From China Policy Institute website:
… China has been reforming its SOE sector since 1984, as a key element in its urban economic reform. It has made tremendous achievements, but has also met crucial difficulties. The Chinese government has been endeavouring to optimise the sector. However, it seems unclear to the Chinese leadership what should be the direction of further reforms of SOEs. Should the government try to improve the productivity efficiency of SOEs to make them capable of competing in the open market? Should they try to create and enhance the monopoly positions of SOEs to gain the extra profit, although thereby allowing them to remain inefficient? Though the hypothesis has not been proved, the leadership seems to believe that only a strong central SOE sector will be able to safeguard China’s economic security and compete with foreign multinationals. Or should the government’s aim be to develop a well functioning SOE sector to provide highquality public goods and services and thereby eventually benefit the whole of society? To continue the SOE reform, the Chinese authorities need to find answers to these questions first. It will undoubtedly be a tough process of bargaining and balancing among different interest groups. This is one of the most vital problems faced by the Chinese economy today. [Full Text]
Zheng Yongnian (郑永年) is professor and head of research at the Nottingham University China Policy Institute. Chen Minjia (陈敏佳) is a research associate at the China Policy Institute.
