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fluffybiscuits
12-11-2013, 06:17 PM
http://www.bbc.co.uk/news/world-asia-china-24910434

Can someone explain what effect these new changes will have on the world economy to me? Most of the companies will remain in state ownership for the time being. Another idea that was mooted was to attract foreign investment into Chinese coastal cities. There was some social changes but not much has been revealsed as of yet.

http://blogs.wsj.com/chinarealtime/2013/11/12/internet-sows-doubt-over-china-reform-plan/

WSJ is reporting that a lot of Chinese web users are cynical of the ideas that would be implemented.

http://www.ibtimes.com/chinas-third-plenum-markets-will-play-decisive-role-formation-economic-reform-focused-leading-group


A communiqué from the Third Plenum of the 18th CPC Central Committee stated the Chinese government’s commitment to allow markets a decisive role in resource allocation and also said Beijing would form two elite groups, one tasked with “deepening economic reform” and one to strengthen state security.

Sam Lord
13-11-2013, 07:08 AM
http://www.bbc.co.uk/news/world-asia-china-24910434
Can someone explain what effect these new changes will have on the world economy to me? Most of the companies will remain in state ownership for the time being. Another idea that was mooted was to attract foreign investment into Chinese coastal cities. There was some social changes but not much has been revealsed as of yet.


The details of the new proposals have yet to be released so it is too early to assess what their likely impacts may be.

With regard to the "state owned" companies they are of course a huge part of the Chinese economy and hold monopoly positions in many sectors, energy, banking, power generation, transportation, telecommunications, etc. I think the term "state owned" may be deceiving to some people however and create the impression that this has something to do with socialism (even if of a Chinese variety). For a start, however, these companies are listed companies ... you could buy shares in them tomorrow if you liked and earn dividends from their profits. There are restrictions regarding the amount of individual ownership, however, and you will never be able to buy your way onto the board. Secondly, there is no reason to believe that the Chinese people in any way benefit from the state-holding in these companies. I suspect that not very many of them would be profitable without extensive state subsidies. Also, any dividends paid to the government do not go into the national budget but are somehow recycled back into the companies. So the only people really benefiting are those who run these companies (salaries are not to be sneezed at) and private investors. Top management is not recruited as far as I know but appointed by the Party. So really it is a form of crony capitalism. The SEC's are also a hotbed of corruption.

The SEC sector was in decline for many years but has surged forward since the inception of the economic crisis. I think this is because it has access to cheap credit (and Chinese government stimulus money).

The SEC's are an issue for the Chinese government because they are quite inefficient performers and a great deal or resources are squandered in nurturing them. Many people believe (and this would include no doubt some in government) that addressing their dominant position is crucial if high rates of economic growth in the future are to be maintained. On the other hand there are vested interests in the Party who will not wish to see things tinkered with too much.

It has been suggested that likely agreed "reforms" may include increasing private share ownership and or working to reduce barriers to the entry of private companies in the sectors where they dominate.

The SEC's in China:

http://en.wikipedia.org/wiki/List_of_State-owned_enterprises_in_China

There are a couple of dozen in the Fortune 500 including Sinopec with a global ranking of 5, China National Petroleum with a global ranking of 6 and State Grid which comes in at number 7.

http://money.cnn.com/magazines/fortune/global500/2011/countries/China.html