Govt to push SOE re­form

Not enough progress seen so far: ex­perts

Global Times - - Front Page - By Xie Jun

“The govern­ment needs to ac­ti­vate the SOE re­form to set other re­forms in mo­tion.”

Li Jin

Ex­pert on State-owned en­ter­prise re­form

The govern­ment’s re­cent pledge to put re­form of do­mes­tic State-owned en­ter­prises (SOEs) in a “cen­tral po­si­tion” shows the coun­try’s de­ter­mi­na­tion to build a mar­ket-ori­ented econ­omy, ex­perts said on Wed­nes­day.

Chi­nese Vice Premier Liu He said dur­ing an SOE re­form fo­rum held in Bei­jing on Tues­day that the govern­ment should re­al­ize the cen­tral role of deep­en­ing SOE re­forms, the govern­ment web­site re­ported.

“The govern­ment should have this line of think­ing – that it is bet­ter to break one fin­ger than to hurt 10,” Liu said, adding China must “bravely, prac­ti­cally pro­ceed with the SOE re­forms.”

The govern­ment’s pledge to pur­sue SOE re­form comes at a time when some over­seas coun­tries, par­tic­u­larly the US, have ac­cused China of not be­ing a mar­ket econ­omy. The Chi­nese econ­omy has also been pres­sured by var­i­ous ex­ter­nal fac­tors, such as global fi­nan­cial fluc­tu­a­tions and the Sino-US trade dis­pute, and some over­seas or­ga­ni­za­tions have marked down their ex­pec­ta­tions for China’s eco­nomic growth prospects for 2018 and 2019.

In Novem­ber 2017, the US sub­mit­ted a state­ment de­scrib­ing China as a non-mar­ket econ­omy to the World Trade Or­ga­ni­za­tion, ac­cord­ing to me­dia re­ports.

Li Jin, an ex­pert on SOE re­form, said that the govern­ment’s call for SOE re­form is a kind of re­sponse to the world, show­ing that China is un­changed and won’t fal­ter in mov­ing to­ward a more mar­ket-ori­ented econ­omy.

“The claim about the cen­tral po­si­tion of SOE re­form shows that of all China’s cur­rent re­form mis­sions, such as tax re­form and oth­ers, SOE re­form will have the most de­ci­sive role. The govern­ment needs to ac­ti­vate the SOE re­form to set other re­forms in mo­tion,” Li told the Global Times on Wed­nes­day.

Po­ten­tial ben­e­fits

Ye Hang, an eco­nomics pro­fes­sor with the Col­lege of Eco­nomics at Zhe­jiang Univer­sity, said that as the pri­vate sec­tor is go­ing through a hard time, the govern­ment wants SOEs to play a greater role in boost­ing the do­mes­tic econ­omy.

In his speech, Vice Premier Liu listed six di­rec­tions for push­ing for­ward the SOE re­forms, in­clud­ing pro­ceed­ing with mixed-own­er­ship re­form, push­ing through mar­ket-ori­ented op­er­at­ing mech­a­nisms and re­form­ing the au­tho­rized op­er­a­tion sys­tem.

Ex­perts pointed out that the SOE re­forms car­ried out so far have not led to con­crete ac­com­plish­ments, and now the time has come for SOE re­forms to evolve from the “guide­line” level to the prac­ti­cal stage.

“Very few SOEs have made prac­ti­cal and pro­found changes in key ar­eas like the eq­uity struc­ture and salary sys­tem,” Feng Liguo, a re­search fel­low with China Min­sheng Bank, told the Global Times on Wed­nes­day. “Many SOEs have not rolled out clear, de­tailed plans or made them known to the pub­lic,” he said.

But once such re­forms are ac­ti­vated, they will bring sig­nif­i­cant changes to the do­mes­tic econ­omy, Feng said.

“Now there are about 150 tril­lion yuan ($21.7 tril­lion) worth of as­sets su­per­vised by the State-owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion, but the ma­jor­ity of those as­sets are ei­ther idle or in­ef­fi­cient. If the as­sets can be ac­ti­vated by the SOE re­forms, it will con­trib­ute greatly to the gen­eral econ­omy,” he noted.

But ex­perts also noted that push­ing SOE re­forms does not mean the govern­ment will ig­nore or down­grade the pri­vate sec­tor.

At a fo­rum on Septem­ber 28 in Taizhou, East China’s Zhe­jiang Prov­ince, Premier Li Ke­qiang noted that the govern­ment will in­sist on equal treat­ment for com­pa­nies with dif­fer­ent own­er­ship struc­tures, ac­cord­ing to in­for­ma­tion posted on

Vis­i­tors ex­pe­ri­ence bread mak­ing at State-owned Bei­jing Yili Bread Food Co in June.

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