Govt seeks to re­tain tal­ent needed to over­haul bloated sec­tor, says source

New Straits Times - - Business / World - ZHU WEIQUN

BEI­JING said the per­son, in an ef­fort to hold onto their man­agers.

The dis­cus­sions show the chal­lenges fac­ing Pres­i­dent Xi Jin­ping as he pushes China’s al­most US$20 tril­lion (RM86.8 tril­lion) state sec­tor to em­brace struc­tural re­form while crack­ing down on per­ceived ex­cesses that have fu­elled pub­lic anger at the Com­mu­nist Party.

While the cap saw the earn­ings of China Con­struc­tion Bank Corp chair­man Wang Hongzhang halve to 600,000 yuan (RM377,580) in 2015, the salaries of some over­seas executives have stayed high: JP­Mor­gan Chase & Co’s Jamie Di­mon re­ceived US$28 mil­lion last year. help­ing gen­er­ate the strong­est profit growth in years and adding to a re­fla­tion­ary pulse across the global man­u­fac­tur­ing sec­tor.

But China’s re­fla­tion cy­cle in pro­ducer prices had prob­a­bly peaked, and would trend down fur­ther, which could drag on China’s eco­nomic growth in the sec­ond half of the year, said ANZ se­nior China econ­o­mist Betty

The stakes are high as Xi seeks to prove his stew­ard­ship of the econ­omy ahead of a midterm party lead­er­ship reshuf­fle later this year, which will de­ter­mine the strength of his in­flu­ence go­ing for­ward.

China was set to kick off an­other round of state-en­ter­prise re­form, with as many as 10 com­pa­nies pre­par­ing pro­pos­als to sell stakes in their units, said peo­ple with knowl­edge of the plans.

Still, while China quickly reined in ex­ec­u­tive pay un­der Xi, ef­forts to force con­sol­i­da­tion and in­crease prof­itabil­ity among Wang in Hong Kong.

“The re­cov­ery mo­men­tum in the econ­omy that emerged in the sec­ond half of last year was mainly driven by pro­ducer price in­fla­tion rather than any changes from a fun­da­men­tal per­spec­tive,” said Wang.

The soft April in­fla­tion data, com­bined with slightly slower growth in man­u­fac­tur­ing ac­tiv­ity, state com­pa­nies have pro­gressed slowly.

In­ter­na­tional Mone­tary Fund first deputy man­ag­ing di­rec­tor David Lip­ton last year rec­om­mended China es­tab­lish a spe­cial to group to over­see “un­even” state-en­ter­prise re­forms.

“The de­press­ing pace of the state­sec­tor re­form process re­flects a wider be­lief that the cur­rent SOE­com­pen­sa­tion sys­tem is un­sus­tain­able,” said Shang­hai Univer­sity of Fi­nance and Eco­nom­ics ad­min­is­tra­tion pro­fes­sor Zhu Weiqun. Bloomberg

The de­press­ing pace of the state-sec­tor re­form process re­flects a wider be­lief that the cur­rent SOE-com­pen­sa­tion sys­tem is un­sus­tain­able.

re­in­forces an­a­lysts’ views that China’s eco­nomic ex­pan­sion re­mains solid but is start­ing to mod­er­ate af­ter a sur­pris­ingly strong start to the year.

The con­sumer price in­dex rose 1.2 per cent last month from a year ear­lier, said the sta­tis­tics bu­reau, up from a 0.9 per cent rise in March and slightly above an­a­lysts’ fore­casts. Reuters


China’s con­sumer price in­dex rose 1.2 per cent last month from a year ear­lier.

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