Chinas Ownership Transformation

Chinas Ownership Transformation - ASIAN-PACIFIC ECONOMIC...

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ASIAN-PACIFIC ECONOMIC LITERATURE 72 Journal compilation © 2006 Asia Pacific School of Economics and Government, The Australian National University and Blackwell Publishing Asia Pty Ltd. China’s Ownership Transformation: process, outcomes, prospects Ross Garnaut, Ligang Song, Stoyan Tenev and Yang Yao International Finance Corporation, World Bank Group, Washington, DC, 2005 Pp. xviii + 235. ISBN 0 821 36237 2 For more than 25 years, as China has undergone a transformation from a centrally planned econ- omy to a more market oriented economy, the state-owned sector has been diminishing in sig- nificance, while private enterprises are now play- ing a critical role. However, there has not been a detailed study of how this transformation ( gaizhi or in Chinese) and ownership diversification in particular has developed and what its impact has been on governance, labour, and firm perform- ance. This book is very informative and helps us to develop a concrete picture of the economic restructuring that is underway in China. The book tackles this issue by conducting a survey of around 700 Chinese enterprises in 11 cities. While the overall results of the survey are not so surprising, there are some interesting find- ings. For example, the authors try to identify the factors that contribute to the gaizhi process and find that improving the efficiency of enterprises is not necessarily the factor that motivates governments to initiate privatisation. Rather, the authors conclude that regional factors, such as the progress of market liberalisation and private sector development, deeply affect the gaizhi pro- cess. Such a conclusion appears, however, to be somewhat tautological, and further investigation of the historical and social background of, or even the mindsets of people in, each city and region under consideration may explain the dif- ferences between gaizhi processes in different areas. Another finding is that restructuring and pri- vatisation are not necessarily associated with unemployment, but rather contribute to increas- ing job opportunities. Certainly, the current con- ventional wisdom is that China can only solve its serious unemployment problem by further developing the private sector and by pursuing a more market-oriented strategy for the economy.
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