8/6/2019 State Owned Enterprises in China
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State Owned Enterprises in China
Role of State-Owned Enterprises in China in the Past(prior to
open market
reforms):
-The role of state owned enterprises were originally used as
production organs
wehre raw materials were turned into industrial products. In
essence, it was akey component of the centralized command
economy.
-State-owned enterprises needed to modify their role in
the free-market economy and to remove the many inefficiencies
that previously
plagued its systems. The basis upon which SOEs were founded is
no longer
tenable. SOEs were a social unit in that, besides providing life
long employment
to its employees, it also provides all the necessary social
services to its
employees and their family: housing, healthcare, child care,
education, grocery,
to name a few. In some sense, a unit takes care of its employees
from the cradle
to the grave. At a certain point of time, SOEs in China provide
such services for
more than 112 million workers and their families.
-The main challenge of privatization of the State-Owned
enterprises was the
unemployment that was generated as a result, because
privatization meant the
downsizing and bankruptcy of many firms. In 1997, more than
100,000 people
were laid off in the northwest region of China, creating the
possibility of social
unrest. The Economist, Chinas Reforms: The second Long March,
December 11 th
2008
-Chinese reformers started reforming the SOEs as early as
1980s,
-However, the most notable initiative was Zhu Rongjiszhua da
fang xiao
initiative launched in 1998 that sought to reduce inefficiencies
in State-Ownedenterprises. There were more than 100 million Xiagang
workers in 1998.
-State owned state-owned Assets supervision and administration
commission
owns enterprises in China.
Role Of Chinas State-Owned enterprises in Todays China :-State
owned enterprises have a strategic purpose too in safe-guarding
Chinas
key infrastructural resources, paramount in ensuring the
security of China. For
example, Chinas oil resources are secured by three of Chinas
state owned
companies, namely CNOOC, CNPC and SinoPEC. Its engagements in
Africa, which
is suspected to hold a significant amount of undisclosed oil
resources is
increasing, and China now receives about one-third of its oil
imports from Africa.
-Sinovel, the second largest producer in the world of wind
turbines seeks to
ensure that China ensures the security of its energy
supplies.
