China started its transition from a planned economy to a market economy with some bold reforms in the government system. In particular, it decentralized the fiscal system in 1980 so that the central and local governments shared fiscal revenues according to certain sharing contracts. The fiscal decentralization has motivated local officials to lend a “helping hand” in pushing forward local economic growth (Jin et al., 2000). Another equally important reform, the reform of the personnel management system, was carried out at almost the same time, but its significance has long been overlooked in the literature. In this sense, our findings should help to draw attention to the role of China's internal political market, which not only provides incentives to local officials to promote economic growth, but also integrates the decentralized central-local fiscal mechanism in China.