Rating agency Moody’s said Beijing’s pilot program to restructure ownership of state-owned enterprises (SOEs) is an encouraging, concrete step in realizing the economic reforms outlined by the Communist Party in November.
“This focused approach will reduce execution risk and allow the government to maintain strong control over the central SOEs that have high strategic importance to China,” Kai Hu, a Moody’s vice president and senior credit officer, said Monday.
The State-owned Assets Supervision and Administration Commission (SASAC) announced last week the six SOEs selected for the pilot program — China National Cereals, Oils and Foodstuffs Corp. (COFCO), State Development & Investment Corp. (SDIC), China National Building Materials Group Corp. (CNBM), China Energy Conservation and Environmental Protection Group, Xinxing Cathay International Group and China National Pharmaceutical Group Corp. (Sinopharm).
SASAC has tapped COFCO and SDIC as the first to become state capital investment companies, in theprocess gaining more discretionary power to make new investments and dispose of assets.
CNBM and Sinopharm were selected for the pilots to increase private ownership in SOEs. More SOEs are expected to be selected for the programs in the next one to two years.
Moody’s said the central government’s bid to diversify the ownership of central SOEs will further strengthen the entities’ standalone credit quality through better corporate governance and more efficient operations.
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