State Control, Entrepreneurship and Resource Allocation

Abstract

State-led resource allocation has been an important part of China�s economic reform strategy, having exerted substantial effects on the survival of stateowned enterprises (SOEs) and the evolution of private enterprises. Focusing on capital, land, energy and utilities as key resources, we examine how the state has changed and reformed the institutional systems governing the supply and distribution of these resources during the market reform process. At the same time, we investigate how enterprises of different ownership types have responded to access these resources. Differences in firm behaviours and responses across the sectoral and ownership patterns of investment activities, asset and output shares, and profit and productivity performance are examined. This sheds light on the puzzle of China�s high economic growth with rapid expansion of the private sector in the total economy, but accompanied by the continuing predominant role of SOEs in some of the key sectors in the economy such as oil, petrochemicals, aviation, steel, coal, finance, telecommunications and railways.