Views: 20468|Replies: 44

Chinese Economy Still Really State Run? [Copy link] 中文

Rank: 8Rank: 8

Post time 2008-7-24 01:00:44 |Display all floors
Interesting Article in Business Week...


... which brought up a few of key items:

Quote 1: This stands in stark contrast to China, where more than 1,200 of the 2,000 companies listed on the exchanges are state-owned.

Quote 2: China also has numerous companies that have a market capitalization of over $1 billion, but the majority of these are state-owned behemoths recognized by their sheer size and not their nimbleness.

Quote 3: A recent survey found that of the 20,000 richest men in China, more than 95% were directly related to {CCP} officials.

So... as much as P.R. China has publicly embraced captialism - under the skin it is still a bit M@rxist?
China's Eccentric 'Uncle Laowai' from Chicago, IL

Use magic tools Report

Rank: 8Rank: 8

Post time 2008-7-24 02:13:00 |Display all floors

The time will suit us...

This is an interesting topic, but my time is so limited these days.

For China without socialism, imagine this scenario: China is a free market in a developing country struggling to set up indigenous, native industries, run by Chinese.  Imagine a small, lucrative business of a few hundred people and maybe capitalisation of  $20-30 millions.

Along comes a global behemoth worth billions, and experienced, predatory CEO's. Our Chinese small company gets run over like a rabbit on a country road on a warm spring morning after a cold night. Some of these global behemoths can wage their own little wars e.g. United Fruit. You can almost smell out profitalble small companies ripe for take-over in developing countries.

Since China started off from a relatively low base with scare capital resource ( money ), most profitable Chinese SME's won't survive hostile take-overs by global companies under those circumstances.

For developing countries, only the state can put up enough resource and capital to start a major company which can withstand the takeover tendancies of global behemoths. Examples of western companies which started off as government enterprises abound galore eg. The Commonwealth Bank of Australia.

This recipe of major companies starting off as state run enterprises is a western thing and is equally applicable to China. Our telco industry cannot have survived and expanded to what it is today without the state injecting scarce capital. Where and who else could have put up that sort of money and survive as a Chinese company? The west, maybe, but than that wouldn't be Chinese, would it? They would be listed on NYSE or LSE, wouldn't they?

Well done CCP!

Well done China!
Let the dice fly high

Use magic tools Report

Rank: 8Rank: 8

Post time 2008-7-24 04:19:15 |Display all floors

The major problem is political: appointments to the upper ranks of SOEs is a good way to reward officials (either directly by appointing them or indirectly by appointing relatives) and a way to build political power. As these companies have become more successful by leeching off the private economy, the influence of people who use the patronage system inherent in the SOEs grows, keeping them from being privatized and accountable.

Of course, CM is being silly again. India, for example, has several private companies which have no risk of being bought out by foreign concerns. What's more, we should be asking why "developing nation" status matters here. China is a developing nation but also a large one and can easily create large businesses which use their local knowledge of the Chinese market to have distinct advantages over foreign concerns and high enough market capitalization to make buyouts unlikely. We should be asking why smaller states like Finnland, Sweden, Germany, Britain, France, Italy, Greece, etc. even have industries since, by CM's logic, they should have been bought out long ago by predatory CEOs from the US.

[ Last edited by interesting at 2008-7-24 02:09 AM ]
"Justice prevails... evil justice."

Use magic tools Report

Rank: 8Rank: 8

Post time 2008-7-24 11:40:00 |Display all floors

Reply #1 tradervic's post

The rich and the political connected are often in confidence with those in the seats of government.

nothing strange, seems the same everywhere.
only in China, they hold CCP membership.

Green Dragon

Use magic tools Report

Rank: 6Rank: 6

Post time 2008-7-24 19:01:05 |Display all floors
good issue and good question.
if there is something complicated in this world, that is China's economic system and its mechanism. it is the biggest mixture economic body and it runs in a special interactive way. if you just watch it generally but not go to earth, you will get bewildered and you will hardly get perspective about what a picture it is.

Use magic tools Report

Rank: 8Rank: 8

Post time 2008-7-24 20:08:07 |Display all floors

Some good replies...

... in terms of needed capital and all that.  I have been curious about the long term affects of the CCP trying to use both hands stirring seperate pots, in terms of business growth and law enforcement.  I tend to take a vary eye on such endevours - thinking of the U.S. F.A.A. (United States Federal Aviation Adminstration), with it's dual purpose of promotion and enforcement of air travel.  Pesky things like safety, quality, and security tend to get damaged over time under such systems.
China's Eccentric 'Uncle Laowai' from Chicago, IL

Use magic tools Report

Rank: 6Rank: 6

Post time 2008-7-24 20:29:31 |Display all floors
since private bosses have been allowed to join in ccp according to a file released several years ago,  great deal of capitalists have joined into ccp.

Use magic tools Report

You can't reply post until you log in Log in | register

Contact us:Tel: (86)010-84883548, Email:
Blog announcement:| We reserve the right, and you authorize us, to use content, including words, photos and videos, which you provide to our blog
platform, for non-profit purposes on China Daily media, comprising newspaper, website, iPad and other social media accounts.