By Shi Yaodong & Zhou Yi, Research Team on “A Review of the Experience of Reform and Opening-Up over the Past 40 Years”, DRC

Research Report, No.116, 2019 (Total 5616) 2019-7-18

Abstract: Monopolized industrial reform has undergone earth-shaking changes over the last 40 years, providing a strong support for national economic and social development. After giving an introduction to the vertical integration at the start of monopolized industrial reform, the combination of government administration and enterprise management, state monopolized operation and the performance of planned economy, this paper analyzes the reasons behind reform driving forces including the long-term supply shortage, the relatively low production and service efficiency and the strong yearnings for reform by the public. On this basis, it illustrates the market-based reform of monopolized industries in three different stages including electricity, telecommunications, oil and gas, railways and civil aviation sectors. First, the government launched pilot practice in relevant sectors, delegated more management powers to enterprises and conceded them more profits and separated government administration from enterprise management. Second, the government conducted industrial restructuring, made preparations for China’s entry into the World Trade Organization (WTO) and initiated market-based reform. Third, the government sped up reform including price reform and made structural optimization. Before conclusion, this paper sorts out the basic logic and main experience of market-based monopolized industrial reform, including the two-wheel-driven reform forces at the macro- and micro-level, the equal stress laid on the relaxation of market access control and the promotion of industrial restructuring, the emphasis on pricing mechanism and the continuous improvement of the industrial administration and supervision mechanism.

Key words: monopolized industries, reform progress, experience and enlightenments