Regulator to push mixed-ownership reforms

The National Development and Reform Commission, the country’s top economic regulator, will push forward mixed-ownership reforms by encouraging foreign and private capital to pour into State-owned enterprises to advance the reform and restructuring of the SOEs.

Foreign and private capital will be encouraged to join the State firms through buying stakes and convertible bonds from or conducting share rights swaps with SOEs, it said in a statement on Thursday.

The commission will also continuously improve the withdrawal mechanism for all types of capital to encourage the inflow of capital to foster more world-class, globally competitive companies, it said.

The NDRC said it would further improve the corporate governance of enterprises by ensuring that the injection of private and foreign capital would efficiently improve the management of State assets and promote new management and business models for SOEs.

Eastern Air Logistics, one of the first batch of SOEs mixedownership pilot projects, is a positive test case of Beijing’s ambitious plans to reform State-owned enterprises by bringing in foreign and private investors.

With the aim of building a world-class logistics company, Eastern Air Logistics saw its total revenue reach 7.751 billion yuan ($1.23 billion) last year, a 31.7 percent increase compared with the same period of 2016, after the reform. The return on net assets was 53.25 percent, far exceeding the average 15 percent of worldclass aviation logistics enterprises.

Peng Huagang, deputy secretary-general of the commission, said during a seminar at the Counsellors’ Office of the State Council that the pilot reform on employee ownership reform, conducted on the 10 mixed-ownership enterprises, has been successful with tangible results.

He said that by the end of 2017, the 10 enterprises have successfully attracted both private and overseas capital adding up to 1.83 billion yuan. At the same time, employee ownership reform is now being carried out in 126 enterprises in 21 regions across the country, Peng said.

China so far has had three rounds of pilot SOEs mixedownership reform, including one focusing on China Unicom — mainly through share issuance, to bring in private investment.

Aiming to invigorate the companies and ending the situation of overcapacity, poor corpo+rate governance and low labor productivity, which have dragged down profits at SOEs in recent years, the reform covers seven major sectors including power, petroleum, natural gas, railway, aviation, telecommunication and military industry.

The results of the reform have been broadly positive, said Xiao Yaqing, head of the State-owned Assets Supervision and Administration Commission.