CHINA: Provinces Press on with Privatisation

Publisher Name: 
Financial Times

The provinces of Sichuan and Yunnan are planning to
put up roughly 1,000 local state-owned enterprises as
candidates for acquisition or merger with foreign or
private Chinese companies starting next year, senior
provincial officials told the Financial Times.

The initiatives by Sichuan and Yunnan - home to a
combined 130m people living in the southwest of China
- are indicative of gathering activism across the
country to sell down stakes in state-owned companies,
thereby providing a vast new opportunity for foreign
and private investors.

If the sale of such stakes proceeds smoothly, the size
of China's non-state economy will grow significantly,
officials and analysts said.

The move coincides with the imminent establishment of
more provincial branches of the State Assets
Supervision and Administration Commission (Sasac), an
official body set up to oversee greater separation of
government from business.

Huang Xiaoxiang, vice-governor of Sichuan province,
said his province would "very soon" set up its Sasac
branch to facilitate the province's strategy of
reforming all of its SOEs, changing their ownership
structure and streamlining their employee numbers.

Mr Huang said that more than 500 SOEs in his province
would be available for acquisition, merger or for the
sale of strategic stakes to foreign or private
companies. He mentioned that Changhong Electrics, one
of China's largest television makers, and Wuliangye
Distillery, a diversified drinks maker,are two
companies planning to diversify their ownership.

Shao Qiwei, vice governor of Yunnan province, said
that more than 400 local SOEs are to be prepared for
ownership change over the next year, mainly in the
fields of metals, mining, building materials, coal,
tourism, sugar, tea and other agricultural processing.
The total assets of these companies come to Rmb110bn
($13bn).

Mr Shao said he imagined that by the time the
ownership restructuring was finished, some 30 per cent
of these assets would have been transferred to other
companies or to existing workers. He added that by
2005, some 50 per cent of the provincial economy would
be in non-state hands, up from around 30 per cent now.

"This is a very big opportunity for investors looking
for a way to enter the market of the west of China,"
Mr Shao said in an interview.

Asked if the local government was concerned about loss
of influence after it sells down its stakes in state
enterprises, Mr Shao said that it was government
policy these days to "return the influence to the
people". The government's duty, he said, was to create
a level playing field and a conducive environment for
the flourishing of business and to ensure
transparency.

AMP Section Name:Privatization