China's Ownership Transformation

by Garnaut, Ross; Song, Ligang; Tenev, Stoyan; Yao, Yang

• ISBN13: 9780821362372
• ISBN10: 0821362372
• Format: Paperback
• Copyright: 2005-05-15
• Publisher: World Bank

Summary

China's emergence as a global economic player has been accompanied by a major internal transformation. Over the past decade, the economy has made the transition from complete reliance on state-owned and collective enterprise to a mixed economy where private enterprise also plays a strong role. Gaizhi, a Chinese term meaning "transforming the system", has become a major phenomenon in most parts of the country; in many cases it has involved full privatization.'China's Ownership Transformation' applies descriptive and econometric analysis to survey, and official statistical data to examine, the progress of gaizhi over the years and across regions. It discusses the main players in the process, their motivation and incentives, and looks at the forms, scope, and timing of gaizhi. The authors also provide an assessment of the outcomes of gaizhi, focusing on employee issues, corporate governance issues and firm performance. The book concludes with discussion of the issues related to the fairness and efficiency of the gaizhi process, particularly concerning the role of management buy-outs and outside investors. These issues are at the center of a lively public debate in China, which is likely to influence future Chinese policies toward gaizhi.This title provides researchers, students, policymakers, and those interested in the emergence of China as a global manufacturing and economic powerhouse with in-depth information on the transformation of its state-owned sector.

Author Biography

Ligang Song is director of the China Economy and Business Program, Asia Pacific School of Economics and Management, the Australian National University.

Table of Contents

FOREWORD, Javed Hama	vii
PREFACE, Stoyan Tenev	xi
ACKNOWLEDGMENTS	xv
ABBREVIATIONS AND ACRONYMS	xvii
1 INTRODUCTION	1	(24)
Overview of SOE Reform in China	2	(9)
Focus and Empirical Approach of the Study	11	(13)
The Structure of the Study	24	(1)
2 THE MAIN PLAYERS IN GAIZHI	25	(21)
How Far Has Gaizhi Progressed?	25	(6)
The Key Participants	31	(7)
Theories on Incentives for Gaizhi	38	(4)
Empirical Tests	42	(3)
Conclusion	45	(1)
3 THE GAIZHI PROCESS	46	(41)
Forms of Gaizhi	46	(4)
Sample Distribution of Forms of Gaizhi	50	(4)
Trends and Geographic Variations	54	(5)
What Determines the Form of Gaizhi Chosen?	59	(3)
The Process and Main Issues Surrounding the Transfer of State Assets	62	(5)
Asset Valuation	67	(9)
Dealing with Enterprise Debts and Other Obligations in the Gaizhi Process	76	(5)
Land-Use Rights and Gaizhi	81	(5)
Conclusion	86	(1)
4 IMPACT OF GAIZHI ON LABOR	87	(26)
China's Emerging Social Security System	87	(2)
Government Policy toward Unemployment in the Gaizhi Process	89	(6)
The Impact of Gaizhi on Employment and Labor Force Structure	95	(8)
Gaizhi and Obligations of Firms to Workers	103	(5)
Gaizhi and Changes in Compensation Schemes	108	(3)
Conclusion	111	(2)
5 IMPACT OF GAIZHI ON CORPORATE GOVERNANCE	113	(32)
Changes in Ownership Structure	114	(7)
Ownership and Control	121	(6)
Gaizhi and Traditional Stakeholders	127	(6)
Gaizhi, Managerial Autonomy, and Managerial Incentives	133	(5)
Gaizhi and Changes in the Relative Influence of Stakeholders	138	(1)
The Role of Outside Investors in Corporate Governance	139	(4)
Conclusion	143	(2)
6 IMPACT OF GAIZHI ON FIRM BEHAVIOR AND PERFORMANCE	145	(30)
Gaizhi, Internal Restructuring, and Financial Discipline	145	(13)
Gaizhi and Firm Performance	158	(12)
Gaizhi and Time Trends in Performance	170	(2)
The Impact of Other Factors on Performance	172	(2)
Conclusion	174	(1)
7 TOWARD A FAIRER AND MORE EFFICIENT GAIZHI PROCESS	175	(30)
The Public Debate about Privatization in China	175	(6)
Regulating Gaizhi	181	(4)
Strengthening Enforcement	185	(6)
Reducing Transaction Costs for Outside Investors	191	(6)
Enhancing the Role of the de Novo Private Sector in China's Transformation	197	(4)
Conclusion	201	(4)
REFERENCES	205	(12)
INDEX	217