BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
The Chinese government's new approach to ownership and financial control of strategic state-owned enterprises
Abstract: This paper reviews recent regulatory and policy changes
that affect the Chinese central government's ownership and authority over
the capital allocations of strategic state-owned enterprises (SOE). The
paper examines the reform of the central government's relationship with key
SOEs as a consequence of the establishment of the State Assets Supervision
and Administration Commission of the State Council (SASAC) in 2003, the
coming introduction of a centralised operating and budgeting system for
SOEs, and the government's ongoing re-evaluation of its ownership policy.
SASAC appears to have the potential to develop into a major actor in
China's domestic capital allocation, with an active role in strategic
financing and restructuring of key sectors of the Chinese economy. The data
reviewed for this paper strongly suggests that the Chinese central
government aims to retain significant ownership control over key SOEs and,
by extension, over a major part of the domestic economy. The new operating
and budgeting system is set to significantly enhance central government
control over SOEs' capital allocation.
Keywords: state-owned enterprises; privatisation; corporate governance; China; (follow links to similar papers)
JEL-Codes: G32; G38; P26; P31; (follow links to similar papers)
59 pages, May 4, 2007
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