Xi Jinping’s grip on Chinese enterprise gets uncomfortably tight
Xi Jinping Thought in the New Era of Socialism with Chinese Characteristics." A billboard-sized image of Mr Xi, China’s leader, waves to visitors as they enter the lobby. In a nearby factory NHI’s tunnel-boring machines, used for digging metro lines, rise four storeys into the air. The company was founded by the state many decades ago.
Today more than ever it embodies an archetypal image of a state-owned enterprise (SoE). Except that on paper NHI is private. A company called Fangda Group, which is listed in Shenzhen and fully privately owned, took a 47% stake in NHI in 2019, in a rare instance of a private company bailing out a state one.
This made Fangda by far the largest single shareholder. The deal should have privatised NHI. But in China’s corporate sector nothing is so straightforward.
Fangda is not the controlling shareholder. Executives say it does not have one. Some staff in its factories call it a state firm; some say it is private.
When asked about Fangda’s involvement in NHI, a manager says the investment was a “policy decision". An investment adviser says that, for reasons he cannot divulge, investors should approach Fangda itself as if it had the backing of the state—even though the state does not feature in its shareholder register. Fangda’s website is covered in Communist Party imagery such as sickles and hammers.
It describes its corporate mission as “listening to the party and following the party". Chinese business has become much more professional in the past three decades. Its stock market is one of the world’s largest and has been rapidly opening up to Western investors.
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