Reform to forge global competitiveness of SOEs

SASAC urges firms to improve leadership, open up to overseas markets

Managers of State-owned enterprises (SOEs) must redouble efforts to deepen reforms, to promote their innovative development and to expand business openness, so as to increase their global competitiveness, said Xiao Yaqing, head of the State-owned Assets Supervision and Administration Commission (SASAC), on Tuesday.

SOEs should uphold the principle of Party leadership while improving the professionalization of management, establishing standard boards of directors and strengthening the board’s decision-making abilities, Xiao wrote in an article published on Tuesday in Qiushi Journal, a bi-monthly periodical published by the Central Committee of the Communist Party of China.

Xiao also mentioned the need to streamline SOEs, concentrating them in industries related to national security and the country’s fundamental economic lifeline. Unproductive assets, overcapacity and “zombie assets” were cited by Xiao as problems to be solved in order to increase the overall efficiency of SOEs.

Technology is also a focus of SOE reform. Xiao said China’s public companies must aid the nation’s scientific and technological innovation 2030 project by building more national technological innovation centers, research and engineering laboratories, and other research and development institutions to discover disruptive technology and bring forward the industries of the future.

Citing the development achieved in China in the last 40 years thanks to the reform policy initiated in 1978, Xiao exhorted SOEs to continue opening up to international markets. In addition to private companies, foreign capital is welcomed to participate in SOE reform. Furthermore, innovative ownership structures will be explored to help SOEs and foreign companies cooperate and help them learn from each other, to facilitate investment in China and abroad, and to support partnerships with foreign companies in developing countries, Xiao continued.

Eventually, SOEs will become globally competitive, world-leading companies, said Xiao, who pledged to continue improving efficiency and management quality of SOEs.

SOEs also have a special responsibility to promote the Belt and Road (B&R) initiative, Xiao noted. They are to focus on key investment projects, as well as build infrastructure and industrial and energy capacity in a new form of win-win cooperation with China’s B&R partners.

But Xiao cautioned that Chinese companies must respect local laws and customs, uphold integrity in their operations and provide high-quality, safe and healthy goods and services wherever they go in order to earn the trust and acceptance of local customers.