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Can a Tiger Change Its Stripes? Reform of Chinese State-Owned Enterprises in the Penumbra of the State

Author

Listed:
  • Ann Harrison
  • Marshall Meyer
  • Peichun Wang
  • Linda Zhao
  • Minyuan Zhao

Abstract

The majority of state-owned enterprises (SOEs) in China were privatized through ownership reforms over the last two decades. Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2013, we show that privatized SOEs continue to benefit from government support relative to private enterprises. Compared to private firms that were never state-owned, privatized SOEs are favored by low interest loans and government subsidies. These differences are more salient with the Chinese government’s trillion-dollar stimulus package introduced after the 2008 global financial crisis. Moreover, both SOEs and privatized SOEs significantly under-perform in profitability compared to private firms. Nevertheless there are clear improvements in performance post-privatization. The tiger can change its stripes; however, the government’s behavior seems to be sticky.

Suggested Citation

  • Ann Harrison & Marshall Meyer & Peichun Wang & Linda Zhao & Minyuan Zhao, 2019. "Can a Tiger Change Its Stripes? Reform of Chinese State-Owned Enterprises in the Penumbra of the State," NBER Working Papers 25475, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25475
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    References listed on IDEAS

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    Cited by:

    1. Stephan Heblich & Marlon Seror & Hao Xu & Yanos Zylberberg, 2019. "Industrial clusters in the long run: evidence from Million-Rouble plants in China," CESifo Working Paper Series 7682, CESifo.
    2. Barraza, Santiago & Rossi, Martín A & Ruzzier, Christian A, 2022. "Sleeping with the enemy: The perils of having the government on(the)board," Journal of Comparative Economics, Elsevier, vol. 50(3), pages 641-651.
    3. Jakopin Edvard & Gračanac Aleksandar & Aničić Jugoslav, 2021. "Restructuring of State Enterprises as a Prerequisite for Economic Growth in the Republic of Serbia," Economic Themes, Sciendo, vol. 59(1), pages 1-22, March.
    4. Mr. Jacques A Miniane & Ezequiel Cabezon & Mr. Sebastian Weber & Christine J. Richmond & Ms. Dora Benedek & Mr. James Roaf & Mr. Francisco J Parodi & Mr. Peter Dohlman & Rima Turk & Bobana Cegar & Mic, 2019. "Reassessing the Role of State-Owned Enterprises in Central, Eastern and Southeastern Europe," IMF Departmental Papers / Policy Papers 2019/010, International Monetary Fund.
    5. Berkowitz, Daniel & Nishioka, Shuichiro, 2024. "The growth of firms, markets and rents: Evidence from China," Journal of Comparative Economics, Elsevier, vol. 52(2), pages 383-399.
    6. Carpenter, Jennifer N. & Lu, Fangzhou & Whitelaw, Robert F., 2021. "The real value of China’s stock market," Journal of Financial Economics, Elsevier, vol. 139(3), pages 679-696.
    7. Bae, Sung C. & Kwon, Taek Ho & Liu, Chenyang, 2024. "The impact of high-pressure political reforms on state-owned enterprises: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    8. Ouyang, Difei, 2024. "State-owned enterprise presence: Local spillovers," China Economic Review, Elsevier, vol. 84(C).
    9. Bayari, Celal, 2020. "The Neoliberal Globalization Link to the Belt and Road Initiative: The State and State-Owned-Enterprises in China [alternative title: Bilateral and Multilateral Dualities of the Chinese State in the C," MPRA Paper 104471, University Library of Munich, Germany, revised 21 Jul 2020.
    10. Wang, Xun & Yu, Jingwen, 2023. "COVID-19 pandemic and corporate liquidity: The role of SOEs’ trade credit response," Journal of International Money and Finance, Elsevier, vol. 137(C).

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    More about this item

    JEL classification:

    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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