Date
28 March 2017
China will encourage some state firms to rope in private investors and move to a mixed ownership model. Photo: Bloomberg
China will encourage some state firms to rope in private investors and move to a mixed ownership model. Photo: Bloomberg

China unveils guidelines for SOE reform

China has unveiled guidelines for restructuring of state-owned enterprises (SOEs), pressing ahead with a long-awaited plan to reform the bloated sector amid a slowing economy.

The guidelines, issued jointly on Sunday by the Communist Party’s Central Committee and the State Council, include plans to clean up and integrate some state firms and partial privatization of some entities.

Under the plan, SOEs will promote “mixed ownership” by bringing in private investment, and will also take necessary steps for more stock market listings, according to Xinhua news agency.

Private investors will be encouraged to buy stakes in SOEs, buy convertible bonds issued by the firms or swap shares with them.

Steps will be taken to curb corruption during reforms.

SOEs will be divided into commercial and public welfare-related businesses during the reform process.

Oil and gas, electricity, railways and telecommunications were identified as sectors that could be suitable for limited non-state investment, Reuters reported.

Overall, authorities expect “decisive results” by 2020.

Reform of underperforming SOEs is one of China’s most pressing needs. But if not handled well, the restructuring could lead to hundreds of thousands of people being laid off and social instability, Reuters noted.

China’s central government manages 111 companies under the State-owned Assets Supervision and Administration Commission, or SASAC.

Local governments own and manage around 25,000 state-owned companies. The sector employs nearly 7.5 million people.

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