SASAC Denies that China’s State-owned Enterprises Are Too Strong

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The head of the State-owned Assets Supervision and Administration Commission (SASAC) has rebuffed claims that China’s state-owned enterprises (SOE) are too large or wield too much influence in the Chinese economy.

Former Director-General of the World Trade Organization Pascal Lamy recently said that China’s SOE’s were too strong, and that their share of the economy needed to be reduced in the subsequent round of economic development.

According to Lamy an excessively large SOE sector will impede economic competition, pointing out that the European Union has introduced regulations to prevent government companies from receiving preferential treatment, such as low-cost financing.

At a discussion on SOE reform held at the 2018 Boao Forum for Asia, SASAC chair Xiao Yaqing (肖亚庆) addressed Lamy’s remarks, claiming that the economic share enjoyed by SOE’s was unimportant as “this is simply the result of competition between SOE’s and private companies.”

According to Xiao the crux of SOE reform would lie in raising core competitiveness, as well as the role they play within the economy.

Xiao said that SOE’s possess a two-fold nature as enterprises and government entities, and that as the former they needed to increase their core ability to compete on an international playing field.

As state-owned concerns they need to focus on further reform, and in particular closer association with the market as well as more efficient operation.

In Xiao’s opinion these two objectives are aligned, as they involve strengthening and abetting the success of such entities via the process of competition.

“Chinese SOE’s develop in accordance with the laws of the market…and in actuality SOE’s will expand their markets via competition following growth, thus stimulating the vigour of the market,” said Xiao.

“All enterprises that achieve greater efficiency amidst market competition are definitely finding solutions via their own competitive capabilities.”

Zhu Min (朱民), head of the Tsinghua University National Institute of Financial Research, concurs with Xiao’s assessment, telling Yicai that the share of the domestic economy held by SOE’s wasn’t the key issue.

According to Zhu the key matter is the provision of a fair environment for competition, and the most important thing is whether or not enterprises can achieve core competitiveness.

Hans-Paul Bürkner, chair of Boston Consulting Group, also said to Yicai that raising the competitiveness of Chinese enterprises was the key issue, alongside the creation of a fair and competitive environment for business.

According to Bürkner China current efforts to expand opening of the economy will serve to create a more fair and competitive environment for both private enterprise and foreign capital.

 

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