11 China’s recent share sales in large central enterprises in telecoms and energy made it the top revenue earner among all developing countries after 2000 (Box 2).

# **Box 2:  Overview of SOE Reform in China**

Reform of China’s state-owned enterprises (SOEs) has been a major aim since urban reforms began in 1984. Although there were calls to privatize the SOEs, the Government’s initial emphasis was on boosting performance by changing the internal governance of SOEs and improving the market environment in which they operated. By the late 1980s the Government had decided that the best way to reform small SOEs was to lease them out, with the manager paying the state a fixed proportion of the firm’s profit. Incorporation was another significant measure that led to privatization.

Since the start of the present century the reform of China’s state enterprise sector has accelerated and acquired some qualitatively new features. First, the scale of change has expanded to affect almost every kind of SOE – small, medium, large, and very big; under both central and local control. Second, ownership diversification has been so extensive that the wholly state-owned non-financial company has become an endangered species in China. Third, the range of restructuring mechanisms being used has expanded dramatically to include bankruptcies, liquidations, listings and de-listings, debt-for-equity swaps, sales to private parties (domestic and foreign), auctioning of state firms and their assets or liabilities, standard corporate governance techniques, and so on. Finally, mass layoffs – unheard off just four or five years ago--have become a widespread phenomenon.

Some restructuring of SOEs is occurring through the four state-owned asset management companies (AMCs) that have been created to take more than $170 billion in nonperforming loans from the big four state-owned banks. As part of their program, 580 SOEs, accounting for about 40 percent of the state sector’s assets and sales, have been selected for debt-equity swaps. The AMCs have emerged as important, and often majority, shareholders in a number of large SOEs.

In the strategically important infrastructure and energy sectors where the regulatory framework is still evolving, monopolies have been broken and competition has been introduced. Many companies have been corporatized, and some have been listed on local and international exchanges. China has nurtured over 20 giant corporations and conglomerates that have proven competitive in the international market. Some of these companies are laying off tens—or even hundreds—of thousands of employees, not because they are in financial distress (some of them are hugely profitable) but because they wish to position themselves as important international players. As of 2002 the top 12 Chinese transnational corporations, mainly SOEs, controlled over $30 billion in foreign assets and had some 20,000 foreign employees and $33 billion in foreign sales.

## _Source: Garnaut et al 2005_

# _Middle East and North Africa_

17. The Middle East and North Africa region raised $19 billion or 5 percent of total proceeds from 310 transactions. In the 1990s, activity was concentrated in two countries: Egypt (with 50 percent of regional proceeds) and Morocco (nearly 40 percent). Transactions in both countries were mainly in manufacturing, although Morocco’s program was more diversified with transactions in energy (oil refining) and banking. In 2000, Maroc Telecom was the first telecoms privatization in the region, raising $1.4 billion. This transaction together with the partial sale of Jordan telecoms ($508 million) later in that year and the partial sale in 2003