In recent years, the Chinese government has taken several measures to extend its power to private enterprises. China’s State-owned Assets Supervision and Administration Commission (SASAC) has recently launched a new policy to form new giant central enterprise groups in industries such as steel, transmission and distribution equipment manufacturing, through paid acquisitions and joint-stock partnerships. According to Zhejiang businessmen, the local government is seeking to take a stake in private enterprises.
China is actively expanding the share of central enterprises in the Chinese economy, said Peng Huagang, secretary-general of the State Council’s State-owned Assets Supervision and Administration Commission (SASAC), at a briefing on July 16, adding that in the first half of this year, SASAC, together with relevant departments, steadily promoted the restructuring and integration of central enterprises and made positive progress. For example, the formation and establishment of China StarNet Group became the first central enterprise with its headquarters registered in Xiongnu.
He also said that in the next step, SASAC will, in terms of specialization and integration, aim at business strengthening and refinement, vigorously promote specialization and integration through transfer without compensation, paid acquisition and shareholding cooperation, and effectively enhance the core competitiveness of enterprises through optimal allocation of resources to build a globally competitive world-class enterprise.
The goal of state-owned equity in private enterprises is becoming clearer
Zhejiang businessman Jiang Jie said in an interview with this station on Monday (19) that the government has long had the intention of taking shares in private enterprises, and this time the SASAC has made clear the way of taking shares.
“In fact, this trend is long-term. They have been compressing private enterprises and private capital since the beginning when they said they wanted to make state-owned enterprises bigger and stronger. The recent pressure from internal and external sources has led to an acceleration on all fronts. Starting from the consolidation of Ant Financial to DDT. The direction is now clear. He (the government) is going to nationalize these enterprises, and in the future this area of the private economy will not exist.”
The new central enterprises are beautifully named as another “reform”
Peng Huagang also said at the press conference that in promoting integration and fusion, the newly formed, newly transferred and newly restructured central enterprises should be urged to further take effective measures to increase the integration of internal resources, dig deeper for synergy benefits and improve the efficiency of resource allocation, “to achieve the expected goals of the reform as soon as possible.”
According to the financial scholar commander, China’s State-owned Assets Supervision and Administration Commission (SASAC) is making all-out efforts to promote newly restructured central enterprises, in effect speeding them up to achieve a dominant position in the Chinese economy, which is an old path. He told the station.
“There is actually some replication of the ‘public-private partnership’ that was implemented in China in the 1950s, and that ‘public-private partnership’ turned the Chinese property rights system completely upside down. But this time, the Chinese government wants to achieve public-private partnership again through a new arrangement of the property rights system.”
A Zhejiang businessman said the Zhejiang government is highlighting and emphasizing its role in private enterprises, to large and medium-sized private enterprises are required to integrate a certain percentage of public capital, that is, to integrate state-owned capital as the main, small and medium-sized private enterprises, to collective capital as the main.
In this regard, the commander said.
“Zhejiang’s share of the private economy is very large, relatively speaking, is a relatively difficult to gnaw hard bones, starting from the most difficult places, more reflective of this round through Zhejiang, kill an example, but also to other provincial governments to purge private enterprises, to provide a demonstration. This is the policy intent of the Chinese government starting with Zhejiang.”
Liu He had strongly supported private enterprises but the time has changed
Private enterprises have occupied an important position in China’s forty years of reform and opening up. in October 2018, Chinese Vice Premier Liu He said in a joint interview with the People’s Daily, CCTV and Xinhua News Agency that the private economy contributes more than 50% of tax revenue, 60% of GDP, 70% of technological innovation, 80% of urban labor employment and 90% of new jobs and enterprises.
Zhejiang businessman Jiang Jie said that private enterprises are the most dynamic in China.
“I think the direction they [the government] are going now is to flood state-owned enterprises into the private sector, merging, co-owning or re-founding them. I think this is a big trend, so this last one or two years, including Jack Ma, Ma Huateng, Huang Zheng of Predo, Zhang Yiming and Liu Qiangdong of Byte Jump, they have all resigned or moved away from management, and it has actually started.”
Liu He also said at the time that without the development of private enterprises, there would be no stable development of the entire economy, and supporting the development of private enterprises is to support the development of the entire national economy. However, three years later, China’s private enterprises are facing the situation of being “nationalized”.
According to China’s official statistics, of the total 41.1 million enterprises in China, there are only 368,000 above-scale enterprises, accounting for only 0.9%, most of which are state-owned enterprises, and more than 99% are below-scale enterprises, i.e. private enterprises. Currently, of the 750 million employed people in China, 73 million are employed by enterprises above the scale, and more than 90% of the other employment is solved by enterprises below the scale, which shows that private enterprises play a rather important role in the Chinese economy.