Oil Company Reform

Caijing Magazine
May 5

In November 2013, the Chinese Government once again shed light on mixed ownership reform. And of all industries, the state-capital-intensive oil industry was put at the forefront. However, despite the multiple positive indicators, the reform is actually encountering significant difficulties.

It has been agreed within the industry that to promote mixed ownership reform, the top priority now is to break the monopoly of China's three major state oil giants and make it possible for other market players to survive on their own.

Where there is a market, there is competition; where there is competition, there is a driving force for improvement in efficiency. Mixed ownership has arisen as a response to internal demand within state-owned companies. But the private capital shouldn't just join the ownership, inject capital and wait for their share of the profits. Their joining should contribute to an enhancement of the company's competitiveness—specifically, a more effective corporate governance structure and a better awareness of market and efficiency.

This requires a major environment of institutional innovation. It is essential for the companies to separate themselves from government management and recover their nature as market players.

The mixed ownership reform requires the property rights of the state-owned companies to be more diversified. The board of directors should become the hub of corporate governance. Currently, the truth is the board is just a figurehead. The shareholders can't participate in the decision-making process. The investment safety and investment return of the shareholders don't have a procedural guarantee. Therefore, changes should be made in this regard.

Situation in Ukraine

Life Weekly
May 5

"The West will not confront Russia on the issue of Ukraine with everything it has got, because for the West, the importance of Ukraine is limited, and so is the price it is willing to pay," said Liang Qiang, a researcher with the Chinese Academy of Social Sciences. "On the contrary, the price that Russia is willing to pay is infinite. Russia has already seen the bottom line of the West during its war with Georgia in 2008."

The crisis in Ukraine has three aspects. The first is how the Russian nationality in Ukraine can protect their rights and interests. They may tend toward gaining independence, or return to Russia. They hope to safeguard their rights and interests as an ethnic minority. The second aspect is the territorial dispute between Ukraine and Russia. And the third aspect is the conflict between the east and the west of Ukraine. This conflict results from different political opinions between the two regions, yet it is between people within one shared nationality.

All these three aspects are closely related to Russia, especially the aspect involving the Russian nationality. Without the backing of Russia as a strong support, the crisis would never have become so serious. Therefore, the crisis in Ukraine is essentially a problem of Ukraine-Russia relations.

Free Highway

Beijing Youth Daily
May 4

During the Labor Day holiday, highways across China witnessed yet another wave of traffic jams, the latest in a long line of such incidents experienced since the country implemented the policy to waive tolls for vehicles on four important national holidays, as part of an attempt to ease congested traffic during annual travel peaks.

The Central Government approved of the policy on August 1, 2012. On the following National Day vacation on October 1-7, 2012, many families that chose to travel by highway experienced the worst traffic jam on record. The severe traffic congestion drew fierce complaints. Some people even blamed the congestion on the free highway policy. Some criticized the free highway policy for going against economic theory. Based on this argument, the tolls for vehicles should even be increased, so that more vehicles would stay parked at home, ensuring that the highway traffic would be smoother.

It is a pity that these critics failed to see the whole picture. The policy was carried out at a time when the Central Government decided to deal with the disorder in highway tolls. In June 2011, the Central Government launched a year-long investigation on toll roads. Following the investigation, a number of toll roads changed to a free-pass system. However, a much bigger number of highways were completed by banking lending. Because the debt has not yet been paid off, it is impossible to waive the tolls. Against this backdrop, the Central Government implemented the policy. It came as a signal implying that the nation's highway system may change back from being a money maker to a public resource.