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This book is constituted of the three main chapters of my Dphil thesis of the University of Oxford. The focus of the thesis is to explore the role of property rights and political connections on China's development. In the first chapter, I use a natural experiment, the exogenous increases of reserve requirements as a major tool of tightening monetary supply, to study the impact of political connections on the allocation of bank loans. Contrary to the traditional wisdom, I find that those firms with political connections experienced more pronounced decreases in their stock prices compared with non-connected firms, companies with a large drop in bank loans and a sharp increase in default probabilities of those connected firms.