Funding Economic Transition in China: The Privatization Option

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An American specialist on the economy of China examines whether gradual and partial privatization remains a viable option for the future, or whether rapid privatization of remaining state-owned enterprises is now necessary. The paper presents estimates indicating that rising expenditures stemming from changes in the country's economy, demographics, and technology will increase fiscal pressure on government revenues, resulting in fiscal shortfalls and exposing other vulnerabilities. Privatization is then assessed in terms of its potential to generate additional resources to support the next round of economic growth in China.