Publication

This publication focuses on the development of China’s state firms since 1978 as the country’s financial and industrial nucleus. The author states that between 1996 and 2001 substantial improvement in the profitability of the state-owned enterprises did seem evident. The publication analyzes the causes and names massive layoffs and corporate restructuring as well as debt restructuring and government-arranged buy-outs and mergers as possible factors. Nevertheless, in the next step, the author warns that this strategy could be a disaster in the long term and that real reform in China's financial sector requires serious moves toward a social security system for displaced workers, and more outright privatization of state firms to give non-state shareholders real power on their boards.