Chinese Enterprise Reform as a Market Process

The reform of China's enterprise system increasingly reflects the outcome of China's emerging property rights market. We distinguish between a centrally-directed reform strategy, with characteristics similar to those of a Pigouvian tax, and a market-driven reform process, which captures the essential features of a Coasian approach to social cost. The Coase Theorem postulates that eliminating transaction costs and attaching well specified property rights to public goods that generate externalities will allow uncoordinated economic agents to negotiate institutional arrangements that produce socially efficient allocation of resources. Extending Coase's reasoning to the case of socialist transition ' we argue that reforms that expand competition, move toward well-specified assignment of ownership rights to public enterprises, and reduce transaction costs will motivate the "ultimate" owners, including officials of national and sub-national government agencies, to reconfigure their assets or to combine their assets with those of other jurisdictions and/or private investors to create more efficient ownership arrangements. We review the extent to which China's reforms have established the conditions for an effective market in ownership rights to industrial property. We tabulate progress from 1 980 to present along the three major analytic dimensions inherent in Coase's analysis: competition, property rights, and transaction costs. We conclude that the sheer size and diversity of China's industrial economy will motivate a continuation of decentralized reform initiatives. To support this Coasian reform process, central and provincial governments need to expand initiatives to clarify property rights, particularly the right of alienation, reduce impediments to competition, and facilitate the reduction of transaction costs.http://deepblue.lib.umich.edu/bitstream/2027.42/39466/3/wp76.pd

Chinese Enterprise Reform as a Market Process

The reform of China's enterprise system increasingly reflects the outcome of China's emerging property rights market. We distinguish between a centrally-directed reform strategy, with characteristics similar to those of a Pigouvian tax, and a market-driven reform process, which captures the essential features of a Coasian approach to social cost. The Coase Theorem postulates that eliminating transaction costs and attaching well specified property rights to public goods that generate externalities will allow uncoordinated economic agents to negotiate institutional arrangements that produce socially efficient allocation of resources. Extending Coase's reasoning to the case of socialist transition ' we argue that reforms that expand competition, move toward well-specified assignment of ownership rights to public enterprises, and reduce transaction costs will motivate the "ultimate" owners, including officials of national and sub-national government agencies, to reconfigure their assets or to combine their assets with those of other jurisdictions and/or private investors to create more efficient ownership arrangements. We review the extent to which China's reforms have established the conditions for an effective market in ownership rights to industrial property. We tabulate progress from 1 980 to present along the three major analytic dimensions inherent in Coase's analysis: competition, property rights, and transaction costs. We conclude that the sheer size and diversity of China's industrial economy will motivate a continuation of decentralized reform initiatives. To support this Coasian reform process, central and provincial governments need to expand initiatives to clarify property rights, particularly the right of alienation, reduce impediments to competition, and facilitate the reduction of transaction costs.China, ownership, property rights, Coarse theorem, transition, merger, transaction costs

From Divergence to Convergence: Re-evaluating the History Behind China's Economic Boom

China's long-term economic dynamics pose a formidable challenge to economic historians. The Qing Empire (1644-1911), the world's largest national economy prior to the 19th century, experienced a tripling of population during the 17th and 18th centuries with no signs of diminishing per capita income. In some regions, the standard of living may have matched levels recorded in advanced regions of Western Europe. However, with the Industrial Revolution a vast gap emerged between newly rich industrial nations and China's lagging economy. Only with an unprecedented growth spurt beginning in the late 1970s has the gap separating China from the global leaders been substantially diminished, and China regained its former standing among the world's largest economies. This essay develops an integrated framework for understanding this entire history, including both the long period of divergence and the more recent convergent trend. The analysis sets out to explain how deeply embedded political and economic institutions that had contributed to a long process of extensive growth subsequently prevented China from capturing the benefits associated with new technologies and information arising from the Industrial Revolution. During the 20th century, the gradual erosion of these historic constraints and of new obstacles created by socialist planning eventually opened the door to China's current boom. Our analysis links China's recent economic development to important elements of its past, while using the success of the last three decades to provide fresh perspectives on the critical obstacles undermining earlier modernization efforts, and their removal over the last century and a half.

China and the Ideal Economic Reform

Economists studying socialist transition have established a paradigmatic view that emphasizes flexible prices, openness to international trade, minimal government intervention in market operations, and private ownership of productive resources. China's, the largest and best performing transition economy, deviates widely from this approach. This paper explores the conflict between standard prescriptions and Chinese reality. The author concludes that gradual reform is unavoidable, that partially reformed systems can generate huge growth spurts, that economists overstate the importance of ownership, and that the institutional structures of market systems are far more complex than most observers imagine.http://deepblue.lib.umich.edu/bitstream/2027.42/39481/3/wp91.pd

China's State Enterprise Reform - An Overseas Perspective

After briefly surveying the current circumstances of China' s state-owned industrial enterprises, this paper offers a series of policy recommendations organized around two objectives: raising the returns to capital and promoting the development of market-supporting institutions. The author argues that public ownership is not the central cause of weak performance in state enterprises, and that policy analysis should focus on raising returns to capital and building market-supporting institutions rather than on privatization.http://deepblue.lib.umich.edu/bitstream/2027.42/39480/3/wp90.pd

China's State Enterprise Reform - An Overseas Perspective

After briefly surveying the current circumstances of China' s state-owned industrial enterprises, this paper offers a series of policy recommendations organized around two objectives: raising the returns to capital and promoting the development of market-supporting institutions. The author argues that public ownership is not the central cause of weak performance in state enterprises, and that policy analysis should focus on raising returns to capital and building market-supporting institutions rather than on privatization.

China and the Ideal Economic Reform

Economists studying socialist transition have established a paradigmatic view that emphasizes flexible prices, openness to international trade, minimal government intervention in market operations, and private ownership of productive resources. China's, the largest and best performing transition economy, deviates widely from this approach. This paper explores the conflict between standard prescriptions and Chinese reality. The author concludes that gradual reform is unavoidable, that partially reformed systems can generate huge growth spurts, that economists overstate the importance of ownership, and that the institutional structures of market systems are far more complex than most observers imagine.

Gender Wage Gaps in China's Labor Market: Size, Structure, Trends

Chinese attitudes toward the treatment of men and women in the workplace reflect two divergent perspectives. The legacy of China's past includes a strong tendency to favor male over female workers, while over the last four decades China's government has vigorously propagated an ideology of gender equality. This paper applies econometric methods to a large body of data on average wages and the number and share of female employees to investigate disparities between men's and women's wages in China's urban, formal labor markets during the period 1988-1994. Our results demonstrate the presence of substantial, persistent, and large (relative to available international comparisons) gaps between men's and women's wages in the People's Republic of China during this period. We find no evidence of a tendency for the gap between male and female wages to decline. On the contrary, calculations based on the whole data set and on data for state and collective employers all indicate expanding inequality between men's and women's earnings.http://deepblue.lib.umich.edu/bitstream/2027.42/39478/3/wp88.pd

Gender Wage Gaps in China's Labor Market: Size, Structure, Trends

Chinese attitudes toward the treatment of men and women in the workplace reflect two divergent perspectives. The legacy of China's past includes a strong tendency to favor male over female workers, while over the last four decades China's government has vigorously propagated an ideology of gender equality. This paper applies econometric methods to a large body of data on average wages and the number and share of female employees to investigate disparities between men's and women's wages in China's urban, formal labor markets during the period 1988-1994. Our results demonstrate the presence of substantial, persistent, and large (relative to available international comparisons) gaps between men's and women's wages in the People's Republic of China during this period. We find no evidence of a tendency for the gap between male and female wages to decline. On the contrary, calculations based on the whole data set and on data for state and collective employers all indicate expanding inequality between men's and women's earnings.

Reduced carbon emission estimates from fossil fuel combustion and cement production in China.

Nearly three-quarters of the growth in global carbon emissions from the burning of fossil fuels and cement production between 2010 and 2012 occurred in China. Yet estimates of Chinese emissions remain subject to large uncertainty; inventories of China's total fossil fuel carbon emissions in 2008 differ by 0.3 gigatonnes of carbon, or 15 per cent. The primary sources of this uncertainty are conflicting estimates of energy consumption and emission factors, the latter being uncertain because of very few actual measurements representative of the mix of Chinese fuels. Here we re-evaluate China's carbon emissions using updated and harmonized energy consumption and clinker production data and two new and comprehensive sets of measured emission factors for Chinese coal. We find that total energy consumption in China was 10 per cent higher in 2000-2012 than the value reported by China's national statistics, that emission factors for Chinese coal are on average 40 per cent lower than the default values recommended by the Intergovernmental Panel on Climate Change, and that emissions from China's cement production are 45 per cent less than recent estimates. Altogether, our revised estimate of China's CO2 emissions from fossil fuel combustion and cement production is 2.49 gigatonnes of carbon (2 standard deviations = ±7.3 per cent) in 2013, which is 14 per cent lower than the emissions reported by other prominent inventories. Over the full period 2000 to 2013, our revised estimates are 2.9 gigatonnes of carbon less than previous estimates of China's cumulative carbon emissions. Our findings suggest that overestimation of China's emissions in 2000-2013 may be larger than China's estimated total forest sink in 1990-2007 (2.66 gigatonnes of carbon) or China's land carbon sink in 2000-2009 (2.6 gigatonnes of carbon).This is the author accepted manuscript. The final version is available from NPG via http://dx.doi.org/10.1038/nature1467