Deconstructing state-owned enterprises in socialist China under reform: A scalar examination

Abstract

Studies of economic transformation under socialism in general, and the growth and development of state-owned enterprises (SOEs) in particular, have been based on the assumption that SOEs are a homogeneous entity. With few exceptions, the extant literature tends to compare SOEs as a whole with other economic sectors. Little has been written about the heterogeneous nature of SOEs. The author examines the internal variation of SOEs at different administrative levels in terms of productivity and profitability in China, which remains one of the largest socialist economies undergoing profound structural changes. The performance of SOEs is found to have varied significantly among the administrative hierarchy of the socialist political system. The changing politics of scale from promoting regional self-reliance in the Maoist era toward both expanding SOE autonomy and fiscal decentralization in the post-Maoist era, has resulted in an increase in the disparity between the SOEs affiliated with the national government and those affiliated with local governments. The investigation of SOEs in the Chinese context raises important theoretical questions concerning the growth dynamics of SOEs and suggests the need for a more careful and path-dependent treatment of socialist economies under reform. The growth of SOEs in transitional socialist economies provides an interesting testing ground in which to evaluate the theoretical discourse concerning the politics of scale and the rescaling of politics.