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China snubs US reform demand by reinforcing state-run economic model

CHINA is reinforcing its state-directed economic model despite demands for reform from the United States as a condition to end the trade war, reports Hong Kong's South China Morning Post

China snubs US reform demand by reinforcing state-run economic model

CHINA is reinforcing its state-directed economic model despite demands for reform from the United States as a condition to end the trade war, reports Hong Kong's South China Morning Post

16 July 2019 - 19:00

CHINA is reinforcing its state-directed economic model despite demands for reform from the United States as a condition to end the trade war, reports Hong Kong's South China Morning Post.

China is instead increasing state-owned enterprise and Communist Party intrusion into the boardrooms of private companies.



The State-owned Assets Supervision and Administration Commission (SASAC) that supervises more than CNY50 trillion (US$7.3 trillion) of state assets, announced that China Poly Group, one of the industrial giants in its sphere of influence, would absorb China Silk Corporation as part of a government restructuring plan.



The consolidation of state-owned enterprises has also touched local government-owned firms, especially those in resource, port and overcapacity industries. In the first half of this year, controlling stakes in at least four listed firms, including Hainan Strait Shipping and Maanshan Iron & Steel, have been shifted from local governments to the SASAC.



Filmmaker Huayi Brothers Media then joined the growing ranks of leading private firms that have set up Communist Party cells within their organisations. Similar party organs have been established in more than 1.5 million non-public corporations nationwide, official data showed.



Renmin University economics professor Li Yiping defended China's growth model, saying it already had characteristics in common with market economies, including corporate entities with clear ownership, market mechanisms that played a decisive role in resource allocation, and a role for government to provide necessary public services and development guidance.



'There's not just one market economy model. It is even different among developed countries,' he said in the Communist People's Daily.



The Office of the US Trade Representative said that China had not embraced open, market-oriented policies and 'true state-owned enterprise reform does not appear to be squarely on China's agenda'.



'The state remains in control of China's economy, and it heavily intervenes in the market to achieve industrial policy objectives,' the report said.



Speaking at symposium two weeks ago, Timothy Stratford, chairman of the American Chamber of Commerce in China, argued that China's hybrid economic system had created an uneven playing field.



'The economic system is of Chinese characteristics ?You have a market economy, but you also have the socialist part of the economy,' he said.



'For important industries in China, the government has plans and policies, and state measures are used to support those industrial sectors. It creates an uneven competition situation.'


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