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China'S Corporatization Drive: An Evaluation And Policy Implications

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  • TIAN ZHU
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    Abstract

    "This paper evaluates China's corporatization drive based on an assessment of the state sector's current problems. It shows that the worsening agency problem and excessive welfare burdens, as well as increasing competition, have contributed to the increasing losses experienced by Chinese state-owned enterprises (SOEs). While socialization of welfare burdens may improve SOEs' financial health, the mass corporatization drive by itself without institutional underpinnings, is unlikely to solve the more fundamental agency problem. The paper then argues that the key to a successful restructuring of the state sector lies in the fundamental transformation of state ownership and the creation of effective governance mechanisms, which, in turn, requires the development of the country's market-oriented institutions, in particular, financial markets and the rule of law." ("JEL" P20, P31) Copyright 1999 Western Economic Association International.

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    Bibliographic Info

    Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

    Volume (Year): 17 (1999)
    Issue (Month): 4 (October)
    Pages: 530-539

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    Handle: RePEc:bla:coecpo:v:17:y:1999:i:4:p:530-539

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    Cited by:
    1. Liu Wang & William Judge, 2012. "Managerial ownership and the role of privatization in transition economies: The case of China," Asia Pacific Journal of Management, Springer, vol. 29(2), pages 479-498, June.
    2. Kazuyuki Motohashi, 2005. "IT, Enterprise Reform and Productivity in Chinese Manufacturing Firms," Discussion papers 05025, Research Institute of Economy, Trade and Industry (RIETI).
    3. Cull, Robert & Xu, Lixin Colin, 2005. "Institutions, ownership, and finance: the determinants of profit reinvestment among Chinese firms," Journal of Financial Economics, Elsevier, vol. 77(1), pages 117-146, July.
    4. Sun, Qunyan & Zhang, Anming & Li, Jie, 2005. "A study of optimal state shares in mixed oligopoly: Implications for SOE reform and foreign competition," China Economic Review, Elsevier, vol. 16(1), pages 1-27.
    5. Goering, Gregory E. & Sarangi, Sudipta, 2012. "Durable goods produced by state owned enterprises," Economic Modelling, Elsevier, vol. 29(3), pages 893-899.
    6. Cull, Robert & Li, Wei & Sun, Bo & Xu, Lixin Colin, 2013. "Government connections and financial constraints : evidence from a large representative sample of Chinese firms," Policy Research Working Paper Series 6352, The World Bank.
    7. Zhang, Anming & Zhang, Yimin & Zhao, Ronald, 2002. "Profitability and productivity of Chinese industrial firms: Measurement and ownership implications," China Economic Review, Elsevier, vol. 13(1), pages 65-88.
    8. Jia Liu & Dong Pang, 2009. "Financial factors and company investment decisions in transitional China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 91-108.
    9. Li, Shaomin & Xia, Jun, 2008. "The Roles and Performance of State Firms and Non-State Firms in China's Economic Transition," World Development, Elsevier, vol. 36(1), pages 39-54, January.
    10. Xia, Jun & Li, Shaomin & Long, Cheryl, 2009. "The Transformation of Collectively Owned Enterprises and its Outcomes in China, 2001-05," World Development, Elsevier, vol. 37(10), pages 1651-1662, October.

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