Economics

China’s State Sector: Bigger Than Ever

The giant corporations are deemed essential to the party.

Provide news feedback or report an error

Confidential tip?

Send a tip to our reporters

Site feedback:

Take our Survey

By Dexter Roberts

October 15, 2015 at 7:47 PM UTC

This article is for subscribers only.

This article is part of the October 19, 2015 issue of businessweek.

On Sept. 29, China’s national bureau of statistics said profits of government-owned industrial companies dropped 24.7 percent in the first eight months of the year. The state-owned enterprises performed worse than companies that had foreign investors, which eked out profit growth of 0.7 percent. Private companies did best, recording a 7.3 percent rise.

The poor showing of the SOEs comes as President Xi Jinping is launching his long-awaited state-sector reform. Don’t expect mass shuttering or privatization of China’s more than 100,000 government companies, many of them money losers. Instead, policymakers aim to make “stronger and better” state champions, according to a five-year plan released on Sept. 13 by the State Council and the Communist Party’s Central Committee.