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Abstract Despite a recent line of research highlighting trust as an important determinant of residents’ happiness in Western countries, empirical evidence regarding the strength of these linkages in the developing world needs to be more comprehensive and conclusive. This paper contributes to this literature by performing a deeper examination into the trust-based explanation of happiness and, particularly, exploring the mediating role of social capital in rural China, where rapid economic growth coexists with gradual and fundamental social changes. Using data from the nationally representative cross-sectional Chinese General Social Survey (CGSS) in 2012, 2013, and 2015, we indicate that trust positively affects the happiness of rural residents and social capital. Our findings support the role of social capital in mediating happiness prediction. Furthermore, additional tests suggest heterogeneous social capital for different ages and degrees of regional market competition. Specifically, the mediating effect of social capital on rural residents over 30 years old (inclusive) and living in high-market competition areas is significant. These findings provide a valuable direction for the government that producing an environment that enhances social networks and facilitates the exchange of social support holds promise for improving the life satisfaction of the rural Chinese population. Trust can significantly improve rural residents’ happiness through increasing social capital. The government should effectively manage the rural social trust crisis and help rural residents build social capital in multiple ways, improving the life satisfaction of rural residents.
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