Local Protectionism in China’s Government Disclosure of Food Safety Information

This paper provides new evidence of local protectionism by demonstrating government information manipulation as an important yet understudied strategy to protect local firms. Focusing on China’s food safety information disclosure, we compare food safety testing results conducted by local and national administrations for the same product within the same manufacturer and year. Our findings reveal significantly lower failure rates in food safety tests conducted by the local prefectural administration, holding across model specifications, accounting for different fixed effects, collusions between manufacturers and independent inspection agencies, technical differences in testing between administrations and the impact of the pandemic. Food manufacturing firms with higher registration capital and those strategic to local economies show lower failure rates reported by local administrations, particularly in regions with aggressive GDP growth targets. This implies competition among regional governments drives a local bias in public information reporting, undermining the accuracy and transparency of food safety disclosure.