Essays on Chinese State-Owned Enterprises: Reform, Corporate Governance and Subnational Diversity

Research output: Book/ReportPh.D. thesis

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Abstract

Despite a large and vibrant private sector developed through the last several decades of market reforms in China, state-owned enterprises (SOEs) continue to exercise significant influence over the Chinese economy and remain an irreplaceable element in “Socialism with Chinese Characteristics”. With four freestanding studies of the reform, ownership and corporate governance of Chinese SOEs, this article-based dissertation contributes to a more nuanced and multifaceted understanding of the nature and governance of contemporary Chinese SOEs.
The first two chapters lay out the theoretical, methodological and empirical backdrop of the project as a whole: theoretical perspectives from management studies, sinology and political economy; the application of a mixed-methods approach; and a comprehensive introduction to the Chinese state sector in the Xi Jinping era.
Article 1 offers a detailed qualitative analysis of the historical embeddedness and policy design of the current fourth round of SOE corporate restructuring, initiated in 2013. It argues that the reform agenda centered on mixed-ownership reforms represents yet another step towards a system of “integrated fragmentation” in the Party-led state capitalist model. A model that envisions further pluralization and continuing market-oriented reforms within the system, even as the Party-state’s role in corporate governance becomes more formal and institutionalized, and the position of the state sector in the economy is consolidated.
Article 2 studies institutional barriers and drivers of local implementation of mixed-ownership reforms and the corporatization of locally controlled Chinese SOEs in the period 2008–2017. Utilizing province-level industrial economy statistics, the Article finds that market-supporting institutions and employment in the non-state sector act as support to ownership reforms. However, in contrast to previous stages of reforms, low fiscal capacity and high debt load in the local-state sector do not lead to ownership restructuring. The findings imply that the government’s mixed-ownership strategy is a durable reform path for high-performing SOEs located in rich provinces with well-developed legal institutions.
Article 3 argues that corporate governance structures of locally controlled SOEs vary depending on both geographical location (horizontal institutional diversity) and administrative level of their government owner (vertical institutional diversity). The Article shows that calibrations of the local state capitalist model influence local SOEs’ level of shareholding by management and board, as well as the concentration of shares held by the top shareholder. Furthermore, enterprises with city-level government ownership have significantly more outsider-controlled corporate governance structures compared to enterprises with province-level governments as owners. This reflects variations in previous institutional reform experiences and the assignment of policy objectives to local SOEs at different administrative levels.
Article 4 analyzes the role of the Chinese Communist Party (CCP) in the corporate governance of SOEs. The Article documents how the CCP under Xi Jinping’s leadership has actively formalized its role in Chinese business by embedding itself into the corporate governance structure of state-owned enterprises. Through the application of Chinese indigenous administrative corporate governance concepts such as “bidirectional entry, cross appointment”, the CCP has consolidated its dominance of enterprise decision-making procedures and personnel appointment, resulting in a hybrid Party-led model of corporate governance.
Taken together, the dissertation documents the emergence “Party-led state capitalism” – a hybrid political market economy blending traditionally separate planning and market modes of economic coordination, and public and private modes of ownership. The changes in state sector governance and organization documented in the dissertation mark a new paradigm in China’s development trajectory. Furthermore, the dissertation shows that local institutional diversity matters, and that state ownership in China is diffuse and fragmented. Local SOE heterogeneity is significant and, to some extent, defined by calibrations of local state-capitalist models, while previous reform experiences and local political-economic conditions also shape the implementation of SOE reforms.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School [Phd]
Number of pages244
ISBN (Print)9788775680023
ISBN (Electronic)9788775680030
Publication statusPublished - 2021
SeriesPhD Series
Number13.2021
ISSN0906-6934

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