The 'blind rush' by the country's large state-owned enterprises
(SOEs) to be listed on international markets has led to a huge loss
of state assets and is jeopardizing the mainland's economic
stability, an expert has warned.
In yesterday's panel discussion of lawmakers from Beijing
on the sidelines of the ongoing Fourth
Plenary Session of the 10th National People's Congress (NPC),
Ji Baocheng, president of the Renmin University of China
and a top economist, said that he had hoped that Premier Wen
Jiabao's government work report would include a warning to
regulate or curb the trend.
He estimated that at least US$60 billion worth of state-owned
assets were lost on international markets from 1993 to 2005.
"The sum is appalling," Ji said. He said his estimate was based
on the price gap between the domestic and international Initial
Public Offering (IPO). "An enterprise's international IPO is often
20 percent lower than its domestic one," he commented.
By the end of 2005 more than 310 overseas-listed enterprises had
a total market value of US$370 billion -- more than twice that of
those listed domestically, Ji added. He estimated about 100 more
are expected to be listed on international markets in the next
three years.
"What adds insult to injury is that 80 percent of these
internationally-listed SOEs are leaders in their own areas of
expertise, have high-quality assets and can create a monopoly for
themselves in a certain field," said Ji. "Their low IPOs are
causing huge state-owned asset losses," he observed.
Ji said that to be listed on international markets these SOEs
shrugged off their burden of liability through capital regrouping
and ridding themselves of poor assets. "The foreign capitals can
then share the high-quality assets and the benefits we achieved
through monopolization," he said.
Ji urged the central government to curb the 'blind rush' of SOEs
to the international marketplace. "Too much internationalization of
our stock ownership will pose a danger to China's economic security
and exert a negative influence on our future development
strategies," he said.
He suggested that a system should be set up to carefully screen
the SOEs that intend to be listed on overseas markets.
(China Daily March 8, 2006)