{"id":579,"date":"2012-11-19T16:27:02","date_gmt":"2012-11-19T20:27:02","guid":{"rendered":"http:\/\/jparnell.com\/blog\/?p=579"},"modified":"2012-11-19T16:27:02","modified_gmt":"2012-11-19T20:27:02","slug":"the-soe-problem-in-china","status":"publish","type":"post","link":"https:\/\/battle4liberty.com\/?p=579","title":{"rendered":"The SOE problem in China"},"content":{"rendered":"<p>The <em>Wall Street Journal<\/em> reported last week that Chinese regulators won\u2019t let ships from a Brazilian miner (Vale) deliver iron ore, citing alleged \u201csafety concerns.\u201d The problem is not safety, but the undue influence of state-owned enterprises (SOEs).<\/p>\n<p>In December 2011, the Valemax Berge Everest\u2014a huge ship 50% larger than the next largest global carrier\u2014unloaded a record 350,000 tons of iron ore in the Chinese port of Dailan in only 55 hours. The head of China\u2019s steel industry association praised the feat, noting that the large ships will cut production costs. But the Chinese Shipowners\u2019 Association blasted the Valemax ships as \u201ca matter of monopoly and unfair competition.\u201d The association\u2019s chairman, Wei Jaifu, is also chairman of SOE China Ocean Shipping Company (COSCO), China\u2019s largest shipping line. Shortly thereafter, China\u2019s Transport Ministry effectively banned the ships, citing a 2-foot crack in the ship\u2019s hull. Experts had examined the crack and found no reason for concern, but this didn\u2019t stop the Ministry from intervening.<\/p>\n<p>The problem here is not safety, but protectionism. Most of the shipyard business Vale created went to a private company that lacked government pull. Vale\u2019s huge ships represent a direct threat to COSCO and other firms in shipping and related industries. Those that are state-owned have the necessary connections to raise safety or other concerns to keep the global competitors out. While privately held companies must compete on factors like price and quality, SOEs have another level at their disposal, government intervention.<\/p>\n<p>This type of government-big business collusion is known as crony capitalism in the U.S. But direct government ownership and control is much less common here, with notable exceptions like Amtrak, the US Postal Service, and GM. China has opened its economy to some extent over the past two decades, but SOEs still control banking, telecom and many other sectors of the economy, making it difficult for non-Chinese firms to get a fair shot at the Chinese market.<\/p>\n<p>Politicians often focus on problems with China over exchange rates and intellectual property rights. These are certainly important issues, but they emanate from a deeper notion that Beijing can and should intervene in global business affairs to protect Chinese firms. Until China is willing to privatize its SOEs it will continue to arbitrarily and unfairly deter global competitors seeking to enter the country.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Wall Street Journal reported last week that Chinese regulators won\u2019t let ships from a Brazilian miner (Vale) deliver iron ore, citing alleged \u201csafety concerns.\u201d The problem is not safety, but the undue influence of state-owned enterprises (SOEs). In December 2011, the Valemax Berge Everest\u2014a huge ship 50% larger than the next largest global carrier\u2014unloaded [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/579"}],"collection":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=579"}],"version-history":[{"count":0,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/579\/revisions"}],"wp:attachment":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}