Official's Kobe comment sparks ire on role of SOEs

By Xu Lin
0 Comment(s)Print E-mail, March 11, 2012
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A former top official has come under fire after equating the role of China's State-owned enterprises (SOEs) to the role of Kobe Bryant in the NBA. Li Rongrong, former Chairman of the State-owned Assets Supervision and Administration Commission of the State Council, made his comment at a recent CPPCC meeting during discussions about the coordinated development of SOEs and non-SOEs.

A former top official has come under fire after equating the role of China's State-owned enterprises (SOEs) to the role of Kobe Bryant in the NBA. []

A former top official has come under fire after equating the role of China's State-owned enterprises (SOEs) to the role of Kobe Bryant in the NBA. []

The growth of SOEs and the subsequent shrinking of non-SOEs in the national economy has been a heated topic of discussions at the conference. However, Li expressed the opposite view, stating that in recent years, private enterprises have actually grown faster than SOEs. In support of his view, he indicated the following statistics: From 1998-2010, the proportion of the number of SOEs dropped from 39 percent to 4.5 percent; the proportion of their total assets declined from 68.8 percent to 41.78 percent; the proportion of their main business revenues almost halved, falling from 52 percent to 27.8 percent; the proportion of their total profits decreased from 36 percent to 27.8 percent; and their workforce fell from 60.5 percent to 19.2 percent.

Li said that the SOEs and non-SOEs should work in tandem in the global marketplace, but that "the former should take the starring role, like Kobe does for the Los Angeles Lakers in the NBA." He continued: "By using only substitutes rather than using Kobe, the Lakers would not be able to win the game; by relying only on private enterprises, China simply cannot be competitive in the global marketplace."

Li's analogy aroused debate among people from all walks of life, especially among microbloggers. Most disputed Li's assertion, claiming that Kobe and the SOEs are not comparable. Famous economist Xu Xiaonian retorted: "The difference between Kobe and the SOEs is that Kobe is not the eldest son of the referee." The co-founder of the New Oriental School Xu Xiaoping also took issue with Li, commenting: "When Kobe is dribbling, others can challenge for the ball; when Kobe is shooting, others are allowed to block the shot." Property tycoon Ren Zhiqiang was more forthright: "If the SOEs compete with the private enterprises on the same platform, can they [SOEs] still be the star?"

People's criticisms of Li's comments mainly focused on two points. One is the unfair competition between SOEs and private enterprises, especially in certain monopolized sectors such as oil and banking. Ge Wenyao, a former CPPCC member who also sits on the board of directors of Shanghai Jahwa United Co. Ltd., also denounced the present system in which SOEs still keep official government status. He emphasized that addressing this would be a central part of the CPPCC's next reforms, and also suggested that legislation be implemented to prevent the loss of State-owned assets.

The second criticism centers on the argument that assessing SEOs by revenues and profits from their main lines of business is an unfair measurement, as a number of SOEs are often engaged in other profitable businesses, such as real estate, telecommunications and energy. However, private enterprises do not have this option.

Hong Kong scholar Wu Muluan claimed that the blind expansion of SOEs impedes the development of private enterprises, and even threatens the market economy in China. "In reality the SOEs are not strong enough, but they consume a large amount of financial resources, while the private economy is merely struggling for survival," said Wu. "To boost the development of the market economy, private enterprises should become the major driving force."

Financial commentator Yang Chunyang concurred, commenting that it is the private enterprises, not the SOEs that are the real stars, yet they are constantly relegated to the role of "substitute". He stated his belief that such a situation is bad for China's economic development and emphasized his view that the future lies in the private sector. "The private economy will be the most promising and vigorous economy in China," he declared.


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