Negative investment in China: financing constraints and restructuring versus growth

Sai Ding, Alessandra Guariglia and John Knight

Discussion Papers from University of Nottingham, GEP

Abstract: This paper addresses a puzzle in China’s investment pattern: despite high aggregate investment and remarkable economic growth, negative investment is commonly found at the microeconomic level. Using a large firm-level dataset, we show that private firms divest in order to raise capital. We also find that, owing to over-investment and mis-investment in the past, state-owned firms have had to restructure by getting rid of obsolete capital in the face of increasing competition and hardening budget constraints. Finally, rapid economic growth counterweighs both effects for all types of firms, with a larger impact in the private and foreign sectors.

Keywords: Negative investment; Financial constraints; Industrial restructuring; Economic transition; China; firm-level data (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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https://www.nottingham.ac.uk/gep/documents/papers/2012/12-01.pdf (application/pdf)

Related works:
Journal Article: Negative Investment in China: Financing Constraints and Restructuring versus Growth (2021)
Working Paper: Negative investment in China: financing constraints and restructuring versus growth (2010)
Working Paper: Negative investment in China: financing constraints and restructuring versus growth (2010)
Working Paper: Negative investment in China: financing constraints and restructuring versus growth (2010)
Working Paper: Negative investment in China: financing constraints and restructuring versus growth (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:12/01

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