Commission backs role of China's SOEs

Analysts with the State-owned Assets Supervision and Administration Commission (SASAC) have defended China's state-owned enterprises (SOEs), arguing they have played a huge role in raising the country's global competitiveness.

The backing comes amid speculation that SOEs have gained massive benefits out of a monopoly.

State-owned capital has been the main driver in creating competition in industries, including iron and steel, chemical and machine manufacturing as well as other sectors, according to Xu Baoli, analyst with the commission.

Xu told the People's Daily that in other sectors where there was more market concentration, competition was also alive. He cited the refined oil retail market, where foreign oil giants, including BP and Shell, have been given access to the country's profitable eastern coast.

"Some people say that revenues of centrally administered SOEs are mainly supplied by those in monopolized industries, and that is not true either," Xu said. He suggested that the several large SOEs working in oil and gas, power and telecommunications sectors contributed to 40 percent of total turnover.

According to Xu, monopolies are a common practice in certain industries. As many as 76 percent of the world's major oil producing and consuming countries own only one oil corporation in each country, and 20 percent own no more than three.

Shao Ning, deputy director of the SASAC, said China needs its SOEs, as well as other types of ownership, to compete internationally.

He said SOEs play a leading role in advancing technological innovation and help support industrial competitiveness.

It has been argued that more of the private sector should be introduced into monopoly industries. However, Cheng Enfu, an analyst with the Chinese Academy of Social Sciences, said private ownership does not mean high-efficiency.

According to Cheng, large SOEs are better placed to stand up against the economic downturn than their smaller private counterparts. He added that the exit of SOEs could be riskier for China to compete globally.

Official data showed that the combined profits at China's SOEs outside the financial sector declined 12.8 percent year-on-year in the first eight months of 2012.