China sends government officials to companies like Alibaba and Geely

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Officials from Hangzhou City, a private enterprise center in China's Zhejiang province, will be sent to 100 companies in the region, including the e-commerce giant. Ali Baba (Baba) and car manufacturer Geely (GELYF), the local government said in a statement on the weekend.
The role of "government affairs representatives" is to promote communication and help companies to carry out key projects, he added. China's ambition is to become a technological superpower by advancing its huge manufacturing sector into the value chain.

This announcement, however, triggered a brutal reaction on Chinese social media. Many users have worried about the growing role of the state in business. It is also unlikely to reassure foreign governments worried about the independence of private companies such as Huawei.

"The government wants more control over the economy, especially in these difficult times, the trade war is intensifying and Washington is putting more pressure on Beijing." The economy continues to deteriorate, said Ronald Wan, Managing Director of Partners Capital International in Hong Kong. Kong.

It was understandable that the government wanted to strengthen communication with private companies in times of economic crisis, said Wan, but even a limited role for civil servants would be symbolic, as Hangzhou is home to some of the largest private companies in China.

"The government could also send a signal to private companies: get closer to the government and listen to it," he added.

Beijing has reinforced the communist party participation in the corporate sector since the end of last year. A directive issued by the central government last November obliges all businesses, including private and foreign companies, to set up party committees if more than three of their employees are party members.

The party committee in private sector companies should act as supervisors to ensure that companies comply strictly with Chinese laws and regulations, in accordance with the directive. In state-owned enterprises, they participate in decision-making.

"The decision of the Hangzhou government could be just a start – it could be copied by other local governments," said Wan Wan.

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Alibaba said the initiative aimed to create "a better business environment" to support Hangzhou-based enterprises.

"The government representative will act as a gateway to the private sector and will not interfere with the company's operations," the company said in a statement sent to CNN Business.

Geely did not immediately respond to a request for comment.

The statement of the Zhejiang provincial government did not contain a complete list of the 100 companies that will be designated as responsible. But Meng Xinzhe, vice president of the local industry association, on Monday uploaded to his Weibo account a government document that listed a number of leading financial and technology companies, including online payment company Ant Financial, a conglomerate of entertainment and the internet. NetEase (NTES), maker of Hikvision surveillance cameras, and rival Dahua Technology.
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The government of Zhejiang Province has responded to concerns about the future of the market economy in an article published on its website on Sunday, saying representatives would not interfere in the decisions taken. by the companies and would only be there to help solve the problems related to the government. .

The officials would be overseen by the city government and their appointment would last one year, he added.

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