Tuesday, April 6, 2010

国进民退: Is China Really Re-nationalizing? (II)

Following up on my post from March 27, I first wanted to look back in history a bit to the origin of the term guo tui min jin to determine how it entered the lexicon of policy a decade ago. I am not certain whether this particular exercise buys us any better understanding of whether the state is re-nationalizing businesses today, but perhaps it sheds a little light on why the idea is generating debate.

Referring once again to an official history of the reforms of China's state-owned enterprises, as I mentioned before, the credit for guo tui min jin is given to a Professor Wang Jue of the Central Party School.*

In 1999, Professor Wang was interviewed about this concept, and the following few lines are important for an understanding of what policymakers were apparently hearing from the originator of this concept. I will quote a line or two of the original Chinese and follow with my (possibly flawed) translations. Words in brackets "[ ]" are my own exegesis.
国退民进—就是国家退出来,让老百姓进去。有人说国退民进是搞私有化,其实不是,民有经济和私有经济是两个概念,

Guo tui min jin means the state withdraws to let the common people go in. Someone said that guo jin min tui means privatization [um, like me a few posts back], but that is not the case. People’s economy (民有经济) and private economy (私有经济) are two different concepts. [Note that he’s distinguishing between “the people” collectively and private individuals.]

私有经济是民有经济的一个部分。集体经济、股份制经济都是民有民营的。

The private economy is part of the people’s economy. The collective economy [encompassing some of the few remaining township and village enterprises or TVEs] and the shareholder ownership economy [encompassing firms that have undergone conversion to a shareholding, though not necessarily publicly listed, corporation] are also part of the people’s economy.

民有民营是相对国有国营说的。不是国有国营的都是民有民营的,它既有公有性质的也有四有性质的,也有公私混合所有制的。

“People owned and managed” (民有民营) should be contrasted with “state owned and managed” (国有国营). If a company is not state owned and managed then it is people owned and managed. [He’s saying these two types are mutually exclusive.] The people owned and managed (economy) contains the natures of both public and private ownership. [If I’m not mistaken, here he is saying that people owned and managed enterprises can have both the state and individuals as owners – which, again, if I’m not mistaken, violates the mutual exclusivity implied by his previous sentence.]

So what, in a nutshell, does all of this mean? Assuming the policy truly was influenced by Professor Wang, as this official state-owned enterprise history says it was, then this is what I have learned:
  • Everyone outside China (or inside, for that matter) who interpreted guo tui min jin as privatization was simply wrong.
  • The many shareholder reforms among state-owned enterprises that took place over the past couple of decades all qualify as guo tui min jin reforms. That despite the fact that few of these shareholding enterprises were listed on China’s stock markets (only about 1,800 firms are traded), and among those, all but about 200 continue to have either the state, or a state-owned entity, as the controlling shareholder.
  • One may also say that this has all been a wasted effort anyway: how unusual is it, really, for politicians and officials to interpret rules and policies for their own benefit?
As promised last time, I will later post a summary in English of a good article in Chinese describing the current debate around guo jin min tui. But I’ve taken enough of your time for today.

Thanks for reading.

And, by the way, I welcome clarifications anyone has to offer in translating the Chinese material above.

The next post in this series can be found here.

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*
章迪诚,著,中国国有企业改革编年史,(北京:中国工人出版社,2006) pp.556-7.