The emergence of private ownership in China

How has privatization, formerly considered an anathema to the Chinese Communist Party, become legitimized? How has the initial reform, intended primarily to boost the productivity of state-owned enterprises (SOE), evolved into large-scale privatization? This paper develops an institutional theoretical framework to explain how economic reform precipitated institutional change. We argue that mimetic and regulative convergence processes can explain privatization, at least in its early stages, in the case of China. Normative change followed the diffusion of privatization. We submit the theory to an empirical test by using a large database about privatization rates in the various regions of China.