Unleashing Mass Entrepreneurship: The Impact of China’s Registered Capital Reform
This event was recorded on November 30, 2022.
About the event
Stimulating private entrepreneurship has been a purportedly vital item on the Chinese government’s recent policy agenda, though perhaps few have given it credence. Arguably the most significant legislative implementation of this policy was the 2013 amendment of the Company Law, which reformed long-standing “registered capital” rules. Professor Wei Cui will discuss a research project (conducted with Mengying Wei) that uses confidential taxpayer data to identify the reform’s impact on firm formation, firm financing choices, and overall firm performance. Preliminary findings include that the reform enabled new firms to start with 40% lower assets but generate similar levels of revenues and profits as firms registered before the reform, indicating an improvement in investment efficiency. New firms optimized their financing structure by borrowing more and smoothing equity contributions over time. The reform also substantially increased firm registration, and there is suggestive evidence that it allowed productive but wealth-constrained firms to enter. Read the research project here.
About the speaker
Wei Cui is a visiting professor of law at NYU School of Law. He has taught at the Peter A. Allard School of Law, University of British Columbia since 2013. His research and writing span a wide range of topics in tax law and policy, including international taxation, tax administration and compliance, tax and development, the value added tax, and tax and spending policies targeted at the labor market. His most recent book, The Administrative Foundations of the Chinese Fiscal State (Cambridge University Press 2022), offers a systematic study of Chinese taxation that explains the lessons China’s successful revenue-raising effort holds for developing countries, the reasons why mainstream economic theories must be revised to recognize fundamentally different types of state capacity, and the challenging questions the Chinese paradigm raises for the future of taxation.
About the discussant
Robert J. Jackson, Jr. is the Pierrepont Family Professor of Law, co-director of the Institute for Corporate Governance and Finance, and director of the Program on Corporate Law and Policy at the New York University School of Law. His research identifying significant insider trading before the announcement of significant corporate developments led to legislation to outlaw that trading. His calls for an insider-trading law for the 21st century produced a bipartisan bill to close gaps in existing law. He served as a commissioner of the US Securities and Exchange Commission from 2017-2020, where he advocated for more transparency in capital markets and evidence-driven policymaking. Before that, Professor Jackson taught at Columbia Law School. He also previously was a senior policy advisor at the U.S. Treasury Department during the financial crisis and a deputy to Kenneth Feinberg, Treasury’s special master on executive compensation. Earlier in his career, Professor Jackson practiced law at Wachtell, Lipton, Rosen & Katz and was an investment banker at Bear, Stearns.