The Role of Ownership and Property Rights in China's Economic Transition

Abstract

The ever-greater roles played by markets and pecuniary incentives, and the increasing decision-making authority of localities, enterprises and individuals, have been central elements of China's economic reforms. Compared with these radical departures from the past, change in the area of property rights has been ambiguous. Depending on one's perspective, China might be seen as on its way to establishing a socialist market economy, in which public and collective ownership forms are predominant, or well along the path to a radical transformation of property rights, including a de facto private agriculture, massive private foreign investment, stock markets and the growth of private enterprise. What role property rights have played in the successes and problems of China's reforming economy is similarly debatable. The view that property rights have remained largely “social” leaves open interpretive possibilities ranging from the conclusion that China offers evidence of the viability of a market socialist option, to arguments that the transformation of property rights remains a major hurdle on the road to an economy that can support sustained growth. The quite different view that sectors experiencing substantial privatization have been the main contributors to the achievements of the reform economy, and that those maintaining public ownership have held back economic growth, is also taken by some.The nature of the property rights that have characterized China's economy during the years of economic reform, and the influence of property rights and property rights reform on the performance of the economy during that era are the subjects of this article.