(China Daily)
Updated: 2007-09-05 07:18

The development of monopoly enterprises will do no good for the country in the long term, says an article in China Youth Daily. The following is an excerpt:

The annual Top 500 Chinese Enterprises list was published recently, and just like previously, monopoly State-owned enterprises (SOEs) such as Sinopec, PetroChina, State Grid, the Industrial and Commercial Bank of China and China Mobile occupied the top 10 positions.

A total 349 State-owned or State-controlled companies are on the list this year. SOEs also lead in operating revenues.

Unlike the situation in China where most of the top 500 companies are SOEs and in monopoly industries, the world's top 500 companies are mostly privately owned and in competitive industries.

Monopoly industries are gaining fat profits. At present the average wage level in monopoly industries is much higher than the country's average. Monopolies distort the pricing system. They increase their profits but do not contribute to the welfare of the public.

Monopolies impede technical advancement and in the long term harm economic progress. The research and development facilities of the monopoly enterprises are poor.

The ultimate goal of economic development is to maximize national welfare. But monopolies have hindered the effective allocation of resources, decreased the nation's welfare level, increased social transaction costs, impeded the free flow of market forces, restricted the expansion of market investment and strangled the business opportunities of individuals.

What is more, in China's current transitional stage, monopoly industries have become the major obstacle in the promotion of social interests.

(China Daily 09/05/2007 page10)