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When a Brazilian or Chinese SOE in banking or finance lends to a SOE in other fields, what happens when the borrowing SOE runs into trouble and cannot repay the loans?

The borrowing bank says to its owner, the state as shareholder, we cannot pay. The state stockholder, the government, instructs the SOE s who lent to the troubled firm, “Let it Ride.”

When this happens, problem also multiplies for the SOE s in banking, who have to carry heavy loads of non-performing loans, endangering the health of the entire financial system. This happened in India 1970-80. It was happening in China and Brazil in 2014.

Notwithstanding the long-standing problems of SOE s , many of the lessons learned about the performance of state capitalism in the earlier period (1945-85) have been forgotten. Even the Economist of London can go overboard on the issue of state capitalism. A quote from an issue in 2008:

State capitalism looks like the coming trend.

Perhaps one reason for such statements has been the emergence of the so called Chinese model of STATE capitalism.

One very salient point - SOE s now heavily dominate the world’s holdings of reserves of oil and gas. These are called NOIs (National Oil Companies). This group includes NIOC (Iran) Aramco (Saudi), Gazprom (Russia), CNPC (China), Pertamina (Indonesia), Pemex (Mexico), Petronas (Malaysia). By 2012 NOIs held almost 90% of oil reserves. However, if in the coming year Whatever might be the future of SOE the U.S. fully taps its now huge reserves of oil shale reserves in Texas, North Dakota, Pennsylvania and Ohio, the dominance of the NOIs will diminish, at least for a time.

In critiquing the performances of SOE s , it is important to recognize that many, management is quite competent, and equal to the best anywhere, except when they are subjected to political pressure from the government-as- owner .

Indeed, there are several examples of reasonably well managed SOE s in oil and gas sectors across the world.

Statoil Norway (oil)
Aramco Saudi - especially proficient in IT and in promoting health and safety in operations.
Petronas Malaysia (oil)
Ecopetrol Columbia (oil)

Until recently, PETROBRAS of Brazil would have to be included in this list. In any case the movement for privatization of SOEs in energy nations had largely passed by the year 2000.

China: Annual Report on Assets

Why many soe s Are unprofitable

Profitability in SOE s tends to be low because the government-as-owner often utilizes them to typically pursue other aims of the state, including:

  • Employment, sometimes leading to excessive payrolls.
  • Political rewards to government officials.
  • Military needs (there military-owned SOE s in Iran, Pakistan, etc.)

And often SOE s pursue social aims unrelated to their businesses.

In China large private firms in 2012 had an average return on equity of 13%. The reported return in SOE s was 8.2%, and even that may have been inflated.

What can be said about recent profitability in SOE s ? What can be said about efficiency in SOE s , in big countries such as Brazil, China and India?

Over the period 1996-2012, the average return on assets for Chinese SOE s was less than 5% from 1996-2010, and barely above 5% thereafter. By 2010, returns to private firms were 3 times higher (see Table 11-1).

Questions & Answers

Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
sciencedirect big data base
Introduction about quantum dots in nanotechnology
Praveena Reply
what does nano mean?
Anassong Reply
nano basically means 10^(-9). nanometer is a unit to measure length.
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
how to know photocatalytic properties of tio2 nanoparticles...what to do now
Akash Reply
it is a goid question and i want to know the answer as well
characteristics of micro business
for teaching engĺish at school how nano technology help us
Do somebody tell me a best nano engineering book for beginners?
s. Reply
there is no specific books for beginners but there is book called principle of nanotechnology
what is fullerene does it is used to make bukky balls
Devang Reply
are you nano engineer ?
fullerene is a bucky ball aka Carbon 60 molecule. It was name by the architect Fuller. He design the geodesic dome. it resembles a soccer ball.
what is the actual application of fullerenes nowadays?
That is a great question Damian. best way to answer that question is to Google it. there are hundreds of applications for buck minister fullerenes, from medical to aerospace. you can also find plenty of research papers that will give you great detail on the potential applications of fullerenes.
what is the Synthesis, properties,and applications of carbon nano chemistry
Abhijith Reply
Mostly, they use nano carbon for electronics and for materials to be strengthened.
is Bucky paper clear?
carbon nanotubes has various application in fuel cells membrane, current research on cancer drug,and in electronics MEMS and NEMS etc
so some one know about replacing silicon atom with phosphorous in semiconductors device?
s. Reply
Yeah, it is a pain to say the least. You basically have to heat the substarte up to around 1000 degrees celcius then pass phosphene gas over top of it, which is explosive and toxic by the way, under very low pressure.
Do you know which machine is used to that process?
how to fabricate graphene ink ?
for screen printed electrodes ?
What is lattice structure?
s. Reply
of graphene you mean?
or in general
in general
Graphene has a hexagonal structure
On having this app for quite a bit time, Haven't realised there's a chat room in it.
what is biological synthesis of nanoparticles
Sanket Reply
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
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Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
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