Government-linked bodies are increasingly becoming the top shareholders of listed Chinese companies as financial strains and an uncertain outlook force firms to look to local authorities for investment.
More than 50 companies trading on the country’s two major stock exchanges have received financial backing from local Chinese governments so far in 2018, according to the Nikkei Asian Review, in what state media has portrayed as Beijing providing a safety net for troubled businesses.
State-backed asset managers had pumped Rmb 30 billion ($4.3 billion) into the companies so far this year, as of the end of October. In about half of the cases, the government bodies went on to become top shareholders.
Others are arguing, however, that low stock prices have given the government an opportunity to aggressively acquire vulnerable companies. Many have begun citing the Chinese axiom guo jin min tui, or “the state advances, the private sector retreats.”
Beijing has denied these claims, describing the investments as market-driven transactions that benefit both parties involved.