The senior-most official in China’s banking regulatory system has stressed the importance of the role played by the rapidly expanding private sector in the Chinese economy, and denied accusations that the country is a form of “state monopoly capitalism.”
Speaking at the 14th Asian Financial Forum held on Hong Kong on 18 January Guo Shuqing (郭树清), head of the China Banking and Insurance Regulatory Commission (CBIRC) and party secretary of the Chinese central bank, said that “state monopoly capitalism” was a mischaracterisation of the China’s economic system.
“Over two decades ago it was said that China wasn’t a market economy, and needed a transitional period. In recent years however, the accusation has been one of ‘State Monopoly Capitalism,'” said Guo.
“The main basis for this was that China has a strong state-owned sector, and state industrial policy warped market relations…this is obviously a great misunderstanding.”
During his speech at the Asian Financial Forum, Guo took pains to emphasise several points in relation to China’s economy:
- “China’s private economy currently accounts for 60% of the total economy, yet prior to the launch of reforms at the end of the 1970’s, China almost lacked any non-state economy,” said Guo. “If China had a state monopoly or state-owned protectionism, how could this situation have arisen?”
- “China’s industrial policy has maintained overall consistency with market-guided reforms. It is because of openness, fairness and full competition that China has been able to become the country with the most complete set of industries.”
- “State-owned enterprises have overall received negative subsidies from the government,” said Guo. “On average, the tax burden of state-owned enterprises is twice that of private enterprises. State-owned enterprises in general still bear broader social responsibilities. Private factories and foreign invested companies have long enjoyed rapid growth, and a key reason for this is preferential tax and fee policies.”
- “Banks and state-owned enterprises are completely independent,” said Guo. “China’s banking system is the most profitable in the world, and if it provided long-term subsidies to enterprises, it would not have been possible to achieve this.”