Can a Tiger Change Its Stripes? Reform of Chinese State-Owned Enterprises in the Penumbra of the State / Ann Harrison, Marshall Meyer, Peichun Wang, Linda Zhao, Minyuan Zhao.

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Harrison, Ann

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w25475.Publication details: Cambridge, Mass. National Bureau of Economic Research 2019.Description: 1 online resource: illustrations (black and white)Subject(s):

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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.

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Previous	nber w25472 An Extra Year to Learn English? Early Grade Retention and the Human Capital Development of English Learners /	nber w25473 Active Choice, Implicit Defaults, and the Incentive to Choose /	nber w25474 The Effect of Superstition on Health: Evidence from the Taiwanese Ghost Month /	nber w25475 Can a Tiger Change Its Stripes? Reform of Chinese State-Owned Enterprises in the Penumbra of the State /	nber w25476 Has the U.S. Wage Phillips Curve Flattened? A Semi-Structural Exploration /	nber w25477 Markets for Financial Innovation /	nber w25478 Noisy Memory and Over-Reaction to News /	Next

January 2019.

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.