Currently, there is a heated discussion in China about the direction of the economy and whether privately-owned businesses should exit the market. Many large state-owned steel enterprises, with their large scale, cross-industry operations, and high starting points, possess advantages that are unattainable for privately-owned small and medium-sized steel enterprises. Private steel enterprises are facing unprecedented challenges.
I. How can private and state-owned steel enterprises coexist in the market?
Recently, a government leader in a provincial capital city in Northeast China publicly stated at a meeting that certain projects in the region would only use steel from state-owned enterprises. This openly excludes capable private steel companies that want to invest! However, in recent years, thanks to the efforts of government leaders at all levels, the business environment in Northeast China has greatly improved, but such unfair competition still exists.
At the recent "Commemoration of the 40th Anniversary of China's Reform and Opening Up and the 20th Anniversary of the Establishment of the 50-Person Forum Academic Seminar," Yang Weimin, vice chairman of the National Committee of the Chinese People's Political Consultative Conference's Economic Committee and former deputy director of the Central Leading Group on Finance and Economics Office, gave a very direct suggestion on this topic: "In the long term, we should gradually weaken and abolish the classification of state-owned enterprises, private enterprises, and foreign enterprises based on ownership. In accordance with the requirements of the 19th National Congress of the Communist Party of China, all enterprises registered within China should be treated equally under the law and receive equal policy treatment. The implication behind this statement is to gradually abolish this classification based on ownership." If this can be achieved, it means that the market entry barriers will be the same, discrimination and monopolies will be eliminated, everyone can participate, and success or failure will depend on real ability.
However, it is always difficult to touch the interests of vested interests. Li Yang, former vice president of the Chinese Academy of Social Sciences, offered a more moderate suggestion -
Private enterprises seeking state-owned enterprises as a protective umbrella, I would rather say it is a self-rescue measure in the face of severe economic downturn. However, the drawbacks are also obvious, because the efficiency of state-owned enterprises is generally lower than that of private enterprises.
II. How to break regional exclusionism?
Xiang Songzuo, chief economist of the Agricultural Bank of China, once believed that private and state-owned steel enterprises cannot compete fairly to a certain extent. He said, "State-owned enterprises, first of all, are state-owned. Banks feel it is safe to lend them money. If something goes wrong, the loan officer and the bank president are not responsible, or they can say they are responsible. This is a state-owned enterprise. However, if you want to lend money to a private steel enterprise, if something goes wrong, people will immediately suspect whether you have received private bribes. This is an unspoken rule, not a written regulation, but the subconscious is like this."
Are private steel enterprises really inferior to central and state-owned enterprises?
Ma Jiantang, secretary of the Party Leadership Group and vice president of the Development Research Center of the State Council, said at the China Economic 50 Person Forum: "Does the new round of reform and opening up have landmark and touchstone reforms? Are there reforms that affect the overall situation? Are there reforms that truly reassure people? If so, further deepening the understanding of the status and role of the private economy may be one area."
The competition between central and state-owned enterprises and private enterprises is not only a competition of financial resources, but also a comprehensive competition of efficiency and effectiveness under a market-oriented economic system. The main experience that the 40 years of reform and opening up has brought to our country is that "we must adhere to the direction of market-oriented and legalized reforms."
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