China looks for tips from Russia on state economy revamp

Assets chief departs from China’s usual critical line on Moscow’s 1990s privatisation

PUBLISHED : Friday, 10 March, 2017, 8:03am
UPDATED : Friday, 10 March, 2017, 8:03am

Russia has “relatively good experience” in reforming its state economy, and China looks forward to sharing its experiences with its giant northern neighbour over the issue, the chief of China’s state-owned assets watchdog said in Beijing on Thursday.

“Russia has relatively good experiences in this respect, and I hope we can have the opportunity for further exchanges,” said Xiao Yaqing, chairman of the State-owned Assets Administration and Supervision Commission (Sasac), which oversees the country’s biggest 102 state industrial giants.

Xiao did not elaborate on what he expected to learn from Moscow, but his comments at the press conference hall of the National People’s Congress departed from China’s usual critical line on Russia’s abrupt privatisation of its state sector in the early 1990s.

Beijing has always maintained that Russia’s decision to relinquish its control of the state economy overnight had disastrous consequences, while China’s gradualist approach has created stability and prosperity.

China steps up capital controls, tightens investment rules for state firms

The central government still regards state-owned enterprises as the backbone of the national economy and President Xi Jinping in particular has argued that the country’s state businesses need to be stronger.

At the same time, the state sector has also been accused of being inefficient and corrupt.

Chang ­Xiaobing, former chairman of state-owned China Telecom, was officially charged with bribery, becoming the latest state company boss to be charged with such offences, Xinhua reported on Thursday.

Jiang Jiemin, former chairman of state-owned oil company CNPC who also went on to become Sasac’s chairman, was sentenced to jail for 16 years for corruption in October 2015.

After more than three decadesof experiments, Beijing is pursuing a new model of state asset supervision by setting up 10 asset holding vehicles directly under Sasac and another 52 under its ­local branches.

China moves to limit state firms’ investment overseas to stem capital outflows

These asset holding entities will act as financial investors, withdrawing from day-to-day management of specific businesses to be non-financial state -owned enterprises.

According to Sasac, state companies under its control or that of its local branches oversaw 144 trillion yuan (HK$162 trillion) worth of total assets by the end of last year, including 50.5 trillion yuan of assets of the 102 companies under direct control of the central government.

The state-owned enterprises together made a profit of just 2.3 trillion yuan, a return on assets of just 1.6 per cent in 2016.

Xiao, who was chief executive of the Aluminium Corporation of China until 2009, said the 102 central state enterprises last year laid off 110,000 staff, each of whom were duly compensated.