Transaction cost logic of parent company externalization in the reformation of Chinese SOE

摘要

The present Chinese industrial market is dominated by state-owned enterprises (SOE). The new Chinese SOE reforming is forming a new kind of market player named State Capital Investment Platform (SCIP) to be the public parent company of existing SOEs, changing greatly the decision making system of state-owned industrial units, making great influence to the industrial market trends. The paper argues that the move of SCIP is externalizing to the outside market the agency costs between parent company and subsidies of state-owned business groups, in the context of transaction cost theory. And the key point in this move shall be to build up market evaluation mechanism to avoid the administrative ignorance of the true value of state-owned resources, and to authorize SCIP full power to manage state-owned property independently.