Study On China's Industrial Barriers

As a core issue in the studies of industrial organization, the barrier to entry and exit calls for a particularly in-depth investigation in China where the industrial development and the reform of enterprises are living a crucial moment. In its most general term, the industrial barrier, or the barrier to entry and exit, refers to the obstacles that enterprises come across when getting into and out of certain industries, sectors, markets and regions. Theoretically, in a supposed "contestable market", a firm should be able to enter and exit any industry without cost, therefore act at its own will and according to its proper interests. So will the industrial structure and organization develop in an optimised configuration of resources. But various barriers exist in real economies. They might hold on the distribution and flux of resources, enabling well-positioned enterprises to monopolize the profits. They could also contribute to a concentration of resources, make scale economy possible and promote technological renovation.Evidently, a study on industrial barriers in China calls for detailed investigations on many aspects, from competition and monopolization in the Chinese market, status quo of its industrial organization to characteristics of enterprises behaviour. It does not involve a theoretical innovation to analyse the industrial organization through industrial barriers since much has been achieved in this field as shown by relevant theories from the West. But little research has been done in this field in China and an inaugurating one could be helpful for the decision-making of policy-makers.In this dissertation, I started with a general analysis of the barriers of entry and exit in China, based on the Marxist principles and methods as well as western theories on industrial organization. Then I concentrated on the symptoms of over-entry and exit-difficulties experienced by Chinese enterprises during this transition period. I tried to differ the "over-entry" from the "over-competition" and look deep into the roots of "over-entry" in the economicstructure, institutions and enterprise strategy.In a correct industrial policy with reasonable barriers, the "over-entry" is not to be eliminated by tougher government control on industrial entry, but through deepening reforms towards market economy, which provide larger space for non-public economic activities. I also tried to present some proposals for the development of national industry as trans-national firms have had influences on the industrial barriers in China. On exit barriers, I focused my research on institutional ones experienced by state-owned enterprises and put forward policy proposals such as public subvention for exiting enterprises.