From Public to Private Savings: Decline of State Ownership in the Chinese Corporate Sector

Zhang Chunlin

Chapter 6 in Transition from Socialist to Market Economies, 2009, pp 123-141 from Palgrave Macmillan

Abstract: Abstract At the outset of the reform in 1978, state-owned enterprises (SOEs) completely dominated the corporate sector in China and accounted for nearly 80 percent of the gross value of industrial output. By 1998 this figure had dropped to 28 percent (NBS 1999, 423). In September 1999, the Communist Party of China (CPC) made further strategic decisions in the Fourth Plenum of the Central Committee on state ownership to withdraw the state from most industries and enterprises except for a few of strategic significance. This chapter provides an account of this decline in state ownership, adopting corporate finance as an analytical framework. Before the reform, the SOEs were financed by public savings, but market-oriented reform combined with the part privatization of agriculture shifted their reliance from public to private savings. Reform efforts forced the state to withdraw from the corporate sector. The liabilities that the government incurred in financing the SOEs would drive the reform toward further transformation of ownership.

Keywords: Corporate Governance; Banking System; State Sector; State Ownership; Private Saving (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-24498-6_7

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DOI: 10.1057/9780230244986_7

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