Less is more in China
While we all appreciate the work ethic and discipline of the Chinese nation, one is amazed that Mark Barnes, after his “first visit to China” to attend a recent conference, feels he is sufficiently informed to pen an article on its economy and the efficiency of its state firms (China’s powerful mix of technology and state intervention works, August 1).
He is obviously unaware that one of the keys to China’s economic rise has been its success in reducing the sprawl of its state firms. In the 1980s, the state sector accounted for nearly four-fifths of China’s output. A big factor behind that country’s remarkable growth since then has been the reduction of these state-owned enterprises (SOEs) to the point where they account for less than a fifth of output today.
The reform of China’s SOEs has been a priority for the Xi Jinping administration since 2015. Beijing’s economic plan is to decrease drag on domestic growth by its large firms, which were long plagued by declining performance, rising debt and corruption. The government closed 2,730 SOEs in 2016 and recently pushed ahead with mergers between SOEs in the power, steel and shipping sectors.
The example of the Chinese SOEs is not what SA must follow. We already have our own reality of maladministration by the state after two decades under the ANC government.
Former president Nelson Mandela realised the need to restructure the SOEs he inherited and Thabo Mbeki followed by appointing Jeff Radebe in charge of privatisation. Radebe showed signs of jolting SA’s privatisation programme out of its coma by vowing to bring in outside management and equity partners.
Swissair was to buy a 20% stake in South African Airways for R1.4bn, chunks of the state forestry and arms businesses were also to be sold and the New Zealand postal service was to be hired to clean up the Post Office.
Sadly, nothing came of this since it was a bridge too far for the governing tripartite alliance — drab state ownership with its characteristic inefficiencies was central to its socialist ideology.
Alan Mantle via e-mail