China’s economy: state versus private
January 08 2016
Just a few decades ago China’s private sector was almost non-existent. How important is it today?
1. In 2014 China economy specialist Nicholas Lardy concluded that the private sector now produces at least two-thirds of China’s GDP.
2. Competitive conditions prevail in some industry sectors where state-owned enterprises (SOEs) remain prominent such as steel and coal production. State monopolies only survive in a few sectors such as oil and utilities. Here regulated prices mean that profit margins can be thin.
3. In 2015 there were 54.08 million self-employed businesses in China, a 44 percent increase from 2011. Over the same period the number of privately-owned firms nearly doubled to reach 19.08 million.,
4. In China 25 percent of the working age population own and manage a private business. This compares with:
- 22.9 percent in Australia
- 15.9 percent in South Korea
- 34.7 percent in Brazil
- 20.9 percent in Turkey
5. In 2014 China’s economy created 13.2 million new jobs. More than 90 percent were in the private sector.
- 14.3 percent in Australia
- 7.4 percent in South Korea
- 12.1 percent in Brazil
- 11.7 percent in Turkey
7. In 2014 the top 100 Chinese brands increased 22 percent in value compared with a year earlier. The value of privately-owned brands increased by 97 percent while that of state-owned brands fell by nine percent. Three of the top five Chinese brands are privately-owned – Tencent, Alibaba and Baidu – compared to 2010 when all five were state-owned.
8. In 2014 the value of Chinese investment in Australia by privately-owned companies was twice that of SOEs. In terms of the number of deals completed, privately-owned firms outnumbered SOEs by 5:1.
 Lardy, N.,2014.Markets over Mao: The Rise of Private Business in China, Peterson Institute for International Economics.
 According to Chinese regulations, the distinction between a self-employed business and a privately-owned firm is that the former employs fewer than seven workers.
 The figure is for 2011. Nicholas Lardy, 2014. Markets over Mao: The Rise of Private Business in China, Institute for International Economics.