A proposal to transfer shares in China's state-owned companies to the National Social Security Fund (NSSF) has stalled because of opposition from state-appointed managers and the bureaucrats who oversee them, according to sources.
The proposed transfer of 10 per cent of shares in all listed state-owned companies to the NSSF, the fund established as a backup of last resort for regional pension schemes, has the support of numerous government agencies, including the China Securities Regulatory Commission (CSRC), Ministry of Finance, the central bank, Ministry of Labour and Social Security and the NSSF, the sources said.
But the State-owned Asset Supervision and Administration Commission (Sasac), established in March 2003 as the entity responsible for governance and oversight of China's giant network of state-owned enterprises, is opposing the move and supporting management resistance, on the grounds of social stability, the most sensitive political topic in China today.
A recent internal directive to regional Sasac officials essentially requested them to come up with reasons why the transfer of shares could not be carried out, according to a source with access to a copy of the document.
'If you read between the lines it was an invitation to come out with a lot of negative comments,' the source said.
The directive asked officials to pay close attention to whether or not the state would lose control of companies that have already been partially privatised and whether this could lead to widespread layoffs, a recipe for the social unrest the communist party is most anxious to avoid.