Our paper is also closely related to the empirical literature on the career concerns of firm managers. Both our methodology and findings are similar to those of studies on career concerns of managers in western corporations (Murphy and Zimmerman, 1993 and Weisbach, 1988).4 In fact, the evidence presented in this paper supports the characterization of the Chinese economy as being run in such a way that provincial leaders act as middle managers of a large corporation and their internal career mobility, which is controlled by headquarters, is closely tied to their economic performance.