More SOEs to be reformed
Mixed-ownership pilot scheme making progress, says NDRC
China has included another 31 State-owned enterprises (SOEs) in a pilot mixed-ownership reform scheme, an official with the country’s top economic planner said Wednesday.
The third round of the mixed-ownership reform program will involve both centrally and locally administered SOEs, according to Meng Wei, spokesperson for the National Development and Reform Commission.
“We are losing no time in helping the SOEs draw up reform plans,” Meng said at a press conference.
So far, two rounds of pilot mixed-ownership reform programs have been launched, involving 19 SOEs in industries ranging from electrical services to civil aviation. The reform aims to bring private and even foreign investment into the companies.
Meng said over two-thirds of the 19 SOEs have seen the introduction of outside investors, registration of new firms, restructuring of corporate governance and establishment of internal incentive systems.
The reform has produced results, improving the SOEs’ strength and lowering their leverage, she said.
The first two rounds of reform mainly covered central SOEs such as China Eastern Air Holding Company and China Southern Power Grid.
Overcapacity, poor corporate governance, and low labor productivity have dragged down profits at SOEs in recent years, so China has launched a series of reforms to invigorate the companies, including changing their shareholding structure and spinning off non-core assets.
According to data from the Ministry of Finance, combined SOE profits rose 24.9 percent year-on-year in the first three quarters of this year, quickening from the 21.7 percent expansion seen in the first eight months.
The 19th National Congress of the Communist Party of China held last month indicated that the Chinese authorities will seek to maintain the dominance of SOEs in key strategic sectors, while advancing them up the value chain to support economic development, according to a report Fitch Ratings released on October 30.
The reform agenda will continue to focus on consolidation, with the aim of creating national champions that can lead development. An increase in hybrid ownership structures is also likely, as the government looks to increase its presence in emerging sectors, the report noted.