How does privatization work in China?

Bai, Chong-En, Lu, Jiangyong, and Tao, Zhigang-How does privatization work in China? Using a comprehensive panel data set of China's state-owned enterprises, we investigate the impacts of privatization on social welfare and firm performance indicators. The privatization of China's state-owned enterprises was found to have little impact on the change of firm employment, but it did lead to increasing sales and hence higher labor productivity. Meanwhile, there was a gain in firm profitability contributed to mostly by the reduction of managerial expenses to sales. The impact of privatization was sustainable in the long run, and was more pronounced when state ownership was reduced to minority position as opposed to majority position. Journal of Comparative Economics 37 (3) (2009) 453-470. School of Economics and Management, Tsinghua University, Beijing, China; Department of Business Strategy and Policy, and Center for China in the World Economy, Tsinghua University, Beijing, China; School of Business, and School of Economics and Finance, University of Hong Kong, Pokfulam Road, Hong Kong. (C) 2008 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.