PetroChina Valued at $1 Trillion After IPO
RENEE MONTAGNE, Host:
NPR's Anthony Kuhn reports from Beijing.
ANTHONY KUHN: But Fraser Howie, the author of "Privatizing China," says that it's misleading to compare these firms to their counterparts in other countries. These Chinese firms are all state-owned, and they all enjoy government-granted monopolies in their industries.
FRASER HOWIE: If you compared it with your traditional company, like your ExxonMobil, you can't compare these companies or just look at their numbers and make a genuine comparison. Because actually what they're made of and how they've been all put together - they're very, very different sort of beasts, entirely.
KUHN: Howie points out that while China may have five companies in the world's top 10 in terms of market value, it has only two in the top 50 in terms of sales. But this is not to say that these companies are insignificant.
HOWIE: Well, you can certainly be taking some of this with a pinch of salt, and you can make excuses or reasons why their numbers are so large. I think the danger, as well, is to then also dismiss it and somebody say it doesn't matter.
KUHN: But China's government keeps most of its state-owned firm shares off the markets. Yesterday, PetroChina listed less than 2 percent of its shares. Huang Yiping, senior economist with Citigroup in Hong Kong, explains why the government doesn't float more shares.
HUANG YIPING: The government still want to maintain state ownership.
KUHN: But bank interest rates aren't even keeping pace with inflation and China's capital controls mean that its citizens are barred from buying stocks overseas. Huang points out that luckily for China, its stock markets are still young, and they account for less economic activity than other sectors, such as manufacturing and trade.
YIPING: It still is a relatively small portion of the economy and the other part of the economy remains pretty robust, for instance, if export continue to grow out between 20 to 30 percent would provide a very strong support.
KUHN: Andy Xie is an independent economist based in Shanghai.
ANDY XIE: The Chinese stock market drops by 50 percent the last of people (unintelligible) is about 20 percent of the GDP. It's common to the U.S. stock market dropping by 15 percent. So the world effect is relatively low.
KUHN: Anthony Kuhn, NPR News, Beijing.
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