|Abstract: ||A minimal agreement between two theoretical perspectives—local state corporatism and privatization—lies in the recognition that incipient formal privatization is taking hold in rural China during the 1990s. While the corporatists insist that this privatization is stringently contained within local governmental jurisdiction, the other camp finds in the shareholding system a seed, protected by the Chinese Communists, that can grow into a full-bloomed privatization of rural enterprises.|
This paper intends to respond to these controversies with a case study of the shareholding system in a township in Shandong. From the fieldwork materials, the author suggests, first, that the shareholding system differs from the shareholding cooperative system primarily in the local government’s attitude to support privatization in the former but not in the latter Second, the shareholding system is further connected to privatization by means of turning an enterprise’s public assets into a portfolio of cash shares and free shares for individuals, especially for the managerial stratum. Finally, this privatization does not seem to be able to be contained within the jurisdiction of the local government, as the local state corporatism perspective suggests. Rather, this privatization is an expanding force that calls for the establishment of the capital market and thus it penetrates into the deep roots of socialist China.