• PRC companies
  • Diversity of forms due to path dependent reform
  • BUT Kirby puzzle. Why are there no private publicly traded companies in Mainland China?

• Major types of corporations
  • State owned enterprises
  • Collective enterprises
  • Listed enterprises
  • Private enterprises
  • Foreign ventures

• State-owned enterprises
  • Initial type
  • Until 1993 - Responsible for social welfare functions
  • Important!!! - Most SOE's are not large manufacturing enterprises
  • 1993 reform - Intend to convert SOE's to listed enterprises

• Listed enterprises
  • Created by 1993
  • One third state owned
  • One third legal person owned
  • One third individual owned - tradable on stock markets

• Types of shares
  • A shares - RMB denominated
  • B shares - foreign currency denominated
  • H shares - traded in Hong Kong
  • N shares - traded in NYC
  • informal markets - trade mainly in LP shares

• Who owns this company?
  • Web of holding companies

• PRC stock markets
  • Opened in 19th century - HK, Shanghai
  • Shanghai Closed after 1949 revolution
  • 1980's - small collective and private enterprises begin trading small numbers of shares. Illegal markets form
  • 1990 - Shenzhen and Shanghai open
  • 1993 - SOE reform policies begin

• Purpose of PRC stockmarkets
  • Primary purpose has been to raise capital for SOE's
  • Effective allocation of capital is secondary purpose in 1990's
  • This explains a lot........

• Is China privatizing?
  • Ambiguious - legal person shares
  • Wenzhou versus Sunan - Back and forth

Discussion questions:

1) What do you see as the future of privatization in China?

2) Compare and contrast the ownership structure and/or economic policies toward corporations in China with those of another region?

Readings:

http://www.riia.org/pdf/research/asia/ChinasstockmarketFinalPDF.pdf

http://econpapers.repec.org/scripts/redir.pl?u=http%3A%2F%2Feprint.uq.edu.au%2Farchive%2F00000434%2F01%2FDP302Jan02.pdf;h=repec:qld:uq2004:302

http://www.riia.org/pdf/briefing_papers/OTC%20LiuGreenPDF.pdf

On the Absence of Privately Owned, Publicly Traded Corporations in China: The Kirby Puzzle J. Ray Bowen II; David C. Rose The Journal of Asian Studies, Vol. 57, No. 2. (May, 1998), pp. 442-452.

The Rise and Decline of Local Public Enterprises in China’s Economic Transition: A Property Rights … JK Kung, Y Lin, C Bay, KH Kong - The Rise and Decline of Local Public Enterprises in China’s Economic Transition:A Property Rights Analysis. James Kai-sing Kung* & Yi-min Lin. ... http://scholar.google.com/url?sa=U&q=http://teaching.ust.hk/~sosc542/Kung%26Lin_2003_the%2520rise%2520and%2520fall.pdf

Entrepreneurs from Wenzhou: A Case Study of Economic Freedom in China W Wu - http://scholar.google.com/scholar?hl=en&lr=&q=cache:O27nDOuX_5gJ:www.pubchoicesoc.org/papers/wu.pdf+regional+enterprise+structure+china+wenzhou+model

Beyond the Sunan Model: Trajectory and Underlying Factors of Development in Kunshan, China - http://scholar.google.com/url?sa=U&q=http://www.uwm.edu/~weiy/PDF/EPA023.pdf

Long live China's state-owned enterprises: deflating the myth of poor financial performance Author: Holz C.A.1 Source: Journal of Asian Economics, July 2002, vol. 13, no. 4, pp. 493-529(37)

Privatization, Chinese-style: economic reform and the state-owned enterprises Authors: Morris J. 1; Hassard J. 2; Sheehan J. 3 Source: Public Administration, Summer 2002, vol. 80, no. 2, pp. 359-373(15)

Privatization and economic performance: evidence from Chinese provinces Author: Tian X.1 Source: Economic Systems, March 2001, vol. 25, no. 1, pp. 65-77(13)

Creating Real Capital Markets in China Author: James Van Dorn Source: http://www.cato.org/pubs/journal/cj21n1/cj21n1-5.pdf