End-to-privatization call stirs debate
- Source: Global Times
- [07:31 August 21 2009]
- Comments
By Liang Chen
About 500 scholars and retired government officials, headed by a former director of the National Bureau of Statistics, have written a public letter to the central government calling for an end to the privatization of State-owned enterprises (SOEs) and to stop foreign investment, following several violent mass protests in factory restructuring across China.
In more than 20 years, and especially in the last 10 years, a large amount of SOEs have been privatized and public assets pocketed by a few private owners, the letter, addressed to the State leadership, says, The basis of the socialist system, the public-owned economy, does not really exist now,” according to the letter, posted on tianya.cn and many other Chinese Internet forums.
“We must stop privatization, including the practice of using foreign investment to reform State-owned enterprises,” the letter said. “It’s against our Constitution, as it actually turns State-owned enterprises into colonized companies.”
The letter was drafted by Li Chengrui, who served as deputy and then chief director of the National Bureau of Statistics in the 1970s, and Gong Xiantian, a professor of law at Peking University, who was known for his objection to the recently passed Property Rights Law due to its “betrayal of the basic principle of socialism.”
The letter was jointly signed by retired government officials and staff of SOEs, scholars at prestigious universities, media professionals, entrepreneurs and farmers.
Li said he instigated the letter after learning about the deadly protest over the takeover of a State-owned steel company in Jilin.
In July, more than 1,000 workers in Tonghua, Jilin Province, protested against the takeover of State-owned Tonghua Iron and Steel Co, beating a factory manager to death, which forced the local government to shelve the takeover.
Last week, in Henan Province, a deal to sell State-owned Linzhou Steel was canceled after staff held an official hostage for four days.
“These are not random cases,” Li said. “An increasing number of workers have been laid off, farmers have lost their land, resulting in a fight to end all privatization activities and to prevent capitalism engulfing the country, ” he said.
In 2007, the State-owned economy accounted for just 46 percent of the paid-up capital of secondary and tertiary industries. Private businesses took 65 percent of the GDP, while the public-owned economy occupied just 35 percent, the letter said.
Market rules
Ding Yifan, a researcher at the Development Research Center of the State Council, disagreed with the letter, saying it is too dogmatic to say that “just keeping a large proportion of State ownership is the socialist system.”
“The real problem is that some believe privatization would solve all the problems. It seems that we need reform, not just privatization,” Ding said.
He said it is critical for the government to optimize SOE operations according to market rules, and make sure corporate management is monitored closely to prevent corruption.
Since China carried out its reform on State-owned enterprises in the early 1990s, various problems emerged, drawing criticisms. This is not the first time that such letters have been written to criticize the fact that the country has “gone astray in the direction toward socialism.”
However, this stance was often criticized as leftist, and did not seem to gain ground with the general public, as the country continues to stride toward a market-oriented economy.
Since the establishment of the State Asset Regulatory Commission (SARC) in 2003, reform of Stated-owned enterprises created a profit of more than 1 trillion yuan in 2006. In 1998, before the reform, two
thirds of SOEs were loss-making, to the tune of around 100 billion yuan.
Meanwhile, a large-scale “merger and restructuring” program was carried out, as SARC-controlled SOEs were reduced from 236 to 149 between 2003 and 2006.
Zhou Xiaozheng, a professor of sociology at Renmin University of China, agreed that Li’s letter is too extreme in calling for an end to all privatization. He believes that the problems are caused by the excessive concentration of power in the companies’ corporate management and a lack of transparency in the process.
“It’s fine to carry out reforms, but the public hearing should be carried out before that, and the staff should have channels with which to express themselves,” Zhou said.
In the letter, Li and his co-signatories also call on the government and related departments “to establish a communication system to listen to the public and allow them to express their opinions via different means.”
Zhang Han and An Baijie contributed to this story
