In the corner of Wang Huisheng’s office stands a red flag, but instead of the five gold stars of the Chinese national flag, this carries the hammer and sickle of the Communist Party.

That says a lot about Mr Wang as a captain of industry and current changes in the structure of China’s economy.

Mr Wang is the president and chief executive of State Development and Investment Corp, a sprawling state-owned industrial conglomerate that invests in and manages ports, coal mines, railway lines, chemical factories, power stations and desalination plants across China.

It is also expanding into the financial sector through investments in fund management and trust companies, and it has joint ventures with Swiss bank UBS and a co-investment with Standard Chartered. “We want to make financial services a big part of our business – that’s something we learned from GE,” Mr Wang says.

Mr Wang is the ultimate party bureaucrat, a product of the old state planning system who has adapted to the rhetoric and rules of the system that now governs the economy: “socialism with Chinese characteristics” for which read – capitalism.

SDIC is an example of a Chinese blend of state ownership and market imperatives that has created a whole generation of competitive state-owned giants.

“Our company has evolved from a government-commanded entity to a market-commanded one along with the reform and opening up of China,” Mr Wang says. SDIC has the support of the state and grand ambitions to become the newest of China’s increasingly global state-sponsored champions.

The company was formed, out of 1,000 industrial companies from all over the country, 13 years ago during great state-owned enterprise reforms.

From an estimated Rmb20-30bn in loss-making assets, SDIC has reduced the number of projects under its control, selling 800 of them for about Rmb6bn in the process.

SDIC has 60 individual projects, including some of the country’s largest coal ports, comprising Rmb162.1bn ($23.7bn) in assets by the end of June. SDIC’s revenues increased 50 per cent to Rmb20.4bn in the first half and profits rose 24 per cent to Rmb2.7bn over the same period.

SDIC sees its role changing from that of a government holding company to an asset manager for the state. “We are more and more like an investment fund and like private equity – but we’re different from private equity because we want to control the companies we own and we will hold good ones for 100 years,” Mr Wang says.

As long as assets are not in industries considered strategic or restricted by the Chinese government, SDIC can sell them to private or foreign investors, but acquisitions are more likely now.

SDIC’s next move will be abroad – a path it has embarked on through investments in an auto accessories plant in India and hydropower projects in Myanmar.

“We were born out of a pile of crap assets so we need to sort out our domestic issues first,” Mr Wang says modestly. “But we hope to have some very good projects abroad before 2012.”

Mr Wang is sensitive to concerns that Chinese companies are interested only in stripping natural resources. “Some Chinese companies definitely didn’t do a great job overseas by not paying enough attention to social responsibility,” he says. ”I want to make clear that China investing abroad absolutely does not mean Chinese devils robbing foreign resources.”

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