| | | The SOE ( state owned enterprises ) have had the implicit guarantee that the Chinese government will backstop them and not let them go in bankruptcy. This is similar to the implicit guarantee in the US of Fannie Mae and Freddie Mac debt.
As the Chinese state capitalist economy develops , the government is sorting out how it is going to handle the the various aspects of a free market economy, including the currency, the use of government backing of debt and an array of related issues.
China is a big global player so they will continue to impact the global economy in alternating positive and negative ways
China has a state capitalist economy, i.e. the state maintains ultimate authority (note I didn't say control) over basically all aspects of the economy, at different levels -- At the "commanding heights" of elements perceived by the Communist Party to be strategically important (i.e. energy, finance, transportation), the state owns and directly controls most large to medium-size enterprises. In other areas (land development, communication, media) the state owns key parts, and directly controls the rest. In other areas (consumer commerce, for instance), the state allows relatively uncontrolled development.
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