China lists 400 SOEs for market reform

The Chinese government has listed about 400 State-owned enterprises (SOEs) for market reforms by 2022, signaling policymakers’ continued determination to carry out broad reforms of the country’s massive Stateowned assets.

The State Council, China’s cabinet, identified the SOEs, including both central and local SOEs, and instructed each to draft a comprehensive reform plan by the end of next month, the China Securities Journal reported on Wednesday.

Feng Liguo, a research fellow at China Minsheng Bank’s research center, told the Global Times on Wednesday that this round of SOE reforms is much bigger in scale compared with those of past years, when only several enterprises owned by the government were chosen as pilot participants.

These listed SOEs must make breakthroughs in mixed-ownership reform, corporate governance structures, market-oriented operating mechanisms, incentive mechanism and other leftover problems, the report said.

“The unstable external environment might bring some uncertainties to the reform but it is vital now to resolutely advance it. The reform must be diversified as well, depending on the situation and businesses of different companies, instead of a one-size-fitsall approach,” Feng noted, referring to an escalating trade war with the US.

The SOE reforms would enter into a faster development period for the remainder of the year, and pilot enterprises’ experience would be expanded to a larger range, the report said, citing Dai Kang, chief investment strategist of GF Securities Co.

Profit growth in SOEs accelerated in the first half of the year. Combined profits reached 1.72 trillion yuan ($253 billion), up 21.1 percent year-on-year, according to a Xinhua report.

By the end of June, total assets of SOEs reached 171 trillion yuan, up 9.4 percent from a year earlier, Xinhua reported.

Feng noted that reform should also focus on traditionally State-owned areas such as telecommunications and railways. Since “Chinese private enterprises have already showed that they could do well in sectors including aviation, and postal and delivery services, reforms could be more bold and resolute.”

“The top design of China’s SOE reform is very clear and mature. The next step is to resolutely realize it, and the finalization of the name list is a positive signal, as well as a good start,” Feng noted.