It is paring down and restructuring the state sector in ways unimaginable only a few years ago. In the mid-1990s, China had about 300,000 state companies engaged in manufacturing, trade, retailing, finance and services. Although the term is still avoided, privatization is occurring throughout China. The need to pay at least lip service to Marxism once limited the reform options. But faced with growing ranks of companies that can neither repay their debts nor create jobs for a fast-growing workforce, officials at all levels have come to view state ownership not as the crown jewel of socialism, but as a burden that must be lightened to keep the economy growing and the Communist Party in power.
Opposition still exists but is increasingly marginalized.
A recently published speech by retired propaganda chief Deng Liqun, charging privatizers with depriving workers of their rights, received more attention in foreign media than in China. The pace of implementing specific reforms remains linked to the overall health of the economy. When growth slowed last year, for example, the government encouraged banks to loosen credit, running counter to reforms that are intended to tighten loan discipline and clean up bad debts. But Fan Gang, director of the National Economic Research Institute, says it's naive to assume that means bank reforms are dead. But he notes that these measures could make companies more attractive for future sale, something he believes can't be ruled out.