I was especially interested in what the restructuring suggested about the semi governmental status of the China Investment Corporation, and the ramifications of that characterization fopr emerging global regulatory systems that are based on the core assumption that entities like the CIC would be considered as autonomous of the government organs that owned their shares and whose objectives would be economic rather than political. See, Larry Catá Backer, On SWF Autonomy: Restructuring the China Investment Corporation, supra.
But reality is always more complicated than any linear analysis is capable of describing.
CIC, as positioned at the premium cabinet-level within the Chinese government, is responsible directly to the State Council through the State Owned Assets Supervision and Administration Commission of the State Council (SASAC). This is meant to effect the policy of separation of economic and political functions within the state apparatus. ( Keith B. Griffin, Institutional reform and economic development in the Chinese countryside, 99 (1984). But that separation is effected only functionally. . . . The State Council through SASAC exercises the authority of appointment and dismissal of the governing board members of the CIC. But the organization of CIC produces a formal separation between state and fund operator. Larry Catá Backer, Sovereign Investing in Times of Crisis: Global Regulation of Sovereign Wealth Funds, State Owned Enterprises and the Chinese Experience, Transnational Law & Contemporary Problems, Vol. 19, No. 1, 2009.
Currently, only the Finance Ministry (财政部)has the authority to compile public budgets in China. SASAC's only role when it comes to money is to collect dividends from the SOEs that it controls and hand them off to the Finance Ministry.A few years ago, when SASAC's role of "dividend hand off" was established, it followed a bitter battle between SASAC and the Finance Ministry for control of these monies. SASAC's reasoning was that, as controlling shareholder of these SOEs, it should naturally control the dispensation of dividends to which it is entitled. In the end, the Finance Ministry was simply too powerful, and managed to relegate SASAC to its hand off role. Though it controls the shares of China's largest and most important SOEs, SASAC has no source of revenue and must depend on the Finance Ministry for its own budget.Now SASAC is at it again. They have apparently been circulating a draft resolution among local government SASACs that would give SASAC the authority to independently draw up the budget for central state-owned enterprises (独立编制央企预算). This is not an inconsequential sum. In 2008, central SOEs submitted over 500 billion yuan ($73.5 billion) in dividends to the central government. SASAC's Budget End-Run, ChinaBizGov, Sept. 26, 2009.
This story illustrates a couple of interesting aspects about governance in China. One is the constant battle over resources that takes place at the ministerial level. Money is power, and China is no different from any other country whose various departments fight over resources. The other is the variety of policies being implemented by local governments. Foreign observers so often talk of China as if it is a monolith, but this story illustrates that, when you open the box, there are a lot of moving parts, some of which don't rub each other very well. SASAC's Budget End-Run, ChinaBizGov, Sept. 26, 2009.