New economic survey of China

The OECD has released its first economic survey of China, which claims that the private sector has become the basis of economic expansion.

Precise measurement of the size of the private sector is difficult, but a definition which considers as private all companies that are controlled neither by state nor collective shareholders suggests that the private sector was responsible for as much as 57% of the value-added produced by the non-farm business sector in 2003. Even amongst larger companies in the industrial sector, the private sector produced over half of value-added in 2003 and that share appears to have risen even further in the following two years.

The report also highlights (i) a more modernized business framework and (ii) better enforcement of business laws as the two reform areas which would have the greatest impact on private sector growth.

See the concise Policy Brief, a summary of Chapter 2: Improving the Productivity of the Business Sector, or the rest of the report.

Update: The China head at UBS Securities Asia tells us in the FT that China’s private sector remains in the shadow of the state. (Thanks Anthony)