A dispute has broken out between the China Council for the Promotion of International Trade (CCPIT) and Business 20, an international business group affiliated with the Group of 20, over the role of state-owned enterprises (SOEs). Business 20 issued a communique calling for an end to state-related competitive distortions, but the wording met with strong objections from CCPIT, which insisted that the B20 proposal should not be submitted to G20 leaders at their next summit and demanded revisions to the sections covering SOEs. The Chinese trade promotion body claimed that the proposal had ignored concerns expressed by Chinese business delegates at a B20 meeting in Argentina, adding that it one-sidedly highlighted market distortions, excess capacity and corruption in the SOE sector. G20 leaders will discuss the communique when they meet in Buenos Aires on November 30 and December 1, but the quarrel exposes the deep divisions between Beijing and other countries over the management of the state-owned sector.

B20 wants G20 leaders to reach an agreement about government-driven competitive distortions. “The agreement would require significant lessening, limitation, and/or complete elimination of policies that accord preferential treatment to SOEs,” a B20 paper said. It could target the subsidies, debt relief and favorable loans given to state-owned companies. If the B20’s advice on SOE reform does appear in the final G20 communique later this year, it may force China to ditch the multilateral approach Chinese President Xi Jinping has long espoused, Zhao Xijun, Professor of Finance at Renmin University in Beijing, said.

Chinese business executives who joined the B20’s 156-member trade and investment task force this year included Guo Ningning, Executive Director of the Agricultural Bank of China (ABC) and Sun Yongcai, Deputy Party Secretary at the state-owned train manufacturer CRRC.

As of August 31, China’s state-owned industrial enterprises had assets valued at CNY174 trillion, up 7.6%, according to China’s Ministry of Finance. The State-owned Asset Supervision and Administration Commission (SASAC) now directly controls 98 large industrial firms with total assets of more than CNY50 trillion. Forty-eight of these state-run firms have made Fortune magazine’s list of the world’s top 500 companies by revenue.