BEIJING - The listing
on overseas stock markets of more than 300 of
China's largest and most lucrative state-owned
companies has sparked hot debate in China's
business circles, the Economic Information Daily
reported on March 13.
Ji Baocheng,
president of the Beijing-based Remin University of
China, started the debate when he claimed that the
"blind rush" to list state-owned companies on
foreign stock markets had caused
a huge
loss of state assets, marginalized the domestic
capital markets and posed a threat to China's
economic security.
According to Ji, about
310 large and medium-sized state-owned companies
had been listed on the Hong Kong, New York and
other overseas stock exchanges by the end of 2005.
He estimated 80% of them were high-performing
companies that held monopolies in their sectors.
Ji claimed that the initial public offerings
(IPOs) undervalued these companies by at least
US$60 billion, as most of the companies had
stripped off their poorly performing assets before
listing overseas.
Ji said this had
produced a situation where the fruits of China's
dynamic economic growth were being harvested by
overseas investors to the exclusion of ordinary
Chinese citizens, who cannot use their savings in
Chinese banks to invest overseas.
Li
Zhenning, chairman of a Shanghai-based investment
company who supports Ji's idea, said the listing
of the state companies should have included all
their assets, which would have provided better
initial stock prices, he said.
Ba Shusong,
a financial analyst with the Development Research
Center, an influential think tank under the State
Council, concurred that the listing of major
state-owned companies on overseas markets had
marginalized the domestic stock markets.
Few of the Chinese companies that are
listed overseas are also listed on China's
markets, which have become the domain of poorly
performing former subsidiaries of the
foreign-listed companies.
But critics of
Ji's ideas said his concerns were unwarranted.
He Qiang, a scholar with the Central
University of Finance and Economics, said China
was a big country with many enterprises, so it was
unlikely that the overseas listed companies would
hollow out the economy.
Listing on
overseas stock markets has enabled the state-owned
companies, exactly as originally intended, to
raise hundreds of millions of dollars in foreign
capital. This has helped them to expand production
facilities both in China and overseas. Some of
them have become multinational giants operating
around the world.
Yi Xianrong, a
researcher with the Chinese Academy of Social
Sciences, said that overseas listing of even a
large number of companies would not threaten a
country's economy. Although these companies were
listed on overseas markets, their core businesses
would remain in China and their profits would flow
there too, Yi said.
