Head of China’s biggest state firm in Hong Kong urges Beijing to deepen market reforms
- Fu Yuning, chairman of China Resources Group, says competition is necessary for state enterprises to reform themselves and emerge stronger on the global stage
The head of China’s largest and oldest state-owned company in Hong Kong has recommended that the government should let competitive forces play a bigger role in certain market-oriented industries.
The government should continue to dominate industries monopolised by state entities, such as power distribution and transmission, whereas industries that are already populated by private enterprises or quasi-state companies should be allowed to compete.
“Let the fittest survive,” said Fu Yuning, chairman of China Resources Group, a conglomerate with its earliest presence in Hong Kong tracing back to 1938 and owning US$160 billion in assets.
He was speaking at an event on Tuesday organised by Our Hong Kong Foundation, a think tank set up in 2014 by former chief executive Tung Chee-hwa.
Fu’s comment comes at a critical juncture in China’s economic reforms, when state enterprises and private businesses are locked in a collective soul-searching to stake a claim in the world’s second largest economy. At stake are government resources, access to crucial financing, market access, technology and regulatory barriers.
Fu said the central government has changed its attitude towards uncompetitive state firms and will no longer save those losing out to private players or foreign rivals.
“Beijing’s attitude [towards state enterprises] is firm and clear: if you lose, we will just let you collapse and go bankrupt. Competition is necessary for state enterprises to reform themselves and become stronger on the global stage.”
Fu said that history has taught China a lesson that a planned economy fully based on administrative orders does not work, as the economy was on the brink of collapse before 1978 and people lacked food and clothing.
“Reform is still the current consensus among most [top officials] in Beijing,” he said.
“Going ahead, market forces will play a rising role in the economy.”
Fu also said China will not sink into an economic recession or fall into a middle income trap, as its economic growth is not slow compared to other major economies.
Still, the government needs to fix the regional economic disparity, especially northeast China’s net population outflow, and support western China’s development.
China Resources Group owns a dozen listed companies in Hong Kong and China, spanning industries like retail, power, property, cement, gas, health care, and financial services.
As the biggest central government-owned firm in Hong Kong, Fu said the company’s future strategy in the city is to help Hong Kong with its clean energy development, help with the disposal of its growing urban waste with infrastructure support from cities in the Pearl River Delta, and encourage more tech start-ups to settle in Hong Kong to spur innovation.
China Resources Group is working with Hong Kong universities to provide job opportunities in mainland China under the group’s Pacific Coffee Company, Fu added.
