Privatisation and trade performance: evidence from China

Many studies have shown that privatisation has the potential to apply the forces of competition and high-powered incentives to reduce costs and innovate. However, few studies investigate whether privatisation can enhance export performance through higher levels of efficiency. Using China's National Bureau of Statistics surveys and customs trade data, we explore the causal effect of privatisation on trade. The wave of 2002 Chinese state-owned enterprise reforms provided a natural experiment that enables us to use the difference-in-differences approach to examine this question. Consistent with the theoretical predications, the empirical results showpositive and significant effects of privatisation on all the examined indicators of export performance, including total export value, the intensive margin, and the extensive margin.