The Advance of the State and the Retreat of Private Enterprise
国进民退（guójìnmíntùi）

"国", guo, nation; "进", jin, progress, advance; "民", min, civil, private, concerning ordinary people; "退", tui, retreat. "国进民退" is the phenomenon of private companies being edged out from certain sectors by their state-owned counterparts.

The advance of the state and the retreat of private enterprise first emerged at the end of 2008 when the central government issued a stimulus package of four trillion yuan. Most of the four trillion yuan was invested in state-owned enterprises, enabling them to acquire their private counterparts in industries such as steel, oil, and coal.

The best examples of the advance of the state and the retreat of private enterprise are mergers in the steel and coal mining industry. Earlier this year, the Henan Iron and Steel Group acquired five local private steel companies and the Shandong Steel Corporation took over two of its local private counterparts. Meanwhile, privately-developed coal mines across the country have been required to be sold or have their ownership transferred to state-owned energy giants one by one. The private coal mine owners in Shanxi Province who contribute to a large bulk of wealthy Chinese have disappeared in less than one year.

Though the Chinese government claims that these types of mergers have helped to promote the competency of Chinese enterprises, in reality, only state-owned enterprises have benefitted. Their private counterparts have received less government investment. Some of them have even been deprived of market entrance in certain sectors. Though last year China succeeded at maintaining an 8 percent GDP growth rate and will surely manage to do the same this year by supporting state-owned enterprises, the momentum of the economic growth will be damaged if the advance of the state and the retreat of private companies continues.

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