SOE re­form to spark ‘chain re­ac­tion’ next

China Daily (Hong Kong) - - BUSINESS -

BEI­JING -- China’s ma­jor State-owned en­ter­prises will com­plete cor­po­rate gov­er­nance re­form by the end of this year, in an ef­fort to over­haul in­ef­fi­cient com­pa­nies.

The re­form tar­gets SOEs su­per­vised by the cen­tral gov­ern­ment ex­clud­ing fi­nan­cial and cul­tural firms, ac­cord­ing to an ac­tion plan re­leased by the State Coun­cil late last month.

A con­tem­po­rary cor­po­rate sys­tem aims to sep­a­rate gov­ern­ment ad­min­is­tra­tion from busi­ness op­er­a­tions by re­struc­tur­ing them into lim­ited com­pa­nies. As a re­sult, SOEs can func­tion as ef­fi­ciently as other busi­nesses. Cor­po­rate gov­er­nance re­form is one of the key goals of SOE re­form.

Ac­cord­ing to the plan, the re­form will pro­ceed with dis­ci­plined op­er­a­tions when han­dling SOE own­er­ship struc­ture and cor­po­rate debts.

For cen­tral SOEs that be­come wholly State-owned en­ter­prises, regis­tered as­sets will be cal­cu­lated ac­cord­ing to the net as­set value of the pre­vi­ous year.

Those that be­come en­ter- prises with di­verse eq­uity struc­tures will go through spe­cific pro­ce­dures, in­clud­ing as­set ver­i­fi­ca­tion, ap­praisal and fi­nan­cial au­dit.

In ad­di­tion, the mixed-own­er­ship re­form, which di­ver­si­fies the share­hold­ing struc­ture of SOEs, will take off in the sec­ond half of this year.

The re­form will in­tro­duce pri­vate or for­eign in­vest­ment in the share­hold­ing of SOEs. Oil and gas com­pa­nies will be at the fore­front.

To make SOEs leaner and health­ier, the State-owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion also plans to re­duce the num­ber of cen­tral SOEs to un­der 100 this year, with coal, steel and heavy equip­ment man­u­fac­tur­ing in­dus­tries in the spot­light.

“Re­duc­ing the num­ber it­self is not the goal of re­struc­tur­ing. We care more about what the re­forms will ac­tu­ally bring,” said Peng Hua­gang, deputy sec­re­tary-gen­eral of SASAC. “We are not seek­ing abrupt change. We look for a chain re­ac­tion.”

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