The Peterson Institute just published a new Working Paper in which Tianlei Huang and I observe the evolving ownership patterns of China's largest companies over the decade-long period since Xi Jinping took over. Click here to download in PDF format in case the previous link is broken.
In contrast to a cliché narrative of the Chinese state crushing the private sector, we find that this period has actually been the first time since 1949 of significant private-sector inroads into the higher ranks of China's corporate sector, not due to particularly favorable policy (we don't question the fact that SOEs are favored by many government decisions) but rather thanks to the remarkable entrepreneurial dynamism that continues to exist in China.
The paper is based on novel analysis of company-level disclosures which does not rely at all on Chinese official statistics. Two overlapping datasets are used: one of the 100+ largest Chinese companies by revenue, based on Fortune Global 500 rankings; and the other of Top 100 largest Chinese listed companies by market capitalization, irrespective of listing venue (e.g. Shanghai, Shenzhen, Hong Kong, New York) and including variable-interest-entity arrangements such as Alibaba's. In both cases, we find a steady increase of the relative share of the private sector against that of the state sector, even though we use a conservative definition of the former - any company in which the Chinese government owns more than 10 percent of equity capital is considered state sector under our methodology.
Update (April 5): the same research was just published by Bruegel in its own Working Paper series. Click here to download in PDF format in case the previous link is broken.
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