SOAS Research Online

Abstract

Massive losses and falling profitability in China's state‐owned industries have attracted widespread attention in recent years. This paper, based on data from China's new industrial accounting and statistical system, examines the performance of these industries from two perspectives. The first is the comparative performance of state enterprises under central and regional control. The second is the way in which the enterprises have disposed of pre‐tax profits. The findings suggest that the increasingly competitive environment in which state enterprises have to operate and the transitional nature of their institutional arrangements are major factors which have contributed to the problems which they face. It is further argued that the existence of such problems is likely to be the source of considerable pressure on the future development of China's capital markets.