“Of emperors and kings” na Economist
According to the Congressional report, state-owned firms account for two-fifths of China’s non-agricultural GDP. If firms that benefit from state largesse (eg, subsidised credit) are included, that figure rises to half. Genuinely independent firms are starved of formal credit, so they rely on China’s shadow banking system. Fearing a credit bubble, the government is cracking down on this informal system, leaving China’s “bamboo capitalists” bereft.
Those who argue that state-owned firms are modernising point to rising profits and a push to establish boards of directors with independent advisers. Official figures show that profits at the firms controlled by SASAC [State-owned Assets Supervision and Administration Commission] have increased, to $129 billion last year. But that does not mean that many of these firms are efficient or well-managed. A handful with privileged market access—in telecoms and natural resources—generate more than half of all profits. A 2009 study by the Hong Kong Institute for Monetary Research found that if state-owned firms were to pay a market interest rate, their profits “would be entirely wiped out”.
Miguel Noronha