Chinese state backed China Unicom reports misleading fund raising figure, opens Pandoras Box

Although the misrepresentation has been quickly dismissed by China Unicom Hong Kong Ltd as a technical issue, the fact that China Unicom has the full support and backing of the Chinese state, it puts into doubt the veracity of the fantastic numbers that China spews out.

On Thursday, two main units of China Unicom’s have stated that trading in their stocks have been suspended until further notice.

The development comes in the wake of China Unicom announcement that it raised $11.7 billion from investors including Alibaba Group and Tencent Holdings.

No reason has been given so far as why the trading in their shares were suspended, especially since it runs counter to expectations that trading would resume once the details of the fundraiser were released.

One of the investors named by China Unicom has denied, on Thursday, that it participated in the deal. Adding to the confusion was the fact that the announcement of the deal was taken down from the Shanghai bourse website while remaining on the Hong Kong bourse’s website and on the website of the Hong Kong unit, as well.

China Unicom Hong Kong Ltd said, the announcement was taken down from the Shanghai exchange due to “technical issues”, without elaborating any further.

The controversy surrounding the fundraiser revolves around CRRC Corp Ltd. Of the 14 investors who were named by China Unicom’s Hong Kong unit, the rail equipment maker, CRRC Corp Ltd, denied making an investment through the purchase of shares in the Shanghai-listed unit.

“According to verification results, the company did not participate in the afore-said subscription,” it said in a notice to the stock exchange, referring to media reports about it being one of the investors.

The development puts a doubt into the veracity of information flowing from China which controls every bit of information flowing out of the nation.

This is significant since the China Unicom fundraising is part of Beijing’s push for state-owned enterprises to be revitalized with private capital.

China Unicom is among the first batch of state-owned enterprises slated for mixed-ownership reforms.

In a note to investors, Edison Lee, analyst at brokerage firm Jefferies, said the diversified nature and representation of private investors was unprecedented for a Chinese state-owned enterprise. This signifies to what extent the Communist Chinese government supports China Unicom.

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