According to a source close to top Beijing’s officials, after the 20th National Congress, the Chinese Communist Party (CCP) plans to centralize various sectors of China through the implementation of “one enterprise for one industry,” to influence and dominate the world.
On September 1, Weng Jiming, deputy director of the State Asset Supervision and Administration Commission (SASAC), spoke at a special meeting on the “reform” of state-owned companies. He said that it is necessary to strengthen the merger of enterprises in each industry into state-owned enterprises managed by the Chinese Communist Party. In this way, the fragmented resources from businesses will be concentrated, which is convenient for administration and (also) facilitates the highest efficiency.
State-owned enterprises under one central management are those that are financed by the State Council or by SASAC. They are directly managed by the CCP or delegated to ministries and central committees to control.
The phrase “one business per industry” refers to the highly centralized, consolidation of businesses, to achieve a monopoly position in industries.
Actually, this strategy is not so new. Subsidizing and giving important incentives to local production has long been China’s official policy. In 2006, the National Medium- and Long-Term Plan set out to make China a “world leader” in science and technology with the following tactics:
1. Provide direct subsidies: The government will increase direct support for Chinese industries through state funding, low-interest loans, tax breaks, and other subsidies through the 2025 plan. The exact amount is unclear, but some outside estimates put the number in the hundreds of billions of dollars.
2. Foreign investment and acquisition: Chinese companies, both private and state-owned, have been encouraged to invest in foreign companies, especially semiconductor companies, to gain access to cutting-edge technology. The value of Chinese acquisitions in the United States peaked in 2016 at more than $45 billion.
3. Forced Transfer Agreements: Foreign companies complain that in order to invest or do business in China, they must enter into joint ventures with Chinese companies under terms that require them to share intellectual property and advanced technological know-how. Council of Foreign Relations senior member Brad W. Setser explained that China has used its joint venture rules to acquire outside technologies, from high-speed rail to electric vehicle batteries. Some rules regarding automakers have since eased.
Chinese authorities often incite anti-Western sentiment and tell the Chinese people that the West is authoritarian because it has “discourse power” – the power to reshape values and norms around the world. The CCP is clearly pursuing that power when it proposes the creation of giant monopolies.
Keystone enterprises, Keystone projects
SASAC released the latest list of central state-owned enterprises on July 25, including 98 companies. thirty-sixth on the list is China Mineral Resources Corporation, with a registered capital of 20 billion yuan (about $2.92 billion), just behind China Baowu Steel Group in the mineral industry.
China’s Baowu Steel also officially transformed into a state-owned investment company in June, stating that it aims to “become a global leader in the steel and advanced materials industry.”
According to China Steel News, Baowu has attracted steel enterprises such as Bastel, Shaogang, Masteel, TISCO, Shigang and Kunsteel, resulting in total crude steel output exceeding 100 million tons, ranking first among global steel companies in terms of crude steel production.
Mike Sun, a North American investment strategist and China expert, told The Epoch Times, “China Baowu is now truly the world leader [in steel industry].”
Sun said: “China has at least five of the top ten steel companies in the world—that’s the direction the CCP wants to go and the goal it is pursuing. It is the result of the three-year restructuring of state-owned enterprises from 2020 to 2022.”
He believes that “one enterprise per industry” does not mean that there is only one central enterprise per industry; instead, a central state-owned enterprise to an achieve absolute monopoly in the industry.
He added: “The CCP’s proposal to break the geographical restriction is to not allow local governments to have local protection, which is tantamount to taking away the pie from private enterprises and local governments.” This is a solution to centralize more power to the CCP.
Mergers and acquisitions in China’s steel industry began in the CCP’s final five-year plan (2015-2020). The main goals set for the Development of the Materials Industry in the CCP’s five-year continuous plan (2021-2025) include the formation of “more than five world-class advanced manufacturing clusters in the field of raw materials.”
Sun said, “The CCP’s ambition goes way beyond making these companies national leaders.” He added, “Its goal following the 20th National Congress is to enable these gigantic monopolies to have absolute influence on the world.”
The newly established China Mineral Resources Corporation is part of the CCP’s Keystone Project. This project will supply and price iron ore through the development of new iron ore mines in China along with the development of new sources of iron ore and scrap steel overseas. China’s major steel companies have all participated in this project.
Ambition for global domination
In January, the Securities Times, a Chinese media, quoted a Chinese steel industry executive saying, “If we can reach 60 percent concentration by merging the top 10 steel companies, we will be able to enhance our bargaining power when negotiating with the [international] iron ore giants in the future.”
Sun told The Epoch Times that currently, the CCP’s central state-owned enterprises, with the advantage of resources, have extremely extensive access.
For example, China’s Minmetals Group is involved in the real estate business and asset management. These central state-owned enterprises are now required to return to their core businesses and become “large but centralized” instead. In other words, they have to become bigger and more powerful, to monopolize the country, control all the industries in their hands, as well as compete with foreign enterprises. Since Western countries are mostly private enterprises, the CCP’s central enterprises have their own advantages, Sun said.
Over the past few years, the CCP has set up a number of “giant” central enterprises, such as China Logistics Group Co., which was established in 2021.
This central enterprise includes China Railway Materials Group and four well-known companies formerly under China Chengtong Holdings Group in logistics. Their investors are also industry giants such as China Eastern Airlines Group, China Ocean Shipping Group, and China Merchants Group.
Official reports said that newly established China Logistics has more than 600 branches, 120 railway lines, 42 futures warehouses, and nearly 3 million professional off-road trucks. Its network of operations is widely distributed over 30 provinces in China and on five continents. Such scale certainly gives it a clear competitive advantage in the international logistics market.
In addition, on May 8, 2021, China Sinochem Group Corporation and China National Chemical Corporation merged to form China Sinochem Holdings Group. With total assets of more than 1 trillion yuan (about $157 billion), it is the largest synthetic chemical company in the world.