The geography of privatization in China, 1978-1996

Abstract

Economic reform in China since the late 1970s has led to remarkable economic growth and many changes in China's economic geography. Privatization, an important process in deregulating a centrally controlled economy, has been a significant component of China's economic reform and restructuring. Privatization also has significant spatial consequences linked to its role in China's regional economic development. With data from policy documents and state statistical sources, we use descriptive statistics and correlation analysis to describe, map, analyze, and explain the changing spatial dimensions of China's privatization process. A complex pattern of spatial variation in privatization has emerged related to the recent historical legacy of socialist development and new economic opportunities in different regions. Empirical analysis shows that unemployment was influential to privatization in the late 1970s, but in the 1990s, strong state employment in the commercial sector has been associated with the growth of the urban private sector. Moreover, it is geographically significant that the stronger the private sector at the provincial level, the faster the province's economic growth. Findings on the spatial variation and changes of privatization enhance our understanding of the complex processes of regional development under way in China today and can contribute to the formulation of innovative regional development policies.