Sunday, January 18, 2009

SASAC to Hang "Not For Sale" Sign

A SASAC insider has reportedly told Jingji Guancha that, sometime during 2009, SASAC will publish a list of subsidiary enterprises that must indefinitely remain in the hands of central SOEs. (Jingji Guancha Wang, 19 Jan 2009)

Though the Central Government (via SASAC) as of today owns only 141 enterprises, many of the important operating assets of these enterprises are buried in subsidiaries two or three levels down. (These 141 enterprises directly owned by the Central Government control some 22,000 subsidiaries.*) In essence, the Central Government has decided (or is in the process of deciding) that there are subsidiaries in certain industries that they have no intention of selling in the foreseeable future.

The industries most likely to be covered by this "list" were actually named in a document released by SASAC in December of 2006: military, electricity generation and transmission, petroleum and petrochemical, telecommunications, coal, civil aviation and shipping.

Some analysts see this as an attempt by SASAC to extend the depth of its control from the "mother companies" (母企业) down into the subsidiaries (子企业). However, it is also possible that this list will remove a lot of suspense as to what the state intends to control in perpetuity.

What isn't clear at this point is what is to be done with the subsidiaries that don't make the list. Will they be privatized, or absorbed into those firms that do make the cut?

* Update/correction: While the Central Government owns enterprises that control 22,582 subsidiaries, SASAC's 141 SOEs only control 16,373 of that number. (2007 SASAC Yearbook, p. 585)

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