Development and Finance from issue 2010/3

Annamária Artner

Public or Private? Role of the State and SMEs in China

- Abstract -

JEL L-53

 

The number of public Chinese companies is falling but they are growing in size. Private companies and self-employed businesses (SMEs) are burgeoning, the added value is attracting an increasing number of firms to their side while the level of dependence on state-run companies, the public-sector ‘teat’, remains, albeit in a more implicit manner. There is no doubt that this situation means they are almost ‘parasites’ living on the state, while it keeps innovations in check that are fuelled by the will to make profits. The question is what outcome this mixed situation will have. Will it turn capitalism loose on China with its massive population that still has many hundreds of millions of poor people, the same capitalism that is currently crumbling on a global scale, is incapable of alleviating global imbalances and income differences and in recent years has only made things worse, or will it be able to develop a more harmonious socio-economic apparatus. Yet the Chinese ‘mixed economy’ or ‘market socialism’ has performed well so far by historical comparison and by international standards.


Annamária Artner, CSc, senior research fellow (Institute for World Economics of the Hungarian Academy of Sciences)

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