Grasping the large and letting the small go

The “grasping the large and letting the small go” policy (Simplified Chinese: 抓大放小 , pinyin: zhua da fang xiao) was part of a wave of industrial refoms implemented by the central government of the People’s Republic of China in the mid-1990s. These reforms included efforts to corporatize state-owned enterprises (SOEs) and to downsize the state sector. The “grasping the large and letting the small go” policy was adopted in September 1997 at the 15th Communist Party Congress. The “grasping the large” component indicated that policy-makers should focus on maintaining state control over the largest state-owned enterprises (which tended to be controlled by the central government). “Letting the small go” meant that the central government should relinquish control over smaller state-owned enterprises. Relinquishing control over these enterprises took a variety of forms: giving local governments authority to restructure the firms, privatizing them, or shutting them down. [Barry Naughton, The Chinese Economy: Transitions and Growth (Cambridge, MA: MIT Press, 2007), 301-302.]

While “grasping the large and letting the small go” represented a significant policy change at the central level, it merely gave legal sanction to changes in SOE ownership structure that had been occurring at the local level since 1992. [Mary Gallagher, “Time is Money, Efficiency is Life”: The Transformation of Labor Relations in China, Studies in Comparative International Development 39:2 (Summer 2004): 11-44.]

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