Important English Vocabulary from “The Economist”-(Day-9):
Dear Readers, to score good marks in English Section first and for most thing is you need to develop your reading skills, while reading a passage you need to highlight the tough words in it and you should know the correct meaning for those words. This will help you understand the passage clearly and also you can learn more new words, it means also you can develop your vocabulary. To help you in this part we have provided a passage along with meaning, synonyms and usages of hard words in the passage, make use of it.
Reform of China’s ailing state-owned firms is emboldening them – Part-3
In the 1990s, when SOE reforms began, the vision was of the state controlling whole industries but with the companies in them battling each other to promote better management. The imperfections of this scheme are clear, judging by weak returns in the state sector. But the government’s response is to create even bigger monsters. Chinese economists have described them as “red zaibatsu”, a reference to Japan’s sprawling, slow-moving conglomerates. Yanmei Xie of Gavekal Dragonomics, a research firm, is even blunter: policymakers “are trying to create conglomerates that can dominate domestic and international markets through sheer size”.
The risk is that such supersized SOEs could hurt the global economy. In a paper published earlier this year, Caroline Freund and Dario Sidhu of the Peterson Institute of International Economics, a think-tank, argued that businesses around the world were operating in more fragmented environments, with the exception of sectors in which Chinese SOEs have large footprints. In these sectors, such as mining and civil engineering, concentration has increased as China’s state firms have bulked up. Normally, it is the most productive companies that grow the fastest. China’s SOEs, by contrast, are much less efficient than their international counterparts, even when they are growing more quickly, according to Ms Freund and Mr Sidhu.
The business of state
The saving grace in the past was that the vast majority of SOE business was within China. That is changing: industries from construction to steel to railways are looking abroad. The “One Belt, One Road” strategy—the core of Mr Xi’s foreign policy—has made foreign expansion an explicit part of their mandate. The danger is not just that they will elbow Chinese private-sector competitors aside but that in doing so, they will provoke a backlash. Big firms in other countries will demand state backing in order to level the playing field. Foreign regulators, already wary of Chinese capital, will turn more hostile. The drift away from free trade could easily gather steam.
This is not the only worry. One of the keys to China’s economic rise hitherto has been its success in restricting the sprawl of state firms. They control the commanding heights of the economy, from transportation to power, but have largely been confined to these sectors. Hard-charging entrepreneurs have been free to break into new businesses around them. The manufacturers that led China’s export assault on global markets were private. The tech firms that dominate the internet are private. The restaurants, cafés and shops that line city streets are private.
This model still works, for now. Within the MSCI index of large listed Chinese firms, the state accounts for more than 80% of market capitalisation in sectors such as energy, industry and utilities, according to Morgan Stanley. But the state accounts for 40% or less of market value among consumer, health-care and IT companies, says the bank. With these newer sectors growing far more quickly than smoke-stack industries, private companies may well continue to outflank SOEs.
There is a big looming worry, however. One aspect of SOE reform is in fact making quick progress: the creation of what are known as “state capital investment and operation” companies (SCIOs), to help manage existing state assets and invest in new ones. This initially looked like part of the solution for China. It borrows an approach honed in Singapore, where Temasek, a government-owned holding company, manages a portfolio of state firms but does not meddle in their operations, apart from demanding that they deliver good returns. It is now clear that this is not what China has in mind. Government officials say that SCIOs should not seek to make money in their investments; rather, they are meant to be more like “policy funds”, seeding firms and industries with government cash or money raised from SOE dividends without worrying about profit.
The other striking feature of SCIOs is that they are expressly enjoined to break into new high-tech sectors. Provincial governments around the country have published plans over the past two years in which they promise to guide more than 80% of their funds into infrastructure, public services and, crucially, “strategic emerging industries”, a category that refers to new energy, biotechnology and IT, among other areas. The upshot is that SCIOs, armed with cheap capital, seem set on expanding the state’s reach into the private sector. “We should anticipate the emergence of literally thousands of well-resourced SCIOs,” says Barry Naughton at the University of California in San Diego.
State-backed private-equity funds, which can be seen as forerunners to the investment function of the SCIOs, are already making a big impact. To give three examples from last year: the city of Shenzhen launched a 150bn yuan fund; Jiangxi, a relatively poor central province, created a 100bn yuan fund; and the city of Chengdu set up a 40bn yuan fund. This influx of cash is pushing up valuations. Bain & Co, a consultancy, calculates that private-equity deals in China were priced last year at a frothy 26-times earnings before interest, tax, depreciation and amortisation, compared with ten times in America. The state may turn out to be a wise investor but experience suggests otherwise. More likely, the state will crowd out private investors, hogging capital and allocating it poorly.
The outcome does not have to be this bleak. Optimists still think that Mr Xi could spring a surprise after a big Communist Party congress later this year. With his authority firmly entrenched, he might feel emboldened to unleash the market forces that he spoke of four years ago. But based on his rhetoric and actions so far, this looks like wishful thinking. SOEs, far from retreating, are on the march, drawing on government support to compensate for their weakness. They are making conquests at home and abroad. Cutting state firms down to size and opening them up to competition ought to be the point of SOE reform. Instead, China is beefing them up and driving them into new territory.
Source: The Economist
1). Sprawling (Verb) gerund or present participle: sprawling
Definition: spread out over a large area in an untidy or irregular way.
Synonyms: spread, stretch, straggle, ramble, trail, spill
Usage: The town sprawled along several miles of cliff top.
2). Conglomerates (Noun)
Definition: a thing consisting of a number of different and distinct parts or items that are grouped together.
Synonyms: mixture, mix, combination, mingling, commingling
Usage: The Earth is a specialized conglomerate of organisms.
3). Blunter (Adj) comparative adjective: blunter
Definition: (of a person or remark) uncompromisingly forthright.
Synonyms: Straightforward, frank, plain-spoken
Usage: He had a blunt message for the audience.
4). Sheer (Adj)
Definition: nothing other than; unmitigated (used for emphasis).
Synonyms: utter, complete, absolute, total, pure
Usage: He whistled at the sheer audacity of the plan.
5). Bulked (Verb) past tense: bulked; past participle: bulked
Definition: treat (a product) so that its quantity appears greater than it is.
Synonyms: make bigger, expand, fill out
Usage: Some takeaway meals are bulked out with fat.
6). Counterparts (Noun) plural noun: counterparts
Definition: a person or thing that corresponds to or has the same function as another person or thing in a different place or situation.
Synonyms: equivalent, opposite number, peer, equal
Usage: The minister held talks with his French counterpart.
7). Explicit (Adj)
Definition: stated clearly and in detail, leaving no room for confusion or doubt.
Synonyms: clear, direct, plain, obvious, straightforward, clear-cut
Usage: The arrangement had not been made explicit.
8). Provoke (Verb)
Definition: stimulate or give rise to (a reaction or emotion, typically a strong or unwelcome one) in someone.
Synonyms: arouse, produce, evoke, cause, give rise to, occasion
Usage: The decision provoked a storm of protest from civil rights organizations.
9). Backlash (Noun)
Definition: a strong negative reaction by a large number of people, especially to a social or political development.
Synonyms: adverse reaction/response, counteraction, counterblast
Usage: The move provoked a furious backlash from union leaders.
10). Wary (Adj)
Definition: feeling or showing caution about possible dangers or problems.
Synonyms: cautious, careful, circumspect, on one’s guard, chary
Usage: Dogs which have been mistreated often remain very wary of strangers.
11). Hostile (Adj)
Definition: showing or feeling opposition or dislike; unfriendly.
Synonyms: antagonistic, aggressive, confrontational, belligerent, bellicose
Usage: He wrote a ferociously hostile attack.
12). Hitherto (Adverb)
Definition: until now or until the point in time under discussion.
Synonyms: previously, formerly, earlier, so far,
Usage: Hitherto part of French West Africa, Benin achieved independence in 1960.
13). Confined (Adj)
Definition: (of a space) restricted in area or volume; cramped.
Synonyms: cramped, constricted, restricted, limited
Usage: She had a fear of confined spaces.
14). Assault (Verb)
Definition: make a physical attack on.
Synonyms: hit, strike, physically attack, aim blows at, slap
Usage: He pleaded guilty to assaulting a police officer.
15). Outflank (Verb)
Definition: move round the side of (an enemy) so as to outmanoeuvre them.
Usage: The Germans had sought to outflank them from the north-east.
16). Looming (Verb)
Definition: appear as a vague form, especially one that is large or threatening.
Synonyms: Emerge, appear, become visible, come into view
Usage: Ghostly shapes loomed out of the fog.
17). Honed (Verb) past tense: honed; past participle: honed
Definition: refine or perfect (something) over a period of time.
Usage: Some of the best players in the world honed their skills playing street football.
18). Meddle (Verb)
Definition: interfere in something that is not one’s concern.
Synonyms: interfere, butt in intrude, pry
Usage: I don’t want him meddling in our affairs.
19). Influx (Noun)
Definition: an arrival or entry of large numbers of people or things.
Synonyms: inrush, rush, stream, flood
Usage: We have a large influx of tourists in the summer.
20). Depreciation (Noun)
Definition: a reduction in the value of an asset over time, due in particular to wear and tear.
Synonyms: devaluation, devaluing, decrease in value, lowering in value
Usage: We are concerned about the depreciation of house prices.
21). Amortisation: Amortization is an accounting term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time.
22). Hog (Verb) gerund or present participle: hogging
Definition: take or use most or all of (something) in an unfair or selfish way.
Synonyms: monopolize, keep to oneself, dominate, take over
Usage: He never hogged the limelight.
23). Bleak (Adj)
Definition: (of an area of land) lacking vegetation and exposed to the elements.
Synonyms: bare, exposed, desolate, stark, arid, desert
Usage: A bleak and barren moor.
24). Entrenched (Adj)
Definition: (of an attitude, habit, or belief) firmly established and difficult or unlikely to change; ingrained.
Usage: An entrenched resistance to change.
25). Emboldened (Verb)
Definition: give (someone) the courage or confidence to do something.
Synonyms: give courage, make brave/braver, encourage
Usage: Emboldened by the claret, he pressed his knee against hers.
26). Rhetoric (Noun)
Definition: the art of effective or persuasive speaking or writing, especially the exploitation of figures of speech and other compositional techniques.
Synonyms: oratory, eloquence, power of speech, command of language
Usage: He was considered to excel in this form of rhetoric.
27). Conquests (Noun)
Definition: the subjugation and assumption of control of a place or people by military force.
Synonyms: defeat, beating, conquering, vanquishment
Usage: The conquest of the Aztecs by the Spanish.
28). Beef (Verb)
Usage: He was beefing about how the recession was killing the business.