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China's mixed ownership reforms are continuing with over 160 state firms having accepted private investment in the fourth round of a pilot program, based on the National Development and Reform Commission (NDRC) Friday.
Wang Jianhui, general manager of the RD Department at Capital Securities, forecasted the reform would inject more “fresh capital” into the state-owned enterprises (SOEs), and advising that the concepts of corporate governance and business operation, as well as the shareholders' structures, should make changes correspondingly.
“With more capital coming in, the new organizations could cut some debts and leverages,” Wang said.
“For the challenges, we still have lots of things to do,” he continued, highlighting challenges in terms of concepts of corporate governance and business operation, and the shareholders' structures.
“You change the structure of ownership, but if you don't change the concepts from old fashion and not so market-oriented ones to the suitable ones, then the new organization will still face some tough time,” the expert told CGTN.
“So far, the private shareholders just take about 10 to 20 percent of those new organizations. But that percentage of shareholding may not bring them enough decision power. So if they cannot influence the new organization, the other private entrepreneurs will lose the motives to join new reform,” he addressed.
China's steel output in the first quarter hit a new record, against the backdrop of reducing capacity. The NDRC addressed the fresh concerns over steel production capacity, stressing the government will implement policies to ensure all targets on cutting steel excess production were hit.
Wang attributed the rising steel production to the increase of fixed investment and implementation of PPP (Public Private Partnership) projects.
“For the first four months this year, the investment has been increased by 6.1 percent, and for the last three months, the growth of fixed investment has been remaining over six percent… So far, we have over 12,600 PPP projects inventory with the implementation rate over 64 percent – versus 48 percent a year ago,” he said, adding that “government is so serious about making things happen,” which has pushed up the demand for steels as well.
He remarked the property investment, in particular, claiming that real estate investment “has been growing by 11.9 percent, the fasted pace since December 2014. If you build more houses, you need more steel products.”
Trade tension influence
The economic planner also said the influence of U.S. tariffs on China's economy is controllable and promised measures to deal with the influence.
“Trade tensions did provide some serious challenges,” the expert worried. “According to my estimation, for the worst scenario, we could lose about 120 billion U.S. dollars sales from the U.S. market. That could translate to 0.8 percent of GDP,” he explained.
However, he considered China's trade with the U.S. still has some resilience, as “our export to the U.S. market has been shrinking by less than ten percent, and the U.S. export to China has been dropping by 30 percent.”
And he remained positive on the future growth, saying that “if the government could implement all supporting policy measures it promises, the growth for fixed investment could reach 6.5 percent, and the consumption could boost growth to 7.5 percent, we would still reach over six percent of GDP growth after deducting these damages caused by trade tensions.”
(CGTN)
