In China Privatizations, Mind the Communist Party Golden Share

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At least one of the Chinese private-sector champions ponying up billions of yuan for a stake in the country’s second-largest mobile carrier said it was delighted to join the deal to infuse the state-owned enterprise with outside capital and management expertise.

What might not be so delightful for other shareholders is the Communist Party’s moves in the past year to tighten control over China’s companies. The concept of new “independent” non-executive directors in China has a different context given the party’s requirement that SOEs modify bylaws to give it more oversight. In June, that was extended even to SOEs’ overseas units.

So Tencent’s joy -- the tech titan is honored to be involved in the China Unicom deal, says President Martin Lau -- may not be broadly shared given the potential for non-business concerns to be a focus for the Communist leadership.

— With assistance by Keith Zhai

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