INDUSTRYS RESPONSE TO MARKET LIBERALIZATION IN CHINA - EVIDENCE FROM JIANGSU PROVINCE

China's concern about efficiency led its leadership to liberalize markets and to reverse its international and regional import substitution policies. These reforms have indeed improved economic performance as measured by production specialization and productivity in industry. In this study, productivity performance in Jiangsu Province during the reform period was shown to be substantially more positive than in some of the productivity estimates done for China nationally. This suggests the possibility that the effects of the reforms are not uniform across regions. Another possible explanation for the difference in results is the methods used to adjust the data for pricing and aggregation problems, and the numbers of years of reform covered. The productivity results comparing collective and state industry in Jiangsu were less definitive. Using gross value of industrial output, productivity growth in collective industry was higher than in state industry, but this results was reversed when net output was used. Some evidence that Jiangsu's production patterns had become more specialized with reforms and that the province has been growing faster than the national average was found. There was also a surprisingly strong indication that production patterns during the Maoist period did not respond to regional import substitution, or "self-reliant', policies. -from Author