State-Owned Enterprise Reform in Post-Mao China

Abstract

This article assesses some critical issues concerning China's State-Owned Enterprise (SOE) reform and foresees its future in a broader picture of administrative reform. The first section of the article provides a review of the reform process. The second section discusses the current situations of the SOEs and the reform's implication to such issues as: ownership (privatization), governance, marketization and management. The final section examines some directions for the future reform.

Keywords:

• administrative reform
• China
• reform
• state owned enterprise

Notes

1. COEs operate in a manner more similar to private competitive enterprises than to traditional public enterprises. SOEs have significant differences from COEs in terms of location, ownership form, property rights, functional structure, and policy environment.

2. Yuan is used as a monetary unit in this chapter. US$1 is about 8.3 yuan.

3. One should be cautious about the economic data reported by the Chinese government. Government statistics are often believed to have exaggerated profits and understated losses. For example, see Lardy, N. China's Unfinished Economic Revolution; Brookings Institution Press: Washington DC, 1998. However, statistics from SOEs may be different. In many cases, SOE managers intend to “hide” their profits that would otherwise go to the state and to exaggerate losses to obtain tax relief and soft loans. The above data come from: The National Statistical Bureau of China. The Chinese Statistics Annual; The Statistics Press: Beijing, 2001.

8. Prybyla, J. S. Key Issues in the Chinese Economy. Asian Survey 1981, 21 (9), 925–946; Prybyla, J. S. Why China's Economic Reforms Fail. Asian Survey 1989, 29 (11), 1017–1032; Prybyla, J. S. Economic Reform of Socialism: The Dengist Course in China. Annals of the American Academy of Political and Social Science 1990, 507, 9–17.

9. The National Statistical Bureau of China, op. cit.

11. The basic experience is “liang can yi gai san jie he.” Liang can (two types of participation) means cadres participate in work and employees participate in management. Yi gai (one change) means changing unreasonable rules and procedures. San jiehe (integrating three types of people) means that managers, technicians, and workers should collaborate with each other.

12. It focused on issues including quality assurance, product variety, material saving, cost control and productivity improvement. It also contains some democratic management methods and a job responsibility system.

13. Xu, Z.; Xu, J. The Development History of China's Public Enterprises 1927–1965 (Chinese); The Press of Shang Hai Social Science Academy: Shanghai, China, 1992; Xu, Z.; Li, L. The Development History of China's Public Enterprises 1966–1992 (Chinese); The Press of Shang Hai Social Science Academy: Shanghai, China, 1996.

15. Broadman, H. G. Meeting the Challenge of Chinese Enterprise Reform. World Bank Discussion Papers 1995, 283; The Social Science Academy of China, op. cit.

16. Broadman, H. G., op. cit.

17. Li, R. R. Report, the National Meeting on Economic and Trade December 6, 2001.

19. It is beneficial to approach administrative reform from a public policy perspective (25), such as the formulation, implementation, and evaluation of SOE reform. See: Pierre, J. Parallel Paths? Administrative Reform, Public Policy and Politico-Bureaucratic Relationships in Sweden. In Politicians, Bureaucrats and Administrative Reform, B. Guy Peters; Jon Pierre, Eds.; Routledge: London and New York, 2001.

20. Liou, K., 1996, op. cit.

24. Ibid.

25. Ibid.

26. Ibid.

30. The National Statistical Bureau of China, op. cit.

33. Stiglitz, J. More Instruments and Broader Goals: Moving Toward the Post-Washington Consensus. WIDER Angle 1997, 2, World Institute for Development Economics Research: Helsinki, 1997; 1–3.

34. In reform years, the output growth rate of non-SOEs is 28.2%, higher than SOEs' 13.8%. In The Social Science Academy of China, op. cit.

44. Stiglitz, J. More Instruments and Broader Goals: Moving Toward the Post-Washington Consensus. WIDER Angle 1997, 2, World Institute for Development Economics Research: Helsinki; 1–3.

47. Tiao refers to the central ministry in charge of the relevant industry; Kuai refers to the provincial or local government.

48. Young, M. N.; McGuinness, P. B., op. cit.

54. McNally, C. A. China's State Sector Under Reform: Old Wine in a New Bottle? In Peter Nan-Shong Lee, P.; Wing-Hung Lo, C., op. cit.; 162.

55. Parker, E., op. cit.

58. Ramamurti, R., op. cit.

62. Ibid.

63. Ibid.

64. Yang, K. On the Sustainable Growth of Chinese Large Companies (Chinese); Ph.D. dissertation, Renmin University of China: 2001.

65. The Enterprise Association of China, op. cit.

67. OECD, op. cit., p. 15.

69. McNally, C. A., op. cit.