Trends in China’s SOEs reform
- By Ding Yifan
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E-mail China.org.cn, August 15, 2014
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This round of centrally-administered SOEs reform will play a demonstrative and leading role. |
The reform of state-owned enterprises (SOEs) was the focus of the Third Plenary Session of the 18th Communist Party of China’s Central Committee. On July 15, China released a list of the first group of centrally-administered SOEs to reform, thereby unveiling a new round of changes in SOE structure.
Six centrally-administered SOEs are involved: the State Development & Investment Corporation, China National Cereals, Oils and Foodstuffs Corporation, China National Pharmaceutical Group, China National Building Materials Group, Xinxing Cathay International Group and China Energy Conservation and Environmental Protection Group.
Each of these six companies has their own focus. The State Development & Investment Corporation and China National Cereals, Oils and Foodstuffs Corporation will pilot reform in restructuring the state-owned asset investment company; the China National Pharmaceutical Group and China National Building Materials Group will pilot mixed-ownership reform; the reform of Xinxing Cathay International Group and China Energy Conservation and Environmental Protection Group will be placed on the executive right of the board of directors in recruiting executives, appraising performance and managing salaries.
The State Development & Investment Corporation and China National Cereals, Oils and Foodstuffs Corporation are reform pioneers, involved in both capital restructuring and mixed ownership.
On the whole, this round of centrally-administered SOE reform reveals the following: first, the enterprises involved in the reform are all from competitive industries, showing the Chinese government’s willingness to further open up competitive areas. Second, this reform is intended to tackle less controversial enterprises first. This is an easy way to gain success, which can provide a bigger impetus for reform. Third, these enterprises have a strong foundation with competent leadership and better business performance. Lastly, they have clearer business objectives, and are experienced in management.
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