Discuss the Problems and Benefits of Privatization of Public Sector Organizations in China
Discuss the problems and benefits of privatization of public sector organizations in China
Privatization as an important role of economy , has great contribution for all over the world. So what is privatization? Privatization means transfer of assets of economic activity from public sector to private sector, it has been seen by many governments as a means of revitalizing inefficient industries and as an opportunity to raise revenues to ease budgetary problems; however, privatization in China is very complicated.
When reform started in 1978, almost of the productive assets were state-owned in China. But reforms since then have not included privatization. Today, there is more than 70 per cent of Chinese productive wealth which belongs to Chinese government. During the first 20 years of reform, the government concentrated the country’s assets with a great purpose of development which helped to achieve the creation of infrastructure and expansion of industrial capacity. We can image, if the state assets had been privatized, it would become a big trouble for China to mobilize resources during the tremendous industrialization between 1980s and 1990s.That’s why the initial marketization-without-privatization approach has been successful. Also because of that, China has emerged a robust infrastructure and become an industrialized economy.
However, this industry-first, government-investment-driven and export-oriented growth model which has been highly resource intensive has run its course. China has expanded export almost of the world, not only the developed countries, also Latin America, the Middle East and Africa. But this growth model is limiting the speed of export. China has to turn towards growth driven by domestic demand, not exports, and one led by service not industry to shift its economy. So what can help to stimulate the transformation? The answer is privatization.
Privatization remains a thorny issue in a country where private property became a
Privatization as an important role of economy , has great contribution for all over the world. So what is privatization? Privatization means transfer of assets of economic activity from public sector to private sector, it has been seen by many governments as a means of revitalizing inefficient industries and as an opportunity to raise revenues to ease budgetary problems; however, privatization in China is very complicated.
When reform started in 1978, almost of the productive assets were state-owned in China. But reforms since then have not included privatization. Today, there is more than 70 per cent of Chinese productive wealth which belongs to Chinese government. During the first 20 years of reform, the government concentrated the country’s assets with a great purpose of development which helped to achieve the creation of infrastructure and expansion of industrial capacity. We can image, if the state assets had been privatized, it would become a big trouble for China to mobilize resources during the tremendous industrialization between 1980s and 1990s.That’s why the initial marketization-without-privatization approach has been successful. Also because of that, China has emerged a robust infrastructure and become an industrialized economy.
However, this industry-first, government-investment-driven and export-oriented growth model which has been highly resource intensive has run its course. China has expanded export almost of the world, not only the developed countries, also Latin America, the Middle East and Africa. But this growth model is limiting the speed of export. China has to turn towards growth driven by domestic demand, not exports, and one led by service not industry to shift its economy. So what can help to stimulate the transformation? The answer is privatization.
Privatization remains a thorny issue in a country where private property became a