WHAT IS DISTINCTIVE ABOUT CHINA ECONOMIC TRANSITION - STATE ENTERPRISE REFORM AND OVERALL SYSTEM TRANSFORMATION

Entry of nonstate industrial firms has played a crucial role in China' s reform process by creating markets and competition. Yet the state-ow ned sector has also performed adequately, improving incentives and pro ductivity, and turning in a respectable growth performance. Moderate i mprovements in the state sector have thus supported a virtuous cycle o f reform. Simple contrasts between state and private ownership systems therefore explain little of China's apparently successful combination of reform and growth. (C) 1994 Academic Press, Inc.