Big steps in SOE mixed-own­er­ship re­form

China Daily (Hong Kong) - - BUSINESS - By ZHONG NAN

Mixed-own­er­ship re­form of a num­ber of cen­tral Sta­te­owned en­ter­prises is ex­pected to be ap­proved within the third quar­ter of this year, as the coal, steel, heavy equip­ment and ther­mal power sec­tors will be­come the govern­ment’s pri­or­ity in re­struc­tur­ing its gi­ant SOEs, said ex­perts on Tues­day.

Mixed-own­er­ship re­form acts as a ma­jor part of the over­all re­form of SOEs. It is pushed by fac­tors in­clud­ing China’s on­go­ing sup­ply­side re­form, the Belt and Road Ini­tia­tive and many Chi­nese com­pa­nies’ “go­ing global” strat­egy, as well as the “Made in China 2025” plan.

A group of cen­tral SOEs, in­clud­ing China Na­tional Avi­a­tion Hold­ing Co, Power Con­struc­tion Corp of China and China Na­tional Ce­re­als, Oils and Food­stuffs Corp, have al­ready started to draft plans for mixed-own­er­ship re­form.

“Even though it is still in the early stage, cen­tral SOEs will face is­sues in­clud­ing mo­nop­oly and the place­ment of em­ploy­ees dur­ing the process of mixed own­er­ship re­form. But as these en­ter­prises are all strong and com­pet­i­tive, they have the abil­ity to solve prob­lems such as em­ployee place­ment,” said Li Jin, chief re­searcher at the China En­ter­prise Re­search In­sti­tute.

“As for the mo­nop­oly is­sue, we can­not ex­pect it to be solved in the short term. We can and will pro­mote it grad­u­ally.”

A to­tal of 91 cen­tral SOEs achieved a rise in rev­enue dur­ing the first quar­ter of this year, with 54 of them, in­clud­ing de­fense-re­lated in­dus­tries, con­struc­tion ma­te­ri­als, phar­ma­ceu­ti­cals and mod­ern ser­vices, wit­ness­ing a rise of 10 per­cent or more, and sec­tors such as oil, steel and coal ex­pe­ri­enc­ing an in­crease in rev­enue of at least 40 per­cent.

“It is im­per­a­tive that the coal in­dus­try starts to re­struc­ture this year. Cen­tral SOEs in the coal in­dus­try will in­te­grate coal re­sources at the cen­tral level, and then at pro­vin­cial-level com­pa­nies,” Li said.

In terms of heavy equip­ment, China First Heavy In­dus­tries Co, Harbin Elec­tric Corp and Dong­fang Elec­tric Corp are likely to in­te­grate as the ma­jor­ity of their busi­ness is sim­i­lar.

“Against a back­drop of tack­ling over­ca­pac­ity, there’s a grow­ing like­li­hood that China State Ship­build­ing Corp and China Ship­build­ing In­dus­try Corp, two ma­jor Chi­nese ship­build­ing com­pa­nies, will merge,” Li said

He Jing­tong, a busi­ness pro­fes­sor at Nankai Uni­ver­sity in Tian­jin, said that merg­ers and consolidation will take place in power com­pa­nies af­fil­i­ated to the five big power gen­er­a­tion giants — China Datang Corp, Hua­neng Power In­ter­na­tional Inc, Hua­dian Power In­ter­na­tional Co, GD Power De­vel­op­ment Co and State Power In­vest­ment Corp.

The State-owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion said last week that China Hi-Tech Group Corp has been merged with China Na­tional Ma­chin­ery In­dus­try Corp (Si­no­mach). Si­no­mach pro­duces con­struc­tion and agri­cul­ture equip­ment, while China Hi-Tech is a tex­tile ma­chin­ery man­u­fac­turer.

By now, the num­ber of cen­tral SOEs has been cut to 101. SASAC plans to re­duce the num­ber of cen­tral SOEs to un­der 100 this year.

Cheng Yu and Zou Shuo con­trib­uted to this story.

Con­tact the writ­ers at zhong­nan@chi­


A trac­tor comes off the pro­duc­tion line of YTO Group Corp in Luoyang, He­nan prov­ince.

Li Jin, chief re­searcher at the China En­ter­prise Re­search In­sti­tute

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