Abstract:Entering the 1990s, gaizhi has been adopted by the Chinese government to release government ownership of small and medium SOEs and collective firms.Previous studies show that financial problem is governments major concern.The next question is how the newly created private ownership is protected. This paper studies how the rent seeking behavior of a local government vested with excessive and unchecked power can become a destructive factor to private ownership and damage the outcome of gaizhi. Our study has the purpose to set out a dynamic game model with imperfect information.Government reform serves as a signal to show to the entrepreneur the governments commitment to limit its power.Since a government reform is costly,this commitment is credible.Therefore,if the government conducts its own reform,the entrepreneur believes this commitment and makes higher efforts;otherwise,he makes smaller efforts.This model can be applied to explain the regional differences between firm performance after gaizhi is implemented.

Abstract:This paper is an effort to develop a simplified dynamic model to make a systematic analysis of all major achievements and problems of Chinas economic transition.It shows that, as long as the growth rate of the non state sector is higher than that of the state sector this paper takes it as the “Basic Presumption of the Reform”,the most important issue of the transition is the development of the non state sector,rather than the reform of the state sector.This is not only because the non state sector can became the major contributor to the marketization and overall economic growth as what happened in China in the past 20 years,but also because the growth of the non state sector will push the reform of more state owned enterprises forward by creating better necessary conditions for that.The reform of the SOEs is important only because otherwise it would use its political power to increase the transfer of resources from the non state sector and therefore reduce the speed of the development of the new system.This is the reason why the actual “tax” burden on the non state secror is increased which is the source of the increasing financial subsidies to SOEs in the forms such as non performing loans and fund raising on the capital market and the increase of the state debt.Although it proves that China is not at the edge of financial crisis,but the reform of the state sector should be speeded up in order to keep the whole transition process on the path to success.

Abstract:The coverage of debt equity swap should be the marginal non performing assets among enterprises debts.The first stage of swap is a close process.However,if the credit risk could be truly escaped by the bank,and could be shared by public,the process of swaps should be linked with capital markets or out side investors,which step into the second stage of swap.In this transfer game may be occurred between bank asset management corporation and policy maker as one side and firm,local authority and subordinate as the other side.The uncertainty and risk of swaps would be great because of asymmetrical information,interest difference and the regulation of swaps.The selection between single swap and multi swap for firms,between nominal and real rights to be held by asset management corporations as shareholders,may affect firms performance and property right constraints.In addition,other factors such as macroeconomic performance and the uncertainty caused by whether the risk can be shared by outside investors should also be considered.In the end,some policy prescriptions have been suggested.

Abstract:How does the informal institution promote the gradual institutional change in the system of planning economy This paper has defined the concepts of informal market,informal contract and informal institution at first.Then it shows the informal contracts,and a kind of intangible asset,could create income flow and form a new institution which will bring benefit for the contracting parties,improve production and increase the efficiency.This paper has explained the effect of informal contract in the process of setting up the contract of property right.At the same time,it gives an answer to the problem which was discussed for a long time about how the market based transaction derives from the system of planning economy.</p>