45 an ongoing reliance on planning and industrial

  • No School
  • AA 1
  • 25

This preview shows page 13 - 15 out of 25 pages.

45 An ongoing reliance on planning and industrial policy to achieve goals identified by the state China has now turned the focus of its industrial policies to the pursuit of an innovation driven economy. This includes industrial policies such as the National Medium and Long-Term Science and Technology Development Plan Outline (2006-2020) (MLP) which calls for China to become an innovation-oriented society by the year 2020 and a world leader in science and technology (S&T) by 2050, based on developing capabilities for indigenous innovation. The “Made in China 2025” initiative launched in 2015 is a 10-year plan for China to achieve 70 percent self-suf- ficiency in strategic technologies such as advance information technology, robotics, aircraft, new energy vehicles, new material, and biotechnology. Similar industrial policies are also being implemented at the sub-central government level. 46
Image of page 13

Subscribe to view the full document.

The US-China economic relationship: A comprehensive approach 14 Reliance on SOEs as a tool of state economic policy When it comes to implementation of its industrial policy, China largely relies on SOEs and control over key inputs including land, labor, and finance to achieve its objectives. The activities of SOEs are not governed by market forces or commercial standards. The role of SOEs in the Chinese economy only continues to grow in importance under President Xi 47 and China’s government has also been crowding-out private enterprise and taking even larger stakes in private companies. 48 While assessing the extent of the public sector is challenging given the various and often opaque ways that the state controls companies, one estimate is that the public share of fixed investment in 2016 was around 60 percent, compared to official data of 35 percent. 49 SOEs tend also to benefit from subsidies and other state support. For instance, China’s largest oil companies—CNOOC, Petro China, and Sinopec—all benefit from state financial support from state-owned banks. Government support also extends to supporting Chinese firms operating globally. The identification by the state of food security as a strategic priority led state-owned banks to guarantee ChemChina’s acquisition of Swiss firm Syngenta and its biotech assets. Private firms such as Huawei are seeking to dominate the development of 5G networks globally with support from the China Development Bank. 50 A key mechanism for control of SOEs is the State-owned Asset Supervision and Administration Commission of the State Council (SASAC). SASAC has a stake in more than half of the Chinese companies on the Fortune Global 500 List. This includes SOEs with returns on capital far lower than those generated by private firms (sometimes half as less). 51 As Harvard Law Professor Mark Wu explains, the equivalent of SASAC in America would be to imagine a single U.S. govern- ment agency controlling GE, GM, Ford, Boeing, U.S. Steel, DuPont, AT&T, Verizon, Honeywell, and United Technologies, with such an entity empowered to hire and fire management, and to deploy and transfer resources across companies.
Image of page 14
Image of page 15
  • Fall '19

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes