Sunday, September 18, 2005

Incremental Decision Making and Corporate Restructuring

Barry Naughton
Economic and business stories have dominated Western press attention to China in 2005, perhaps more so than in any previous year. Perceptions of a dynamic "rising China" have burst into American consciousness in an unprecedented fashion. Ironically, however, leadership decision making on economic policy in China seems to be sliding back toward a more bureaucratically dominated and less imaginative pattern. From a policymaking standpoint, there has been little significant innovation during 2005. This article reviews developments in four areas: currency revaluation, share conversion, consolidation of firms, and the new industrial policy for the steel industry. Taken together, the trends in these areas suggest a move toward cautious, incremental, and bureaucrat-dominated policymaking as well as an effort to step up the pace of corporate restructuring.

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