Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China

Hsieh, Chang-Tai; Song, Zheng

doi:10.2139/ssrn.3470791

Cited by 95 publications

(179 citation statements)

References 13 publications

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“…The restructuring of the state sector was conducted under the slogan of "Grasp the Large, Let Go of the Small"-i.e., shutting down or privatizing small SOEs and corporatizing big SOEs. 5 The transformation was successful to the extent that big SOEs improved their productivity relative to their private counterparts (Hsieh and Song, 2015).…”

Section: A Dual-track Liberalizationmentioning

confidence: 99%

“…6 This can be viewed as a turning point of decentralization or economic liberalization started in the 1980s (Huang, 2008). sector, and the TFP convergence between SOEs and private firms has also stopped, with the capital productivity of SOEs remaining at roughly half of that of private firms (Hsieh and Song, 2015). The state sector is even bigger in service industries, where misallocation is also significantly more severe (see Ge, Luo, Song and Yang, 2017).…”

Section: A Dual-track Liberalizationmentioning

confidence: 99%

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Risks in China’s Financial System

Song¹,

Xiong²

2018

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Motivated by growing concerns about the risks and instability of China's financial system, this article reviews several commonly perceived financial risks and discusses their roots in China's politico-economic institutions. We emphasize the need to evaluate these risks within China's unique economic and financial systems, in which the state and non-state sectors coexist and the financial system serves as a key tool of the government to fund its economic policies. Overall, we argue that: (1) financial crisis is unlikely to happen in the near future, and (2) the ultimate risk lies with China's economic growth, as a vicious circle of distortions in the financial system lowers the efficiency of capital allocation and economic growth and will eventually exacerbate financial risks in the long run.

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Section: A Dual-track Liberalizationmentioning

confidence: 99%

Section: A Dual-track Liberalizationmentioning

confidence: 99%

Risks in China’s Financial System

Song¹,

Xiong²

2018

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“…Our classification of SOEs follows Hsieh and Song (). Specifically, a firm is classified as an SOE if it satisfies one of the following two conditions: (a) the registered capital held directly by the state exceeds 50%, or (b) ASIF data identify the state as the controlling shareholder of the firm.…”

mentioning

confidence: 99%

Broadband Internet, Firm Performance, and Worker Welfare: Evidence and Mechanism

2019

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This paper examines the effect of high-speed internet on firm's productivity and worker's wage in China. We exploit a national policy reform and devise a differencein-difference strategy to address the endogeneity. We find that high-speed internet significantly increases firm's productivity and worker's wage, and the estimate is larger for firms in industries with high skill intensity and for more educated workers. We provide suggestive evidence that the mechanism is likely from firm's increased use of skill-biased technology and the flattened management organization. (JEL O2, O3, J3)

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“…Here, the urban skilled sector is owned and regulated by the government. This situation is a nontrivial characteristic in China, as Hsieh and Song () show that Chinese state‐owned enterprises mostly lay in upstream industries and play strategically important roles in the Chinese economy. This is an especially important phenomenon in China.…”

Section: The Extended Modelmentioning

confidence: 99%

Rural–urban human capital disparity and skilled–unskilled wage inequality in China

Zhang

2017

Review Development Economics

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This paper builds three-sector general equilibrium models to investigate how a shrink of rural-urban human capital disparity generates an impact on skilled-unskilled wage inequality in China. In the basic model where the urban skilled sector and the urban unskilled sector have no upstream and downstream linkage, we find that the wage inequality will be narrowed down if the urban skilled sector is more capital intensive than the urban unskilled sector. To capture the characteristic of China's state capitalism, we build an extended model where the urban skilled sector acts as an upstream industry for the urban unskilled sector, and find that the wage inequality will be reduced if the substitution elasticity of unskilled labor and intermediate product in the urban unskilled sector is large enough. When we consider the factual characteristics of the Chinese economy, our models predict that a shrink of rural-urban human capital disparity will be helpful to reduce the skilled-unskilled wage inequality in China.

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Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China

Cited by 95 publications

References 13 publications

Risks in China’s Financial System

Risks in China’s Financial System

Broadband Internet, Firm Performance, and Worker Welfare: Evidence and Mechanism

Rural–urban human capital disparity and skilled–unskilled wage inequality in China

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