This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2015/sep/13/china-partial-privatisations-economy-cools

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
China unveils plan for partial privatisations as economy cools China unveils plan for partial privatisations as economy cools
(about 14 hours later)
China has unveiled details of how it will restructure its state-owned enterprises, including partial privatisations, as data pointed to a cooling in the world’s second largest economy.China has unveiled details of how it will restructure its state-owned enterprises, including partial privatisations, as data pointed to a cooling in the world’s second largest economy.
The guidelines, jointly issued by the Communist party’s central committee and the State Council, China’s cabinet, included plans to clean up and integrate some state firms, the official Xinhua news agency said. It did not elaborate.The guidelines, jointly issued by the Communist party’s central committee and the State Council, China’s cabinet, included plans to clean up and integrate some state firms, the official Xinhua news agency said. It did not elaborate.
Reform of underperforming state-owned enterprises is one of China’s most pressing needs. But if not handled well, the restructuring could lead to hundreds of thousands of people being laid off and to social instability.Reform of underperforming state-owned enterprises is one of China’s most pressing needs. But if not handled well, the restructuring could lead to hundreds of thousands of people being laid off and to social instability.
Xinhua said the plans included introducing “mixed ownership” by bringing in private investment, and “decisive results” were expected by 2020.Xinhua said the plans included introducing “mixed ownership” by bringing in private investment, and “decisive results” were expected by 2020.
The government will not force mixed ownership, nor will it set a timetable, giving each firm the go-ahead only when conditions are right, it said.The government will not force mixed ownership, nor will it set a timetable, giving each firm the go-ahead only when conditions are right, it said.
“This reform will be positive for improving the impetus of the economy and making growth more sustainable,” said Xu Hongcai, director of the economic research department at the China Centre for International Economic Exchanges, a Beijing-based thinktank.“This reform will be positive for improving the impetus of the economy and making growth more sustainable,” said Xu Hongcai, director of the economic research department at the China Centre for International Economic Exchanges, a Beijing-based thinktank.
He said partial privatisation would help establish “check-and-balance and incentive systems” at state firms.He said partial privatisation would help establish “check-and-balance and incentive systems” at state firms.
China’s government manages 111 companies centrally under the State-owned Assets Supervision and Administration Commission. Local governments own and manage around 25,000 state-owned companies and the sector employs nearly 7.5 million people.China’s government manages 111 companies centrally under the State-owned Assets Supervision and Administration Commission. Local governments own and manage around 25,000 state-owned companies and the sector employs nearly 7.5 million people.
State firms will be allowed to bring in investors to help diversify share ownership, and more state firms will be encouraged to restructure to pave the way for stock listings, Xinhua said.State firms will be allowed to bring in investors to help diversify share ownership, and more state firms will be encouraged to restructure to pave the way for stock listings, Xinhua said.
Private investors will be encouraged to buy stakes in state firms, buy convertible bonds issued by state firms, or swap shares with state firms, it said, adding that steps would be taken to curb corruption during the changes.Private investors will be encouraged to buy stakes in state firms, buy convertible bonds issued by state firms, or swap shares with state firms, it said, adding that steps would be taken to curb corruption during the changes.
State enterprises will be divided into commercial and public welfare-related businesses. Oil and gas, electricity, railways and telecommunications were identified as sectors that could be suitable for limited non-state investment.State enterprises will be divided into commercial and public welfare-related businesses. Oil and gas, electricity, railways and telecommunications were identified as sectors that could be suitable for limited non-state investment.
However, Beijing will have to persuade entrenched interests at local, provincial and national governments to relinquish some control over state enterprises and attract investors to buy shares after one of the worst stock market crashes in China’s history.However, Beijing will have to persuade entrenched interests at local, provincial and national governments to relinquish some control over state enterprises and attract investors to buy shares after one of the worst stock market crashes in China’s history.
Xinhua indicated that full-scale privatisation was not on the cards, saying the government aimed to “cultivate a large number of state-owned backbone enterprises with innovation capability and international competitiveness”.Xinhua indicated that full-scale privatisation was not on the cards, saying the government aimed to “cultivate a large number of state-owned backbone enterprises with innovation capability and international competitiveness”.
The guidelines called for a flexible and market-based compensation system at state firms by linking pay with company performance.The guidelines called for a flexible and market-based compensation system at state firms by linking pay with company performance.
The details were issued after the government said growth in China’s investment and factory output missed forecasts in August. The data followed weak trade and inflation readings, raising the chances that economic growth may dip below 7% in the third quarter for the first time since the global financial crisis.The details were issued after the government said growth in China’s investment and factory output missed forecasts in August. The data followed weak trade and inflation readings, raising the chances that economic growth may dip below 7% in the third quarter for the first time since the global financial crisis.
“Overall, the economy is very weak and the central bank may have to continue cutting interest rates and banks’ reserve requirement,” said Zhou Hao, senior economist at Commerzbank AG in Singapore. Zhou said growth would probably dip below 7% in the July-September quarter. “Overall, the economy is very weak and the central bank may have to continue cutting interest rates and banks’ reserve requirement,” said Zhou Hao, senior economist at Commerzbank in Singapore. Zhou said growth would probably dip below 7% in the July-September quarter.
Some economists believe growth is already much weaker than official data suggests. August power output rose just 1% year-on-year, and production of key industrial commodities such as steel and coal weakened.Some economists believe growth is already much weaker than official data suggests. August power output rose just 1% year-on-year, and production of key industrial commodities such as steel and coal weakened.
Growth in fixed-asset investment, a crucial economic driver, slowed to 10.9% in the first eight months of 2015, the weakest pace in nearly 15 years, National Bureau of Statistics data shows. Analysts in a Reuters poll had forecast an 11.1% rise, compared with 11.2% in January-July. Growth in fixed-asset investment, a crucial economic driver, slowed to 10.9% in the first eight months of 2015, the weakest pace in nearly 15 years, according to National Bureau of Statistics data released on Sunday. Analysts in a Reuters poll had forecast an 11.1% rise, compared with 11.2% in January-July.
Factory output rose a weaker than expected 6.1% in August from a year earlier. Markets had expected a 6.4% increase, up from July’s 6%.Factory output rose a weaker than expected 6.1% in August from a year earlier. Markets had expected a 6.4% increase, up from July’s 6%.
China’s yuan devaluation in August and a plunge in stock markets since June have fuelled fears of more economic shocks, although the premier, Li Keqiang, has brushed off concerns of a hard landing.China’s yuan devaluation in August and a plunge in stock markets since June have fuelled fears of more economic shocks, although the premier, Li Keqiang, has brushed off concerns of a hard landing.
China’s central bank has cut interest rate five times since November and repeatedly relaxed banks’ reserve requirements to try to boost the sputtering economy. Further policy easing is widely expected and the government is trying to boost infrastructure investment. China’s central bank has cut interest rates five times since November and repeatedly relaxed banks’ reserve requirements to try to boost the sputtering economy. Further policy easing is widely expected and the government is trying to boost infrastructure investment.
The government is aiming for 2015 economic growth of around 7%, which would be the slowest in 25 years.The government is aiming for 2015 economic growth of around 7%, which would be the slowest in 25 years.