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Reading Summary - State Capitalism Readings.docx

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Western University
Geography 3422A/B
Milford Green

State Capitalism Readings 4/7/2013 2:20:00 PM State Capitalism is Not All the Same  What might be called ―the party state‖ exercises a degree of control over the economy that is unparalleled in the rest of the state- capitalist world o The communist party has cells in most big companies, both private and state-owned o It controls the appointment of captains of industry o It holds meetings that shadow formal board meetings and often trump their decisions o It often gets involved in business planning and works with management to control workers’ pay  The party state exercises power through two institutions: o The State-Owned Assets Supervision and Administration Commission (SASAC)  World’s largest controlling shareholder  The number of companies under its supervision has declined from 198 in 2003 to 121 today  It has been implementing the party’s policy of creating a ―harmonious society‖ by regulating pay  Has been trying to force the SOEs to pay higher dividends to the government o Communist Party’s Organization Department  World’s mightiest human-resources department  It appoints all the senior figures in China Inc. and continuously switches around bosses of big airline, telecoms and oil companies  They care more about pleasing their party bosses than about the global market  The party state reinforces its power by creating ―vertical‖ business groups o Most emerging markets (including Hong Kong) have horizontal business groups:  Companies sprawl into adjacent businesses—telecoms into hotels, shipping into property—in order to exploit their local connections o In China business groups focus on industries  The party state encourages companies to ban together into industry clusters by giving them preferential access to contracts and stock market listings  Also encourages them to create subdivisions like domestic holdings companies – of which SASAC owns 100% of the shares  Russia has seen a remarkable strengthening of the power of the state o The Kremlin has turned scattered companies into national champions o The government has also renational
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