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Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China

Author

Listed:
  • Zheng Song

    (Booth School of Business)

  • Chang-Tai Hsieh

    (University of Chicago)

Abstract

Starting in the late 1990s, China undertook a dramatic transformation of the large number of firms under state control. Most small state owned firms were privatized or closed. In contrast, large state owned firms were corporatized and and merged into large industrial groups under the control of the Chinese state. We use detailed firm level data to show that that from 1998 to 2007, labor productivity of state owned firms converged with that of privately owned firms while total factor productivity growth of state owned firms was more than double that of private firms. However, capital productivity of state owned firms continue to be lower than that of private firms and did not change.

Suggested Citation

  • Zheng Song & Chang-Tai Hsieh, 2013. "Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China," 2013 Meeting Papers 1330, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:1330
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    Cited by:

    1. Yikai Wang, 2014. "Will China Escape the Middle-income Trap? A Politico-economic Theory of Growth and State Capitalism," 2014 Meeting Papers 202, Society for Economic Dynamics.
    2. Cheng, Chen & Li, Siming & Han, Jiajun, 2022. "Origin matters: How does institution imprint affect family business TFP?," International Review of Financial Analysis, Elsevier, vol. 83(C).
    3. Xi Li & Xuewen Liu & Yong Wang, 2015. "A Model of China's State Capitalism," HKUST IEMS Working Paper Series 2015-12, HKUST Institute for Emerging Market Studies, revised Feb 2015.
    4. Kun Li, 2016. "Privatization, Distortions, and Productivity," 2016 Meeting Papers 993, Society for Economic Dynamics.
    5. Hui He & Feng Huang & Zheng Liu & Dongming Zhu, 2014. "Breaking the “Iron Rice Bowl” and Precautionary Swings: Evidence from Chinese State-Owned Enterprises Reform," Working Paper Series 2014-4, Federal Reserve Bank of San Francisco.
    6. Chadwick Curtis, 2016. "Economic Reforms and the Evolution of China's Total Factor Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 225-245, July.
    7. Mukim,Megha & Zhu,Tingting Juni, 2015. "Empowering cities : good for growth ? evidence from China," Policy Research Working Paper Series 7193, The World Bank.

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