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[Biweekly Symposium] No.321,State-owned Enterprise and National Economic Security
 
 Author:Unirule  
Time:2006-10-27 14:12:50   Clicks:


Topic: State-owned Enterprise and National Economic Security 
Lecturer:Mr. Xiang Wenbo, CEO of Sany Group Co. Ltd 
Discussants:Prof. Tang Zongkun, Chinese Academy of Social Science;Prof. Zuo Dapei, Chinese Academy of Social Science;Prof. Zhou Fangsheng, Research Institute for Social Science, Ministry of Finance;Prof. Gu Haibin, Renmin University of China;Prof. Han Xiaoming, Renmi
 
 
Mr. Xiang illustrated his points of view through an in-depth analysis of "Carlyle-Xuzhou Machinery Case". He said: "The purpose of this discussion is to arouse a wide-range discussion of the following questions: transaction management of state-owned assets; interests of different parties in the process of state-owned enterprise reform, especially the management of national strategic interests; the path of China's future economic development." In his minds, the core issue of China's economic development is whether it could develop in a sustainable way. And four issues will affect the sustainable development of China's economy. First, the "overdraft" of economic development is unsustainable. It contains the "overdraft" of environmental resources, human resources, natural resources, market resources and policy resources. Second, economic development relies too much on foreign trade and it is unsustainable. Third, too much reliance on foreign investments leads to the unsustainable economic development. Fourth, too much importance is placed on scale rather than efficiency and it is another reason why China's economy is unsustainable. As far as "Carlyle-Xuzhou Machinery Case"is concerned, Mr. Xiang thought that there were mainly two problems. First, Xuzhou Machinery was undervalued. The price that JP Morgan offered was a billion RMB more than that offered by Carlyle. But Xuzhou Machinery was finally acquired by Carlyle rather than JP Morgan. Second, the transaction went against government's policy. It disobeyed government’s policy in automobile industry, which stipulates that shares of foreign investors could not exceed 50 percent of the total. Besides, it violated the catalog for the management of foreign investments in several industries. The catalog states that there are restrictions on foreign investments in Xuzhou Machinery's business. Furthermore, State Council even clearly expressed that the government should maintain the control of this industry. Based on the above-said discussion, how to accurately assess the value of state-owned enterprises, how to effectively monitor the whole process and how to build a relatively sound transactional system are important problems for the government to solve. If these issues are ignored, the lost of national economic security may be irreversible and unaffordable.

 



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