Far from the spotlight, in secretive high-level meetings and company boardrooms, Beijing is drawing up one of the country’s thorniest reforms: an overhaul of China’s hugely inefficient state-owned enterprises (SOEs).
It shapes up as an eclectic mix of pilot projects and initiatives rather than a single blueprint, which makes it hard to judge their progress.
Yet, taken together, they probably mark the beginning of the biggest revamp of China’s state sector since the late 1990s, when Beijing set out to shore up industry before joining the World Trade Organisation.
In recent weeks, some of China’s top conglomerates have announced spin-offs and restructuring plans, local authorities have begun experimenting with new management structures, and political sources say a group focused on state enterprises is playing a prominent role in President Xi Jinping’s economic brain trust.
Last week, Citic Group, China’s flagship conglomerate, detailed plans to inject its main operating business into the firm’s Hong Kong-listed subsidiary Citic Pacific in a US$36.5 billion deal that should improve the management and outside scrutiny of the group.
During the last reform push, the government sold off or closed thousands of firms, laying off 30 million workers and cutting the number of state firms to about 110,000 from 260,000. That boosted efficiency, opened room for private businesses and cemented China’s position as the world’s factory floor.