China state firm reforms limited and slow

AFP, SHANGHAI: China is promising reforms, mergers and even closures in its bloated state-owned businesses as it looks to bolster an economy causing global anxiety, but sceptical analysts said Monday that real change could take years.
A slew of disappointing data from the world’s second-largest economy has sent shudders around the world, with the latest showing weak growth in both industrial output and government infrastructure spending.
So a weekend announcement by Communist Party bosses that they wanted to loosen the ropes binding 150,000 state-owned enterprises (SOEs) was seen as a chance to shake up a flabby sector.
Zhang Xiwu, a vice-director of the government body that oversees the 110-odd centrally managed firms, told a briefing Monday that it would “clear up a group of SOEs and let them exit the market”.
“We will make more efforts in reforming ‘zombie enterprises’, long-time loss-making enterprises and disposing (of) low-efficient and non-performing assets,” he said.
But the lengthy “Guidelines on Deepening State-owned Enterprise Reform” did not specify any particular measures at individual companies.
Crucially, it stopped short of recommending full privatisation, opting instead for advising mergers and mixed ownership.
For Claire Huang, China economist at Societe Generale in Hong Kong, the intention was to strengthen SOEs, but there was little prospect of immediate change.
“Don’t expect this document to have much positive impact on the economy anytime soon,” she told AFP.
“The current downturn caused by structural shift in the economy is only halfway through and the goal of this guideline is to improve the efficiency of SOEs, which will take a long time to accomplish.”

China state firm reforms limited and slow

AFP, SHANGHAI: China is promising reforms, mergers and even closures in its bloated state-owned businesses as it looks to bolster an economy causing global anxiety, but sceptical analysts said Monday that real change could take years. A slew of disappointing data from the worlds second-largest economy has sent shudders around the world, with the latest showing weak growth in both industrial output and government infrastructure spending. So a weekend announcement by Communist Party bosses that they wanted to loosen the ropes binding 150,000 state-owned enterprises (SOEs) was seen as a chance to shake up a flabby sector. Zhang Xiwu, a vice-director of the government body that oversees the 110-odd centrally managed firms, told a briefing Monday that it would clear up a group of SOEs and let them exit the market. We will make more efforts in reforming zombie enterprises, long-time loss-making enterprises and disposing (of) low-efficient and non-performing assets, he said. But the lengthy Guidelines on Deepening State-owned Enterprise Reform did not specify any particular measures at individual companies. Crucially, it stopped short of recommending full privatisation, opting instead for advising mergers and mixed ownership. For Claire Huang, China economist at Societe Generale in Hong Kong, the intention was to strengthen SOEs, but there was little prospect of immediate change. Dont expect this document to have much positive impact on the economy anytime soon, she told AFP. The current downturn caused by structural shift in the economy is only halfway through and the goal of this guideline is to improve the efficiency of SOEs, which will take a long time to accomplish.