State-Owned Enterprises

Beijing selects six state-owned enterprises for reform trials

PUBLISHED : Tuesday, 15 July, 2014, 7:54pm
UPDATED : Tuesday, 15 July, 2014, 7:54pm

The mainland authorities have selected six central government-controlled groups for reform trials aimed at introducing more competition in the state sector and reducing government intervention.

State-owned Assets Supervisory and Administrative Commission (Sasac) spokesman Peng Huagang, who also heads the agency’s leading panel for deepening reforms, announced the decision at a press briefing on Tuesday.

State Development & Investment Corp (SDIC) and Cofco, China’s largest agricultural products and food supplier, would enter into a trial for transformation into state capital investment companies, Peng said.

This trial would involve shifting Sasac’s function to mainly supervising how efficiently capital was used, he said.

The regulator has been criticised for intervening too much in state-owned enterprises’ (SOEs) operations and asset management, which has contributed to SOE returns being stuck, on average, in single digits for nearly two decades.

Wen Zongyu, director of the state-owned economy bureau at the Ministry of Finance’s Institute of Fiscal Science, welcomed the trial on state capital investment companies, saying it would help boost the companies’ efficiency.

But Wen said that the rest of the trials announced failed to touch the most state-dominated sectors, such as oil, telecommunications, power and aviation.

Peng said China National Pharmaceutical Group and China National Building Materials Group had been selected for a trial of running a mixed-ownership structure with participation from private capital.

The two groups, as well as China Energy Conservation and Environmental Protection Group and XinXing Cathay International Group will also carry out an experiment allowing their boards, rather than Sasac, to select senior managers, evaluate officials’ performance and set salaries.

XinXing Cathay is engaged in metal smelting and special equipment making, among other businesses.

In the fourth trial, as the top leadership’s anti-corruption campaign deepens, discipline inspection teams would enter and monitor key managers’ practices at two to three unspecified SOEs, Peng said, without giving details.