IDEAS home Printed from https://ideas.repec.org/a/bla/pacecr/v25y2020i4p495-511.html
   My bibliography  Save this article

Economic performance of state‐owned enterprises under the Chinese Communist Party's supervision: Some reflection on China's economic reform

Author

Listed:
  • Len‐Kuo Hu
  • Daniel C. Lee

Abstract

This study examines the economic behaviour of state‐owned enterprises in China with special emphasis on the role of the state's sole party as either an agent (management) or supervisor in the enterprises. It is found that with the construction of an incentive‐compatible compensation design and the Chinese Communist Party orchestrating an appropriate objective guideline for its members to follow, state or socialist capitalism could still achieve efficient economic performance. If party members did not behave prudently or pursued their personal interests instead of the state's overall welfare, there could be grave consequences, including corruption, nepotism or even the breakdown of the system.

Suggested Citation

  • Len‐Kuo Hu & Daniel C. Lee, 2020. "Economic performance of state‐owned enterprises under the Chinese Communist Party's supervision: Some reflection on China's economic reform," Pacific Economic Review, Wiley Blackwell, vol. 25(4), pages 495-511, October.
    • Handle: RePEc:bla:pacecr:v:25:y:2020:i:4:p:495-511
    DOI: 10.1111/1468-0106.12298
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1468-0106.12298
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1468-0106.12298?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Antoine Faure-Grimaud & Jean-Jacques Laffont & David Martimort, 2003. "Collusion, Delegation and Supervision with Soft Information," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 253-279.
    2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    3. Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
    4. Lin, Yu-Hsiu & Hu, Len-Kuo, 2009. "Optimal supervision with moral hazard," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 473-485, August.
    5. Laffont, Jean-Jacques, 2001. "Incentives and Political Economy," OUP Catalogue, Oxford University Press, number 9780199248681.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lin, Yu-Hsiu & Hu, Len-Kuo, 2009. "Optimal supervision with moral hazard," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 473-485, August.
    2. Raffaele Fiocco & Mario Gilli, 2012. "Bargaining and Collusion in a Regulatory Model," Chapters, in: Joseph E. Harrington Jr & Yannis Katsoulacos (ed.), Recent Advances in the Analysis of Competition Policy and Regulation, chapter 12, Edward Elgar Publishing.
    3. Jacopo Bizzotto & Alessandro De Chiara, 2022. "Frequent audits and honest audits," Working Papers 202202, Oslo Metropolitan University, Oslo Business School.
    4. Chiappinelli, Olga, 2020. "Political corruption in the execution of public contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 116-140.
    5. Charles Angelucci & Antonio Russo, 2022. "Petty Corruption And Citizen Reports," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 831-848, May.
    6. T. Ida & M. Anbashi, 2008. "Analysis of vertical separation of regulators under adverse selection," Journal of Economics, Springer, vol. 93(1), pages 1-29, February.
    7. De Chiara, Alessandro & Livio, Luca & Ponce, Jorge, 2018. "Flexible and mandatory banking supervision," Journal of Financial Stability, Elsevier, vol. 34(C), pages 86-104.
    8. Mookherjee, Dilip & Tsumagari, Masatoshi, 2023. "Regulatory mechanism design with extortionary collusion," Journal of Economic Theory, Elsevier, vol. 208(C).
    9. Raffaele Fiocco & Mario Gilli, 2016. "Bargaining and collusion in a regulatory relationship," Journal of Economics, Springer, vol. 117(2), pages 93-116, March.
    10. Fahad Khalil & Doyoung Kim & Jacques Lawarrée, 2013. "Contracts offered by bureaucrats," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 686-711, December.
    11. Kuhn, Michael & Yan, Qianhui, 2006. "Quality monitoring, collusion and sub-contracting," Thuenen-Series of Applied Economic Theory 70, University of Rostock, Institute of Economics.
    12. Mookherjee, Dilip & Motta, Alberto & Tsumagari, Masatoshi, 2020. "Consulting collusive experts," Games and Economic Behavior, Elsevier, vol. 122(C), pages 290-317.
    13. Boggio, Margherita, 2011. "From Reluctant Privatization to Municipal Capitalism: an Overview on Ownership, Political Connections and Decentralization," MPRA Paper 46232, University Library of Munich, Germany.
    14. Meng, Dawen & Tian, Guoqiang, 2008. "Nonlinear Pricing with Arbitrage: On the Role of Correlation," MPRA Paper 41207, University Library of Munich, Germany.
    15. Francesco Giuli & Marco Manzo, 2009. "Enhancing Bank Transparency: What Role for the Supervision Authority?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(4), pages 1-58, December.
    16. Fahad Khalil & Jacques Lawarrée & Sungho Yun, 2010. "Bribery versus extortion: allowing the lesser of two evils," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 179-198, March.
    17. Faure-Grimaud, A. & Reiche, S., 2006. "Dynamic yardstick mechanisms," Games and Economic Behavior, Elsevier, vol. 54(2), pages 316-335, February.
    18. Qi Chen, 2003. "Cooperation in the Budgeting Process," Journal of Accounting Research, Wiley Blackwell, vol. 41(5), pages 775-796, December.
    19. Doh Shin Jeon, "undated". "Relying on the agent in charge of production for project evaluation," Economics Working Papers 623, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2006.
    20. Galilea, Patricia & Medda, Francesca, 2010. "Does the political and economic context influence the success of a transport project? An analysis of transport public-private partnerships," Research in Transportation Economics, Elsevier, vol. 30(1), pages 102-109.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:pacecr:v:25:y:2020:i:4:p:495-511. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1361-374X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.