India’s halting attempts at privatisation and its preference, for the most part, for disinvestment have been roundly criticised by many as being inadequate. A more aggressive privatisation drive, it is contended, would make for superior economic performance. In popular discourse, China’s privatisation efforts are often compared favourably with India’s. This paper examines China’s record of privatisation to see whether it accords with popular perceptions. The record shows that China has been proceeded cautiously in its privatisation efforts. It has privatised – that is, sold off to private owners- only the smaller SOEs. The state retains control over the larger SOEs that dominate industrial output and profits. In respect of these, China has opted for gradual disinvestment with disinvested shares residing mostly with state-owned entities. Over a long period, China has pushed through reforms of SOEs, including conferment of greater autonomy on enterprises and introduction of incentives for workers and managers. The empirical evidence is that performance at SOEs has improved consequent to these reforms. It could be argued that full-blooded privatisation might have produced even better results. However, given the possible implications in terms of job losses as well as the absence of effective governance mechanisms in China’s underdeveloped capital market. China’s rulers may well have been justified in hastening slowly with privatisation.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Indian Institute of Management Ahmedabad, Research and Publication Department in its series IIMA Working Papers with number
2004-09-04.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: