1 Rawski, Thomas, “Progress without privatization: the reform of China's state industries,” in Vedat, Milor (ed.), Changing Political Economies: Privatization in Post-Communist and Reforming Communist States (Boulder: Lynne Rienner, 1994), pp. 27–52.Google Scholar

2 For example, Nolan, Peter, State and Market in the Chinese Economy (London: MacMillan, 1993), especially pp. 267–296.CrossRefGoogle Scholar

3 Further details of these trends and associated references are available from the author upon request.

4 Putterman, Louis, “Ownership and the nature of the firm,” Journal of Comparative Economics, Vol. 17, No. 2 (1993), pp. 243–263CrossRefGoogle Scholar; Ryan, Alan, “Property,” in John, Eatwell, Murray, Milgate and Peter, Newman (eds.), The New Palgrave: Dictionary of Economics (New York: Stockton Press, 1987), pp. 1029–31.Google Scholar

5 See Putterman, “Ownership and nature”; Louis, Putterman and Randall, Kroszner (eds.), The Economic Nature of the Firm: A Reader (Second Edition) (New York: Cambridge University Press, 1996).Google Scholar

6 See Hart, Oliver, “An economist's perspective on the theory of the firm,” Columbia Law Review, Vol. 89 (1989), pp. 1757–74CrossRefGoogle Scholar, and other references cited in Putterman and Kroszner, Economic Nature of the Firm.

7 Sicular, Terry, “China's agricultural policy during the reform period,” in Joint Economic Committee, Congress of the United States, China's Economic Dilemmas in the 1990s: The Problems of Reforms, Modernization, and Interdependence, Vol. 1 (Washington, D.C.: U.S. Government Printing Office, 1991) pp. 34–64Google Scholar, provides survey results showing that 80% of villages in eastern and over 50% in central and western China set plans for crop rotation and layout in 1987.

8 For a classic statement of this argument, see Kornai, Janos, “The soft budget constraint,” Kyklos, Vol. 39, No. 1 (1986), pp. 3–30.CrossRefGoogle Scholar For applications to China, see Wong, Christine, “The economics of shortage and problems of reform in Chinese industry,” Journal of Comparative Economics, Vol. 10, No. 4 (1986), pp. 363–387CrossRefGoogle Scholar; Bruce, Reynolds (ed.), Reform in China: Challenges and Choices (New York: M. E. Sharpe, 1987)Google Scholar; Walder, Andrew, “Manager and factory in an era of reform,” The China Quarterly, No. 118 (1989), pp. 242–264.CrossRefGoogle Scholar

9 Sicular, Terry, “Going on the dole: why China's enterprises choose to lose,” unpublished paper, University of Western Ontario, May 1994.Google Scholar

10 Theodore Groves, Yongmiao Hong, John McMillan and Barry Naughton, “China's evolving managerial labor market,” Journal of Political Economy (in press).

11 Assuming, that is, that such an interest can be denfined.

12 Lockett, Martin, “The urban collective economy,” in Stephan, Feuchtwang, Athar, Hussain and Thierry, Pairault (eds.), Transforming China's Economy in the Eighties, Vol. 2. (Boulder, CO: Westview Press, 1988), pp. 118–137.Google Scholar

13 Estimates of the comparative GDP growth rate are given by Perkins, Dwight, “Completing China's move to the market,” Journal of Economic Perspectives, Vol. 8, No. 2 (1994), pp. 23–46 at pp. 24–25.CrossRefGoogle ScholarChina Statistical Yearbook 1993 gives indexes of consumption in comparable prices (1952 = 100) of 177 in 1978 and 444.7 in 1992, implying a 2.5-fold gain.

14 Based on data on gross output in current prices in China Statistical Yearbook 1993, p. 301, deflated by the overall farm and sideline products purchasing price index (p. 202). Based on the same series, crop output value fell by – 1.8% a year during 1984–89 but rose by 3.0% a year during 1984–92 as a whole.

15 See Nolan, Peter, The Political Economy of Collective Farms: An Analysis of China's Post-Mao Rural Reforms (Boulder, CO: Westview, 1988)Google Scholar; McMillan, John, Whalley, John and Zhu, Lijing, “The impact of China's economic reforms on agricultural productivity and growth,” Journal of Political Economy, Vol. 97, No. 4 (1989) pp. 781–807CrossRefGoogle Scholar; and Lin, Justin Yifu, “Rural reforms and agricultural growth in China,” American Economic Review, Vol. 82, No. 1 (1992), pp. 34–51.Google Scholar

16 Authors such as Sicular, Putterman and Rozelle indeed emphasize the incompleteness of marketization up to the early 1990s in Chinese agriculture, not only because of the importance of involuntary procurements, but also because of the indications that informal restrictions on planting decisions and a bias towards self-sufficiency were outgrowths of the procurement system and related policies. See Sicular, , “China's agricultural policy”; Putterman, Louis, Continuity and Change in China's Rural Development: Collective and Reform Eras in Perspective (New York: Oxford University Press, 1993)Google Scholar; Rozelle, Scott, “The economic behavior of village leaders in China's reform economy,” unpublished Ph.D. dissertation, Cornell University, 1991.Google Scholar

17 See William, Byrd and Lin, Qingsong (eds.), China's Rural Industry: Structure, Development and Reform (New York: Oxford University Press, 1990)Google Scholar; and Whiting, Susan, “Contract incentives and market discipline in China's rural industrial sector,” unpublished paper, University of Michigan, May 1994.Google Scholar

18 Putterman, Continuity and Change. See also Bowles, Paul and Dong, Xiao-Yuan, “Current successes and future challenges in China's economic reforms: an alternative view,” New Left Review, No. 208 (1994), pp. 49–76.Google Scholar

19 E.g. Weitzman, Martin and Xu, Chenggang, “Chinese township-village enterprises as vaguely defined cooperatives,” Journal of Comparative Economics, Vol. 18, No. 2 (1994), pp. 121–145.CrossRefGoogle Scholar

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21 These studies include Jan Svejnar, “Productive efficiency and employment,” in Byrd and Lin, China's Rural Industry, pp. 243–254; Mark Pitt and Louis Putterman, “Employment and wages in township, village, and other rural enterprises,” in Gary Jefferson and I. J. Singh (eds.), Reform, Ownership and Performance in Chinese Industry (forthcoming), and Dong, Xiao-Yuan and Putterman, Louis, “Productivity and organization in China's rural industries: an efficiency frontier analysis,” unpublished paper, Brown University, August 1994.Google Scholar

22 See Table 4 in Jefferson, Gary and Rawski, Thomas, “Enterprise reform in Chinese industry,” Journal of Economic Perspectives, Vol. 8, No. 2 (1994), pp. 47—70.CrossRefGoogle Scholar

23 Jefferson, Gary, “Are China's rural enterprises outperforming state-owned enterprises?” Research Paper No. CH-RPS#24, The World Bank, 1993.Google Scholar

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25 Kuan, Chen, Jefferson, Gary, Rawski, Thomas, Wang, Hongchang and Zheng, Yuxin, “Productivity change in Chinese industry, 1953–1985,” Journal of Comparative Economics, Vol. 12, No. 4 (1988), pp. 570–591.CrossRefGoogle Scholar

26 Jefferson and Rawski, “Enterprise reform.”

27 This range includes a growth rate estimate of 2.4% per annum obtained by Jefferson, Rawski and Zheng after switching from the two factor (capital, labour) production function of the earlier Chen et al. study to a three factor (capital, labour, intermediate inputs) set-up. See Jefferson, Gary, Rawski, Thomas and Zheng, Yuxin, “Growth, efficiency, and convergence in China's state and collective industry,” Economic Development and Cultural Change, Vol. 40, No. 2 (1992), pp. 239–266.CrossRefGoogle Scholar

28 Groves, Theodore, Hong, Yongmiao, McMillan, John and Naughton, Barry, “Autonomy and incentives in Chinese state enterprises,” Quarterly Journal of Economics, Vol. 109, No. 1 (1994), pp. 183–209CrossRefGoogle Scholar; and Groves et al., “China's evolving managerial labor market.”

29 Jefferson, “Are rural enterprises outperforming SOEs?”

30 Jefferson, Rawski and Zheng, “Growth and convergence.” See also Jefferson, Gary and Xu, Wenyi, “Assessing gains in efficient production among China's industrial enterprises,” Economic Development and Cultural Change, Vol. 42, No. 3 (1994), pp. 597–615CrossRefGoogle Scholar, which shows that the degree of convergence of factor productivities was greater for enterprises that sold more of their output outside state plans.

31 Naughton, Barry, “Implications of the state monopoly over industry and its relaxation,” Modem China, Vol. 18, No. 1 (1992) pp. 14–41.CrossRefGoogle Scholar

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34 Jefferson, Gary, Rawski, Thomas and Zheng, Yuxin, “Productivity change in Chinese industry: a comment,” China Economic Review, Vol. 5, No. 2 (1994), pp. 235–241.CrossRefGoogle Scholar

35 Sicular, “Going on the dole.”

36 See the discussion in Tseng, Wanda, Khor, Hoe Ee, Kochhar, Kalpana, Mihaljek, Dubravko and Burton, David, “Economic reform in China: a new phase,” IMF Occasional Paper No. 114, Washington, D.C., November 1994.Google Scholar

37 For example: it could be held that privatization was unnecessary in the past, but is critical at the present juncture; that China has already gone too far in “restoring capitalism”; and so on.

38 See, for example, Fischer, Stanley, “Privatization in East European transformation,” in C., Clague and G., Rausser (eds.), The Emergence of Market Economies in Eastern Europe (Cambridge: Blackwell, 1992), pp. 227–243Google Scholar; for an application to China, see Sachs, Jeffrey and Woo, Wing Thye, “Structural factors in the economic reforms of China, Eastern Europe, and the former Soviet Union,” Economic Policy, Vol. 18, No. 1 (1994), pp. 102–145.Google Scholar

39 Note, however, that references to the “non-state sector” as a whole to explain China's “progress without privatization” are problematic for such arguments, since most of the “non-state sector” is actually controlled by local governments. Treatment of TVEs as “disguised private enterprises” is unwarranted as a generalization, and there is much evidence of dynamism among TVEs controlled by local governments in places like southern Jiangsu and Shandong. The notion that TVEs and other collectives are “co-operatives” and thus “quasi-private” is also largely refuted by this discussion. Finally, while public TVEs may indeed resemble private enterprises because local governments cannot provide soft budget subsidies, this scarcely permits the privatization proponent to redefine them as such.

40 See Yusuf, Shahid, “China's macroeconomic performance and management during transition,” Journal of Economic Perspectives, Vol. 8, No. 2 (1994), pp. 71–92.CrossRefGoogle Scholar

41 See Wood, Adrian, “Joint stock companies with rearranged public ownership,” China Economic Review, Vol. 4, No. 2 (1993), pp. 181–194.CrossRefGoogle Scholar

42 Thus, Bowles and Dong (“Successes and challenges”) quote enthusiastically Thomas Rawski's reference to “entrepreneurial leaders in hundreds of counties and thousands of production brigades” and Shahid Yusuf s discussion of “the entrepreneurial zeal of local officials.” (See Rawski, “Chinese industrial reform: accomplishments, prospects, and implications,” American Economic Review, Papers and Proceedings, Vol. 84, No. 2 (1994), p. 273, and Yusuf, “China's macroeconomic performance.”)

43 Bell, Michael, Khor, Hoe Ee and Kochhar, Kalpana, “China at the threshold of a market economy,” IMF Occasional Paper No. 107, Washington D.C., September 1993, p. 6.CrossRefGoogle Scholar

44 Of course, even a non-Communist Chinese government may have been unlikely to follow a laissez faire approach. Policies modelled after the export-oriented economies of Japan, South Korea and Taiwan, where a strong state role was combined with private ownership and markets, would perhaps have been more likely, as well as more effective, making the laissez faire benchmark a somewhat unfair standard of comparison. See Amsden, Alice, Asia's New Giant: South Korea and Late Industrialization (New York: Oxford University Press, 1989) andGoogle ScholarWade, Robert, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton: Princeton University Press, 1990).Google Scholar