Beijing has a $12 billion plan to revamp a state firm. It might not matter

Liu Jin | AFP | Getty Images

An office worker talks on a mobile phone in front of a China Unicom logo, California-based Apple’s partner in China, in Beijing on January 5, 2012.

As Beijing continues to drag its feet, some experts are questioning just how serious the government is about making the necessary, painful changes.

Since 2014, Beijing has selected a handful of firms to pilot mixed ownership reform. But some remain in planning phases, and others “so far have not done very much,” wrote Yanmei Xie, a policy analyst at research firm Gavekal Dragonomics. “The slogan of ‘mixed ownership’ is now being applied to almost any kind of corporate action.” For instance, Harbin Electric set up a joint venture to manufacture gas turbines, and China Eastern Airlines sold stakes to a couple of private firms.

Plus, “mixed ownership” isn’t exactly a new concept: China’s state-owned enterprises (SOEs) have been publicly listing for two decades.

“‘Breakthroughs’ in SOE reform has, so far, been to drive bureaucrats and SOE managers to busy themselves with sustaining the appearance of active reform,” Xie said. “The most popular way to maintain the appearance of reform is to keep reform in a perpetual trial state.”

To complicate the messaging from Beijing, major Hong Kong-listed state-owned enterprises have recently amended their articles of association to clearly state that the Chinese Communist Party is at the core of the company.

CRRC, one of Unicom’s newest investors, changed its central document in June, which now includes lines like “when the board of directors decides on material issues, it shall first listen to the opinions of the party committee of the company.”

China Unicom also announced late Wednesday that first-half net profit spiked 69 percent to 2.42 billion yuan, although revenue dipped 1.5 percent to 138.2 billion yuan, compared to the same period last year.

China Unicom’s ADRs in New York rose 3 percent on Wednesday. It’s Hong Kong-traded shares have been halted since Wednesday, and China United Network, the Shanghai-listed unit, have been suspended since March 31, pending the expected announcement on the ownership change. The company’s Shanghai shares had risen 2.3 percent this year until the halt.