1. Loss in state - owned assets and the gap between the rich and the poor liu fengyi School of Economics, nankai university,Tianjin, China

2. 1.Introduction 2.Literature 3.Specific evidence 4.Conclusion

3. 1.Introduction

4. 1.1 The reform of state-owned enterprises affects income distribution system In china, The reform of state-owned enterprises is called the central link of China's economic system. This means that the reform of state-owned enterprise is the key of the reform of China. The reform of state-owned enterprise changes the old production relations. The state-owned property decreased constantly and private property is increasing relevantly. This must affect income distribution system.

5. 1.2 The reform of state-owned enterprise causes the great loss of state assets. The reform of state-owned enterprise was the reform of contract and responsibility system in the 1980s to the joint-stock enterprise in the 1990s. Along with the deepening of reform, the increasingly conspicuous problem is the great loss of state assets.

6. 1.2 The reform of state-owned enterprise causes the great loss of state assets. According to calculation, the annual loss of state assets in 1980s was 50 billion Yuan. Since the 1990s, the annual loss of state assets was close to 100 billion Yuan. There might be a loss of 1/100 if calculated by 1 billion state assets in 2005.This caused strong repercussions in China.

7. 1.3 There are several kinds of the loss of state assets There are several kinds of the loss of state assets. For example, some managers of state-owned enterprises use handle rights to change the state assets into private income. Some deprive the state assets in name of the reform of joint- stock.

8. 1.3 There are several kinds of the loss of state assets Some use the MBO form to buy the state assets under the normal price. A great quantity of the state assets becomes private property. It is servied that the price of the state assets was underestimated about 10% in public auction, while the price of the state assets was underestimated about 30% in privately transaction.

9. 1.4 The gap between poor and rich is serious UNDP believes that the current Gini coefficient of China is 0.45. The poverty-stricken people who accounted for 20% of the population own only 4.7% of the income and consumption, while the richest people who accounted for 20% of the total population hold as high as 50%.

10. 1.4 The gap between poor and rich is serious It is obvious to note that the gap between rich and poor has already broken the reasonable limitation, and the Chinese government has also realized the seriousness of the problem. Therefore, the direction of central government thinking is focused on narrowing the gap between the rich and the poor and emphasizing social fairness and social justice and social harmony since 2003.

11. 2.Literature

12. 2.1 The opinion of the new liberalism There are two kinds of opinion about the loss of state assets among the theorists in China. One is the theory of the new liberalism, especial, the property rights of The New Institutional school. the theory of the economists of new liberalism who believe the power of market. They hold that public ownership and market economy are incompatible to each other. The root of the loss in national assets is indistinct property.

13. 2.1 The opinion of the new liberalism SO they advocate that privatization is the only solution. Some theorists in China who believes in The New Institutional School denied the fact that the state assets were lost. They think that selling state-owned enterprises were only changed the form of national assets. It can benefit the market efficiency.

14. 2.1 The opinion of the new liberalism They also denied that the loss of national assets aggravates the disparity between poor and rich. (representative figure: Zhang weiying 1995,2004; Zhou qiren,1999,2003; Yao yang,2004; Fan gang 1998,2004; Wu jinglian 2004,2005 )

15. 2.2 The opinion of the marxism economics Marxism economics has important position in China. It is official economics. The other opinion belongs the economists of marxism. They hold that a great quantity of the national assets were changing private ownership.

16. 2.2 The opinion of the marxism economics The reason of the loss of state assets is not because State-owned enterprises fail to gear up themselves to the market economy but because the system of state- owned assets is lack of order. The solution is the reform of the management system of state- owned assets, not privatization.

17. (representative figure: Cheng enfu 1998,2000,2004; Zuo dapei, 2001, 2004, 2005;Meng jie 2004; Bai baoli 2004.Wu yifeng, 2003;Ding bing 1999.)

18. Chinese central government is inclined to the marxism opinion, and central government formulated many policies to forbid the loss of national assets from 1998 to today. But the local officials were willing to accept the theory of the new liberalism. So the central government advocated to criticize the new liberalism economics.

19. 3.Specific evidence

20. 3.specific evidence The difficult point about my topic: we can t research for the substantial directly data about the loss of state assets. So I have to analyse the relations between the loss of state assets and the income in town of China indirectly.

21. 3.1 The quantities of state-owned enterprise change (chart 1) state-ownedcollectiveothers

22. Äê·Ý. 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1965 1957 500000 400000 300000 200000 100000 0 total others collective Stae_owned

23. It was a key year about the reform of state-owned enterprises in 1997.There are two reasons: one was that the state-owned enterprises met the most difficult in reform, the national assets became net loss, it never appeared before. the other was that the fifteenth mission of chinese communist party was held, the central government permit

24. to sell small state-owned enterprises while necessary. So the local governments sale the national assets since 1997 rapidly, and the private property increased relevantly.

25. 3.2 State-owned unemployment among total city and town 1998 (year) 19992000 Total unemployment 877 ( ten thousa n ) 937870 State-owned unemployment 515652657

26. The workers in state-owned enterprises met severe challenge at that time. their income decreased rapidly.

27. 3.3 The state-owned enterprises hold the ratio of the low income group The workers Belong State- owned 199619971998 29.5%28.1%31.1%

28. Data source: 1.Ministry of labour and social security.prc. 2.Li peilin.Socal stratification in chinese today.2004,p86.

29. 19783484001837001.00002647001.00000 1 19793550001.0189838001.00122712001.02460 0.0000 19803769001.0617834000.99522935001.0822400 1.0000 19813810001.0109842001.00962968001.0112500 1.2500 19823879001.0181860001.02143019001.0172700 1.4000 19833917001.0098871001.01283046001.0089800 1.1429 19844362001.1136841000.96563521001.15591000 1.2500 19852461000.5642937001.11411507000.42801700 1.7000 19862533001.0293968001.03311541001.02262400 1.4118 19872557001.0095976001.00831542001.00063900 1.6250 19882622001.0254991001.01541577001.02275400 1.3846 19892711001.03391023001.03231616001.02477200 1.3333 19902756001.01661044001.02051624001.00508800 1.2222 19912744000.99561047001.00291589000.978410800 1.2273 19922725000.99311033000.98661550000.975514200 1.3148 19933091001.13431047001.01361723001.111632100 2.2606 19943141001.01621022000.97611674000.971644500 1.3863 19953630001.15571180001.15461847001.103360300 1.3551 19963765001.03721138000.96441925001.042270200 1.1642 19973343000.8879986000.86641584000.822977300 1.1011 19981650800.4938647370.6566477450.301452598 0.6804 19991620330.9815613010.9469425850.891958147 1.1055 20001628851.0053534890.8726378410.888671555 1.2306 20011712561.0514467670.8743310180.819793471 1.3063 20021815271.0600411250.8794274470.8849112955 1.2084 20031962221.0810342800.8336224780.8190139464 1.2347 0.9742 0.9719 0.9133 1.2781

30. 1978000 19790.0189437430.00120.0246 19800.061690141-0.00480.0822 0 19810.0108782170.00960.0112 0.25 19820.0181102360.02140.0172 0.4 19830.0097963390.01280.0089 0.1429 19840.113607353-0.03440.1559 0.25 1985-0.4358092620.1141-0.572 0.7 19860.02925640.03310.0226 0.4118 19870.0094749310.00830.0006 0.625 19880.0254204150.01540.0227 0.3846 19890.0339435550.03230.0247 0.3333 19900.0165990410.02050.005 0.2222 1991-0.0043541360.0029-0.0216 0.2273 1992-0.006924198-0.0134-0.0245 0.3148 19930.1343119270.01360.1116 1.2606 19940.016175995-0.0239-0.0284 0.3863 19950.1556829040.15460.1033 0.3551 19960.037190083-0.03560.0422 0.1642 1997-0.112084993-0.1336-0.1771 0.1011 1998-0.506192043-0.3434-0.6986 -0.3196 1999-0.018457717-0.0531-0.1081 0.1055 20000.005258188-0.1274-0.1114 0.2306 20010.051392086-0.1257-0.1803 0.3063 20020.059974541-0.1206-0.1151 0.2084 20030.080952145-0.1664-0.181 0.2347 -0.025740782-0.0280-0.08670.2781

33. State-owned different quantities

34. Private enterprises quantities

35. 3.4 The Gini coefficient of China change 1978-2005

36. Data source: www.earm.cn Cao putting in order.

37. 4.Conclusion

38. 4.1 The loss of state assets must inevitably results in the polarity between rich and poor. One extreme is the embezzlement of the state assets. They actually become capitalists; the other extreme is the workers in the original state-owned enterprises who had come down to physical labor.

39. Under the condition of excessive supply of labour force in china, their wage has been screwed down to a very low level. What is worse, many workers who have made great contributions to the accumulation of capital in state-owned enterprises become unemployment in the process of reform. They have to survive on a minimum standard of living with the subsistence of security.

40. Before the reform and opening up, the state-owned economy accounted for 90%, while the collective economy accounted for 5%,there was only a 5% of the private sector of the economy. However, 20 years after the reform, the ownership of state-owned capital occupies a percentage of only 26, whereas ownership of private capital rises to 56%. The rest goes to collective economy and foreign enterprise.

41. It is obvious that in the wax and wane of the two economic sectors, private ownership takes up a large proportion. We may say the loss of state assets is the important reason for the disparities in wealth.

42. 4.2 This paper holds the idea that privatization is not only unable to solve the efficiency of the enterprises, but also likely to widen the disparities in wealth. On the other hand, strengthening the management of state assets can not only bring the advantage of public ownership into full play, but overcome all the ill effects of privatization.