Local protectionism in the Chinese construction industry: a data analysis of construction contractors’ credit scores

The Chinese government has recently introduced a credit scoring system to gauge the trustworthiness of construction contractors and urged public project owners to consider these scores during the tendering phase. Meanwhile, however, local protectionism, often seen as preferential policies and practices benefiting local firms over outside competitors, is a major concern in the construction industries of developing countries, particularly in China. Little is known about the presence and extent of local protectionism within this credit-scoring process. To find out, this study analyzes the scores of 15,301 construction firms across five cities in China’s Jiangsu Province. The findings reveal two key points: first, all five cities exhibit local protectionism, evidenced by significantly higher credit scores for local firms compared to non-local ones; and second, the size of a company has a significant moderating effect on this bias, with larger firms experiencing wider score disparities favoring local businesses. The study contributes to the knowledge of local protectionism and potential policy changes in the construction sector by providing empirical data analysis on China’s emerging credit evaluation system.