State-owned enterprises' Outward investment and the structural reform in China

Ligang Song*, Jidong Yang, Yongsheng Zhang

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    51 Citations (Scopus)


    Since China's accession to the WTO in 2001, China has been on a steep learning curve in terms of engaging in outward direct investment, and state-owned enterprises (SOEs) have played a predominant role in this drive. We argue that investment overseas by SOEs is a double-edged sword as far as its impact on domestic reform is concerned. Investing overseas offers opportunities to deepen structural reform in China, but such investment could also strengthen the monopoly position of some SOEs, which is inconsistent with the objective of domestic reform. Therefore, it is important for China to deepen domestic reform with respect to competition, ownership and regulations, to maximize the benefits from investing overseas. The present paper also discusses how building market-compatible institutions will result in increased innovation. This provides opportunities for Chinese firms to effectively catch up with the advanced technologies to remain competitive in overseas markets.

    Original languageEnglish
    Pages (from-to)38-53
    Number of pages16
    JournalChina and World Economy
    Issue number4
    Publication statusPublished - Jul 2011


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