Chinese Communists Extend Control of Firms by Buying “Golden Shares”

(p. A1) In its uneasy dance with China’s private sector, the Communist Party is moving away from a public battle with some of the country’s biggest companies. Instead, it is inching toward a quieter form of control.

At the center of the effort is a push by various levels of government to take stakes in the private companies that have long driven Chinese innovation and job creation.

The government stakes are sometimes very small, like the 1% holding that a fund of Beijing’s cyberspace watchdog recently took in the digital-media unit of e-commerce giant Alibaba Group Holding Ltd. But they tend to give the government board seats, voting power and sway over business decisions. Colloquially, they are known as golden shares.

For the companies, there is little choice: Selling such a stake to a government entity that seeks one is crucial for staying in business. For the state, the stakes mean more direct involvement in some of China’s most high-profile companies—digital cornerstones of Chinese life and, in some cases, darlings of global investors.

. . .

(p. A9) One result of the new normal of subtle influence is that the boundary between the party-state and the private sector is getting increasingly muddled. That reverses a trend dating to the late 1970s, when Chinese leader Deng Xiaoping had the party-state step back from business control and let entrepreneurs flourish.

For the full story, see:

Lingling Wei. “Stakes in Firms Give Beijing New Control.” The Wall Street Journal (Thursday, April 11, 2023): A1 & A9.

(Note: ellipsis added.)

(Note: the online version of the story has the date March 8, 2023, and has the title “China’s New Way to Control Its Biggest Companies: Golden Shares.”)

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