PDF《The Role of State-Owned》

Chapter

16 The Role of State-Owned Enterprises in the Chinese Economy FAN Gang Director, National Institute of Economic Research Chief Researcher, China Center For International Economic Exchanges Professor of Economics, Peking University and the Graduate School of Chinese Academy of Social Sciences Nicholas C.

HOPE Director, Stanford Center for International Development (SCID) and its China Program With contributions from Winnie HE (The Fung Business Intelligence Centre), HUANG Zhilong, ZHANG Huanbo

2 C hina'

s state-owned enterprises (SOEs) have a long history. When the People'

s Republic of China was established in 1949, the coun- try had been devastated by a long period of war and underdevelopment. As there was neither private wealth nor any organized structure to take on the huge task at hand, it was the state enterprises that gradually undertook all the nation-building tasks. In addition to their historical function of rebuild- ing the country, they have been playing an impor- tant role in providing for the livelihood of many people. SOEs provide not just employment, but also a range of social services, education, medical care and healthcare and retirement protection. Since economic reform and opening-up policies began in 1978, China'

s SOEs have undergone a long process of gradual and progressive transformation. To reduce their claim on budgets and/or bank loans, many inefficient and smaller SOEs have been closed down, merged or sold. The resulting unemploy- ment and restructuring problems were painful. The transitional difficulties were made less disruptive because China maintained rapid economic growth and established basic social security, medical ser- vices, education, housing and other safety-net ar- rangements. Concurrently, and more positively, many large SOEs in key and strategic sectors have been successfully transformed, from inefficient pro- duction units operating under the state'

s economic plan, into profitable, incorporated business entities, for which appropriate corporate governance struc- tures are being gradually implemented. The relative economic weight of the state sec- tor has declined substantially as successive reforms have increasingly opened up more industrial sec- tors to competition from non-state enterprises. The share of SOEs in the country'

s gross industrial output, for example, fell from one half in

1998 to one quarter in 2011. The number of SOEs owned by the central government has fallen from

196 in

2003 to

115 in March 2013. But many smaller SOEs are still owned by different levels of sub-national (local) government, many of which adopt policies that still discriminate in favor of local companies. Despite the dramatic restructuring of Chinese enterprises, the subsequent successes of the large Chinese SOEs have become a source of friction be- tween China and some of its trading partners, as these companies have become increasingly formi- dable competitors in both the Chinese and global markets. The U.S. business community has com- plained about the unfair competition arising from government policies that favor SOEs in the China market. In addition, the Chinese government'

s en- couragement of overseas ventures by large SOEs is also seen to disadvantage other companies compet- ing in the global market. Some complaints are justified. For example, SOEs do enjoy some preferential treatment, includ- ing in licensing and in winning government pro- curement contracts in the China market, particu- larly at the local government level. However, some complaints C such as the argument that China'