The relationship between China’s state-owned enterprises (SOEs) andprivate companies is questionable at best, with most parties seeingit as oppositional or complementary. Hu Angang , Director of the Center for China Studies at Tsinghua University,shares his views in an article for Journal of the Chinese Academy of Governance , stating that the idea of the state advancing causing the privatesector to retreat is a misconception. Edited excerpts follow: The misconception is this: SOEs and the private sector are playinga zero-sum game. This premise simply supposes that SOEs and theprivate economy are components under complete market competition.There is no cooperation between the two sectors and one sector’sgain results in the other’s loss. But in fact, both sectors areimportant parts of China’s socialist market economy, and therelationship between the two is not oppositional, but of mutualpromotion and coordinated development. Wcdma Smartphone
China’s huge economic aggregate and market scale provide wide spacefor the development and cooperation for SOEs and the privatesector. By grasping opportunities and making innovations, both ofthem can achieve business success. It is the joint development andcommon prosperity of SOEs and the private sector that ensuresChina’s rapid, steady and sound economic growth. Particularly, inthe recent global financial crisis, rapid adjustment made by bothSOEs and private companies enabled China to be the first to recoverfrom the turmoil. Through some figures we can see whether the notion “the stateadvances and the private sector retreats” is tenable. Wifi Enabled Mobile Phones
According to the National Bureau of Statistics, the number ofindustrial SOEs whose annual sales revenue is above 5 million yuan($791,139) (above designated scale) has declined from 64,700 in1998 to 20,300 in 2010. Among all industrial enterprises abovedesignated scale, the percentage of SOEs declined from 39.22percent to 4.47 percent. In the same period, the number of privateindustrial enterprises above designated scale increased from 10,700in 1998 to 272,300 in 2010, and their percentage among allenterprises above designated scale rose to 60.34 percent from 6.46percent. Seeing from the number of enterprises, it is not “thestate increases and the private sector decreases,” but “the statedecreases and the private sector increases.” The number of employees in SOEs above designated scale dropped from37.48 million in 1998 to 18.86 million in 2010, and the percentageof employees in SOEs above designated scale among all industrialenterprises above designated scale dropped from 57.2 percent to19.2 percent. During the same period, the number of employees inprivate companies above designated scale expanded from 1.61 millionto 33.12 million, and its proportion of the total number ofemployees in industrial enterprises above designated scale rosefrom 2.5 percent to 34.7 percent. China Super Slim Cell Phone
The proportion of the aggregate output value of state-owned andstate-holding enterprises above designated scale to that of allindustrial enterprises above designated scale dropped from 49.6percent in 1998 to 26.6 percent in 2010. In the same period, theproportion of private companies above designated scale surged from3.1 percent to 30.5 percent, an increase of nearly 10 fold. In 2010, state-owned and state-holding enterprises contributed 71.7percent to the total sales revenue tax paid by industrialenterprises above designated scale, while private companies onlycontributed 14.6 percent.