China’s state capitalists celebrate their soaring shares

Remember the :cspmcspmname China Science Publishing & Media () might be the hottest state-owned textbook stock, ever. Shares in the company, which publishes titles such as “Gaseous Detonation Physics and its Universal Framework Theory”, are up 230% since the start of the year. It is not the content, riveting though it is, that has lifted ’s market capitalisation to nearly 30bn yuan ($4.3bn). Across the board, China’s state-owned companies have enjoyed a renaissance—at the request of regulators. Stop focusing on profits, authorities have insisted. Instead, think about firms’ social contributions and their broader impact on the economy. All told, the “reconsideration” of China’s clunkiest firms has been worth 3trn yuan in the first five months of the year.The success of the concept—called the “valuation system with Chinese characteristics”—is quite the coup for the country’s state capitalists. It suggests an ability to guide investment flows. First mentioned in November by Yi Huiman, head of the China Securities Regulatory Commission, the system’s principles continue to evolve. At their core is the idea that standard valuation methods are poor at assessing state-owned companies because such firms adhere to central-government policies which seek to improve overall economic prosperity, not simply a firm’s bottom line.