China Using Stimulus to Buy Up Private Rivals ; Drive Reversing Privatization

Summary

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The Chinese government has been using its massive stimulus of the economy in part to reverse years of privatization and allow large state-owned enterprises to grab back assets in major industries.

While the Obama administration debates to what extent the state should involve itself in health care, banking and auto manufacturing industries, authorities in Beijing have launched "consolidation drives" - putting pressure on independent steel companies and firms in the iron, coal, energy and airline sectors, among others, to sell majority stakes to state-owned rivals, financial analysts here say.

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Extract

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China Using Stimulus to Buy Up Private Rivals ; Drive Reversing Privatization

Under China's $586 billion economic stimulus plan, banks have been directed to lend to support mergers and acquisitions by state- owned enterprises (SOEs). This disproportionate access to funds, as well as overt government backing, h...

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