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Report: China's Communist Party takes growing role in companies

China's Communist Party has begun taking a core role in managing many of the country's biggest companies, writing itself into their articles of association since 2016, the Financial Times reported.

More than 30 Hong Kong-listed state-owned enterprises, representing more than $1 trillion in market capitalization, have added lines to company documents that install the party at the core of each group. This is the first time that the party, rather than the government, has been named, investors said.

These companies range from state oil group Sinopec and Industrial and Commercial Bank of China, the world's largest bank by assets, to brokers such as Haitong Securities.

Key phrases added into the articles of association describe the party as playing a core role in "an organized, institutionalized and concrete way" and "providing direction (and) managing the overall situation."

The articles of association for China Railway Group, one of the country's biggest construction groups, for example, state that "when the board of directors decides on material issues, it shall first listen to the opinions of the party committee of the company." Hong Kong regulators have called for the disclosure of the people who run the party committees, said the Financial Times.

For the country’s four largest banks, the changes were proposed by a unit of CIC, China's sovereign wealth fund and controlling investor of government stakes in many companies.

Beijing said these efforts aim to improve efficiency and productivity at state-owned enterprises, which account for about a fifth of the country's GDP. But for David Webb, an independent investor in Hong Kong, "this is a reminder to investors they are buying into a party machine."