Stability, asset management, and gradual change in China’s reform economy
INTRODUCTION One of the key processes in China’s gradual transition from state socialism to state capitalism occurred during the second half of the 1990s, as state agencies began to shift their conception of control from owners to asset managers. The logic of asset management in the Chinese government was that government agencies would, rather than sell off or privatize state assets, begin to act like institutional investors - managing the companies in their portfolios, pushing them to think about issues like operational efficiency, return on investment, and the like. This approach to managing assets in the transition economy eventually reached the highest levels of the government with the founding of the State-Owned Assets Supervision and Administration Commission (SASAC), a central government agency that at the end of 2010 owned a controlling stake in 122 of the largest, most powerful central government corporations (see Chapter 3). SASAC, which came into existence gradually over the course of the 1990s (it was officially “founded in 2003” but the institutions were in place and operating for the better part of the 1990s), was set up initially to manage about 6.9 trillion yuan in assets (about $866 billion), although with several high-profile IPOs on the books, the value of those assets is several orders of magnitude larger now. Further, provincial governments also have their own local SASAC offices, and these offices control the lion’s share of assets of many of the highest-profile provincial-level firms (for example, Shanghai SASAC controls a significant share of the assets of forty-one Shanghai group companies). Huang (2008) views the persistence of an important state-owned sector in Shanghai as evidence of the incomplete and ultimately unsuccessful state of Chinese reform. Our view is quite different: we see the emergence of SASAC (and other prominent asset management companies) as a crucial positive step in the overall successful gradualist approach to the economic reform process. In either case, there has been surprisingly little empirical assessment of the impact on performance of this key institution in China’s model of state capitalism, and this chapter seeks to contribute to that assessment.
State Capitalism, Institutional Adaptation, and the Chinese Miracle
Guthrie, D., Xiao, Z., & Wang, J. (2015). Stability, asset management, and gradual change in China’s reform economy. State Capitalism, Institutional Adaptation, and the Chinese Miracle, 75-101. https://doi.org/10.1017/CBO9781139962858.004