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It's time to decide if big state-owned firms serve the people
By Wan Lixin |
March 23, 2010, Tuesday
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Print Edition
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THERE has been overwhelming public indignation against the many state-owned enterprises that have become dominant players in the red-hot property sector.
According to the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), 78 centrally administered companies have been told to exit the housing market.
The public have good reasons not to be optimistic.
So far, only one company has announced its intention to withdraw, and as an analysis in Oriental Morning Post on Monday points out, given its complicated ownership structure, the company's announcement can be irresponsible at best.
And there are the 16 enterprises under SASAC that are allowed to continue to suck money from home buyers in good conscience.
Among them is the China National Cereals, Oils and Foodstuffs Import and Export Corp (COFCO), which sold some apartments it developed in Shanghai at an average of more than 110,000 yuan (US$16,000) per square meter last December.
Has the company functioned so well in its specialized field of foodstuff that it has energy to spare for its diversification?
China Central Television reported on Sunday that in Heilongjiang Province, China's major soybean grower, nearly all major soybean processing companies had closed.
They are not buying soybeans from local growers because the price of imports is much lower than the state-subsidized purchase price.
In 2004 the province's output of soybeans stood at 10 million tons, but last year this figure had dropped to 6 million.
Would COFCO be dismayed by China's food sufficiency, or be exhilarated by repeated official assurances that China's housing prices would soar for another two decades?
Among the 16 companies that would continue to be real estate developers are also those that should be properly focused on railways, chemicals, mining, hydropower, dam building and other sectors.
Xiong Zhijun, a SASAC official, asserted recently that the entry of SOEs into the property sector is not a deciding factor in driving up home prices.
He argued that the National People's Congress should define the SOE's role.
If a SOE is defined as an economic organization, then SOE's pursuit of the high profits in the housing sector is above suspicion.
If SOE is defined as an organization to serve the public, then they should enjoy corresponding state support.
From these revelations I am astounded that these SOEs have developed into such global monstrosities without ever being told about their obligations.
Fat cats
In many cases today, the catch phrase is black or white, the cat that catches the mice is a good cat. When many of these cats morph into fat cats, it seems that determining the color of these cats is by no means an easy task.
It's easy to see why.
For instance, nearly all major Chinese food companies have been recipients of international investment.
In terms of obligation, should they be committed to China's long-term food security, or should they be more beholden to American farmers, or the Wall Street speculators?
Similar dilemma confronts many SOEs. In the previous attempts at reining in the home prices, the efforts to regulate were generally gradually undercut. This time we are getting confusing signals from the very beginning.
Senior officials have come out into the open making statements intended to shore up the property market.
Immediately after the National People's Congress had ended, some SOEs began to conclude land deals at record prices.
As analysts point out, SOEs have the best resources to correctly read the real intentions of the government.
Some officials openly pit themselves against the sentiments of the people because the line between these officials and property developers no longer exists.
According to the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), 78 centrally administered companies have been told to exit the housing market.
The public have good reasons not to be optimistic.
So far, only one company has announced its intention to withdraw, and as an analysis in Oriental Morning Post on Monday points out, given its complicated ownership structure, the company's announcement can be irresponsible at best.
And there are the 16 enterprises under SASAC that are allowed to continue to suck money from home buyers in good conscience.
Among them is the China National Cereals, Oils and Foodstuffs Import and Export Corp (COFCO), which sold some apartments it developed in Shanghai at an average of more than 110,000 yuan (US$16,000) per square meter last December.
Has the company functioned so well in its specialized field of foodstuff that it has energy to spare for its diversification?
China Central Television reported on Sunday that in Heilongjiang Province, China's major soybean grower, nearly all major soybean processing companies had closed.
They are not buying soybeans from local growers because the price of imports is much lower than the state-subsidized purchase price.
In 2004 the province's output of soybeans stood at 10 million tons, but last year this figure had dropped to 6 million.
Would COFCO be dismayed by China's food sufficiency, or be exhilarated by repeated official assurances that China's housing prices would soar for another two decades?
Among the 16 companies that would continue to be real estate developers are also those that should be properly focused on railways, chemicals, mining, hydropower, dam building and other sectors.
Xiong Zhijun, a SASAC official, asserted recently that the entry of SOEs into the property sector is not a deciding factor in driving up home prices.
He argued that the National People's Congress should define the SOE's role.
If a SOE is defined as an economic organization, then SOE's pursuit of the high profits in the housing sector is above suspicion.
If SOE is defined as an organization to serve the public, then they should enjoy corresponding state support.
From these revelations I am astounded that these SOEs have developed into such global monstrosities without ever being told about their obligations.
Fat cats
In many cases today, the catch phrase is black or white, the cat that catches the mice is a good cat. When many of these cats morph into fat cats, it seems that determining the color of these cats is by no means an easy task.
It's easy to see why.
For instance, nearly all major Chinese food companies have been recipients of international investment.
In terms of obligation, should they be committed to China's long-term food security, or should they be more beholden to American farmers, or the Wall Street speculators?
Similar dilemma confronts many SOEs. In the previous attempts at reining in the home prices, the efforts to regulate were generally gradually undercut. This time we are getting confusing signals from the very beginning.
Senior officials have come out into the open making statements intended to shore up the property market.
Immediately after the National People's Congress had ended, some SOEs began to conclude land deals at record prices.
As analysts point out, SOEs have the best resources to correctly read the real intentions of the government.
Some officials openly pit themselves against the sentiments of the people because the line between these officials and property developers no longer exists.
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