From the readings on China, I think its pretty clear that enterprises do very
well when they are under private ownership. I'm yet to see a country where
government-controlled enterprises compete at the same level as private enterprises.
Even though the Chinese government was allowing firms to retain some of their profits
and to have some degree of autonomy, the fact still remains that the government was
still very much involved in the operations of state owned enterprises. I do agree with
Huang and Kalirajan and others that planned production does have a negative impact on
growth of output. The government cannot go on granting subsidies to loss-making enterprises.
It only encourages inefficiency. I get the sense that the Chinese government is trying to get
the best of two worlds - a mix of a centrally planned and a market economy. I don't think that's
possible. What do you think?
Post a Followup