Can a Tiger Change Its Stripes? Reform of Chinese State-Owned Enterprises in the Penumbra of the State

Ann Harrison (), Marshall Meyer, Peichun Wang, Linda Zhao and Minyuan Zhao

No 25475, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The majority of state-owned enterprises (SOEs) in China were privatized through ownership reforms over the last two decades. Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2013, we show that privatized SOEs continue to benefit from government support relative to private enterprises. Compared to private firms that were never state-owned, privatized SOEs are favored by low interest loans and government subsidies. These differences are more salient with the Chinese government’s trillion-dollar stimulus package introduced after the 2008 global financial crisis. Moreover, both SOEs and privatized SOEs significantly under-perform in profitability compared to private firms. Nevertheless there are clear improvements in performance post-privatization. The tiger can change its stripes; however, the government’s behavior seems to be sticky.

JEL-codes: L3 L33 O31 O32 O33 P31 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-cna and nep-tra
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