Privatization In China Essay

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Privatization of China’s SOEs: Strategies of the past and present

China underwent a wave of privatization around the end of 1990s. The purpose of this research paper is to analyze the strategies and concepts of privatization from its early stages until today.
The paper will be divided in 2 sections: In the first section the focus will be on the early stages of privatization and the concepts in the past, whereas in the second part I will analyze the strategies and reasons why some sectors where not fully privatized and what are the challenges of privatizing them in terms of political interests and economic relations with domestic and foreign actors.

1. Introduction

By the 1980s, the industrial sector of China was almost entirely consisting
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One important strategy was to “retain the larger, and release the smaller” while the second was the financial restructuring of state owned commercial banks, but we will speak about this in the later point of discussion: Stages of Privatization.

2.3 The economic role of SOEs

2.4 Stages of Privatization

The Chinese economic reform strategies have been described as pragmatic, gradual and experimental. We can recognize two phases of the SOEs reform in the past 30 years, each having its own set of objectives and measures. The first phase focused on establishing an incentive structure without having to change ownership, leading to the implementation of the “contract responsibility system”, which introduced performance contracts that the managers or even all the employees had to sign with the government agencies. The second phase was focused towards establishing a “modern enterprise system”.

According to the National Bureau of Statistics the industrial gross output of the non-state sector was higher than the one of the state sector. By 1993, the government started the shareholding program, that was the most important vehicle for the ownership reform of the SOEs. In 1994, there were 15,533 industrial SOEs in the large and and medium sized sectors, a number that by 2001 decreased to nearly

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