function as a historical bench-marking device because they can be re-run to see if and how things change. Finally, our results have implications for policy. U.S. policymakers have called into question whether engagement, the foundation of U.S. policy toward China for the past half century, should end (Diamond and Schell 2018). There are many reasons for this, but among them is the fact that China has not democratized, and the prospects of a politically liberal China seem increasingly dim because China’s current leaders have explicitly described China’s official ideology as an alternative to Western democracy and capitalism (Brands 2018; Diamond and Schell 2018; Economy 2018).23 It is easy to view China’s current ideological push as a sign of China’s resistance to political change. However, our finding that the majority of Chinese firms actively or passively resist censoring political dissent in their hiring practice suggests that the power of the CCP’s ideological cam-

22Since the beginning of 2019, the CCP has released a new app called Xuexi Qiangguo [Study Strong Country] that contains content related to Xi’s political doctrines and ideology. Party cadres across the country have been required to use the app daily, and the app monitors user activity (Huang 2019). 23See Xi’s speech at the 19th National Congress of the Communist Party of China. Full Chinese text at https://bit.ly/2FZiltb; ofﬁcial English translation at https://bit.ly/2A47JTy.

31 paigns may be more limited than previously thought. While hiring managers’ resistance to censoring support for Western democracy is by no means sufﬁcient for regime change, policymakers should not regard China as a country characterized by complete unity and should not assume that the country as a whole has rejected democratic political institutions and ideas. We hope this research opens the way for more research on the role of ﬁrms and the role of ideology in authoritarian politics.

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