Beijing’s Development of State-owned Assets and Enterprises
The city made high achievements in the reform of a stateowned economy and enterprises which have played roles in structural reform.
State-owned enterprises (SOES) and state-owned assets have played important roles in promoting the country's supply-side structural reform. During the past five years, Beijing has made substantial achievements in the development of a state-owned economy and deepened the reforms and innovations of SOES and state assets. The Party (Communist Party of China) building within SOES has also been strengthened.
High Achievements for a State-owned Economy
During the past five years, Beijing has been active in handling the city's complicated economic environment and enhanced the development of a state-owned economy. It established mechanisms, clarified tasks, and strengthened supervision. The country's state-owned economy realised faster growth, improved markedly in both development quality and returns, with emerging innovations.
By the end of June 2017, the total assets of Beijing's municipal enterprises were 4.16716 trillion yuan, a year-on-year increase of 15.8 percent and an increase of 80.3 percent compared with five years ago; their owners' total equity was 1.3651 trillion yuan, up by 17.9 percent year on year. Their business revenues and profits reached 663.77 billion yuan and 38.75 billion yuan, respectively, increasing by 22.7 percent and 40.6 percent year on year and by 46.3 percent and 78.8 percent, respectively, compared with five years ago. Taxes and fees they turned over increased by 77.8 percent in these five years.
In terms of development quality, Beijing promoted high-end industrial development and established the state-owned economic layout, with infrastructure and public service industry as the basis, backed up by modern manufacturing and modern services, and relied on urban industries characteristic of the capital. Strategic emerging industries have primarily taken shape. Industries treating sewage and solid waste, as well as environmental restoration, occupy a leading position. Modern service industries, such as tourism, health, medical, cultural and creative industries, developed at a faster speed and have become new factors in economic
growth. The BAIC Group and the Head Office of Shougang (renamed the Shougang Group) were included on the list of Fortune 500 companies; in addition, 17 companies were included on the list of China's “Top 500,” and there are 12 enterprises in the city with assets of more than 100 billion yuan.
Meanwhile, Beijing has strengthened independent innovation of SOES, and their innovation-driven achievements are gradually being seen. At present, the municipality's SOES have about 300 laboratories or engineering technology centres for innovation, 61 of which are at the national level. They employ about 70,000 research personnel, who account for 8.3 percent of their total staff. For the recent three years, funding for the municipality's SOES' research and development saw an average annual growth of 15.6 percent, and some high-tech enterprises invested more than five percent of their main business revenue in research; the number of patent applications saw an annual growth of 16.7 percent and reached 14,000 in 2016. The BOE Technology Group realised five “firsts” in the world, including the largest number of applications for new patents and the greatest market share of medium- and large-sized high-end display products; the sales volume of purely electric-powered vehicles of the BAIC Group ranked first in the nation.
Beijing has also actively promoted coordinated innovation. It signed the Working Plan for the Coordinated Innovation of Central and Municipal Enterprises with the Stateowned Assets Supervision and Administration Commission of the State Council, and cooperated with the Zhongguancun Administrative Committee to set up the Zhongguancun Yunti Technology Innovation Alliance. The municipality's SOES in the Zhongguancun area reached agreements on 128 programmes. High-end intelligent parking robots, an E plus innovation and entrepreneurship acceleration community, and other projects have been put into operation.
To promote opening up, the city's SOES have established research and development institutions overseas, such as in the United States, Germany, Spain, Italy and Japan, and have expanded to 49 countries and regions. The Shou Qi Group, a branch of the Beijing Tourism Group, promoted the combination of traditional industries with “Internet plus” and used financial capital to build its own website for automobile rentals and reservations. Its car rental service ranks in the top three in the nation's Internet car rental industry.
At the 2017 Beijing Science and Technology Award Conference, 16 projects that were hosted or completed by 26 municipal SOES received awards. Among them, seven projects from seven different enterprises, such as BAIC Motor and the Beijing Energy Investment Holding Company Limited, won first prize, accounting for a quarter of the city's first-prize awards.
Highlights of Reform
For five years, Beijing has followed the principle of “drafting overall planning, establishing experimental zones, and making breakthroughs in major fields” to develop and optimise SOES. It has established the main reform framework and improved the mechanisms to reform this system.
Beijing has continued to strengthen research on how to improve and reform this system, to make it more systematic, complete and collaborative, and has issued Guidelines on Comprehensively Deepening the Reform of Municipal State-owned Assets and Enterprises. It took the lead in the country to issue an implementation plan concerning the reform and worked out specific measures and regulations for the classification of SOES, the reform of diversified ownership and the salary system for the staff of these enterprises. Beijing has so far formed a systematic reform layout.
With regard to pilot reforms, Beijing has focused on the major and difficult issues that restrained development, worked out measures based on actual circumstances, and launched 15 pilot reforms. It has accumulated experience in setting up boards of directors, how to classify appraisals of staff members, and transfer of property rights, with the aim of promoting these reforms nationwide. The Beijing Tourism Group, on behalf of SOES, gave a speech at the National SOES Conference. Reforms in employee ownership stock plan in mixed ownership enterprises, and the reconstruction of enterprises invested and operated by state capital, have gone smoothly.
Beijing has explored comprehensive usage of SOES' reserve land to promote industrial upgrades and has explored new solutions to other remaining issues by having enterprises establish social insurance platforms and government purchasing services. It has brought forth new ideas to pilot these mechanisms and designated the Head Office of Shougang as the organisation that will carry out comprehensive pilot reforms.
A series of breakthroughs has been made in reform of important areas. To integrate the resources of enterprises, the city guided the completion of a group of mergers and reorganisations, such as the merger between the Beijing Energy Investment Holding Company and the Jingmei Group. The Jinyu Group and the Tangshan Jidong Cement Company achieved a strategic reorganisation to address regional overcapacity, a useful attempt for the Beijing-tianjin-hebei coordinated industrial development.
Beijing has encouraged enterprises to rebuild and go public, and introduced a collaboration system for privately-owned enterprises. The modern enterprise system has been established in all the municipality's first-level SOES. The BAIC Motor Corporation Limited, China Securities, and the Beijing Certificate Authority became an IPO (initial public offering) companies and the Jinyu Group and the Beijing Suburban Tourism Development Company (Beijing Jiaolü) became listed companies. Breakthroughs were made in missed ownership's reform in firstlevel enterprises.
The number of municipal listed companies increased to 58 and shares issued at 63, with a total market capital of more than 1.1 tillion yuan. The municipality's mixed ownership companies accounted for about 70 percent of the total. Beijing has invented more supervision methods and set up sponsored supervision information platforms for SOES to report to sponsors. The mechanism makes 28 major issues—such as companies' finances, investments and major construction tasks— known to the public, ensures shareholders' right to know, and activates supervision. Efforts were also made to promote coordinated supervision, host joint supervision conferences, and improve mechanisms of Beijing's State-owned Assets Administration and Commission for planning, coordinating, resource sharing, and cooperation. In 2016, The Inspection Team of China's State Council spoke highly of Beijing Municipality's reform of SOES and state-owned economy, affirming its adhering to market orientation and correct political direction.
For five years, Beijing's municipal SOES have played a key role in assisting the transfer of the city's functions unrelated to its position as the nation's capital (non-capital functions) and promoting the coordinated development of Beijing, Tianjin and Hebei.
To shift non-capital functions, the city first launched the relocation of the SOES that were not in line with the city's orientation and issued guidelines for accelerating the withdrawal of those unqualified. It listed tasks and established accountability mechanisms, as well as mechanisms for monthly scheduling, division of labour, and incentives based on annual performance.
In the recent three years, state-owned capital invested in non-capital functions surpassed one-third of the total operating budget. Until August 2017, Beijing's municipal SOES have taken the lead to relocate wholesale markets in the Dahongmen and Beijing Zoo areas, shut down 31 markets, improved 17 villages, dismantled 4.474 million square metres of illegal construction, and rectified 300 underground sites.
It made overall planning for land left unused to increase the city's green area and improve public service facilities and ecology. It rectified the shops nearby Dongdan Park and Shuangxiu Park to restore green land. It shut down the Wangpingcun and Changgouyu coal enterprises and five cement companies and addressed the overcapacity of 1.8 million tons of coal and 3.9 million tons of cement.
In the past five years, Beijing has accelerated the withdrawal of 404 enterprises that have high resource consumption and produce a large amount of pollution. Eighteen SOES have undertaken 58 projects related to Beijing's sub-centre construction and made rapid progress in the construction of the Administrative Office Area, the Universal Beijing Theme Park, and urban infrastructure.
To offer better urban services, Beijing issued Guidelines on Municipal State- owned Enterprises Performing Social Responsibilities, which requires first-grade municipal enterprises to include their social responsibilities in annual work reports of boards of directors, establish relevant management systems, and releases, in order to integrate the development of enterprises with urban construction and management.
From 2012 to 2017, the city's SOES undertook 40 percent of the municipality's major projects. Construction was completed on numerous projects, such as the AECC Commercial Aircraft Engine Corporation, the BBAC (Beijing Benz Automotive Company) Supplier Industrial Park, and four thermoelectric centres, and all these projects have now been put into production. The city's rail transit system increased in length by 132 kilometres, and 50 percent of commuters chose public transport methods at the end of 2015. A group of eco-friendly facilities have been put into operation, such as the Huaifang Recycling Water Plant, the Gao'antun Domestic Garbage Incineration Plant, and the Xiaohongmen Sludge Treatment Centre. Beijing's SOES also completed the construction of facilities for the South-to-north Water Diversion Project, created a three-year action plan for improving the city's smalland medium-sized rivers and channels, and constructed 250,000 units of governmentsubsidised housing, which accounts for onequarter of the city's total; 200,000 of these units were built on their own land.
SOES also made innovations to improve services to the community. Enterprises such as the Beijing Capital Agribusiness Group, the Beijing Er Shang Group, and the Beijing Grain Group (BGG) have enriched their products and launched various commercial models, such as community supermarkets and chain stores, offering convenience for residents. About ten enterprises, including the Beijing State-owned Assets Management Corporation and the Beijing Enterprises Group Company, have built nursing institutions for the elderly.
Mechanisms and platforms were set up to promote the coordinated development of Beijing, Tianjin and Hebei, including a system to coordinate conferences for SOES in the three places; coordinated mechanisms for major projects; the Alliance for the Development of Equity Markets in Beijing, Tianjin and Hebei; and the Beijing-tianjinHebei Tourism Resources Trade Platform.
In addition, Beijing has set up platforms to relocate and undertake certain industries. It was decided that 18 projects will be relocated to the 5.5-square-kilometre Caofeidian Industrial Pioneering Zone, with a total investment of 32.7 billion yuan. Infrastructures such as hospitals, schools, and kindergartens were introduced to the 4.6-square-kilometre Caofeidian IndustrialTown Integration Pioneering Zone. The Beijing-tianjin Cooperation Demonstration Zone finalised the ownership of its land and construction was launched in its 11-squarekilometre zone. Major projects, such as The No. 4 Plant of Beijing Hyundai Motor and the Sanyuan Food Industrial Park, have been put into operation. The Beijing-tianjin-hebei Intercity Railroad Investment Company was founded and a railroad network plan was drafted, according to which the regional intercity railway tracks would extend to 3,172 kilometres by 2030. At present, preparations for projects such as the Beijing–tangshan Railway, the Beijing–tianjin Binhai New Zone Railway, and intercity railway linking routes ran smoothly. SOES will also assist in the construction of the Xiong'an New Area.
Strengthening Party Building
Adhering to the CPC'S leadership over SOES is a major political principle, and establishing a modern enterprise system is the direction for reform. For five years, Beijing has firmly adhered to the Party's leadership and laid a solid political and organisational foundation for deepening the reform of SOES and stateowned assets.
The Party Commission of the Stateowned Assets Administration and Commission of the People's Government of Beijing Municipality established a Party building group, held meetings regularly, and strengthened research on Party construction. The commission issued opinions on adhering to the CPC'S leadership and strengthening Party construction while deepening reforms. It focused on seven major tasks, promoted elections and leadership transition for grass roots Party organisations, and strengthened mechanisms for reporting, appraisal, and evaluation.
In addition, the commission explored and implemented a supervision and accountability system, and considered Party building an important aspect for evaluating leadership. Improper measures will be revised and personnel who don't perform their duties well in Party building will be held accountable.
To integrate the CPC'S leadership with enterprise governance, the commission affirmed the Party's legal status in SOES and incorporated its structure and responsibilities into the enterprises' management systems. Enterprises directly funded or registered by the Beijing Municipal Government have all finished revising their articles of incorporation. The commission also paid attention to forming boards of directors. Qualified personnel not from the company are also eligible to be elected a member of the board, which improves the decision-making system. In all the companies directly funded by the city that have boards of directors, the secretary of the Party commission also serves as the chairman of the board. The commission has assigned 103 personnel as outside directors to companies, and the number of noncompany directors accounted for half of the board in competitive companies. Forty companies have finished revising the Party commission's rules of procedures and the decision-making system.
The commission carried out ideological and theoretical construction for Party members and organisations. It launched selections and competitions to strengthen cultural and staff building of SOES. It held an event called “Role Models of State-owned Enterprises • Role Models of Beijing” and launched an “SOES Open Day.”
In terms of developing the conduct and integrity of SOES, the commission has signed letters of accountability with Party commissions that have enterprises under their supervision, and with the first- and secondgrade municipal enterprises. The commission further improved the systems for reporting complaints, for supervising discipline, and for review. It had talks with the leaders and officials of 144 enterprises who have taken office since 2013. It also strictly investigated and dealt with corruption in SOES during the reform process.
In recent years, Beijing has made outstanding progress in shifting its noncapital functions, transferring development modes, promoting the reform of SOES, and strengthening Party building. In the future, on the basis of the sound and stable development of a state-owned economy, Beijing will continue to enhance both development quality and returns, improve the modern enterprise system and state asset supervision system, form a layout in line with the capital's development strategies, and demonstrate the role of SOES and a state-owned economy in better serving society.
Subway Yanfang Line (Yancun Village-zhoukoudian Town), China’s first automatic line for independent research
The Arctic Ocean soda production line at Beijing Yiqing Holding Company Limited