The State of the State Sector

Today, China’s state-owned enterprise (SOE) reform policy agenda is fragile, and the political process to manage it is ill-defined. Pilot programs geared toward mixed-ownership of central and provincial SOEs are currently underway, but there is a notable mismatch between reform plans and the reality of falling SOE profits and weaker macroeconomic conditions. Additional policy adjustments are expected, but are unlikely to signal significant change in the distortion inducing incentives that shape SOE activity, or SOEs’ dominant positions within some sectors of the economy, including privileged access to credit from the financial system.

Posted August 1, 2017
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