12
private individuals,
for instance, in connection with management buy-outs. It is likely that
the private share of (physical and financial) assets will continue to rise further in the
future, due mainly to the large volume of plowed-back profits in private firms and the
high household saving rate (20-25 percent of households’ disposable income). Of course,
this prediction is based on the assumption that neither capital formation in state firms nor
government holdings of financial assets will increase even more dramatically.
The delay of the privatization of firms and assets has not prevented fairly speedy reforms
in other dimensions of the economic system. In particular, economic
decision-making has
largely been decentralized to households (in the case of consumption) and to firms (in the
case of production) – schematically depicted in dimension 3 in Figure 1. For the time
being, however, it is difficult to say whether the degree of decentralized decision-making
is greater in agriculture or in industry. While individual household farms today have
basically full authority to make production decisions themselves, government authorities
continue to intervene frequently in individual SOEs, in particular in large ones, as well as
in remaining truly collective firms (basically TVEs still owned by towns and villages);
see, for instance, Chow (1997, 2002). The autonomy of publicly owned
firms is also
(indirectly) constrained by the fact that political authorities often appoint the managers of
such firms, in particular of large firms. From these specific points of view,
decentralization of decision-making has not progressed as far in industry as in agriculture.
On the other hand, the absence of private ownership of land is a more severe constraint on
the autonomy of investment decisions in farming than in other sectors. In Figure 1, I have
therefore simply assumed that it is impossible to say in which sector the decentralization
of decision-making has advanced the most.
It should be observed that the characterization of the economic system in
China today as
rather decentralized refers to the relation between government authorities, on one hand,
and firms and households, on the other hand – regardless of whether the relevant
government agencies represent the national government, provinces or local authorities. By
contrast, the
government administration
itself is highly (regionally) decentralized, in spite
of the centralization of broad political powers to Beijing. Indeed, such (regional)
administrative
decentralization within the public sector
existed already before the
initiation of the economic reforms; see, for instance, Wong (1985). In this sense, the
13
administrative decentralization may be regarded as an inheritance from the pre-reform
period.
Concretely the decentralization of public-sector administration in China shows up, for
instance, in great provincial and local government powers in the fields of infrastructure
investment, government
regulations of trade, and various social arrangements (social
insurance as well as human services). The regional decentralization of public-sector
administration is therefore an important factor behind the economic and social
heterogeneity in China. It is also reflected in the small share of public-sector employees
that work for the central government.
9
An obvious advantage of the administrative
decentralization is that local initiatives, and local preferences, can play an important part.
It is, however, often difficult to clarify who is responsible for
what in cases when central
political ambitions are not followed up at local levels.
An important prerequisite for the shift to decentralized economic decision-making to
households and firms in China is, of course, that markets and hence price formation have
largely replaced administrative processes as the basic mechanism for allocating resources
and coordinating decentralized decision-making (dimension 4 in Figure 1). Indeed,
markets are the only realistic method for coordinating decentralized decision-making and
hence exploit decentralized and fragmented knowledge in society (a point emphasized, in
Dostları ilə paylaş: