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An elite group of Communist billionaires whose combined worth is near $700 billion are being accused of holding China back as they profit from bloated state enterprises.
Key points:
- China has just announced its slowest growth rates in 26 years
- State-owned enterprises are seen as a major cause of economic slowdown
- But 100 members of the National People's Congress are billionaires, who benefit from keeping failing state-owned companies open
Findings released by Shanghai-based Hurun Report have shown that top-ranking members of the National People's Congress (NPC) are still enriching themselves at a greater rate than ever before.
It reported that 100 members of the NPC were billionaires, with a combined wealth of nearly $700 billion — about the GDP of Belgium.
"State-owned companies lack vitality, but the leaders keep them open because they belong to them, they own them," respected government critic and historian Zhang Lifan told AM.
"It's wrong and it causes the private companies and the economy to shrink."
The report, which was not made public in China, could be potentially embarrassing for President Xi Jinping, who has made his presidency all about cracking down on corruption and decadence.
'Ticking time bomb' for Chinese economy
On Sunday at the NPC — China's annual parliament, which is open for the next 10 days — Premier Li Keqiang announced the world's second-biggest economy would have the slowest growth rates in 26 years, at 6.5 per cent.
In China, the massive state-owned enterprises that dominate the old economy of steel, coal, and construction are seen as a major cause of the economic slowdown.
Mr Li targeted those enterprises for major reform, but many have questioned whether the Government was serious about fixing the problems.
"We will complete the introduction of corporate systems into state-owned enterprises, deepen reform to establish mixed ownership. We will cut steel and coal production," Mr Li said.
The message has been that the reason behind the reluctance to restructure or close the state-owned enterprises is because it would lead to mass unemployment and social upheaval.
So they have been propped up by massive amounts of debt.
In the last decade, debt doubled to 250 per cent of annual GDP. Economists have called it a time bomb for the Chinese economy, which could lead to a prolonged slow-down, or worse, a meltdown.
While those state-owned industries have long been protected, those in other areas feel neglected.
Mr Zhang said military elites in particular were upset when it was revealed that the military budget would only be increased by a moderate 7 per cent.
"The military as an interest group needs to expand themselves, they need the South China Sea conflict to build up the navy — at present the Chinese navy could not fight a war," Mr Zhang said.
Topics: markets, business-economics-and-finance, foreign-affairs, government-and-politics, china
First posted