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  • Cited by 5
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    This article has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Li, Han and Li, Zhigang 2013. Road investments and inventory reduction: Firm level evidence from China. Journal of Urban Economics, Vol. 76, p. 43.

    Fu, Feng-Cheng Vijverberg, Chu-Ping C. and Chen, Yong-Sheng 2008. Productivity and efficiency of state-owned enterprises in China. Journal of Productivity Analysis, Vol. 29, Issue. 3, p. 249.

    2008. Chinese Economic Development.

    Atherton, Andrew and Fairbanks, Alaric 2006. Stimulating Private Sector Development in China: The Emergence of Enterprise Development Centres in Liaoning and Sichuan Provinces. Asia Pacific Business Review, Vol. 12, Issue. 3, p. 333.

    Chen, Gongmeng Firth, Michael and Rui, Oliver 2006. Have China's enterprise reforms led to improved efficiency and profitability?. Emerging Markets Review, Vol. 7, Issue. 1, p. 82.

  • The China Quarterly, Volume 170
  • June 2002, pp. 413-440

Explaining the Financial Performance of China's Industrial Enterprises: Beyond the Competition-Ownership Controversy


Scholarly explanations of the worsening financial performance of Chinese industry over the reform era, particularly the loss-making phenomenon, have coalesced around two rival stories: the “inefficient institutions causing poor financial performance” story and the “increased competition inducing profitability decline” story. This article critically reviews the arguments and empirical substantiation of the two stories, and gives an alternative explanation that takes demand conditions and industrial configurations into the analysis. On this basis, it is argued that the worsening financial performance is a macro as well as micro problem that points to the fundamental contradictions in contemporary Chinese political economy. Some policy implications from this analysis are raised in the concluding section.

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The draft of this article was completed during Yuk-shing Cheng's research visit to the School of Oriental and African Studies, University of London. The paper has been subsequently presented at conferences in Cambridge and Beijing. The authors wish particularly to thank Thomas M.H. Chan for his comments on an earlier version.
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The China Quarterly
  • ISSN: 0305-7410
  • EISSN: 1468-2648
  • URL: /core/journals/china-quarterly
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