China to change state-owned firms into cor­po­ra­tions

Muscat Daily - - BUSINESS -

Bei­jing, China - China said on Wed­nes­day it would move to trans­form all state-owned com­pa­nies into cor­po­ra­tions by the end of this year, as part of ef­forts to re­form the scle­rotic in­dus­trial gi­ants.

China has pledged for years that it would take steps to re­form the cen­trally-run busi­nesses, which dom­i­nate cru­cial in­dus­tries rang­ing from power and steel to avi­a­tion.

But vested in­ter­ests have re­sisted the at­tempts to re­struc­ture the mas­sive en­ter­prises, which are among the coun­try’s largest em­ploy­ers and have cre­ated pow­er­ful fief­doms for the bu­reau­crats that run them.

State-owned en­ter­prises (SOEs) man­aged by the cen­tral gov­ern­ment should aim to be­come ‘lim­ited com­pa­nies or cor­po­ra­tions’ by the end of the year, ac­cord­ing to a state­ment on the web­site of the State Coun­cil, China’s Cab­i­net.

The change will help ‘build a mod­ern en­ter­prise sys­tem and im­prove the mar­ket-ori­ented man­age­ment mech­a­nism’, it said.

Ninety per cent of China’s state en­ter­prises have al­ready been turned into cor­po­ra­tions, ac­cord­ing to the state­ment.

It did not say whether the com­pa­nies will be opened to pri­vate in­vest­ment or could be listed on the coun­try’s stock mar­kets.

The an­nounce­ment fol­lows com­ments ear­lier in the month from Pres­i­dent Xi Jin­ping call­ing for au­thor­i­ties to deepen SOE re­form by ‘fo­cus­ing on the es­tab­lish­ment of a mod­ern cor­po­rate gov­er­nance sys­tem’.

He de­scribed SOEs as an ‘im­por­tant foun­da­tion for na­tional de­vel­op­ment’ but said over­haul­ing them was im­por­tant to en­hance their ‘vi­tal­ity, com­pet­i­tive­ness and risk re­sis­tance’, ac­cord­ing to the of­fi­cial Xin­hua news agency.

China’s lum­ber­ing sta­te­owned gi­ants have long been a drag on the econ­omy, sad­dled with mas­sive debts and over­ca­pac­ity far ex­ceed­ing do­mes­tic de­mand.

While the gov­ern­ment recog­nises the need for re­struc­tur­ing, it lacks the po­lit­i­cal will to make the nec­es­sary re­forms, fear­ing that mass lay­offs at the un­der­per­form­ing firms could lead to so­cial in­sta­bil­ity.

Chi­nese Pres­i­dent Xi Jin­ping

Newspapers in English

Newspapers from Oman

© PressReader. All rights reserved.