18th Party Congress

State-owned enterprises welcome Hu Jintao's backing

PUBLISHED : Saturday, 10 November, 2012, 12:00am
UPDATED : Tuesday, 23 January, 2018, 11:43am

State-owned enterprises (SOEs) have cheered the importance given to the sector in Communist Party chief Hu Jintao's keynote speech to the party's 18th national congress on Thursday, which looks to have ensured their dominance of the world's second-largest economy continues for the next five years.

Hu said China would "unwaveringly consolidate and develop public ownership", help more state-owned capital go to key industries and increase the vitality and influence of the sector.

The comments mean that China will stick to the road of mainly relying on government-controlled companies to develop the economy, instead of focusing on the private sector, to the disappointment of market economy advocates.

"The signal is very clear," Ning Gaoning , a director of Cofco, the largest state-owned oil and foodstuff trading firm, said yesterday. "The predominant position of public-ownership is listed among the basic premises of economic construction with Chinese characteristics."

The Communist Party copied the model used in the Soviet Union to develop government-owned enterprises when it came to power in 1949.

The state sector has prospered in the past decade, with financing, market access and various kinds of policies tilted to protect its interests. SOE delegates expressed pride in the sector's achievements during a group discussion of Hu's report yesterday.

The net profit of China National Building Materials Group rocketed from 100 million yuan in 2002 to 15.8 billion (HK$19.5 billion) yuan last year, while that of State Development and Investment Corp soared from 800 million yuan to 11 billion yuan over same the period, executives said.

The heads of state oil duopolies China National Offshore Oil Corp and China National Petroleum Corp were both confident about their future development.

Yuan Gangming , a researcher at Tsinghua University, said the report's support of the state-owned sector was intended to soothe concerns among various interest groups and show that "the party would not retreat from developing SOEs".

Some have been worried that China could become more market-oriented. Yuan said government-owned companies were increasingly insecure in the face of intense competition from private companies.

Meanwhile, the report addressed the biggest concern of the private sector, he said, by saying the party would ensure fair treatment of all kinds of ownership and protect the rights and interests of private companies.

Zhou Dewen , chairman of the Wenzhou Small and Medium-sized Enterprise Development Association welcomed the mention of fair and equal policy treatment in the report.

"It is possible for the party to break up the state monopolies in some areas," Zhou said. "But considering the complicated situation, with powerful interest groups controlling the lucrative businesses, I think it will not be easy to make it happen."