report, "The Chinese system of state capitalism or ‘capitalism with Chinese characteristics’ has blocked many of the potential benefits of a free market, not only in China, but among China’s trading partners," "The state-owned sector in China can undercut prices charged by privately held competitors globally due to a variety of subsidies granted by the Chinese government: low-interest-rate loans; below-market-rate land, fuel, and electricity; special exemptions from environmental and labor regulations; tax abatements and preferences." [2]

Recently, the Chinese Communist Party (CCP) agreed that having the backing of state funding and favorable government policies gives China’s SOEs a huge economic advantage. Hu Angang, Director of the Center for China Studies, Tsinghua University, wrote an article on for Red Flag Manuscript, a publication of the Central Committee of the CCP in which he argued that, although China’s SOEs are a form of enterprise and compete in the global market, they differ greatly from Western enterprises in that they are state-owned and under the leadership of the CCP. China’s SOEs have the advantage of being backed by state-owned capital and, as such, have the ability to generate strong competition to rival the world’s top 500 enterprises. They should be the leading force for China’s "going abroad" strategy. The following are translated excerpts from the article.] [3]

Continue reading →