China's State-Owned Enterprises: their history and the challenges of competitive neutrality.

Abstract

After the rise of China as a global economic power, Chinese State-Owned Enterprises (SOEs) have become a topic of substantial debate all over the world and they have gained always more attention. These enterprises, owned and operated by the Chinese government, not only are extremely important for China’s economic growth and development, but they also have a significant influence on international markets. SOEs have established a dominant position in China's strategic and pillar industries, such as petroleum and petrochemical, electric power and grid, telecommunications, automobiles, and iron and steel, and their role in shaping Chinese economy is unmatched. However, there are quite a few issues regarding their lack of transparency and unfair competition. The main reason is because the rapid rise of SOEs can be primarily attributed to the extensive preferential treatment they have received over the years by the Chinese government, including privileged market access, access to bank loans at below-market interest rates, advantageous tax treatment, allocation of land use rights, and dedicated funds for technological development. For this reason, their entry in the WTO caused a general discontent among member countries, especially the United States, which requested many obligations to be imposed on China, many of which concerned its SOEs. The main objective of this work is to understand SOE’s domestic and international role, how they evolved during the years and how they should be improved in the future, in order to cooperate with other enterprises engaging in a fair and transparent competition.