China Inefficiencies

by Laura Ehrenberg-Chesler on October 12, 2017

in capitalism,Energy,Foreign Markets,United States of America

There was a fascinating article in today’s WSJ. The title of the article read “China’s Next Five Years – Squeezing the People to Feed the State”. One of the most stark comparisons about the difference between free enterprise/ private sector capitalism and State controlled businesses was the one made between PetroChina and ExxonMobile.

PetroChina – the listed arm of the flagship state-owned China National Petroleum Co. (CNPC)—had seven times as many employees as Exxon Mobil last year, yet produced only marginally more oil and less gas. Little wonder its return on equity in the 12 months to June was a dismal 1.7%, against nearly 7% for Exxon.”

CNPC does have one ace card: It is one of only three significant upstream oil companies in China, all state-owned. Prices are regulated, but CNPC’s dominance often allows it to strong-arm customers and the bureaucracy.”

The full article can be seen here.

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