The SOE reform in China/周大勇(15)
At this point, one should ask, why the Chinese government fulfills the social responsibilities by control the SOEs? Comparing two types of ownership and their contribute, it is clear that the private sector are more efficient by managing the asset. So if the inefficiency of the SOE is evitable (6) , why the state kept such large amount state- owned asset in hand and doesn’t let them distributed? If the asset can be arrange and thus increase in value, it does not matter, who occupy the property, as state has power to collect tax, the result thus will be alike wherever the form of ownership. However, based upon three reasons, Chinese government did not carry out relevant policy to distribute the property of SOEs formally.
1) The SOE problem is determined by the characteristic of the country. The present leading generation has still much benefit in SOEs, because at one hand, SOE is the represent of the socialism economy, in which should state-owned sector dominate. It’s impossible to get rid of the traditional impression of socialism for the Chinese Communist Party under its own name. Exactly or only through emphasizing the character of the State, the Party continues to enjoy the privilege as the only ruling party. Furthermore, the state assets in SOEs are an insurance of the rule; the party should be able to have power over some asset to deal with some emergency such as riot, unrest, and natural disasters and to provide social welfare because of the weak of social security system. At another hand, the bureaucrats of the Party have their personal profit rooted in SOEs, this we have pointed out before.
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