Wen Continues Focus On Northeast China Investment
In Europe
During his visit to Europe, Chinese premier Wen Jiabao
has continued his focus on investment and development
in northeast China. Northeast China has been home to China's
heavy industries, many of which are poorly performing
state-owned enterprises.
In Britain, following his meeting with British prime
minister Tony Blair, Wen attended a dedication of a new
business website, UK-China
Business Net, which is designed to promote business
ties between the two countries. The ceremony was held
during the "Seminar on Invigorating China's Northeast
Industrial Base", which was jointly organized by
the China
Council for the Promotion of International Trade and
the China-Britain
Business Council.
Northeast China, formerly known as Manchuria, is home
to China's heavy industries, as has been particularly
hard hit during the recent round of privatization, which
has resulted in a large number of layoffs of factory workers.
Without capital injections from China's state-owned banks,
virtually none of them are profitable. The result has
been high unemployment, which in some cities, has approached
nearly 50%. Many investment bankers from Hong Kong and
New York are now in China, offering different methods
of monetizing the assets from these state-owned enterprises
throughout China.
The Chinese central government has been wary of most
of the proposed remedies, afraid that there will be a
rerun in China of the asset stripping which occured in
Russia in the nineties. Their main concern is that there
would be high unemployment, with wealth concentrated only
in the hands of a few new oligarchs. Fearing social instability
caused by the high unemployment, the Chinese government
has moved aggressively to encourage foreign investment
in these businesses. At every stop of his current European
tour, Wen has spoken about the need for investment in
northeast China by European businesses.
So far, the only large company in northeast China which
has attracted significant foreign investment has been
Harbin
Brewery , which has become an object of contention
between SABMiller and Anheuser Busch. Anheuser Busch already
holds a minority stake in Tsingtao Brewery which makes
China's only international beer brand, Tsingtao Beer.
This situation highlights the shortage of experienced
business persons who can take formerly unprofitable businesses,
and turn them into profitable businesses which can make
products which are welcome in the market, both in China
and overseas.
This is a problem which exists not only in China, but
worldwide.
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