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Explaining the Persistence of State-ownership in China

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  • Imai, Ken'ichi

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.

Suggested Citation

  • Imai, Ken'ichi, 2006. "Explaining the Persistence of State-ownership in China," IDE Discussion Papers 64, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper64
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    Citations

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    Cited by:

    1. Mattlin, Mikael, 2007. "The Chinese government's new approach to ownership and financial control of strategic state-owned enterprises," BOFIT Discussion Papers 10/2007, Bank of Finland Institute for Emerging Economies (BOFIT).
    2. Mattlin, Mikael, 2007. "The Chinese government's new approach to ownership and financial control of strategic state-owned enterprises," BOFIT Discussion Papers 10/2007, Bank of Finland, Institute for Economies in Transition.
    3. Tong, Sarah Y., 2009. "Why privatize or why not? Empirical evidence from China's SOEs reform," China Economic Review, Elsevier, vol. 20(3), pages 402-413, September.
    4. repec:zbw:bofitp:2007_010 is not listed on IDEAS
    5. Gao, Song, 2010. "Impacts of Restructurings on Manufacturing Productive Efficiency: Evidence from China," MPRA Paper 24766, University Library of Munich, Germany.
    6. Imai, Ken'ichi & Shiu, Jingming, 2007. "A Divergent Path of Industrial Upgrading: Emergence and Evolution of the Mobile Handset Industry in China," IDE Discussion Papers 125, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    More about this item

    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;
    All these keywords.

    JEL classification:

    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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