Selection, staging and sequencing in the recent Chinese privatization

Jun Du, Xiaoxuan Liu

Research output: Contribution to journalArticle

Abstract

Selection in privatization is a decision-making process of choosing state-owned enterprises (SOEs), prioritizing and sequencing privatizing events, and determining the extent of private ownership in partial privatization. We investigate this process in an important but rarely studied case of China. Based on the SOE population over 1998-2008, we track 49,456 wholly SOEs and identify 9,359 privatization cases over time. Our econometric analysis concludes: (i) The privatization selection is a complex decision-making process in which local governments balance between various economic, financial and political objectives. (ii) In the recent Chinese privatization, firm performance relates to the selection, staging and sequencing in privatization in an inverted-U fashion. The worse and the best performing SOEs are more likely to remain state-owned, maintain higher state holding when privatized, and are less likely to be privatized later in time. These patterns suggest the privatization reform slowdown and the underlying changes in the privatization policy.
Original languageEnglish
Pages (from-to)657-682
Number of pages26
JournalJournal of Law and Economics
Volume58
Issue number3
DOIs
Publication statusPublished - Aug 2015

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staging
privatization
decision-making process
political goal
Privatization
Sequencing
econometrics
firm
State-owned enterprises
reform
China
event

Keywords

  • privatisation
  • restructuring
  • China
  • political economy

Cite this

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title = "Selection, staging and sequencing in the recent Chinese privatization",
abstract = "Selection in privatization is a decision-making process of choosing state-owned enterprises (SOEs), prioritizing and sequencing privatizing events, and determining the extent of private ownership in partial privatization. We investigate this process in an important but rarely studied case of China. Based on the SOE population over 1998-2008, we track 49,456 wholly SOEs and identify 9,359 privatization cases over time. Our econometric analysis concludes: (i) The privatization selection is a complex decision-making process in which local governments balance between various economic, financial and political objectives. (ii) In the recent Chinese privatization, firm performance relates to the selection, staging and sequencing in privatization in an inverted-U fashion. The worse and the best performing SOEs are more likely to remain state-owned, maintain higher state holding when privatized, and are less likely to be privatized later in time. These patterns suggest the privatization reform slowdown and the underlying changes in the privatization policy.",
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Selection, staging and sequencing in the recent Chinese privatization. / Du, Jun; Liu, Xiaoxuan.

In: Journal of Law and Economics , Vol. 58, No. 3, 08.2015, p. 657-682.

Research output: Contribution to journalArticle

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AU - Liu, Xiaoxuan

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