From Overseas Press

China fortifies state businesses to fuel growth

(chinadaily.com.cn)
Updated: 2010-08-31 17:04

China is getting richer and wishing to sustain its high-octane growth, so that it has "pumped public money into companies that it expects to upgrade the industrial base and employ more people," said an article on Aug 29.

According to the article, many assumed that "the beneficiaries are state-owned interests that would gradually wither away in the face of private-sector competition."

China has surpassed Japan to become the world's second-largest economy this year, and "its state-directed development model is enormously appealing to poor countries." Even many westerners admire "China's ability to build a first-world infrastructure and transform its cities into showpieces."

China's leaders, who "once eager to learn from the United States during the financial crisis have reaffirmed their faith in their own more statist approach to economic management."

China's State Council "issued orders to give private companies a better shot at government contracts—for roads and bridges, finance and even military work—that now go almost exclusively to state-owned companies."

Other economists though that "China's success speaks well of its top-down strategy." For example, South Korea and Japan also "built their modern economies with strong state help." Many economists agree that "shrewd state management can be better than market forces in getting a developing nation on its feet."

"Experts on both sides of the debate have but two questions. One is how much longer state control of vast areas of the economy will generate that growth. The other is whether, should that strategy stop working, China will be able to change it."