Explaining the Financial Performance of China's Industrial Enterprises: Beyond the Competition-Ownership Controversy

Lo, Dic; Cheng, Yuk-Shing

Abstract

Scholarly explanations of the worsening financial performance of Chinese industry over the reform era, particularly the loss-making phenomenon, have coalesced around two rival stories: the “inefficient institutions causing poor financial performance” story and the “increased competition inducing profitability decline” story. This article critically reviews the arguments and empirical substantiation of the two stories, and gives an alternative explanation that takes demand conditions and industrial configurations into the analysis. On this basis, it is argued that the worsening financial performance is a macro as well as micro problem that points to the fundamental contradictions in contemporary Chinese political economy. Some policy implications from this analysis are raised in the concluding section.

Citation

Lo, D., & Cheng, Y.-S. (2002). Explaining the Financial Performance of China's Industrial Enterprises: Beyond the Competition-Ownership Controversy. The China Quarterly, 170, 413-440. https://doi.org/10.1017/S0009443902000256

• Journal Article Type: Article
• Publication Date: Apr 1, 2002
• Deposit Date: Jun 20, 2008
• Publicly Available Date: Oct 30, 2021
• Journal: The China Quarterly
• Print ISSN: 0305-7410
• Electronic ISSN: 1468-2648
• Publisher: Cambridge University Press
• Peer Reviewed: Peer Reviewed
• Volume: 170
• Pages: 413-440
• DOI: https://doi.org/10.1017/S0009443902000256