CRI:

The Chinese economy is undergoing a shift in regard to its growth drivers. Can you introduce the measures the central SOEs have taken to develop new drivers of growth? And what achievements have they made so far? Thank you.

Shen Ying:

Thanks for your questions. The sustainable and healthy development of central SOEs depends on the cultivation of new growth drivers. We must change our developmental concepts and facilitate advancement through technological innovation. In recent years, SASAC has made some achievements in this regard, which can be summarized in the following aspects:

First, we've strengthened top-layer design and improved the innovation mechanism. In January, we issued the SASAC Work Measures to Facilitate Technological Innovation in Central SOEs, which includes a full set of policies and measures addressing key links in promoting innovation, such as creating a favorable environment and other means to stimulate initiative. In March, a leading group for technological innovation work in the central SOEs was established to coordinate relevant work, such as discussing innovation strategies, major policies, tasks and assignments.

Second, we have pushed forward the drive to strengthen the innovation capacity of the central SOEs. We have organized and supported those enterprises to comprehensively participate in major technological tasks, and encouraged them to increase investments in research and development. Up to now, there are 808,000 R&D personnel working in the central SOEs, involved in 3,063 R&D institutes and 635 national-level R&D platforms.

Third, we have promoted the integration of technology and capital. On May 16, a 150 billion-yuan fund was launched by the China Aerospace Science and Technology Corporation (CASC). Now, a preliminary framework for innovation funds has emerged, with more than 200 equity investment funds playing active roles.

Fourth, we have established high-level platforms for mass entrepreneurship and innovation. Up to now, a total of 518 such platforms have been set up by the central SOEs, including internet platforms, business incubators, and various other activities and funds to encourage innovation and entrepreneurship. The platforms substantially promote SOE restructuring and upgrading, promoting innovation both internally and society-wide.

Fifth, we have formulated mechanisms to stimulate innovation. In order to motivate the researchers to overcome difficulties and produce technological innovations, SASAC has explored and put into effect some measures regarding performance evaluation and salary distribution, such as the mid- to long-term incentives empowering state-owned technology enterprises to reward employees through equity share-outs and dividends.

Such incentives have produced remarkable outcomes. This year, the Chinese-made C919 airliner made a successful maiden flight. The first domestically-built aircraft carrier, jointly developed by the China Shipbuilding Industry Corporation (CSIC), was launched. The underground tunnel section of the Hong Kong-Zhuhai-Macao Bridge was completed. All these projects featured significant progress in technological innovation.

Meanwhile, a large number of advanced manufacturers and hi-tech sectors have significantly driven SOE profit growth. For example, the heavy equipment manufacturing sector in the half-year saw an investment increase of 12.9% year-on-year, with orders up 46%. Other sectors, such as medicine, military and electronic manufacturing, all have shown good momentum.

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