Sasac denies report on opening state firms to investors

Media report said regulator planned to allow private investors to take stakes of up to 15pc

PUBLISHED : Tuesday, 12 November, 2013, 3:30am
UPDATED : Tuesday, 12 November, 2013, 3:30am

The mainland's state assets regulator yesterday denied a media report that the government would allow private investors to take a combined 10 to 15 per cent stake in state-owned enterprises.

The denial comes as the Central Committee of the Communist Party holds a four-day plenary session in Beijing to discuss economic reform plans for the next decade.

Whether and how the government will overhaul state-owned enterprises to reduce their monopoly status and give private investors a greater say will be a key barometer gauging the top leadership's move towards a more market-oriented economy.

China Daily, a leading English-language newspaper and part of the country's official media outlets, cited a senior official at the State-owned Assets Supervision and Administration Commission as saying yesterday that private companies were welcome to acquire larger shares in state-owned enterprises so that they could have a bigger say in the decision-making process.

"Private investors can set up private entities to take over 10 to 15 per cent of an SOE's equity," Bai Yingzi, director of the enterprise reform division of Sasac, was cited as saying.

But Zhang Jinting, the head of Sasac's news department, told the South China Morning Post that the paper's report was inaccurate. He said Bai had not talked about any policy changes.

The mainland has already let private and foreign investors hold shares in many listed state-owned enterprises.

Lu Zhengwei, the chief economist at Industrial Bank, said that even if China allowed private investors to take stakes in large non-listed state firms, the minority shareholders would not exert any significant impact on the enterprises' operations.

"The most important thing would be to improve corporate governance at SOEs, allowing the public to supervise how they are run," Lu said.

State-run companies have dominated the country's most lucrative sectors, such as energy, resources, banking and airlines. The call for Beijing to deepen reform of SOEs has intensified, as the state giants have mostly operated at much lower efficiency compared with private enterprises.

A number of senior officials at the powerful SOEs also have been found to be involved in corruption due to a lack of supervision.

China Ocean Shipping (Group), which incurred huge losses over the past two years, recently announced that its executive vice-president Xu Minjie had been under investigation because of suspected irregularities.