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<p>This study examines how organized crime&#xa0;affects China’s economic climate using a unique dataset from its 2018–2020 “Saohei Chu’e” campaign. It introduces a city-level indicator of organized crime presence in 182 cities at the prefectural level or higher. Our findings provide robust evidence that cities with increased organized crime presence exhibit a significantly worse economic climate. The analysis identifies three mechanisms through which organized crime harms the economic climate: suppressing corporate innovation, inducing government corruption, and thwarting individual entrepreneurship. Additionally, heterogeneity analysis finds that the destructive economic impact of the organized crime is more severe in China’s northeast region but weaker in cities characterized by higher levels of economic development and openness, as well as higher employment rates. This paper makes three contributions. First, it provides new evidence on the economic effects of organized crime in the Chinese context. Second, it enhances previous research by utilizing more theoretically grounded and detailed city-level data. Third, it offers empirical support for China’s recent shift toward normalized anti-gangsterism policies and practices.</p>

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The dark hand of the underworld: measuring the economic impact of organized crime

  • 期刊论文

  • 发表日期：

    2025年4月1日

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  • Wanqiang Wu,
  • Huanqi Lan,
  • Yong Ma,
  • Xifen Lin

摘要

This study examines how organized crime affects China’s economic climate using a unique dataset from its 2018–2020 “Saohei Chu’e” campaign. It introduces a city-level indicator of organized crime presence in 182 cities at the prefectural level or higher. Our findings provide robust evidence that cities with increased organized crime presence exhibit a significantly worse economic climate. The analysis identifies three mechanisms through which organized crime harms the economic climate: suppressing corporate innovation, inducing government corruption, and thwarting individual entrepreneurship. Additionally, heterogeneity analysis finds that the destructive economic impact of the organized crime is more severe in China’s northeast region but weaker in cities characterized by higher levels of economic development and openness, as well as higher employment rates. This paper makes three contributions. First, it provides new evidence on the economic effects of organized crime in the Chinese context. Second, it enhances previous research by utilizing more theoretically grounded and detailed city-level data. Third, it offers empirical support for China’s recent shift toward normalized anti-gangsterism policies and practices.