Privatization And China Economic Reforms

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slightly inefficient compared to completely private organizations because of unnecessary interference by local officials. Under all these conditions, State Owned enterprises kept thriving because of lack of serious competition. They had certain areas built for their workers where they were provided housing facilities and other essential amenities. However in 1990s, SOEs began to suffer and their production level came down. This resulted in loss of jobs for many workers and also resulted in privatization of urban housing. This meant that where previously the enterprise owners provided workers housing facility, they were now forced to pay for the same amenity. But there was no other way to compete with rising cost of living in urban China where impact of free market system was rapidly affecting all sectors of economy. With privatization of housing system, demand for other related goods and services increased considerably thus resulting in more economic activity and more ...

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t produce much and thus contribute very little to the economy. However millions of Chinese workers are associated with these enterprises and shutdown would raise unemployment level dramatically. Thus state owned enterprises and banking system are interconnected however the latter is less inefficient than the former as SOEs are manly dependent on soft budget loans that have kept them afloat since a very long time.

More successful move

Moving to international trade has been a much more successful strategy than shifting to market prices. This is because prior to 1978, foreign trade was simply non-existent. However today it forms 25% of the economy, which makes it clear that it has ...

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