The head of one of China’s largest state-owned manufacturers has said mismanagement by local governments is partly to blame for business failures that have prompted a cascade of bond defaults, reported the Financial Times.
The comments from Wang Min, president of XCMG Group, the country’s biggest construction machinery business, came after China’s multitrillion-dollar debt markets were rocked by defaults at government-backed companies, raising concerns about the wider financial system.
“The fall of state firms isn’t just a result of bad management, unclear strategy and inadequate entrepreneurship,” said Wang, in remarks from a state-owned Chinese group, during an interview with the Financial Times. “It also has to do with government mismanagement that puts [unreasonable] performance targets on these companies.”
Wang said struggling SOEs in China were not worth rescuing because they could not survive without government backing. “Let them die and don’t save them,” he said. “Government protection won’t create a good company [but] competition will.”