Chapter 13 Get out of the misunderstanding of property right reform

China's reform of state-owned assets began in the early 1980s, basically in sync with the process of reform and opening up.From the initial contracting system and smashing the "three irons", to the later buyout of seniority, "starting from scratch", and then to the retreat of the state and the democratization, and management buyouts (MBO), the reform of state-owned assets and state-owned enterprises has always been at the forefront of public opinion.Where is the necessity of reforming state-owned assets?How to avoid the polarization of the rich and the poor and social injustice in the reform process?

◎Reporter: The reform of state-owned assets in China has been going on for many years. How do you comment on the reform in this field?What are the experiences and lessons learned? Chen Zhiwu: In the past 30 years, the assets and wealth have been state-owned, which has its positive side.Especially compared with India, when social wealth is mainly concentrated in the hands of the state, China can quickly mobilize a large amount of resources, focus on the development of industrial production capacity, build infrastructure, and so on.But India is in a situation where neither side depends. They have neither a developed capital market to mobilize and pool scattered private resources, nor state-owned resources. Therefore, when India wants to rapidly develop infrastructure and speed up the construction of industrial capacity , Their ability to mobilize resources cannot be compared with China.Therefore, the state-owned system has played a positive role in the rapid catch-up of the post-development China.

However, as of today, the democratization reform of the state-owned system cannot be accelerated.why?The reason is simple, we can't always invest in building factories, roads, and buildings while ignoring consumption. Now the industrial capacity is seriously overcapacitated.The bottleneck hindering economic growth now is insufficient consumption growth, not insufficient industrial investment.In the past, we always equated "production and construction" with economic development, but now we have to change it. Consumption is also an act of economic development, and even more importantly, it promotes economic development.For an agricultural society that was always on the verge of food and clothing, low production capacity has always been the bottleneck of economic development. The concept that "economic development equals expanding production and construction" is understandable.However, today, thanks to the industrial revolution, production capacity is no longer a problem. The key is where to find more consumer demand to meet the expansion of production capacity?

Therefore, in the past, we talked about why state-owned enterprises should be privatized from the perspective of efficiency, but today, we must consider from the perspective of whether wealth is state-owned or private-owned, who can promote the growth of domestic consumption demand, and who can promote the transformation of the economic model. The question of the direction of reform in the next step. In a society where productive assets are owned by the people, ordinary people can share the benefits of economic growth through two channels, one is through the increase in labor wages, and the other is through property appreciation.This is why although the GDP growth rate of the United States in 1998-1999 was only about 4%, the overall economy and society were prosperous.However, in China, society can experience prosperity only when the GDP growth rate exceeds 9%, because China is dominated by state-owned assets. In this way, ordinary people can only share the benefits of economic growth through wage increases, while asset appreciation is mainly caused by The country has it all.The state ownership of assets makes it difficult for ordinary people to feel the benefits of asset appreciation.

Therefore, the state-owned economy often has insufficient consumption demand and can only rely on investment to stimulate growth.In fact, the state-owned economy also prefers to rely on investment to promote growth, as was the case in the Soviet Union and planned economy China in the past.As long as the private economy has relatively low economic growth, it can drive a lot of domestic demand growth. The report of the 17th National Congress of the Communist Party of China mentioned that it is necessary to increase the property income of ordinary people, and this kind of policy will be very good.However, under the state-owned system, ordinary people have no property rights basis to obtain property income.Therefore, the democratization reform is a fundamental and necessary step to realize the goals set by the 17th National Congress of the Communist Party of China.

◎Reporter: So where is the necessity? Chen Zhiwu: It shows that China can no longer rely on investment, export markets, and expansion of industrial production capacity to provide impetus for further growth.For economic transformation, one of the core reforms is to implement the owners of state-owned assets, invite out the "owners" in the system of ownership by the whole people, and let property rights truly be implemented on specific individuals.That is to say, the state-owned property rights are distributed to 1.3 billion citizens in the form of shares in the "National Equity Fund". In this way, 1.3 billion citizens can participate in the dividends of state-owned enterprises through fund shares and directly enjoy the appreciation of state-owned assets.Only after the democratization reform, the consumption growth of the Chinese people will be more vigorous, and the further growth of domestic demand will have a specific property base.

◎Reporter: In recent years, the reform of retreating from the state and advancing the private sector has not created many powerful private enterprises. On the contrary, the strength of state-owned monopoly enterprises has continued to grow. What is the reason for this phenomenon? Chen Zhiwu: Of course there are many reasons.First, China's entry into the WTO at the end of 2001 has brought about a round of high growth for China's economy. Whether it is a state-owned enterprise, a private enterprise, or a foreign enterprise, they can share some of the WTO dividends. Therefore, the profits of state-owned enterprises have also increased in recent years.However, many people did not see such reasons behind the profits of state-owned enterprises in recent years, but concluded that the nature of the ownership of enterprises has no effect on efficiency. Therefore, the "retirement of the state and the advancement of the people" stopped, and then changed to "the second nationalization" ".Second, in terms of industry access, financing opportunities, financing costs, and regulatory approval framework, there are many aspects of discrimination against private enterprises and preferential treatment for state-owned enterprises.For example, the recent macro-control policy aimed at controlling the total amount of loans, which resulted in the protection of state-owned enterprises and forced many private enterprises to close because they could not obtain funds.In addition, in the administrative, legal and judicial process, since the shareholders of state-owned enterprises are the state, they can always receive special protection, which directly constitutes discrimination against private enterprises and sacrifices the rights of private enterprises.Under these circumstances, private enterprises certainly cannot compete fairly with state-owned enterprises.

◎Reporter: When it comes to distributing state-owned assets to the whole people, many people will think of the privatization of Russia and Eastern European countries, as well as the resulting oligarchs and increased unemployment.In the minds of many Chinese, privatization is synonymous with the polarization of the rich and the poor and social injustice.What is your opinion on this? Chen Zhiwu: I have traveled through so many countries, and what I have seen is just the opposite. On the contrary, the social injustice brought about by public ownership and unchecked power is the most prominent.The outcome of Russia is precisely the result of incomplete privatization and unrestricted power. From 1992 to 1994, the initial privatization in Russia was that the government distributed privatization coupons with a denomination of 10,000 rubles to each citizen. The vouchers can be used to buy company stocks or invest in investment funds, and can also be transferred or sold for a fee. Tens of millions of privatization coupons Russians have become stockholders.Afterwards, due to inflation, some people sold the privatization bonds for their livelihood, and the rich and managers took the opportunity to buy them cheaply, and the privatization bonds were concentrated in their hands.But the proportion of this part is not very large, and because the Russians at that time had no experience with securities, they thought these things were of little value and worthless.

The reason why Russia’s privatization has been widely criticized is that during the privatization process from 1992 to 1994, about 40% of the equity of many key state-owned enterprises continued to be owned by the government. Therefore, after that, these enterprises continued to be essentially state-controlled enterprises , the loss is still serious.By 1996, these corporate financial crises reappeared. At that time, Russia was facing a presidential election, and Yeltsin was going to be re-elected. At this time, the economic situation was not good, enterprises were generally not operating well, and the government's fiscal revenue was very small.The solution that the government thinks of is "debt-for-equity exchange," that is, to let some individuals lend to state-owned enterprises, and at the same time, state-owned shares are used as guarantees: if the company cannot repay the loan within a few years, the individual lending will naturally take over the state-owned shares and become a state-owned enterprise. the owner of the business.In actual operation, although there are biddings, internal transactions are serious.After lending money to enterprises, a small number of people conspired with the enterprise managers to cause the enterprises to run poorly and fail to repay the loans, which effectively forced a large number of state-owned enterprises to fall into private hands at extremely low prices, thus creating some wealth oligarchs.This approach is a bit like the MBO of state-owned enterprises in China a few years ago.

Therefore, the emergence of wealth oligarchs in Russia was not caused by privatization bonds, but by the subsequent "debt-for-equity swap" and incomplete privatization at the beginning. The situation in the Czech Republic is different.The Czech Republic also issues privatization vouchers to distribute all state-owned assets equally to citizens. Citizens can directly purchase shares in public enterprises, or invest in privatization vouchers to investment funds and become fund shareholders.Funds use privatization certificates to purchase company shares, obtain investment returns, and then distribute dividends to citizens who invest in privatization certificates.The investment fund has become the major shareholder of the company, which solves the situation that the company's equity is too scattered.The privatization of the Czech Republic is very thorough, leaving no state-owned shares, and there is no sequelae such as "debt-for-equity exchange".In the Czech Republic, privatization did not create an oligarch like Russia.After the completion of the privatization transition, the Czech Republic became the second Eastern European country to recover economically after Poland.

It can be seen from the above that people's panic about privatization and obsession with public ownership are not supported by much fact.We know that none of the developed and wealthy countries have become rich by relying on state ownership. Today's developed countries in the world are all based on private ownership.Russia's problems are not caused by privatization bonds either.China's current public ownership system is actually owned by the government. Public ownership has become an excuse for a small number of people to control social resources, conduct power-for-money transactions, and blatantly carve up state-owned assets.Under this system, the people are the owners in the name, and in fact they cannot exercise the rights of the owners at all. They neither have the right to speak and supervise the use, management and distribution of state-owned assets, nor can they benefit from the value-added of state-owned assets. .To this day, there is still not even a list of state-owned assets, let alone the financial statements of state-owned enterprises that have been audited by independent auditing companies for ordinary people to see. Therefore, what I want to promote is not privatization in the traditional sense, but to implement the identity of "all people" in the "ownership by the whole people" of state-owned enterprises as property owners.In the past, the owner in "ownership by the whole people" was absent, or virtual.Now, we should inject the shares of state-owned assets into the "National Rights and Interest Funds" one by one, or change the name of the State-owned Assets Supervision and Administration Commission to "National Rights and Interests Funds", and then distribute these fund shares equally to the 1.3 billion citizens so that they can understand Become the owner of these state-owned assets and allow them to freely trade these "National Equity Fund" shares. This is actually to realize the true "ownership by the whole people" and make everyone a property owner.This is democratization. China is going to engage in private ownership today, and the conditions are relatively more mature than those in Russia and the Czech Republic.The common people in Russia and the Czech Republic had no understanding of the value of stocks, bonds, and fund shares at that time, nor did they have any practical experience in operation.I worked at the National University of Defense Technology in 1986. At that time, the school forced teachers to buy treasury bills every month, and part of the salary was directly paid in the form of treasury bills.I didn't know anything about securities at the time. I thought it was worthless and equivalent to waste paper, so I gave it to others.My understanding and attitude towards treasury bonds at that time was probably similar to that of people in Russia and the Czech Republic towards privatization bonds.But now, the situation in China is different. All Chinese people invest in stocks, with more than 100 million fund accounts. Everyone has a relatively full understanding of securities such as stocks and funds. Although there are many problems in market supervision, the regulatory framework is already in place. Nearly 18 years of experience.To engage in privatization, the Chinese are much more experienced than the Russians and Eastern Europeans at the time. At least there will be no situation of exchanging privatization fund shares for alcohol. ◎Reporter: At present, if China carries out large-scale privatization, corruption and power-for-money transactions will definitely occur. How to solve this problem?Is there a sequence problem between political reform and privatization? Chen Zhiwu: In a society that lacks democratic supervision of power, it is more necessary to democratize it, so that power without constraints has no corrupt asset base.Because democratization is not only an economic issue, it can also have the effect of restricting power politically.State ownership makes people subordinate to power, which has been discussed in detail in Hayek's "The Road to Serfdom" and Popper's "Development Society and Its Enemies".On the other hand, the ownership by the people is conducive to the establishment of a power restriction system, because most people have property, especially bourgeois wealth, which will increase the size of the middle class, people will have a stronger desire to realize the value of their property, and their awareness of rights will increase. Supervise and question power more confidently.Therefore, under the premise that it is difficult to make a fundamental breakthrough in the current political system reform, carrying out the democratization reform may improve China's democracy from another angle. ◎Reporter: The Club of Rome published a book "Limitations of Privatization" a few years ago, arguing that privatization is a good thing, but it has limitations, and the promotion of privatization should seek advantages and avoid disadvantages.In your opinion, what are the boundaries and limitations of privatization?Is the higher the degree of privatization the better? Chen Zhiwu: For a country, where the boundary between private and public ownership should be depends on the following factors: The first is the institutional framework of this country. Is there a constitutional democracy?Is the judiciary independent?The higher the degree of realization of these aspects, the higher the degree of support for public ownership, the lower the commission-agent costs brought about by the state-owned system, and the wider the boundaries of public ownership.Only when citizens have sufficient supervisory power over the possession, use, and disposal of state-owned assets can the principal-agent cost be reduced.This puts forward high demands on the degree of democratization of politics.The history of the Soviet Union and Eastern Europe has proved that without constitutional democracy and judicial independence, what is the so-called public ownership? The second is the size of the population.Small countries such as Singapore, Sweden, and Denmark can engage in public ownership, because the population of these societies is only a few million, and the degree of homogeneity is high, so that the degree of information asymmetry between managers and people is relatively low, reducing the process of principal-agent moral hazard.In a large country like China with a population of 1.3 billion, the complexity of state-owned enterprise asset management is beyond people's imagination, and the cost of entrusting agents far outweighs any benefits that public ownership can bring.Of course, one way is to establish a huge bureaucratic system to manage the public assets of 1.3 billion people. However, the bureaucratic system has a large number of people and has an advantage in information and resources. Not only will the moral hazard be surprisingly high, but it will also put ordinary people at a disadvantage in the game .Therefore, it may be feasible for China to implement public ownership at the level of communities, towns, and counties, but it is almost impossible to achieve successful public ownership nationwide. Once again, it is related to the degree of development and stage of development of a country.As mentioned earlier, in the period when China needed high-speed industrialization and the establishment of a huge infrastructure network, the economy was driven by investment. At that time, the proportion of the state-owned economy could be higher, which was conducive to the concentrated investment of resources and rapid industrialization.However, once industrialization matures, or even overcapacity occurs, the proportion of state-owned assets is too high, which will cut off the wealth effect that economic growth can have on society and hinder the growth of domestic consumption, which is not conducive to the transformation of the economic model from investment-driven to consumption-driven. .Therefore, in an industrialized society, the proportion of the state-owned economy must be reduced, and its boundaries should be narrowed, otherwise, further development will be hindered. ◎Reporter: The privatization of finance, oil, national defense and other industries will also involve issues of national security and the strategy of oil-producing countries, but without privatization, it is difficult to improve efficiency. How to solve this contradiction? Chen Zhiwu: I don't see how financial, oil, national defense and other industries are in private hands, which will endanger national security.Judging from the current situation in China, it is even less safe for these industries to be monopolized by state-owned enterprises.Take the oil industry as an example, because monopoly life is so easy, relevant companies have no motivation to carry out technological innovation, and have no motivation to find alternative energy sources. In the long run, this will make the future of the national economy and people's livelihood even more insecure.In human history, the losses caused by laziness and lack of progress are far greater than any tangible losses, but people cannot see it. In the construction machinery industry, Sany Heavy Industry and Zoomlion Heavy Industry are all privately owned and operated enterprises. The owners of these enterprises are private individuals. Do they threaten national security?On the contrary, it is the continuous innovation of these enterprises that makes the international competitiveness of China's construction machinery industry more and more unstoppable. In the United States, industries directly related to national security, such as national defense, are also completely in the hands of private companies.The defense procurement of the United States, from fighter jets to Patriot missiles, is made by the government to Boeing, Lockheed?For those purchased by private companies such as Martin, and even those who fought in Iraq, private security companies contracted many of the combat tasks that were originally done by the army.I have never heard of these companies threatening the national security of the United States.Driven by profit, private enterprises are more efficient and better managed, which is true of any industry. ◎Reporter: In recent months, there have been some worrying changes in the Chinese economy.Against this background, what is the significance and urgency of promoting the reform of privatization? Chen Zhiwu: Recently, China's economy has encountered unfavorable conditions such as overcapacity and tight exports. The growth rate of many economic indicators has slowed down. Everyone is worried about economic problems.But in fact, although the economic growth rate this year will not reach double digits, it is still expected to be above 8%. This is still a very high growth rate, but why are everyone so nervous?This is because the GDP growth felt by the common people and the actual GDP growth are two different things. The latter will be discounted to the common people, and the common people cannot enjoy the fruits of economic development to the same extent. why?Because China's economic growth is mainly productive growth, it relies too much on investment in industry and infrastructure, and most of the social wealth is in the hands of the state. The people do not have much asset income and live mainly or completely on wages.Under the state-owned system, the private sector does not own too many assets, and the common people lack asset income, so their consumption demand is of course suppressed, and economic growth will not produce much wealth effect. This is a deformed resource allocation structure. With the development of human society today, production is no longer a problem, but who will buy the manufactured things is the bottleneck of growth.In the past, things made in China were sold to other countries, especially Western developed countries, but recently, due to the subprime mortgage crisis and other reasons, external orders have decreased, and the problem of insufficient domestic demand has become particularly prominent.And even without the subprime mortgage crisis, since most people in the world have already used Chinese goods, it will be difficult to expand significantly in the future.Therefore, the transformation of China's economy from export-oriented to domestic demand is imminent, and to realize this transformation, the current ownership structure must be changed, and the part of the property rights in the state-owned economy that belongs to everyone should be distributed to individuals, so that everyone can enjoy it to the same extent. results of economic development. ◎Reporter: Since this year, you have repeatedly mentioned the importance of democratization.So at the operational level, what are your ideas on how to nationalize state-owned assets? Chen Zhiwu: The reform model of one share per capita that I envision is fair and transparent, and can eliminate power-for-money transactions to the greatest extent.The specific method is: about 150 central enterprises form a national equity fund at the national level, and 31 provinces, autonomous regions, and municipalities directly under the Central Government also each establish a national equity fund based on the property rights of local state-owned enterprises, including state-owned assets in each jurisdiction.In this way, there are 32 national equity funds existing in the whole country at the same time.Then, all citizens are given the same share of national rights certificates, and the citizens decide voluntarily how much they are willing to spend and which national rights fund shares they are willing to buy.Of course, there may be many people who choose to buy shares of civil rights funds in developed regions such as the whole country, Guangdong, and Shanghai, and the stock prices of national rights funds in these places will rise.This will create a competitive situation, and the National Equity Fund with a low price will find ways to improve its operating level and efficiency. At the end of 2006, the total net assets of state-owned enterprises were about 13 trillion yuan, and the per capita was about 10,000 yuan. If the current GDP growth rate is 10%, each person will have a property income of 1,000 yuan per year, and a family of three will increase The cash flow of about 3,000 yuan will certainly be of great help to stimulating domestic demand. ◎Reporter: How has people reacted to your vision so far?Do you think it is possible for your vision to become a reality? Chen Zhiwu: The response is very good.The point is that people have finally seen that in the past, ordinary people basically only had the single channel of wages to share the benefits of economic development. Now it is time to pass the privatization reform and let go of the channel of asset appreciation, which is the channel to share the benefits of economic growth. In addition, many friends also realized that the state-owned economy must rely on investment and export-driven growth, and if it wants to rely on domestic consumption to drive growth, it must first democratize the property rights of assets, because assets are state-owned. Fundamentally curb household consumption.After seeing these influences of the system, the democratization reform is only a choice of timing.