Economist stirs controversy, saying bosses exploited state firm sell-offs and warning of crony capitalism
A Taiwanese economist, son of a captain in the Kuomintang army, has set off a storm of controversy in China by accusing prominent mainland companies of siphoning off state assets during the course of their listings.
Lang Xianping, 48, an economics professor at Chinese University of Hong Kong (CUHK) who holds a PhD from Wharton Business School, accused the managers of the firms of exploiting inadequate laws and regulations to divert government assets and give themselves lucrative shareholdings. Well argued and supported by statistical analysis, his critique has become so popular that three of his books have become best sellers in China.
Dr Lang says that what China has now is MBI - management buy-ins, with managers setting the listing price themselves - instead of MBOs - management buyouts, in which officers use their own money from outside.
When state companies list, their senior managers usually receive a portion of the issue. The dispute concerns the amount and value of shares they receive and who decides what these should be.
Dr Lang warned that China would end up with the crony capitalism of the Philippines, where officials collude with private businessmen to steal state assets and millions have to go to work abroad as maids and truck drivers, instead of the US model of private economy, which so many aspire to.