OPINION> EDITORIALS
Example of SOEs
(China Daily)
Updated: 2009-10-19 07:57

What example should State-owned enterprises (SOEs), those directly under the auspice of central government, set for business and industry?

Doubtless, they should be models for private businesses to follow in sticking to the rules. As businesses run by the State and supposed to belong to all the people in a nominal sense they have to be models. They are supposed to put the interest of the people and the State above the pursuit of profit.

Yet scandals show that some of them are not run the way they should be.

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The latest issue is the serious pollution an SOE has caused to farmland in North China's Hebei province and the serious damage it has done to a local private business.

An iron ore plant attached to China Mineral Metal Corporation has illegally discharged iron ore waste liquid directly into the riverbed nearby and polluted farmland. The same pollutant also discharged by another plant of the same SOE has caused a private iron ore mine to stop production.

What worsens the situation is that local authorities don't have a mandate to punish SOEs under the central government.

Example of SOEs

As far as law enforcement is concerned, even SOEs directly under the State-owned Assets Supervision and Administration Commission of the State Council (SOASAC) should comply with local rules on environmental protection.

The auditing of 41 SOEs by the National Audit Office in June found that the sulfur dioxide emissions by 10 of them were way above national standards, and the highest is 1.4 times above the limit. Nine other SOEs discharged major pollutants above national standards, and some as high as five times the local standards.

In another investigation of 24 SOEs by the State Administration of Taxation in April, 12 were found to have evaded taxes.

How can SOEs that are supposed to act as models behave so disappointingly?

This has something to do with their status as large SOEs which are subject to higher authorities in administration, and a county or prefecture level government usually has difficulties in imposing fines or other penalties on these SOEs for their misbehavior.

It is unrealistic to expect the situation to change in a day. But it is clear that SOE leaders must be made accountable for violations like illegal discharge of pollutants or tax evasions. There is no reason to let them get away with wrongdoing because of their status as SOEs.

The State environmental department or SOASAC should come up with a mechanism to make all SOEs toe the line and set a good example.

If State-owned enterprises do not conform to environmental protection laws and related regulations while enjoying preferential policies and even monopoly positions in some cases, how can we expect private enterprises to fall in line when they are up against fierce competition?

(China Daily 10/19/2009 page4)