Columbia International Affairs Online: Working Papers

CIAO DATE: 05/2011

Whose money? The tug-of-war over Chinese state enterprise profits

Mikael Mattlin

April 2011

Finnish Institute for International Affairs


While China’s reform strategy has largely been a success story that has seen living standards rise tremendously, it has also led to widening income gaps, regional disparities, and much wasteful investment. Large income gaps breed social discontent that may turn into political demands. The ruling Communist Party has proved itself adroit at preventing such demands from emerging, by taking timely pre-emptive action in response to people’s needs.