China Post’s privatisation battle is back on

The on-off saga of China Post’s possible privatisation has been thrown into turmoil again after its deputy director, Chen Furong, said that speculation about a stock market listing was “pure rumour”. Mr Chen, in an interview with China Business Weekly, also said there was no imminent plans to change the state-owned company.

“We have several plans … but the final plan is still under review,” he told the Chinese publication.

China Post, or the National Postal Bureau (NPB), has proposed to list its branches in six overseas regions, Hong Kong being one of the six.

Analysts say this listing exercise could raise US$500 million, which could be used to further invest in strategy against competition from other carriers.

However, there are a few hurdles blocking a favourable listing, not least China’s dual tax system, which distinguishes between China’s domestically-owned companies and those with foreign investment.

Foreign enterprises can limbo under a 17 per cent tax barrier whereas home-owned firms face a 33 per cent slug.

This has given China an edge in attracting foreign investment, culminating in the fact that last year China overtook the US as the world’s number one country for direct foreign investment.

Mr Chen also said it would take time to get China Post into a position ready to list.

“It is not possible for the firm to go public before its functions are split, as the government cannot be listed,” he told China Business Weekly