China Daily:

The central government has vowed to further boost supply-side structural reform to promote long-term, sustainable economic development. Since the reform involves a wide variety of issues, could you tell us what is the main focus for the central SOEs? Thank you.

Xiao Yaqing:

Implementing supply-side reform is a major strategic decision of the central authorities. Central SOEs have resolutely carried out the reforms and greatly benefitted from them.

The following are some of the main aspects.

First, taking the lead in reducing excessive production capacity. Central SOEs, especially those in the steel and coal sectors, achieved their goal ahead of schedule and, indeed, beyond expectations, in 2016 and continuing in the first eight months of this year.

Last year, the amount of overcapacity cut by the central SOEs in the steel industry accounted for 80 percent of the industry total. Meanwhile, in the coal industry, the central SOEs cut overcapacity by 200 million tons, or 73 percent of the industry total. In the first eight months this year, enterprises in the two sectors undertook further cuts in their overcapacity of 16.14 million tons and 55.10 million tons respectively.

Besides, small coal companies under the central SOEs, with a total production capacity of some 100 million tons, were either shut down or integrated.

The second area involves addressing the problem of "zombie enterprises". A total of 500 "zombie enterprises" of those in serious trouble achieved rectification, reducing annual losses of companies directly under the central SOEs by 88.5 billion yuan.

The third focus is reducing leverage and debt. A risk control system is taking shape and has achieved positive initial results. The system sets the debt alarm level for enterprises in different industries, monitors and controls operations of heavily indebted enterprises, and curbs issuance of bonds by such companies. At the end of August, the average debt to asset ratio fell by 0.2 percentage point to 66.5 percent.

Fourth, efforts were undertaken to further streamline the organizational structure. They focused on redundant and overlapping departments in central SOEs. Unprecedented efforts have been made in the past year and achieved remarkable results, with 6,395 departments shut down, and the posts of 6,395 general managers and an even larger number of deputy general managers abolished.

Fifth, there was also a significant focus on resolving long-lasting problems. Pilot programs have been launched to relieve enterprises of the burden of providing water, electricity, heating, gas, and property management services to employees, and to improve the service system covering retired employees.

The economic structure has noticeably improved as a result of supply-side structural reform. As was just mentioned, when carrying out reform, we obviously favor emerging industries of strategic importance and those that have a bearing on the national economy and people's livelihood.

On the whole, the reform has contributed to the development of central SOEs, especially in ensuring their development becomes more sustainable, market-oriented and in line with the expectations of the people. However, the reform needs to go deeper in a number of aspects, and we are undertaking studies and improvements in this regard. At any rate, we will continue the reform among central SOEs to help elevate the Chinese economy to the medium-to-high level.

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