How Uncompetitive is the State-Owned Industrial Sector in China
The profitability gap between state-owned enterprises and the non-state industrial sector in China is significant. Using a highly-disaggregated database of China's industry in 2003, we estimate an average return to capital in state-owned enterprises about 9% that of foreign-invested firms, and about 59% of the return to capital in all non-state-owned industrial enterprises. Capital return differences are mainly driven by productivity differences, but the negative impact on SOEs' rental rates of a relatively integrated labor market is not negligible. The rental rate gap is much higher in sectors that represent a small share in SOEs' output and assets, meaning that the capital subsidies granted by the government have not biased SOEs' production structure toward industries with greatest profitability gap. The inefficiency cost of distortions in relative factor prices is estimated between 5% and 8% of total industrial output.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: Avda. Vicuña Mackenna 4860, Macul, Santiago|
Phone: (562) 354-4303
Fax: (562) 553-1664
Web page: http://www.economia.uc.cl
More information through EDIRC
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.:
- Sebastián Claro, 2006. "Why does China protect its labour-intensive industries more? -super-," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 289-319, 04.
- Sinn, Hans-Werner, 2002.
"Germany's Economic Unification: An Assessment after Ten Years,"
Review of International Economics,
Wiley Blackwell, vol. 10(1), pages 113-28, February.
- Hans-Werner Sinn, 2000. "Germany's Economic Unification. An Assessment after Ten Years," CESifo Working Paper Series 247, CESifo Group Munich.
- Sinn, Hans-Werner, 2002. "Germany’s Economic Unification: An Assessment after Ten Years," Munich Reprints in Economics 19643, University of Munich, Department of Economics.
- Hans-Werner Sinn, 2000. "Germany's Economic Unification: An Assessment after Ten Years," NBER Working Papers 7586, National Bureau of Economic Research, Inc.
- Zheng, Jinghai & Liu, Xiaxuan & Bigsten, Arne, 2000.
"Efficiency, Technical Progress, and Best Practice in Chinese State Enterprises (1980-1994),"
Working Papers in Economics
30, University of Gothenburg, Department of Economics.
- Zheng, Jinghai & Liu, Xiaoxuan & Bigsten, Arne, 2003. "Efficiency, technical progress, and best practice in Chinese state enterprises (1980-1994)," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 134-152, March.
- Robert C. Feenstra & Gordon H. Hanson, 2004.
"Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 13(1), pages 3-35, 03.
- Gordon H. Hanson & Robert C. Feenstra, 2001. "Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods," NBER Working Papers 8088, National Bureau of Economic Research, Inc.
- Jefferson, Gary H. & Rawski, Thomas G. & Li, Wang & Yuxin, Zheng, 2000. "Ownership, Productivity Change, and Financial Performance in Chinese Industry," Journal of Comparative Economics, Elsevier, vol. 28(4), pages 786-813, December.
- Jefferson, Gary & Hu, Albert G. Z. & Guan, Xiaojing & Yu, Xiaoyun, 2003. "Ownership, performance, and innovation in China's large- and medium-size industrial enterprise sector," China Economic Review, Elsevier, vol. 14(1), pages 89-113.
- Lin, Justin Yifu & Cai, Fang & Li, Zhou, 1998. "Competition, Policy Burdens, and State-Owned Enterprise Reform," American Economic Review, American Economic Association, vol. 88(2), pages 422-27, May.
When requesting a correction, please mention this item's handle: RePEc:ioe:doctra:305. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jaime Casassus)
If references are entirely missing, you can add them using this form.