May 31, 2019 / 1:00 AM / 4 months ago

China's SOE regulator calls for continued overseas expansion despite trade war: CSJ

SHANGHAI (Reuters) - A top Chinese policymaker has called for state-owned enterprises (SOEs) to continue their overseas expansion despite the intensifying trade dispute with the United States and increasing scrutiny of Chinese firms abroad.

Weng Jieming, deputy director at China’s State-owned Assets Supervision and Administration Commission, said in an interview with China Securities Journal that the regualtor would support SOE expansion efforts via Beijing’s Belt-and-Road initiative.

“At present, 85 central enterprises have implemented about 3,000 projects along the Belt and Road,” Weng said in response to a question about how the trade war would affect the country’s SOEs.

“We will continue to support central enterprises in the areas of infrastructure construction, equipment manufacturing and capacity cooperation, scientific and technological innovation, and also strengthen cooperation with governments and enterprises.”

Weng’s comments come as overseas governments increasingly speak out against China’s business operations in their countries, arguing that Beijing subsidises such firms, causing market distortions.

Weng added that China’s SOEs are “independent market players” and downplayed the role of government subsidies in maintaining their operations.

“It can be said that Chinese laws and regulations do not specifically provide for subsidies for state-owned enterprises, and central enterprises do not have subsidies based on ownership,” Weng said.

Washington argues that China indirectly subsidises many of its industries through support at the local, regional and provincial level of government, below the central government level and as such outside the direct scrutiny of the World Trade Organization.

Such subsidies remain a contentious issue as they are a central part of China’s economic policy. Beijing grants subsidies and tax breaks to state-owned firms and to sectors deemed strategic for the country’s long-term development.

But analysts and trade groups say SOEs in China enjoy not only explicit subsidies but also other benefits such as implicit government guarantees for debt and lower interest rates for bank loans.

Reporting by Josh Horwitz; Additional reporting by Ryan Woo in BEIJING; Editing by Sam Holmes

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