Understanding the Chinese government’s pervasive influence over the country’s domestic and international companies is crucial to foreign businesses operating in China, as the activities of state-owned enterprises shape international relations, trade policies, and global market dynamics.
>> Discover how China uses Golden Shares for state control and influence <<
One of the mechanisms the Chinese government uses to exert economic control is through Chinese State-owned Assets Supervision and Administration Commissions (SASACs). SASACs focus on the operational and strategic management of state-owned enterprises (SOEs), playing a key role in exerting state influence over the economy.
As a result, foreign businesses must carefully navigate the complexities associated with state ownership to ensure long-term success in the Chinese market and navigate potential challenges related to fair competition and market access.
What is the reach of SASACs in China?
Created in 2003, SASACs exist under the State Council and directly manages around 100 SOEs that operate nationally and internationally across strategic sectors including military supplies, power generation and distribution, oil and petrochemicals, telecommunications, and more. In 2022, centrally administered SOE revenue was valued at nearly $5.4 billion.
The commission’s influence is primarily focused on the operational and strategic management of China’s SOEs. It ensures that these enterprises align with government policies and contribute to broader economic and social objectives. This includes appointing top executives, approving major business decisions, and safeguarding state interests in these enterprises.
The involvement of the Chinese Communist Party (CCP) in personnel management is universal throughout Chinese government institutions. This makes identifying directorships, managers, and officers an especially vital and valuable part of measuring potential CCP involvement in SOEs.
>> A deep dive into China’s economic coercion with the Atlantic Council <<
Are there regional differences?
Although regional SASACs fall under the jurisdiction of both their respective governments and the national SASAC, in practice, local SASACs primarily answer to their local governments and the associated local Party Councils. As a result, commissions typically manage their SOEs in the interest of the local government rather than as part of a national strategy, although national SASACs may influence or interfere at the regional level when deemed necessary.
>> Read our case study on Chinese government influence on Alibaba <<
Every province in China has its own set of SOEs, particularly in industries like transportation, utilities, and infrastructure, adding up to thousands of state-owned asset management entities at the city, town, and county levels.
If you’re looking to learn more about other methods used by China for economic control, read our latest report, “Understanding & Identifying Chinese State Ownership and Investment Vehicles.” This report will additionally explain the importance of sovereign wealth funds (SWFs) that invest in tactically significant industries to achieve long-term economic and strategic goals.