More state control over the economy - Arthur Kroeber

Arthur Kroeber

As China's autumn meeting on decisions for the next five year looms, private capital has clearly brought to heel and is deployed to support the state economy, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to the South China Morning Post. "State enterprises are guaranteed a “dominant” role in the economy,” Kroeber said.

The South China Morning Post:

The current drive aims to reinforce state control over the biggest companies not only by bringing private capital into the fold, but also to indoctrinate private entrepreneurs with the Communist Party’s dictated way of investments, analysts said. 

“Private sector firms have been given clear “rules of the road” about how to deploy their capital – less leveraged investments in speculative overseas assets; more equity support for domestic SOEs,” said Arthur Kroeber, co-founder of the China-focused research service Dragonomics in Beijing. 

Look no further than in the recent case of state-owned China United Network Communications Group (CUNC), whose restructuring is backed by investments from the country’s most high-flying tech entrepreneurs including Jack Ma and Pony Ma. Announcement of the plan has pushed shares of its Hong Kong listed entity, China Unicom to a two-year high... 

 “It is important to be clear we are not talking about the resurgence of a large-scale privatisation agenda here (regarding the latest SOE reform)...the ultimate policy direction is clearly stated in the Third Plenum decision – state enterprises are guaranteed a “dominant” role in the economy,” Kroeber said...

One sure factor is, private entrepreneurs are directing their investments into sectors that the party deems important, over acquiring assets abroad. 

As such, it was announced on Monday that a group of state and private companies will invest a total of 6.9 billion yuan (US$1.04 billion) in COFCO Capital, a subsidiary of state-run agribusiness COFCO Group. 

“The government is quite serious about a “deleveraging” agenda which involves SOEs reducing their debt/equity ratios, not by reducing debt, but by increasing equity. And here is quite a lot of capital in the private sector that can be put to use in repairing SOE balance sheets,” Kroeber said.

More at the South China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

State gets stronger in economy - Arthur Kroeber

Arthur Kroeber

State-owned companies are getting a stronger grip on the economy, at the expense of private capital, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, at the New York Times. The major investment of major tech firm in China Unicom was just the latest move.

The New York Times:

A number of state-owned companies, including big players in the energy and railroad industries, have also said in filings this year that Communist Party committees will play a major role in corporate leadership. The new language essentially formalizes — and underscores — what most investors and executives already assumed to be the case. 

“It seems for the last two-and-a-half years the tide has been moving toward state capital at the expense of private capital,” said Arthur Kroeber, a partner at Gavekal, a research firm. “That’s not very encouraging.” 

Still, China Unicom’s deal has the potential to be different because some successful private companies are involved, Mr. Kroeber said. 

“This can be fairly interpreted as a signal that there’s a fairly serious effort to restart this mixed ownership reform in more or less the format that was originally planned,” he said.

More at the New York Times.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more political analysts at the China Speakers Bureau? Do check out this list.

Telecommunication changes for 2012 - Tricia Wang

Tricia Wang

Sociologist Tricia Wang maps out for 88-bar.com the competitive playing field between China's largest telecom providers, China Telecom, China Unicom and China Mobile. What can their customers expect for 2012?

Tricia Wang:

From the clouds to the ground, 2012 looks like it’s going to be an exciting year for mobile  industry. China Telecom is going abroad to offer mobile services for the transnational elite who travel between China and North America. China Unicom just launched a new mobile internet platform, the Wo-plus Opening System. Let’s see how long China Mobile 600 million 2G users can wait for 3G before switching to Unicom or Telecom. Now that China is the world’s largest smartphone market, how will the future of hardware and software evolve? We already have a glimpse from HTC of their new Sina Weibo smartphone. And then to top if off, both China Telecom and China Unicom may lower broadband prices! 

With all these technical and market changes, one of the big questions for 2012 is will Chinese citizens will be relieved of telecommunications costs? Or will 2012 could be the equivalent to the 1996 Telecommunications Act in the United States where institutions benefited more from telecommunication reforms than individuals? [1] We’ll have to see who benefits from thee anti-monopoly investigation. 

With the stable divisions of China Unicom, China Mobile, & China Telecom, we don’t hear of potential industry shake ups like this very often. I imagine that Chinese Telcom scholar, Eric Harwitt, is giddy with news. But luckily we have Marc Laperrouzag, so we won’t have to wait a few years for a book or paper to be published to stay up to date on the details. 

Let’s hope for faster and more equitable broadband access in 2012! 新年快乐!

More in 88-bar.com

Tricia Wang is a speaker at the China Speakers Bureau. She will be in Europe for an academic conference in Switzerland and is available for speeches in the third week of February. Do you need her at your meeting or conference? Do get in touch, or fill in our speakers' request form.

More on Tricia Wang's exploration of China's economic underbelly at Storify.

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