Enterprise reform, domestic competition and export competitiveness: The case of China

This paper draws on the experience of China to show that improved enterprise performance can be achieved without privatization. Export expansion is used as an indicator of increased economic efficiency. China has reformed its traditional state-owned enterprises by the use of management contract systems, expanding enterprise autonomy and increasing retained profits. Township and village enterprises, which are public enterprises under the ownership and control of local authorities, have been crucial to China's export expansion, and are particularly suited to the environment of a partially reformed transitional economy. Foreign investors have been important in the export drive too, but usually in joint ventures with domestic firms, whose reform they have had to undertake themselves.