China to change over state-owned firms

CHINA said yesterday it would move to transform all stateowned companies into corporations by the end of this year, as part of efforts to reform the sclerotic industrial giants.

China has pledged for years that it would take steps to reform the centrally run businesses, which dominate crucial industries ranging from power and steel to aviation.

But vested interests have resisted the attempts to restructure the massive enterprises, which are among the country’s largest employers and have created powerful fiefdoms for the bureaucrats that run them.

State-owned enterprises managed by the central government should aim to become “limited companies or corporations” by the end of the year, according to a statement on the website of the State Council, China’s cabinet.

The change will “build a modern enterprise system and improve the market-oriented management mechanism”, it said.

Ninety percent of China’s state enterprises have already been turned into corporations, according to the statement.

It did not say whether the com- panies will be opened to private investment or could be listed on the country’s stock markets.

The announcement follows comments earlier in the month from President Xi Jinping calling for authorities to deepen SOE reform by “focusing on the establishment of a modern corporate governance system”.

He described SOEs as an “important foundation for national development” but said overhauling them was important to enhance their “vitality, competitiveness and risk resistance”, according to the official Xinhua news agency.

China’s lumbering stateowned giants have long been a drag on the economy, saddled with massive debts and overcapacity far exceeding domestic demand.