Capitalism with Chinese Characteristics: Entrepreneurship and the State

by Yasheng Huang

The high concentration of the ownership structure of the legal-person shareholding firms is another sign that these firms are not private at all. In the NBS dataset, SAIC Motor has the most dispersed shareholding structure among the legal-person shareholding firms because 30 percent of its shares are held by individual shareholders. (This is because the firm is listed.) In contrast, of 16,871 legal-person shareholding firms in the NBS dataset for 1998, 75 percent have zero individual share capital. The average individual share capital is only 3.7 percent. This is entirely expected given the heavily accounting nature of the SOE reforms. As evidence, 7,612 of these so-called legal-person shareholding firms are actually factories – they are simply production subsidiaries of other SOEs. This explains the extraordinary concentration of ownership and control of these firms.