Explaining the Persistence of State-ownership in China

Ken Imai

No 64, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: In the recent decade China witnessed an upsurge of privatization of small and medium state-owned enterprises (SOEs). In contrast to the consequent sharp reduction in the number of firms, however, the estimated share of broadly-defined SOEs that includes limited liabilities companies controlled by the State has shown virtually no sign of decline. We explain the backgrounds of this seemingly paradoxical persistence of state-ownership by looking into two distinctive types of large SOEs: traditional SOEs that remain dominant in oligopolistic industries and manager-controlled SOEs surviving in competitive industries. The two types exemplify several factors constraining further progress of SOE reform such as, financing the costs of restructuring, redefining the role of the State as the single dominant shareholder, and balancing the interests of the State and managers as entrepreneurs. Sorting these issues out will take time, which means that instabilities associated with state corporate ownership will remain in place in the foreseeable future in China.

Keywords: State-owned enterprise; Corporate governance; China’s economic reform; Public enterprises; Small and medium-scale enterprises; Industrial management; China; 国有企業; 経済改革; コーポレートガバナンス; 公企業; 中小企業; 企業経営; 中国 (search for similar items in EconPapers)
JEL-codes: L29 L32 P26 (search for similar items in EconPapers)
Date: 2006-06-01
New Economics Papers: this item is included in nep-cna, nep-dev, nep-sea and nep-tra
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Citations: View citations in EconPapers (5)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 64. 2006-06-01

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