Analysis by Agatha Kratz based on:- Lin Yongsheng, (1) Working out once again the efficiency of SOEs, Xin shiji, 13 August 2012.- Zhang Wenkui (2) interviewed by Wang Xiaobing, Reforming state-owned enterprises represents the next opportunity for growth, Xin shiji, 20 July 2012 (interview conducted in June, before the publication of July's economic figures).- Sheng Hong!3) interviewed by Chen Cai, Public shareholding has lost its halo of virtue, Licaiyizhoubao, 27 November 2011.- Sheng Hong interviewed by Wang Daojun, Private enterprises have the right of access to all markets, Dongfang zaobao, 15 May 2012.On the eve of the 18th Congress of the Chinese Communist Party (CCP), the Chinese press was publishing an increasing array of articles setting out details of the reforms to be undertaken by the new leadership. A number of these discussions focused on state-owned enterprises (SOEs).!4) Among these contributions are those of Lin Yongsheng and Zhang Wenkui, both of whom are advocates of root-and-branch reform of the system of state-owned enterprises. In addition to these two noticeably critical contributions, we offer two interviews with Sheng Hong, a highly controversial figure in the overall debate on SOEs.A significant contribution of SOEs to the Chinese economySheng Hong begins his piece by recalling that in 2011 the gross aggregate income of Chinese public companies reached 30,3 billion yuan, that is, 64 percent of China's GDP for the year.® Hence, these companies, whose capital is largely if not wholly under state control, represent a considerable portion of China's economy. Lin explains that although the weight of these companies has gradually been reduced within the economy, ever since the reforms of the 1970s, they still account for 30 percent of all Chinese companies.!7) This spread is very uneven, however, since in some sectors, such as everyday consumer items, these companies represent only 50 percent of invested capital, whereas in certain strategic sectors - such as industries to do with the military, telecommunications, energy, etc. - they represent nearly 90 percent of capital invested.Sheng Hong points out that not all SOEs are comparable. Some are veritable industrial monsters, while others operate on quite a limited scale. This differentiation is reflected in their levels of profit. Some of these companies are perfectly viable, while others are experiencing financial difficulties.It is on this subject of the profitability of SOEs that Sheng Hong made his name. He reminds us that in 2011, his research centre, the Unirule (Tianze) Institute of Economics, published a damning report highlighting the economic inefficiency of these companies. Indeed, this report established that over the period 2001-2009, Chinese SOEs recorded an average annual rate of return of 8.16 percent. However, when the enormous state subsidies that these companies received were factored into the equation, their average annual rate of return fell spectacularly, to minus 6.29 percent. This figure shows the extent to which these companies are not economically viable, as well as the extent to which they are assisted by the government through various kinds of subsidies.Ongoing support to public companies within the political and academic arenasIn spite of these very poor figures, there are still many in favour of maintaining SOEs for a variety of reasons. Zhang explains that many people highlight the sustained growth of SOEs in the past, and their rather significant contribution to the country's development. But Zhang rejects this point of view, arguing that this contribution was in terms of volume and not return on investment. Lin notes that others are keen to preserve the state's capacity for action in certain key industries related to national well-being (guoji minsheng SL+Kife). …