Calling Chinese entrepreneurs: forget overseas shopping, serve the party, spend at home
China’s latest SOE reform and restriction for overseas investment illustrates the party’s dictates of the private economy
China’s latest mixed-ownership reform of its state-owned enterprises (SOEs) isn’t to promote privatisation of the state-owned economy.
It is the opposite.
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.
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
At another level of the state’s growing influence on how and where private investments should flow, former Chinese top billionaire and property tycoon Wang Jianlin has almost given up his overseas expansion ambition, shifting his focus to poverty alleviation and business development in the home market.