How a man’s jailing exposed China’s state-run spin
Nothing that follows is personally approved by David Penberthy or Rupert Murdoch, let alone Kevin Rudd. That’s the beauty of writing for a free media in a democracy.
However, it’s equally ludicrous to suggest that every word that appears in China’s state-owned media every day represents the personal views of Chinese president Hu Jintao.
I don’t know Hu - who really does? - but I’m not sure he would have chosen the noun “perfidy” to describe Rio Tinto’s betrayal of Chinalco a couple of months back. Yet that phrase was quickly interpreted as the semi-official, if colourful, position of China Inc to the collapse of the deal - purely because it ran on the “state-owned” Xinhua news agency.
Likewise, China News Agency’s report last month of a giant iron find in the country’s northeast was accepted as a China Inc negotiating tactic in the increasingly fraught negotiations with Rio Tinto over iron ore prices.
Therein lies one of the China’s biggest problems as it embraces the corporate world - the perception that Beijing exerts an iron grip on every state-owned enterprise, including the media outlets, in the giant nation. It’s the reason why Chinese companies seeking to invest in other countries are, rightly or wrongly, viewed with a special level of suspicion. And it’s the reason why it’s extremely difficult, from the outside, to understand the strange mix of business and politics at play in the case of Rio Tinto’s Stern Hu.
“State owned does not mean state run.” I can’t remember how many times I heard that line during Chinalco’s ultimately doomed romance with Rio Tinto. Chinalco, its advisers, its lawyers, the local embassy, the Chinese press are to be commended for their Labor-like ability to stay “on message”, all spinning in the same direction from the moment the deal was announced in February to the moment it fell apart in May.
The trouble was that too many Australians - in business, politics and on the street - didn’t buy it. And after the events of the past week we now know their scepticism was justified. Regardless of Stern Hu’s guilt or innocence, China’s admission that the accounts and contracts of state-owned but supposedly independent steel companies are “state secrets” has given the game away.
There are 150 or so state-owned enterprises (or SOEs) that report directly to the central Chinese government. Then there are thousands of others that are subsidiaries of those 150, or who report to provincial or municipal governments. Beijing’s influence may be fading as more SOEs forge alliances with overseas partners and list on foreign stock exchanges. But there is still evidence that the various levels of the Chinese government have a hand in the strategy and running of the big state-owned firms beyond the appointment and removal of chairmen, despite China’s pained insistence that state-owned firms are independent, fully fledged commercial beasts. In particular, in times of tension or crisis – say, difficult iron ore negotiations – the hand of government is never far away.
Even if the politburo doesn’t meddle on a day-to-day basis, it’s nonsense to suggest that 100 per cent owners do not exert some kind of “control” over their businesses. You’d almost expect them to. Frank Lowy, Kerry Stokes and Murdoch all “control” their listed companies with significantly smaller stakes. In western markets, you would never expect a 100 per cent business owner to abrogate all say in the running of a business, and simply sit back waiting for the profits and dividends to roll in.
In any case, it’s the perception that is as important as the reality. Given the opaque nature of most Chinese businesses, and their relatively recent emergence on the world stage, it’s too big a leap of faith for most to accept that they are truly independent of a non-democratic government. It’s a barrier they’ll never fully overcome.
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