Pan-Asia: China rejects Singapore model for state-owned enterprise reform – 20 Jul 2017

  • Chinese policymakers have largely rejected plans to depoliticise state-owned enterprises by governing them through financial holding companies that aim solely to maximise returns.
  • A forthcoming plan to reform China’s SOEs is the latest sign that efforts to boost efficiency and profitability are taking a back seat to ensuring that state groups support government macroeconomic and industrial policies.
  • Use of holding companies, a model based on that of Singaporean wealth fund Temasek, had been seen as a middle way between the privatisation of SOEs and the current system, in which top managers are approved by the Communist party and often put politics ahead of commercial considerations.
  • But the new plan from the finance ministry and the State-owned Assets Supervision and Administration Commission will cap the number of Temasek-style holding companies at two or three, the official Shanghai Securities News reported.
  • In addition, big acquisitions such as ChemChina’s USD44bn purchase of Syngenta were used to acquire advanced technology, even though the deals might not be profitable for the acquirer.
  • Singapore’s Temasek holds stakes in domestic and foreign companies and is known for making decisions based purely on financial considerations.

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