The Role Of State-Owned Enterprises And Of The State Assets Supervision And Administration Commission (SASAC) In The Chinese Economy

The presence of the Chinese State in its economy has always been preponderant.The Chinese openings towards the rest of the world and its improvements in the rationalization of SOEs did not cause, as many commentators think, a withdrawal of the State from its economy. It is true that the share of private entrepreneurship on the total (industrial) output has surpassed the one of SOEs and furthermore, there are signs of a reinvigorating private sector. However, both qualitative and quantitative data show that the State, directly or indirectly through SASAC (State Assets Supervision and Administrative Commission), has made a U turn in the last decade towards a stronger control of its State Owned Enterprises. As of 2013, all the biggest industrial groups all have just one shareholder:the State. Their ownership formally belongs to SASAC, a state holding that also enjoys market regulatory powers. Still, in this dissertation I analyze the actual intention of the State to maintain control of central enterprises and how the creation of SASAC has contributed to this purpose. Furthermore, I analyze the impact of SASAC on the State-SOEs relationships and find out that despite the increased efficiency and profitability of SOEs after its creation, whenever it comes to important decisions to be made, SASAC loses its role since either the Party or important Ministries take over control. In defiance of the huge powers SASAC was given, the actual decision making processes still have to go through the governmental offices. Moreover, statistical data show that the economic sectors where the presence of SOEs is greater have had a growth rate of profits, revenues and investment higher than the others. This is mainly because of the economic and legal incentives SOEs enjoy and because of the higher profitability of SOEs sectors.These facts show a departure of China with respect to Western capitalism, where, up to some years ago, it seemed it was directed. Beijing wants to increase its influence over some particular sectors and it is willing to reach these objectives notwithstanding the concerns coming from international organizations and the US.Besides, the economic experiment going on in China is not following any known economic path and it is also causing some competition and national security concerns whenever SOEs go abroad to conquer foreign markets.