Understanding The Changing Geography Of China's State-owned Enterprises: A Statistical Examination

Abstract

The growth dynamics of SOEs in China's transitional economy had long been a research topic attracting much scholarly attention within China studies. With few exceptions, the existing interpretations are all based on a common assumption to understand SOEs as a closed, homogeneous entity driven by the same structural force of state-market interaction across different regional economies. Little is known about the internal variations of the growth dynamics of China's SOEs. Drawing upon the recent theories of firm-territory relational nexus in new economic geography, this paper examines the uneven growth and performance of SOEs in socialist China under transformation. SOEs in north and northeast China are found to be much larger than SOEs in south China, whereas their productive performance had been greatly lagged behind by the latter. Statistical exercise reveals that intra-regional organization of production system played an important role in shaping the productive efficiency of SOEs in China. Localized production and market linkages, diversified local labor market and dense corporate networks with foreign enterprises are all regionally specific traded and untraded relationships affecting the labor productivity of China's state-owned sector. The investigation of region dynamics of SOEs in the Chinese context suggests the need of a regional lens in analyzing the path-dependent nature of industrial transformation in transitional socialist economy.