State-Owned Enterprise in China: Reform, Performance, and Prospects

Gary Jefferson ()
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Gary Jefferson: Brandeis University

No 109R, Working Papers from Brandeis University, Department of Economics and International Business School

Abstract: State-owned enterprise reform in China has travelled a long and uneven road. Throughout, its key driver has been the introduction of competition across China’s transforming economy, both the surge of new forms of domestic ownership and the ever-expanding access to technology and business methods from abroad. By highlighting the commons/public-good character of China’s SOEs, this paper underscores the importance of a clear Coasian assignment of property rights and reduced transaction costs. The paper then reviews the three stages of the reform of China’s state sector over the past 30 years, drawing on the literature that describes the intentions, achievements, and shortcomings of China’s reform program. Finally, the paper reviews the 2015 reform Guidelines and the recent literature assessing these guidelines, including their intent to clearly distinguish between the public service and commercial mission of individual SOEs, so that state-owned firms can be more rigorously accountable to their fiduciary responsibilities. Arguably, the key issue for China’s successful SOE reform is whether successful reform of China’s state sector can be achieved at the firm level on a firm-by-firm basis or if, instead, it can only be achieved through deep institutional and political reform.

Pages: 31 pages
Date: 2016-08, Revised 2017-03
New Economics Papers: this item is included in nep-bec and nep-cna
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