Who owns an enterprise isn't so important . Privatization shifts the problems off government shoulders, but does not automatically solve them. The new owners often still face heavy debts and glutted markets. For most companies, the main change is sudden financial discipline, as banks hold private companies to standards of risk that they waive for state ones. But when large numbers of jobs are at stake, banks find it difficult to foreclose even on private companies.
China has lots of Chryslers.
Moreover, China's private sector lacks the capital to buy very large companies, even at firesale prices, says Dai Yuanchen, a senior economist at the Chinese Academy of Social Sciences. Some cities have been unable to unload their worst small companies, even for free. Such arguments bolster the central government's instinctive preference for moving slowly on privatization while focusing on better management at the large companies it wants to keep. More than 70,000 party, government and company bureaucrats made pilgrimages to Hangang last year to learn how General Manager Liu Hanzhang turned the mid-sized steel plant into one of China's most profitable. Liu says that even last year, when the slowing economy cut demand for construction steel, Hangang was able to maintain output and sales at better than 2.5 million tons, although lower prices hurt earnings.