The Political Economy of China’s Development
Paper Session
Friday, Jan. 7, 2022 12:15 PM - 2:15 PM (EST)
-
Chairs:
Zheng Michael Song, University of Chicago - Chang-Tai Hsieh, University of Chicago
The SOE Premium and Government Support in China’s Credit Market
Abstract
Studying China’s credit market, we find improved price efficiency and paradoxically, worsening segmentation as, amid government-led credit tightening, perceived government support for state-owned enterprises (SOEs) causes the credit spreads of non-SOEs to explode relative to their SOE counterparts, deepening the already existing SOE premium. This segmentation, driven by the emergence of government support in credit pricing beyond the SOE label, also divides the content of price discovery, with non-SOE significantly more informative of credit quality and SOE more sensitive to government support. Examining its real impact, we find that non-SOEs are losing their long-standing advantage over SOEs in profitability and efficiency.Special Deals from Special Investors: The Rise of State-Connected Private Owners in China
Abstract
We use administrative registration records with information on the owners of all Chinese firms to document the importance of ``connected'' investors, defined as state-owned firms or private owners with equity ties with state-owned firms, in the businesses of private owners. We document a hierarchy of private owners: the largest private owners have direct investments from state-owned firms, the next largest private owners have equity investments from private owners that themselves have equity ties with state owners, and the smallest private owners do not have any ties with state owners. The network of connected private owners has expanded over the last two decades. The share of registered capital of connected private owners increased by almost 20 percentage points between 2000 and 2019, driven by two trends. First, state owned firms have increased their investments in joint ventures with private owners. Second, private owners with equity ties to state owners also increasingly invest in joint ventures with other (smaller) private owners. The expansion in the “span” of connected owners from these investments with private owners may have increased aggregate output of the private sector by 1.5 to 2% a year between 2000 and 2019.Party-State Capitalism in China
Abstract
The "state capitalism" model, in which the state retains a dominant role as owner or investor-shareholder amidst the presence of markets and private firms, has received increasing attention, with China cited as the main exemplar. Yet as models evolve, so has China's "state capitalism." We argue that a resurgent party-state, motivated by a logic of political survival, has generated political-economic dynamics that better resemble "party-state capitalism" than familiar conceptualizations of state capitalism. We demonstrate this by examining three prominent manifestations of China's unique model: party-state encroachment on markets; a blending of functions and interests of state and private ownership; and politicized interactions with foreign capital. Nevertheless, there remain deficits in the party-state's hold over capital, some of which themselves result from Beijing's logic of control. By probing the comparative and historical context of this evolution of China's model, we suggest directions for further inquiry on the consequences of party-state capitalism.Discussant(s)
Daniel Yi Xu
,
Duke University
Jacopo Ponticelli
,
Northwestern University
Xiaobo Zhang
,
Peking University
Chenggang Xu
,
Imperial College London
JEL Classifications
- P3 - Socialist Institutions and Their Transitions
- O4 - Economic Growth and Aggregate Productivity