Working Paper: NBER ID: w25475
Authors: Ann Harrison; Marshall Meyer; Peichun Wang; Linda Zhao; Minyuan Zhao
Abstract: The majority of state-owned enterprises (SOEs) in China were privatized through ownership reforms over the last two decades. Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2013, we show that privatized SOEs continue to benefit from government support relative to private enterprises. Compared to private firms that were never state-owned, privatized SOEs are favored by low interest loans and government subsidies. These differences are more salient with the Chinese government’s trillion-dollar stimulus package introduced after the 2008 global financial crisis. Moreover, both SOEs and privatized SOEs significantly under-perform in profitability compared to private firms. Nevertheless there are clear improvements in performance post-privatization. The tiger can change its stripes; however, the government’s behavior seems to be sticky.
Keywords: State-Owned Enterprises; Privatization; Government Support; Firm Performance
JEL Codes: L3; L33; O31; O32; O33; P31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Privatized SOEs (L33) | Government support (H53) |
| Government support (H53) | Performance of privatized SOEs (L32) |
| Privatization (L33) | Performance of privatized SOEs (L32) |
| Privatized SOEs (L33) | Profitability (L21) |
| Private firms (L39) | Profitability (L21) |
| Post-privatization (L33) | Productivity (O49) |
| Post-privatization (L33) | Patent filings (O34) |