Opinion | No better time for fundamental reform of China's state enterprises

The Chinese government's Central Economic Work Conference that concluded last week sets out the priorities and policy directions to further the country's growth. While these are important for economic planning in the short term, reform remains China's best bet for development in the longer term.

We should make 2014 the Year of Reform and roll out the many measures proposed by the party's third plenum.

Things are already moving as far as state-owned enterprises and assets are concerned. Within a month of the launch of the plenum's resolution, Shanghai has accelerated its pace of change while Shandong, Guangdong, Chongqing and others have begun to initiate market reform.

China's state-owned enterprises have long dominated the market. Hence, the resolution's call to clarify the relationship between government and market in the economy, so the market can play a "decisive role" in the allocation of resources, cannot be more timely.

There's no lack of good ideas of how state-owned assets can be reformed. Reorganising state assets and encouraging private capital to invest in state-owned enterprises - to name but two - are workable, complementary ways to change state-owned enterprises for the better.

In recent years, the sheer dominance - and influence - of state players in the market has skewed debate about state-owned enterprises. As soon as the topic of property rights reform is broached, we hear dire warnings about the loss of state capital; every time there is any discussion of the harm of monopolies in the power and telecommunications sectors, there will be an outcry about the importance of safeguarding national security; and anyone who calls for the better management of state assets is accused of advocating the evils of privatisation. In this environment, it seems, making state-owned enterprises more efficient and stronger are the only acceptable changes.

Many state-owned enterprises make substantial profits, thanks to their market dominance and the government's hefty subsidies and generous stimulus in the wake of the 2008 financial crisis. But in terms of return on assets, return on equity and other such measures of performance, they compare poorly with private companies and foreign-owned companies.