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Red Flag Manuscript: Confidently Make State-owned Enterprises Bigger and Stronger

A high profile article titled “Confidently Make State-owned Enterprises Bigger and Stronger” recently appeared on Red Flag Manuscript, a core publication of the Chinese Communist Party’s Central Committee.

The author, a director at the policy making State Development and Reform Committee, refuted voices in favor of privatization. “Some people want the state-owned sector, as a percentage of GDP, to fall to 10%, the U.S. standard, and ‘exit the competitive sector.’ Some have asked the state-owned enterprises to exit the basic industries and the service sector, in the name of ‘antitrust.’ Some advocate that the state only control the land and financial sectors and completely retreat from the business world.” The article argued, “The experiences of Eastern Europe and Latin America have shown that a market oriented toward privatization will leave the national economy unprotected; its property rights and even its economic lifeline will then be controlled by foreign capital.”

The author emphasized that the state-owned enterprises should maintain an advantageous and dominant position in the following sectors: (1) strategic areas related to national security: defense and the science & technology industry (nuclear, aerospace, weapons, ships, and military electronics); national infrastructure (such as the communications and broadcasting, electricity, and railway networks and important transportation facilities); key urban infrastructures (water supply, drainage, electricity, gas, and roads); the financial sector; and bulk agricultural commodities. (2) important basic industries: such as power, telecommunications, energy, and key petrochemical and metallurgy industries. (3) non-renewable strategic resources: mining, oil and gas resources. (4) pillar industries and the high-tech industry: mining, metallurgy, petrochemical, machinery, and transportation equipment; and high-tech industries (new materials, new energy, electronic communications, aerospace, biomedical, etc.

Source: Red Flag Manuscript, March 26, 2012