State advances and private retreats? — Evidence of aggregate productivity decomposition in China |
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| Institution: | 1. Enterprise Research Centre, UK;2. Stockholm China Economic Research Institute, Stockholm School of Economics, PO Box 6501, 113 83 Stockholm, Sweden;3. Institute of Economics, Chinese Social Science Academy, 2 Yue Tan Bei Xiao Jie, Beijing 100836, China;4. Economics and Strategy Group, Aston Business School, Aston University, Birmingham B4 7ET, UK;1. The Research Institute of Economy, Trade and Industry, 1-3-1, Kasumigaseki, Chiyoda-ku, Tokyo 100–8901, Japan;2. Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda Shinjuku-ku, Tokyo 169–8050, Japan;1. School of Cybersecurity, Chengdu University of Information Technology, Chengdu 610225, China;2. School of Software Engineering, Chengdu University of Information Technology, Chengdu 610225, China;3. School of Management, Chengdu University of Information Technology, Chengdu 610103, China;4. School of Electronic and Information Engineering, Beijing Jiaotong University, Beijing 100044, China;5. College of Information Engineering, Nanjing University of Finance and Economics, Nanjing 210023, China;6. School of Computer Science and Technology, Beijing Institute of Technology, Beijing 100081, China;7. School of Information Science and Engineering, Yunnan University, Kunming 650500, China;8. School of Computer Science and Technology, China University of Mining and Technology, Xuzhou 221116, China;1. Department of Economics, Chinese University of Hong Kong, Shatin, N.T., Hong Kong;2. College of Economics, Zhejiang University, 38 Zheda Rd., Hangzhou 310027, China;3. Academy of Financial Research, Zhejiang University, 38 Zheda Rd., Hangzhou, Zhejiang Province 310027, China |
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| Abstract: | This paper is motivated by the recent debate on the existence and scale of China's ‘Guo Jin Min Tui’ phenomenon, which is often translated as ‘the state sector advances and the private sector retreats’. We argue that the profound implication of an advancing state sector is not the size expansion of the state ownership in the economy per se, but the likely retardation of the development of the already financially constrained private sector and the issues around the sustainability of the already weakening Chinese economy growth. Drawing on recent methodological advances, we provide a critical analysis of the contributions of the state and non-state sectors in the aggregate Total Factor Productivity and its growth over the period of 1998–2007 to verify the existence of GJMT and its possible impacts on Chinese economic growth. Overall, we find strong and consistent evidence of a systematic and worsening resource misallocation within the state sector and/or between the state sectors and private sectors over time. This suggests that non-market forces allow resources to be driven away from their competitive market allocation and towards the inefficient state sector. |
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