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When investors buy stock in a corporation, they want to make sure the company has an independent board of directors, that its books have been audited by professional accountants, and that its CEO has authority to make decisions about hiring, firing, and investment.
Yet as panelists at a recent American Enterprise Institute seminar noted, few of these safeguards exist reliably among nominally independent companies in China.
All of the more than 1,000 companies on the Shanghai Stock Exchange are state-controlled, with 54 to 60 percent of the stock in government hands. The government and Chinese Communist Party also control most nominations to Chinese boards of directors. Even very large Chinese companies have assets that can be seized by the government at any time. Small print in a share offering by the giant Chinese National Petroleum Corporation revealed that 90 percent of the land on which the company drills is owned by state entities and ...
Source: HighBeam Research, China's fake capitalism. (Scan).(Brief Article)