ABSTRACT
Changing central-local relations have often been seen as a result of political games among central and provincial leaders of various factions. The rapid growth of the coastal regions has given rise to many bold suggestions on reforming central-local relations. The behavior of the managers and workers in the state and non-state enterprises has created important constraints and opportunities for both the central and local governments. The chapter analyzes the property rights issue with regard to the Contract Responsibility System in Chinese industrial enterprises. It presents some empirical findings about the performance of state and collective enterprises during the reform period, followed by an examination of the sources of provincial productivity gaps. Economic reform in the 1980s increased productivity of both the state and collective enterprises. But the growth rate of productivity in collective enterprises is much higher than that in state enterprises.
