Date
24 November 2017
The National Development and Reform Commission has indicated that the oil and gas sectors will be included in the mixed-ownership reform. Photo: Reuters
The National Development and Reform Commission has indicated that the oil and gas sectors will be included in the mixed-ownership reform. Photo: Reuters

Mixed-ownership reform to become a key investment theme

All eyes at home and abroad were on the Chinese Communist Party (CCP) 19th Party Congress when it kicked off last week.

Chinese President Xi Jinping presented achievements over past five years and also outlined a slew of ambitious plans for the next five years.

China’s economic priority has shifted from pursuing high growth to high-quality growth, and is at the critical stage of transforming its economic growth model, optimizing the economic structure and switching growth engines.

Looking back on the 18th party congress five years ago, the meeting outlined many new policy initiatives in environmental protection, urbanization and internet technology. All these measures have had deep impacts on the investment market over past five years. Policy initiatives highlighted in the 19th party congress will have similarly far-reaching implications.

Belt and Road is a key focus of the 19th party congress, and the authorities are set to continue or even step up economic structural reforms. Companies with potential for mixed-ownership reform will almost certainly get a lot of market attention.

The mixed-ownership reform in particular is at the core of the reform and is thus a very interesting theme.

China launched the first batch of target companies for mixed ownership reform in September 2016, including Unicom, China Eastern Air Holding Co., China Southern Power Grid Group, Harbin Electric and China Nuclear E&C Group etc.

The second batch has been expanded to sectors like power distribution, power equipment, high-speed railway, airline logistics, civil aviation information service, national defense, key commodities and finance.

The market is closely watching the direction of the third batch. It’s reported that COFCO Capital Investment Co, China National Gold Group Gold Jewelry Co. will be on the list.

The National Development and Reform Commission also indicated that the oil and gas sectors will be targeted, too. China’s top three oil companies are likely to be included in the third batch.

This article appeared in the Hong Kong Economic Journal on Oct. 23

Translation by Julie Zhu

[Chinese version 中文版]

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RT/RA

Senior investment banker

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