Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 Opportunities and challenges in China's economic development
- 2 Why the Scientfic and Industrial Revolutions bypassed China
- 3 The great humiliation and the Socialist Revolution
- 4 The comparative advantage-defying, catching-up strategy and the traditional economic system
- 5 Enterprise viability and factor endowments
- 6 The comparative advantage-following development strategy
- 7 Rural reform and the three rural issues
- 8 Urban reform and the remaining issues
- 9 Reforming the state-owned enterprises
- 10 The financial reforms
- 11 Deflationary expansion and building a new socialist countryside
- 12 Improving the market system and promoting fairness and efficiency for harmonious development
- 13 Relflections on neoclassical theories
- Appendix Global imbalances, reserve currency, and global economic governance
- Index
9 - Reforming the state-owned enterprises
Published online by Cambridge University Press: 05 June 2014
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 Opportunities and challenges in China's economic development
- 2 Why the Scientfic and Industrial Revolutions bypassed China
- 3 The great humiliation and the Socialist Revolution
- 4 The comparative advantage-defying, catching-up strategy and the traditional economic system
- 5 Enterprise viability and factor endowments
- 6 The comparative advantage-following development strategy
- 7 Rural reform and the three rural issues
- 8 Urban reform and the remaining issues
- 9 Reforming the state-owned enterprises
- 10 The financial reforms
- 11 Deflationary expansion and building a new socialist countryside
- 12 Improving the market system and promoting fairness and efficiency for harmonious development
- 13 Relflections on neoclassical theories
- Appendix Global imbalances, reserve currency, and global economic governance
- Index
Summary
China's reform has produced some tremendous achievements in the last thirty years, but also some problems, most of them related to the gradual manner of reform. A gradual reform implies that, when new arrangements of the market system emerge, some elements of the old system still linger on. The conflict between the two systems is the root cause of many problems. In fact, both systems have their strict underlying logic and both are made up of correlated and interacting institutional arrangements. Likewise, while some new institutional arrangements have emerged, others are denied due to the persistence of some old arrangements. In such circumstances friction and conflict are inevitable.
In theory a solution to the dual system is either a complete transition to the market system or a complete restoration of the original planned system. But in practice neither option is easy. True, the original system could get rid of the problems of the financial system – corruption and loss-making state-owned enterprises (SOEs). But it simply is no longer possible to go back. Even if it were possible, after tasting the sweetness of the reform, people would not be willing to do so. And if the old system were reinstated, the incentives to work would be even weaker. So, China's economic reform has to forge ahead with full momentum.
Although the reform started over three decades ago, China has not yet completely transformed to a market economy. The major reason is that the reform of its SOEs has yet to be accomplished, imposing great inertia on the transition.
- Type
- Chapter
- Information
- Demystifying the Chinese Economy , pp. 191 - 206Publisher: Cambridge University PressPrint publication year: 2011