Can Shenzhen escape the bureaucratic swamp?
Considering the SEZ’s youth and relatively relaxed ground rules, it is rather remarkable that the state sector is as large as it has become: the state controls about half the business assets in the city. But the built-in flaws of government ownership make the sector a disaster waiting to happen. In many cases, it has already happened: out of some 90 publicly listed companies in the city, more than 28 are in financial distress. In one case, a major investment holding company, the Shenzhen Chemical Group, went de facto bankrupt after chronic mismanagement. As a result, the local government sold its controlling stake – for $1.20. Government units don’t want to sell their enterprises because they have a vast vested interest. But this very fact makes effective supervision of state companies almost impossible, which has already caused many disasters. In one case, the former chairman and party boss Lao Derong of Shenzhen Energy, a city-owned utility company, was arrested for stealing more tha
