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The Colour of the Cats

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  • David D. Li

    (Hong Kong University of Science and Technology)

  • Changqi Wu

    (Hong Kong University of Science and Technology and Guanghua School of Management, Peking University)

Abstract

China has experimented with two strategies of reform of its state-owned enterprises (SOE). One is diversification of SOEs’ ownership through introducing non-state sources of investment. Another is to improve the management of SOEs by granting SOEs’ managers autonomy and their employees profit incentives. Utilising a data set on 680 SOEs over 1980-94, we tested the relative effectiveness of two kinds of reform measures. Our results show that ownership diversification had a significant impact on the performance of SOEs while efforts to improve SOE’s management had very little effect. Moreover, the impact of ownership diversification on SOE’s economic performance was as strong as that of enhancing product market competition.

Suggested Citation

  • David D. Li & Changqi Wu, 2002. "The Colour of the Cats," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 133-146.
    • Handle: RePEc:eso:journl:v:33:y:2002:i:1:p:133-146
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    References listed on IDEAS

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    Cited by:

    1. Bai, Chong-En & Liu, Qiao & Lu, Joe & Song, Frank M. & Zhang, Junxi, 2004. "Corporate governance and market valuation in China," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 599-616, December.
    2. McGoldrick, Peter & Walsh, P. Paul, 2007. "Successful Factor Market Competition Pre-Privatisation? China`s eclectic.com," Research Technical Papers 3/RT/07, Central Bank of Ireland.

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