The Dynamics of Reforms of Large State-Owned Enterprises in China: A Theoretical and Political Economy Analysis

Although the Chinese economy has grown dramatically in the last 40 years, the bulwark of the economy, large state-owned enterprises (SOEs), still encounter major dilemmas in the form of political, economic and social factors. This thesis offers a theoretical framework for understanding the reform of China’s large SOEs and brings political economy and neo-classical economics approaches to the analysis. This thesis puts forward two main arguments. Firstly, the dramatic growth and expansion of large SOEs in China can be explained by drawing on notions of internal corporate governance and external state governance structures. Secondly, the dynamics of the partial-privatization reform of large SOEs is contingent upon the interaction of three factors: (1) the state’s foreign ownership regulation policies towards partially privatized large SOEs; (2) the state’s foreign ownership regulation policies towards domestic private firms and thirdly, and (3) the output dynamics of both domestic private and partially privatized large SOEs