Wolves Fighting Over Meat — State-Owned Share Circulation and the Game of Eroding and Carving Up State Assets!

2006/3/10 0:11:53

(Written two years ago; widely reprinted, including in some very special places)

Whether covertly or overtly, using every possible means to erode and carve up state assets has constituted the fundamental orientation of various interest groups over the past nearly 20 years. Ultimately, this erosion and carving-up has escalated on a massive scale from physical assets to capital — just as the economy has developed. The earlier corporatization games intentionally or unintentionally paved the way for this, and the subtleties therein need not be elaborated. The current dispute over state-owned share circulation is precisely rooted in this context. As for nonsense like "preserving and increasing the value of state assets" — that's pure drivel. Think about it: if ultimately all these assets are going to be divvied up, what's the point of preserving or increasing their value? As for talk about "preventing the dominant single-shareholder problem of state shares" and "protecting the interests of small and medium investors" — that's even more of a children's game.

State-owned shares are the biggest piece of meat — everyone on earth knows this. Over the past few years, China's best assets have been steadily corporatized and subsequently listed — truly painstaking effort. And effort demands returns. In this grand chorus of state-owned share circulation, all interest groups share one common voice: state-owned shares must circulate. The so-called debates over pricing and methodology are merely a matter of appetite.

Linking state-owned share circulation with erosion and carving-up is hardly absurd — especially when the circulation of state-owned shares is taken for granted. In reality, circulation — and particularly listed circulation — is not a necessary condition for the existence of equity. For example, preferred shares can be non-tradable and don't need to be listed, and state shares share many similarities with preferred shares. As for invoking so-called "international conventions" — that's even more tedious. Back in the Tang Dynasty, Chinese conventions were the international conventions.

In truth, to put it plainly, there aren't really any major problems with China's stock market — no more than anywhere else. The reason problems exist is that behind these so-called problems lie far too many political and economic calculations among various interest groups. With such a huge piece of meat sitting there, how could it not attract a pack of wolves fighting over it? The specific tactics and tricks don't matter — what matters is the ultimate objective. Without seeing this clearly, everything else is drivel.