June 14, 2015

“Congress is hearing about the problems rather than the opportunities.”

Financial Times The Chinese government risks “real damage” to the economy if it does not hasten reform of China’s state-owned enterprises and overhaul a debt-fuelled growth model, Hank Paulson has warned. by Tom Mitchell

'For more than two decades the former US Treasury secretary and Goldman Sachs chief has worked closely with pivotal Chinese political figures such as Wang Qishan, currently head of the Chinese Communist party’s anti-graft bureau, and visits Beijing frequently.

'“Until the state-owned enterprises are put on a level and competitive playing field, it’s going to be difficult to have the marketplace work efficiently in some key sectors of the economy,” Mr Paulson told the Financial Times during a visit to the Chinese capital. “Reform of the SOEs has been moving too slowly.”

'At a party conclave in 2013, President Xi Jinping pledged that market forces would play a “decisive role” in the Chinese economy, presaging what appeared to be a renewed drive to reform the state companies that still dominate critical sectors such as energy, finance and telecommunications.

'But two years later there has been little progress on state-sector reform even as economic growth slows to its lowest level in a quarter-century and overall debt levels, now at 250 per cent of gross domestic product, continue to climb.'

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