Profit-Making State Firms and China’s Development Experience

Abstract

State-owned “enterprises” from the planned era, converted into profit-making state firms in the 2000s, have been playing a major role in the continued spectacular growth of China’s GDP. This fact, however, has been obscured by hegemonic neoliberal economic discourse with its assumption that only private firms can drive economic development, thereby turning what is a major dynamic into a major failing. At the same time, by a variety of abstract constructs founded on theoretical speculations rather than empirical reality, neoliberal economic and sociological discourse has also obscured the mounting social inequalities that have accompanied Chinese development. The evidence shows that central and local Chinese government actions lie at the root of the growing social inequalities. This article ends with a discussion of the new Chongqing experiment and its implications for the big issue of the direction of China’s future development: whether “state capitalism” or “socialist market economy,” not in rhetoric but in actual substance.