Four years ago, I was part of a chorus of analysts who predicted that a wave of privatization would soon sweep through China. Our sense was that the pressure of official debt, already then reaching a scarily high level by global and Chinese historical standards, would force local governments to sell off interests in commercial ventures. Simply too much had been borrowed at interest rates of more than 7% to build roads, bridges, office towers and sports stadiums which were not generating enough cash flow to pay back trust companies and other creditors.
We were all wrong. Although debt levels have almost doubled again since 2013, there is no sign the government is about to unload its vast array of state-owned enterprises. In fact, the state is still building up its portfolio both at home and abroad.
