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China to break up state monopolies

As China's ruling Communist Party prepares for a once-in-a-decade leadership transition next month, it is planning a daunting step - breaking up the monopolies enjoyed by its gargantuan state-owned enterprises (SOEs).

business Updated: Oct 17, 2012 21:51 IST

As China's ruling Communist Party prepares for a once-in-a-decade leadership transition next month, it is planning a daunting step - breaking up the monopolies enjoyed by its gargantuan state-owned enterprises (SOEs).

The monopolists have other ideas. One of the most powerful of all Chinese state-owned giants is the power-grid operator, State Grid Corp, led by the politically savvy engineer Liu Zhenya. This summer, with blackouts paralysing India, he seized an opportunity.

Liu called his managers together for an urgent conference in Beijing to explore what lessons the world's biggest utility could learn from the Indian crisis. His conclusion: Beijing should preserve State Grid's monopoly over the transmission and distribution of power to 1.1 billion people across 90% of China.

"In light of the recent series of large-scale power cuts abroad, it is of crucial importance to stick to the right path of power industry reform," Liu told his team on the afternoon of July 31, as a swathe of India suffered blackouts for a second day running. Preserving State Grid and its 1.6 million employees as a single entity "will be conducive to supply security," Liu added.