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Fast-Falling Barriers and Growing Concentration: The Emergence of a Private Economy in China

Author

Listed:
  • Sean Dougherty

    (OECD)

  • Richard Herd

    (OECD)

Abstract

This paper assesses the progress of China’s transition toward a market economy by examining the structure of ownership, productivity, and profitability, as well as the concentration of production across firms, industries and regions. It does this by analyzing a database of firm microdata of the quarter of a million industrial companies in operation during the 1998–2003 period. Results show that the private sector now accounts for more than half of industrial output, compared with barely more than a quarter in 1998, and operates much more efficiently than the public sector. Higher productivity has fed through to profitability, motivating greater regional specialization of production. These changes are consistent with what would be expected in a market-based economy, and suggests that reforms are making rapid progress. This Working Paper relates to the 2005 OECD Economic Survey of China (www.oecd.org/eco/surveys/china). La chute rapide des barrières et la concentration croissante de l'activité économique : L'émergence d'un secteur privé en Chine Ce document examine les progrès réalisés par la Chine dans la transition vers une économie de marché en étudiant plus particulièrement la structure de la propriété, la productivité et la rentabilité, ainsi que la concentration de la production à l'échelle des entreprises, des secteurs d'activité et des régions. Pour cela, il analyse une base de microdonnées portant sur 250 000 entreprises industrielles qui étaient en activité au cours de la période 1998-2003. Les résultats montrent que le secteur privé représente désormais plus de la moitié de la production industrielle, contre à peine plus d'un quart en 1998, et qu'il est bien plus efficace que le secteur public. Par ailleurs, l'accroissement de la productivité et ses effets positifs sur la rentabilité de l'activité économique ont entraîné une plus grande spécialisation régionale de la production. Ces évolutions, conformes à ce que l'on peut attendre dans une économie fondée sur le jeu du marché, sont sans doute le signe que les réformes progressent rapidement. Ce Document de travail se rapporte à l'Étude économique de l'OCDE de la Chine, 2005 (www.oecd.org/eco/etudes/chine).

Suggested Citation

  • Sean Dougherty & Richard Herd, 2005. "Fast-Falling Barriers and Growing Concentration: The Emergence of a Private Economy in China," OECD Economics Department Working Papers 471, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:471-en
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    File URL: http://dx.doi.org/10.1787/470526613141
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    Citations

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    Cited by:

    1. Sai Ding & Alessandra Guariglia & John Knight, "undated". "Negative investment in China: financing constraints and restructuring versus growth," Discussion Papers 12/01, University of Nottingham, GEP.
    2. Yasheng Huang, 2012. "How Did China Take Off?," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 147-170, Fall.
    3. Sai Ding & Alessandra Guariglia & Richard Harris, 2016. "The determinants of productivity in Chinese large and medium-sized industrial firms, 1998–2007," Journal of Productivity Analysis, Springer, vol. 45(2), pages 131-155, April.
    4. Richard Herd & Sean Dougherty, 2007. "Growth Prospects in China and India Compared," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 4(1), pages 65-89, June.
    5. Chong-En Bai & Chang-Tai Hsieh & Yingyi Qian, 2006. "The Return to Capital in China," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(2), pages 61-102.
    6. Sai Ding & Puyang Sun & Wei Jiang, 2016. "The Effect of Import Competition on Firm Productivity and Innovation: Does the Distance to Technology Frontier Matter?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(2), pages 197-227, April.
    7. Huanhuan ZHENG & Qingyang GU, "undated". "Measuring Inter-Regional Trade Barriers," EcoMod2008 23800159, EcoMod.
    8. Steven A Barnett & Ray Brooks, 2006. "What’s Driving Investment in China?," IMF Working Papers 06/265, International Monetary Fund.
    9. Jun Du & Alessandra Guariglia & Alexander Newman, "undated". "Does social capital affect the financing decisions of Chinese small and medium-sized enterprises?," Discussion Papers 10/13, University of Nottingham, GEP.
    10. Yasheng Huang & Yi Qian, 2010. "Is Entrepreneurship Missing in Shanghai?," NBER Chapters,in: International Differences in Entrepreneurship, pages 321-346 National Bureau of Economic Research, Inc.
    11. John Knight & Sai Ding, 2010. "Why Does China Invest So Much?," Asian Economic Papers, MIT Press, vol. 9(3), pages 87-117, Fall.

    More about this item

    Keywords

    concentration régionale; firm microdata; market economy; micro-données d'entreprise; private sector; productivity; productivité; regional concentration; restructuration; restructuring; secteur privé; transition; transition; économie de marché;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • F15 - International Economics - - Trade - - - Economic Integration
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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