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Eric Ng

The revolving door connecting politics and commerce is a well-oiled one. America's first MBA president presides over a cabinet filled with former  chief executives while Italy and Thailand are governed by tycoon-cum-premiers.

China is no exception, albeit at lower levels of government, with a recent leadership change at the parent of Aluminum Corporation of China (Chalco)  attracting conflicting views on whether or not the promotion of state-owned enterprise (SOE) bosses to senior government posts  is beneficial to their firms.

It was the third such transfer for a major mainland resource company this year.

Last month, Chalco said its chairman,  Guo Shengkun, had resigned  as general manager  of parent Chinalco to take up a central government appointment.  The firm later added he would also step down as chairman, president and chief executive of Chalco after  its annual general meeting.

A company spokesman confirmed that  Xiao Yaqing, deputy general manager,  had replaced 49-year-old Mr Guo as Chinalco's general manager.

The transfer from government  to SOE  - and  vice versa - is common in the mainland, where  most big business, especially in strategic industries, remains in government control.

If the practice of oil and gas producers China Petroleum & Chemical (Sinopec) and CNOOC in their leadership changes last year  is to be followed, Mr Xiao will also head the listed company, Chalco.

Chen Tonghai,  chairman of Sinopec and president of parent China Petrochemical,  and  Fu Chengyu, chairman of CNOOC and president of parent China National Offshore Oil, held the No2 positions in both  listed and parent companies prior to their promotions.

Former Sinopec chief  Li Yizhong was promoted to party secretary of the ministry-level State Assets  Administration and Management Commission, which oversees 188 key SOEs.

Mr Chen, on the other hand, was previously a vice-minister of the powerful State Development and Planning Commission and mayor of Ningbo. He is perceived  as having less 'baggage'  when it comes to implementation of staff reduction measures at the bloated  utility  than Mr Li, who had been with the group for more than 30 years.

Wei Liucheng,  ex-chairman of CNOOC, took up the governorship of Hainan Island, a market for the company's  fuels where parent China National also has a methanol plant using feedstock from natural gas produced by CNOOC.

Some analysts believe Mr Wei's promotion  will help China National's business development.

'It was a strategic move  that may help the group in future negotiations in projects such as chemicals and liquefied natural gas (LNG),' Daiwa Securities analyst Rachael Tsang said. 'At least you have someone high up in the government who understands the industry.'

According to industry sources, Chalco's Mr Guo will assume the post of the Guangxi Autonomous Region equivalent to a deputy provincial governor.

Guangxi is rich in resources such as alumina, manganese and coal. Chalco recently received central government approval to form a joint venture with United States aluminium giant Alcoa in Guangxi but negotiations with the local government on the supply of cheap power have not been resolved.

Mr Guo's career move could facilitate the negotiations.

Other analysts are more sceptical on how much the ex-chief's influence in the government will help the company.

'Once in a government position, the person's ears will be bent by the diverse interests of its new jurisdiction and not that of the former company,' one market watcher said.

Mr Xiao  would be a newcomer to Chalco.

Unlike  the cases at Sinopec and CNOOC, Mr Xiao was not the No2 at Chalco prior to his taking the helm of its parent. He was not even a member of Chalco's board.

Before Chalco announced that Mr Guo would step down, the board  nominated Mr Xiao as a non-executive director but his nomination  has since been changed into that for an executive director.

Vice-president  Luo Jianchuan and chief financial officer  Chen Jihua were nominated  for board membership as executive directors. Senior vice-president Xiong Weiping will remain as an executive director.

Although the Chalco announcement stopped short of saying who  among Mr Xiao, Mr Luo, Mr Chen and Mr Xiong would be nominated  for the positions of chairman, president and chief executive - the former positions held by Mr Guo - Mr Xiao is the most likely candidate for chairmanship  as he is the head of parent Chinalco.

His career advancement was fast-tracked last October, when he was appointed deputy general manager  of  Chinalco, despite the company already having another deputy general manager, 50-year-old Luo Tao.

The 44-year-old Beijing native is chairman of Southwest Aluminium Industry Group, a wholly-owned unlisted subsidiary of Chinalco engaged in the processing of aluminium ingots into high value-added rods and sheets, which are used in a wide range of sectors.

Under Mr Xiao's leadership, Southwest  halted nine consecutive years of losses by turning in a profit of 82.36 million yuan, according to its website.



Benefits of getting a foot in the door