China’s State Controlled Enterprises More Productive than Private Capitalist Enterprises

The Western stereotype of state owned enterprises is that they are sluggish because they are not “incentivized” by the prospect of unlimited profits as are private corporations. However, in China this is hardly the case.

The percentage of state-owned enterprises have increased in the last 6 months from 57% to 61%. But more importantly, state investments have expanded by 8%. Meanwhile in the private sector, investment in fixed assets is negative. This means, like the whole world over, capitalists do not want to invest in infrastructures. However, they will pay for their commitment to speculation. If a financial bubble occurs in China, the Chinese Communist Party will allow them to go bankrupt.

Read in Peterson Institute for International Economics – PIIE

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