Competition or Privatization: China’s Experience in SOE Reform

Abstract

China is usually recognized in economic transition literature as a special case which achieved tremendous economic success simply through competitive market forces, without fundamental reforms in ownership system. That is, the Chinese model is generally regarded as an alternative to the privatization approach which was widely adopted in East Europe and Russia for economic and especially State Owned Enterprise (SOE) reform.This paper examines the characteristics of the Chinese model and identifies the exact nature of China’s SOE reform. For this purpose, this research adopted a comprehensive literature review as methodology, with particular focus on existing empirical studies on China’s SOE reform and Share Issuance Privatization (SIP). Specifically, first, this paper will describe the process and consequences of economic and SOE reforms in China. Second, it will identify the patterns and features of China’s privatization.