Archive for the State-owned Enterprise (SOE) Category

China unveils policies to revitalize northeast [Xinhua]

Posted in China, Economy, Employment, Heilongjiang Province, Housing, Jilin Province, Labor, Liaoning Province, Reform and opening up, State-owned Enterprise (SOE) on October 21, 2014 by Zuo Shou / 左手

BEIJING, Aug. 19 (Xinhua) — The Chinese central government announced an action plan to assist the northeast region’s staggering economy with a list of new measures.

The plan aims to free up private businesses, deepen reforms of state-owned enterprises (SOEs), develop modern agriculture, renovate urban rundown areas and launch dozens of infrastructure projects in the provinces of Liaoning, Jilin and Heilongjiang, according to the new measures announced Tuesday.

The 35 new measures, listed in a document by the State Council on its website, came as the northeastern regions saw the slowest economic growth among China’s provincial areas during the first half of this year.

China will speed up the construction of eight rail lines and build or expand 10 regional airports in the region, the document said.

SOEs are encouraged to sell part of their equities to private and foreign investors to build a mixed ownership system and pay for the reforms.

A new state-owned regional investment company will be established to hasten the reorganization of poorly run SOEs in the region, the document said.

The central government will support emerging industries including robotics, gas turbines, advanced marine engineering equipment and integrated circuits, as well as expanding the service industry of the region.

For traditional sectors such as agriculture, the document said the northeast provinces’ status as a core grain production base will be strengthened. Grain storage and logistical facilities will be improved.

The central government will fund the building of affordable housing and grain logistics facilities, included in a 60-billion-yuan (9.7 billion U.S. dollars) new credit reserve for shanty town renovation by the China Development Bank.

The document also named a few power transmission projects, nuclear power plant projects and heating projects to be initiated as part of a clean energy network in the region.

Once China’s industrial base, the northeast provinces relied heavily on SOEs to drive local economy but they fell short of the national economic growth of 7.4 percent in the first half of the year, with Heilongjiang’s GDP ranking at the bottom with an increase of just 4.8 percent during the period.

Editor: Luan

Article link: http://news.xinhuanet.com/english/china/2014-08/19/c_133568678.htm

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CRE, Tesco explore retail joint venture [People’s Daily]

Posted in China, State-owned Enterprise (SOE) on August 14, 2013 by Zuo Shou / 左手

By Zhang Ye (Global Times)
August 12, 2013

Tesco Plc, a leading international retailer, announced on Friday that it would set up a joint venture (JV) with China’s State-owned supermarket operator, a move analysts said would reduce the risk and costs of Tesco’s expansion in China.

The two sides have signed a Memorandum of Understanding and are currently involved in talks.

According to a joint press release issued on Friday, China Resources Enterprises Ltd (CRE) will control the JV with an 80 percent stake, while the other 20 percent will be held by Tesco.

The combined entity will include Tesco’s 121 stores and shopping malls in the Chinese mainland as well as CRE’s 2,986 stores, branded as “CR Vanguard”, throughout the mainland and Hong Kong.

Analysts said that this partnership is likely to benefit both sides.

Upon the integration of the two’s edges, the JV is expected to “create a business with sales of some 10 billion pounds ($15.5 billion),” said the statement posted on the two companies’ websites.

“CRE could get global expertise on hypermarket operation from Tesco, the world’s No.4 retailer,” Zhang Wenze, an independent Beijing-based industry insider, told the Global Times Sunday.

Meanwhile, Tesco could also benefit from CRE’s good understanding of local customers and well-established infrastructure, furthering its expansion in the Chinese market while cutting down on costs and taking less risks, said Zhang.

“As the retail industry in China is sluggish and consumer demand is weak, lowering operating costs is a common goal. Cooperation is a good choice to achieve this,” Yan Qiang, a partner of Beijing Hejun Consulting, told the Global Times Sunday, adding that other competitors should follow the example of Tesco and CRE.

But Yan also expressed his concern whether the “Tesco” brand could be reserved in China, as its supermarkets business in the market will come under the CRE banner. He predicted that Tesco’s present stores would be rebranded as “CR Tesco.”

A PR representative with Tesco China, who wished to remain anonymous, refused to comment on this when contacted by the Global Times, saying that the cooperation is still under negotiation and more details will be released at the right time.

Many foreign retail companies have been seeing sales decline in the Chinese market since 2012, with several closing stores.

According to a financial report released in April, Tesco’s sales in China increased by 1.1 percent year-on-year during the fiscal year ended February 23, 2013, compared to a 4.1 percent growth rate over the same period in the 2011-12 fiscal year. The company closed five under-performing stores in the duration and closed another in May.

According to a list issued by UK-based market research firm Kantar Worldpanel in July, Hong Kong-listed Sun Art Retail Group and CR Vanguard ranked first and second respectively in the Chinese market by sales volumes during the second quarter, while Wal-Mart was in second place over the same period of one year earlier.

Editor:ChenLidan、Gao Yinan)

Article link: http://english.people.com.cn/90778/8360754.html
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The following Guardian article claims, in opposition to the prediction made above, that the Tesco name will NOT be a part of the new joint venture… – Zuo Shou

“Tesco set to withdraw brand from China in new joint venture”

– UK supermarket in talks with China’s biggest retailer, which means the Tesco name is likely to disappear from the country –

by Simon Neville
August 9, 2013

Tesco is bringing its nine-year solo venture in China to an end at a cost of up to £1.5bn – making it the grocer’s latest aggressive international expansion to unravel…

Full Guardian article link: http://www.theguardian.com/business/2013/aug/09/tesco-withdraws-brand-china-joint-venture

(c) Guardian News & Media Ltd

China’s former railways minister Liu Zhijun sentenced to suspended death for bribery, abuse of power [Xinhua]

Posted in China, Corruption, Law enforcement, State-owned Enterprise (SOE), Transportation on July 11, 2013 by Zuo Shou / 左手

BEIJING, July 8 (Xinhua) — China’s former railways minister Liu Zhijun was sentenced death penalty with a two-year reprieve here on Monday for bribery and abuse of power.

The Beijing No. 2 Intermediate People’s Court announced the verdict of the first instance.

The court sentenced Liu to death with a two-year reprieve, deprived his political rights for life and confiscated all his personal property for taking bribes. Liu was also sentenced to 10 years in jail for abuse of power, according to the court verdict.

The combined punishment for Liu’s crimes is death penalty with a two-year reprieve, deprival of political rights for life, and confiscation of all personal property, the court said.

The court found that from 1986 to 2011, Liu took advantage of his positions as official of local railway authorities as well as the former Ministry of Railways, and helped 11 people, Shao Liping and Ding Yuxin included, win promotions, project contracts, and cargo transportation contracts. He accepted 64.6 million yuan (10.53 million U.S. dollars) in bribes from them during this period.

During his tenure as railways minister, Liu helped Ding Yuxin and her relatives to win cargo transportation contracts and railway construction contracts. He also helped them in the acquisition of shares in a bullet train wheel set company, and with enterprise financing, by breaking regulations and applying favoritism, which allowed Ding and her family to reap huge profits and inflicted colossal losses in the public assets, violating rights and interests of the state and the people.

Article link: http://news.xinhuanet.com/english/china/2013-07/08/c_132521370.htm

See also the longer, more exhaustive article “Liu Zhijun given suspended death penalty for bribery, power abuse” [Xinhua] – http://news.xinhuanet.com/english/china/2013-07/08/c_132522378.htm

Marxism and the social character of China [Workers World]

Posted in Capitalism crisis early 21st century, China, CPC, Deng Xiaoping, France, Germany, Japan, Lenin, Mao Zedong, PLA, Socialism with Chinese Characteristics, State-owned Enterprise (SOE), U.K., US imperialism, USA on June 15, 2013 by Zuo Shou / 左手

by Fred Goldstein

June 13, 2013

The issue of China is one of the most important questions of the 21st century for the working class and the oppressed peoples, as well as the hostile imperialist ruling classes of the world.

The progressive and revolutionary movements, especially in the U.S., have a great stake in arriving at a correct policy toward China.

First of all, China is a formerly oppressed country that achieved liberation from British, French, German, U.S. and Japanese imperialism in 1949 by making one of the greatest revolutions in history. At that time, one quarter of the human race was torn from the clutches of imperialism. As a formerly oppressed country struggling for national development, it must be defended against all varieties of imperialist military, economic and political aggression, regardless of what one thinks about its social character.

China today is a new, complex and contradictory phenomenon in history. It has fundamental socialist structures alongside capitalist development and imperialist penetration. The leadership calls it “market socialism” or socialism with Chinese characteristics.

Socialism is inscribed firmly as China’s foundation in its constitution. The international capitalist class is profoundly hostile to China and never ceases to try to undermine its fundamental socialist structures.

Yet workers in Chinese private industry are subjected to capitalist exploitation and the workers in the state industries have lost much of the economic support that once attached to their workplaces. Horrendous industrial accidents take place and environmental problems are severe.

– Dual character of China’s economic foundation –

Only Marxism enables us to approach an analysis of China.

Marxism has shown that the character of any society is determined by its economic foundation and that the superstructure of society, its politics, ideology, etc., are determined by the economic foundation.

How can such an analysis be applied to China and how can it help to clarify how to view China?

To begin with, the economic foundation of China is not homogeneous. It is partly socialist and partly capitalist. The question for us and for the world working class is: Which is dominant? — the socialist foundation, or the capitalist enterprises seeking private accumulation of profit through the exploitation of the working class?

Similarly, the superstructure is not homogeneous. On the one hand, there are the Communist Party, the People’s Liberation Army and the ideological doctrine that declares socialism to be the foundation of China. On the other hand, there is the relentless promotion of opening up to imperialism and capitalist market reforms. And, above all, there is a struggle over political reform, meaning the right for the bourgeoisie and the petty bourgeoisie to organize politically, either inside the party, outside the party or both. There is a steady drumbeat for “political reform” from the imperialists and their class allies inside China.

– Economic crisis of 2008-2009 was a critical test –

How can we assess this situation? We should start by empirical examination of China, on the one hand, and the rest of the capitalist world on the other.

A critical test came when the Chinese leadership was forced to deal with the effects of the worst capitalist crisis since World War II.

When the crisis hit in 2008 to 2009, many tens of millions of workers in the U.S., Europe, Japan and across the capitalist world were plunged into unemployment.

China, which had dangerously allowed itself to become heavily dependent on exports to the capitalist West, suddenly was faced with the shutdown of thousands of factories, primarily in the eastern coastal provinces and the special economic zones.

More than 20 million Chinese workers lost their jobs in a very short time.

So what did the Chinese government do?

We described what happened in a series of articles in Workers World entitled “The Suppression of Bo Xilai and the Capitalist Road — Can Socialism Be Revived in China?” The article, published on March 27, 2012, explained that plans drafted as far back as 2003, to go into effect in future years, were pushed forward and implemented.

We then quoted from Nicholas Lardy, a bourgeois China expert from the prestigious Peterson Institute for International Economics, who described how consumption in China actually grew during the crisis of 2008-09, wages went up, and the government created enough jobs to compensate for the layoffs caused by the global crisis.

Said Lardy: “In a year in which GDP expansion [in China] was the slowest in almost a decade, how could consumption growth in 2009 have been so strong in relative terms? How could this happen at a time when employment in export-oriented industries was collapsing, with a survey conducted by the Ministry of Agriculture reporting the loss of 20 million jobs in export manufacturing centers along the southeast coast, notably in Guangdong Province? The relatively strong growth of consumption in 2009 is explained by several factors. First, the boom in investment, particularly in construction activities, appears to have generated additional employment sufficient to offset a very large portion of the job losses in the export sector. For the year as a whole the Chinese economy created 11.02 million jobs in urban areas, very nearly matching the 11.13 million urban jobs created in 2008.

“Second, while the growth of employment slowed slightly, wages continued to rise. In nominal terms wages in the formal sector rose 12 percent, a few percentage points below the average of the previous five years (National Bureau of Statistics of China 2010f, 131). In real terms the increase was almost 13 percent. Third, the government continued its programs of increasing payments to those drawing pensions and raising transfer payments to China’s lowest-income residents. Monthly pension payments for enterprise retirees increased by RMB120, or 10 percent, in January 2009, substantially more than the 5.9 percent increase in consumer prices in 2008. This raised the total payments to retirees by about RMB75 billion. The Ministry of Civil Affairs raised transfer payments to about 70 million of China’s lowest-income citizens by a third, for an increase of RMB20 billion in 2009 (Ministry of Civil Affairs 2010).”

He further explained that the Ministry of Railroads introduced eight specific plans, to be completed in 2020, to be implemented in the crisis. The World Bank called it “perhaps the biggest single planned program of passenger rail investment there has ever been in one country.” In addition, ultrahigh-voltage grid projects were undertaken, among other advances.

The full article by Lardy can be found in “Sustaining China’s Economic Growth after the Global Financial Crisis,” Kindle Locations 664-666, Peterson Institute for International Economics.

– Socialist structures reversed collapse –

So income went up, consumption went up and unemployment was overcome in China — all while the capitalist world was still mired in mass unemployment, austerity, recession, stagnation, slow growth and increasing poverty.

The reversal of the effects of the crisis in China is the direct result of national planning, state-owned enterprises, state-owned banking and the policy decisions of the Chinese Communist Party.

There was a crisis in China, and it was caused by the world capitalist crisis. The question was which principle would prevail in the face of mass unemployment — the rational, humane principle of planning or the capitalist market. In China the planning principle, the conscious element, took precedence over the anarchy of production brought about by the laws of the market and the law of labor value.

But the institutions based on the remaining structures of Chinese socialism, which saved the masses from economic disaster, are the very institutions that the World Bank, the International Monetary Fund, Wall Street and London want to reduce and eventually destroy. They are the state-owned enterprises, government planning and the control by the Chinese Communist Party.

One might say that the Chinese leadership did this to avoid unrest. Surely the capitalists in Europe and the U.S. also want to avoid unrest. But that did not cause them to put tens of millions of workers back to work, raise pensions, raise stipends and social welfare payments. It only caused them to institute austerity to secure the profits of the bankers.

Coming back to Marxist analysis, it is clear from the way the Chinese leadership handled this crisis that the socialist side of the economic foundation is still dominant in China. And the same can be said for the political superstructure.

The enemies of socialism claim that capitalism is responsible for the great successes in China.

But that is a falsehood. China has succeeded in its economic development because the socialist sector has broadly contained domestic capitalism and imperialist investment within the framework of the national economic goals of the leadership.

Without that, China would look like India — which also has planning but is a thoroughly capitalist country.

In India, poverty is so deep that people live on garbage dumps, wash their clothes in polluted water, and the urban slums in Kolkata and Mumbai rival rural poverty. The masses of India are desperately poor — living on $1 to $2 a day — even as the glittering high-tech industry develops alongside the abysmal economic conditions faced by hundreds of millions of Indians.

There is no comparison with China. But if the imperialists have their way, if they can destroy the socialist foundation and the Communist Party, they will turn China into another India. That is what is at stake in the struggle to stop the counterrevolution in China.

– ‘Market socialism’ a false and dangerous concept –

This analysis should not be understood in any way as support for the doctrine of “market socialism.” In our view the anarchy of the capitalist market is antagonistic to the planning of a socialist society and socialist construction. Capitalist private property is antagonistic to socialist property and production for private accumulation is antagonistic to production for social use and human need.

There are historical circumstances of extreme underdevelopment which compel a socialist government to employ both private and state capitalist methods to promote development of the productive forces and the creation of the working class from the rural population.

It is one thing, however, to use these methods as a temporary expedient, to make a retreat from socialism in order to make socialism triumphant in the struggle against capitalist methods. That was Lenin’s idea behind the New Economic Policy. It began in 1921 in the USSR, during the direst times after the civil war left the country in ruins and the working class that survived was going back to the country to get food.

But Lenin always regarded this as a retreat and a crucial struggle. The question, as Lenin put it, was “Who will win?”

China long ago developed economically after the capitalist reforms instituted by Deng Xiaoping. But what should have been a temporary retreat has become an enshrined policy of treating capitalism as a partner with socialism. Private capital grows automatically and with it the economic strength and political influence of the capitalist class, its petty bourgeois hangers-on, as well as the petty bourgeois intelligentsia. This carries great long-term dangers for China.

The socialist component of the economic foundation is dominant at the present. But capitalism is continuing to erode that foundation and do damage to the workers. Furthermore, the new leadership of Xi Jiping and Li Kequang have sent signals that they want to move to the right in the economy. Expanding the opportunities for imperialist investment and moving more and more in the direction of bourgeois economic reforms is playing with fire.

– Revive spirit of Mao, workers’ power –

Bo Xilai, the former head of the party for Chongqing Province, is now languishing in detention. He has been held for over a year because he sought to revive the cultural and egalitarian spirit of Mao Zedong and because he had a program to retard the march down the capitalist road. (See articles from Workers World.)

Bo represented a left resistance to the current policies at the level of top leadership. His defeat has paved the way for a further turn to the right.

What is really needed is a sharp turn to the left. The workers must reclaim the socialist rights first established by the Chinese revolution and deepened during the period of Mao. This is the only thing that can revive and secure Chinese socialism in the long run.

But in the meantime, there must be a firm defense of China against every scheme by imperialism and by the domestic capitalist class in China to undermine the socialist foundation that still exists there.

* Based on a talk by Fred Goldstein at the Left Forum in New York City on June 9. *

Article link: http://www.workers.org/2013/06/13/marxism-and-the-social-character-of-china/

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Articles copyright 1995-2013 Workers World. Verbatim copying and distribution is permitted in any medium without royalty provided this notice is preserved.

Grotesque gaps in income undercut social harmony [People’s Daily]

Posted in China, Corruption, CPC, Economy, Income gap, State-owned Enterprise (SOE), USA on November 6, 2012 by Zuo Shou / 左手

By Wan Lixin (Shanghai Daily)
15:40, October 30, 2012

A COMPREHENSIVE report in 2010 titled “China’s Wealth Gap Is Testing the Limit of Social Toleration” is still compelling reading for policy makers today.

Authored by a Xinhua team, the report pointed to the danger of accelerating concentration of social wealth in the hands of the few, and the yawning gap in income across difference regions, between urban and rural residents, and among different professions.

The report cited professor Chang Xiuze from an institute under the National Development and Reform Commission (NDRC), who revealed that although estimates for the Gini coefficient (a statistical measure of income or wealth inequality with a value ranging between 0 and 1) for China differs, the ratio given by the World Bank is 0.47, which is above the warning level of 0.4, and is climbing fast by the year.

Two figures hint at the nature of the gap: The urban residents are earning 3.3 times more than their rural cousins, and the senior executives (officials) of listed state-owned enterprises are earning 128 times more than the average wage earners.

An expert from Beijing Normal University found that in 1988 the top 10 percent was earning 7.3 times more than the bottom 10 percent. In 2007 that figure went up to 23 times.

Real estate, mine owners and securities are just some of the sectors openly known to be generating exorbitant profits.

It has been recently reported that in 2007 in Shanxi Province a state-owned coal mine valued then at 200 million yuan (US$32 million) went to private owners for 375,000 yuan. Now the mine is worth 3 billion yuan.

The report concludes that fabulous riches are being made in the nonrenewable resources sector.

In coal-rich Zuoyun County, in Shanxi Province, where per capita peasant income was below the national average, there have emerged in recent years hundreds of coal mine bosses with a net worth to a tune of hundred of millions [sic] yuan.

Real estate is another sector. We need not be surprised that in the just-released Forbes 2012 list of 100 Richest People on China’s mainland, 16 are in real estate.

Another fortune list identified Wu Yajun as the world’s richest self-made women [sic] billionaires with estimated personal assets at 38 billion yuan. You can bet the self-made tycoon was actually made by real estate developments.

* Income distribution *

“Although our [sic] social toleration of the wealth gap is growing, the consequences would still be unimaginable if inequality and unfair distribution were allowed to worsen at this pace,” said Yang Yiyong, an researcher with an NDRC institute, who was cited in the Xinhua report.

Towards the end, the report made an impassioned call for initiating reform in income distribution “as soon as possible.”

Today, two years later the government is still talking about coming to grips with these thorny problems.

At a Cabinet meeting on October 17, it was revealed that a comprehensive plan for reform in income distribution – already eight years in the making – will come out soon, in the fourth quarter of this year.

In a recent interview with International Finance News, professor Liu Jiping from the China University of Political Science and Law said that the distribution reform initiative has already suffered many delays.

“If the plan fails again this time, it would become the only legislative proposal in the current term of government that has been promised to the people but failed to be worked out,” Liu added.

In an interview on Tuesday, Chen Baosheng, vice president of the Party School of the Communist Party of China, stressed that the Chinese people have high hopes for the coming national Party congress, and affirmed the correctness of open discussion about political reform.

“We are confronted with many problems and challenges in political reform, and there is no avoiding it. There can be no solution without pushing through with the reform,” Chen added.

As the widening divide between the haves and have-nots is a global problem, the situation in other countries can shed light on the solution of the problem in China.

In his “99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It” (Berrett-Koehler, 2012), author Chuck Collins offers a history of how today’s economic situation in the US evolved, makes an impassioned plea for deflating the superrich, and provides a political prescription for economic equality.

According to the book, since the 1980s, the superrich one percent of the population in the US has become vastly richer.

Today the 400 richest American people together possess more wealth than the 150 million poorest Americans.

Remedies

The one percent rigs the economic system in five ways to perpetuate the widening gap:

1. “Political influence” – Politicians serve those who contribute most heavily to their political campaigns. The one percent donates lavishly.

2. “Charity sector influence”- Some people in the one percent make charitable donations to tax-exempt organizations that conduct lobbying to further the interests of the wealthy.

3. “Media influence” – The one percent owns a large segment of the media and uses it to promote views that its members support.

4. “Organizing others in the one percent and leveraging networks” – Superrich individuals know how to use their connections and coordinate their activities to maximum political and social effect.

5. “Partnering with Wall Street game riggers” – Corporations underwrite think tanks and advocacy groups (for example, the US Chamber of Commerce) to influence those who make the economic rules.

“Today, the dirty secret about how to get very wealthy in this economy is to start with wealth,” Collins concludes.

Naturally the gap will make social stratification entrenched, in a country famously known for its intolerance of aristocracy [ha ha].

On a practical basis, you cannot serve in the US Senate unless you can raise approximately US$15,000 a day to cover your campaign expenses.

So the easiest way to gather this money is to solicit members of the superrich one percent, who will then demand that you safeguard their interests and deliver on their agenda.

In [sic]solving this problem, the book prescribes higher minimum wages, reforms in campaign finance, and elimination of the wealth-power nexus.

Article link: http://english.people.com.cn/90882/7997388.html

China’s banks caught breaking rules [People’s Daily]

Posted in China, Economy, Law enforcement, State-owned Enterprise (SOE) on July 10, 2012 by Zuo Shou / 左手
By Chen Yang (Global Times)
June 04, 2012

The State-owned Assets Supervision and Administration Commission (SASAC) said over the weekend that it will increase supervision on State-owned enterprises (SOEs), after three big banks were found to have violated several financial regulations in their lending and other operations.

Subsidiaries of Industrial and Commercial Bank of China (ICBC), China Citic Bank and China Merchants Bank acted against rules in providing credit services, including granting loans to unqualified property projects, land development organizations and local government financing vehicles (LGFVs), as well as providing bill discounting services to falsified trade contracts, the National Audit Office (NAO) said in a statement Friday.

The banks’ financial management was chaotic, and some of their loans were misused by their clients, the audit office noted.

The SASAC, China’s SOE watchdog, said Saturday that it will increase supervision on the SOEs in terms of financial management and risk control.

The loans issued in violation of rules by ICBC, Citic Bank and China Merchants Bank amounted to 18.86 billion yuan ($2.96 billion) between 2004 and 2010, according to the NAO.

"Commercial banks’ loans increased significantly in 2010 as part of the government’s stimulus package to combat the effects of the global financial crisis," Zhao Xijun, deputy director of the School of Finance at Renmin University of China, told the Global Times yesterday. "However, banks’ management skills did not improve in line with the explosive credit growth."

"The volume of improper lending was still small compared with the 7.95 trillion yuan-denominated loans issued by Chinese banks in 2010, so the problem is manageable," he said.

"But NAO’s move signals China’s effort to further regulate the finance industry and reduce risks in the banking system."

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US blames Chinese firms for its own failure [People’s Daily]

Posted in China, China-US relations, State-owned Enterprise (SOE), USA, WTO on June 12, 2012 by Zuo Shou / 左手

By Zhou Xiaoyuan (People’s Daily Overseas Edition)
16:11, May 24, 2012

Edited and translated by People’s Daily Online

The U.S. Department of Commerce (DOC) recently issued a preliminary ruling, in its review of four countervailing investigations into laminated woven sacks and other products imported from China, to deem most of China’s state-owned enterprises (SOEs) as public bodies. The ruling means that the United States will consider Chinese SOEs’ sales as subsidies from public bodies to downstream companies, and thus impose countervailing duties on imports of the products of these downstream companies.

= Most Chinese companies are market-oriented =

In its preliminary ruling, the DOC divided Chinese SOEs into three categories: enterprises wholly owned or controlled by the government, enterprises in which the government holds a relatively large stake and that are subject to governmental plans, and enterprises in which the government has little or no stake but enjoys de facto control. The first category of enterprises is deemed public bodies, and the third category is presumed as public bodies unless there is sufficient counter-evidence. Enterprises that are not involved in trade cases fall under the second category.

“It is undoubtedly untenable for the United States to deem all Chinese SOEs as government offshoots,” said He Maochun, director of the Research Center for Economic Diplomacy Studies at Tsinghua University, adding that the nature and structure of Chinese companies have changed profoundly in recent years, especially since the country’s accession to the World Trade Organization 10 years ago. When conducting investigations into Chinese companies, the United States failed to realize that the reform and opening-up policy has turned most Chinese companies into market-oriented joint-stock companies.

= US blames China for its own failures =

“The logic of the United States is based on an assumption that the American-style private economy is most reasonable and efficient. Other countries would go against the natural law if they let the public sector play a dominant role,” said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation.

“During the subprime crisis, almost all key financial institutions and carmakers in the United States were found to be state-owned businesses. Should they also receive the same discriminatory treatments as their Chinese counterparts? ”

The United States has deliberately intensified trade friction with China since the beginning of the year…

Full article link: http://english.people.com.cn/90778/7826183.html