Should Chinese Government Support State-owned Enterprises?

  In the mirco-economics course yesterday, the teacher asked us if there is any industry should get sepcial support like low tax rate or mandatory high price. The first student said the agriculture industry should be supported because it fulfills the basic need of human to survive. The second student made his point that some weak industry like auto and high tech industry in present China should be protected and supported in intensely competing market. Then the teacher asked us why? No one could provide sufficient proof! "So, you just think they ought to be supported and then they should be supported?" the teacher seemed quite disappointed, I realized there are many things we never thought about and we just simply believe it should be what it's like now, even if it's actually not reasonable or ridiculous.

  Early in the 1960s, Chinese government decided to develop its industry prior to agriculture, farm products are purchased by the  government at extremely low price and invested into industry to develop cities. We never doubt that if it's wrong to do that, the fact is :even the whole country's farmers sacrificed so much for so many years, Chinese industry is still like a sick man, countryside all over the country look like Africa. The conclusion yesterday was : the weaker the industry is, the less you should support or protect it. The reason is that all enterprises are existed for only one single reason: profit. This  nature would motivate the company to improve its productivity, thus survive in the competition. If you protect it, they can get profit without productivity improvements,they keep surviving,but you can't protect it for centuries even you can do that for decades,once those companies lose their protection, they go to bankrupt soon. There is  another strange phenomenon with Chinese protected state-owned enterprises: when the government is no longer capable to support them, they go bankrupt, but no management member lose his/her money, instead, they can full their moneybag and get out of the mess.

  Once the CEO of a very famous corporation said the whole Chinese mainland is a evil, I doubted that, because all what I saw and heard  were reasonable and I was taught to think them as normal, but as I learn more and think more, I believe more that he is right, so many strange and abnormal things happened time and time again, I don't know what would Chairman Mao's face look like if  he see today Chinese society.    

 
 


 
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