China banking regulator: SOEs are subject to negative subsidies

CGTN
On average, the tax burden of SOEs is about twice the size of private enterprises.
CGTN

China’s state-owned enterprises in general are subject to negative subsidies from the government budget, the head of the country’s banking regulator said on Monday at an online event.

Guo Shuqing, Party chief of the People’s Bank of China and chairman of the China Banking and Insurance Regulatory Commission, made the remarks at the 14th Asian Financial Forum. He said that for a long time, China’s economic and social development has made a positive global impact, and over the past decade, China has contributed 30 percent on average to the global growth.

Yet internationally, there have been some negative remarks about China’s economy, he said, pointing out that misunderstandings obviously exist.

“On average, the tax burden of SOEs is about twice the size of private enterprises. State-owned enterprises actually assume broader social responsibilities. A consequential engine powering the long-term rapid growth of private factories and foreign companies is tax concessions,” Guo elaborated.

He also said banks and SOEs are financially independent of each other and banks’ ownership has long been well diversified. Even banks with relatively large state-owned shares are impossible to transfer benefits to state-owned enterprises.

“China’s banking system boasts the strongest profitability in the world. It’s impossible to grant long-term subsidies to SOEs.”

He said the private sector now accounts for 60 percent of China’s economy while before 1978, there were hardly any, and China’s industrial policies, in general, have been consistent with the market-oriented reforms.

At the end of the 1970s, China encouraged light industries and lifted import restrictions on consumer goods, making China an “expo of brands of all nations.” Since the late 1980s, China’s main policies have been to prevent duplicated constructions resulting from over competition, he added.

The strong competitiveness of Chinese production is not due to a lack of labor protection, Guo said, noting that China’s Constitution and laws provide strong protection for people’s interests and in the past 10 years, the income of Chinese workers has grown rapidly.

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