State-owned Enterprises in Chinese Economic Transformation: Institutional Functionality and Credibility in Alternative Perspectives

Lo, Dic

Abstract

The institutions of China’s state-owned enterprises have deviated fundamentally from the principle of individual(istic) property rights. The paradox is that the enterprises appear to have performed well in terms of productivity and profitability. This article examines the institutions in the light of alternative theoretical perspectives. The central message is two-fold. First, regarding functionality, the long-term oriented institutions could be conducive to productive efficiency but could also be detrimental to allocative efficiency. Second, regarding credibility, the actual performance hinges on the appropriate match between the institutions and the broader developmental conditions. The efficiency attributes are thus found to be context-specific. Further discussion on the notion of context-specificity reveals that relative efficiency is conjunctural rather than structural in the determination of the functionality and credibility. In the spirit of Original Evolutionary and Institutional Economics, it is submitted that the attributes of relative efficiency are themselves subject to the particular “social valuation” of China’s prevailing political-economic conditions.

Citation

Lo, D. (2020). State-owned Enterprises in Chinese Economic Transformation: Institutional Functionality and Credibility in Alternative Perspectives. Journal of Economic Issues, 54(3), 813 -837. https://doi.org/10.1080/00213624.2020.1791579

• Journal Article Type: Article
• Acceptance Date: Jul 14, 2019
• Online Publication Date: Sep 3, 2020
• Publication Date: Sep 3, 2020
• Deposit Date: Jul 30, 2019
• Publicly Available Date: Jul 30, 2019
• Journal: Journal of Economic Issues
• Print ISSN: 0021-3624
• Electronic ISSN: 1946-326X
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 54
• Issue: 3
• Pages: 813 -837
• DOI: https://doi.org/10.1080/00213624.2020.1791579
• Keywords: China, ownership, institutions, development