China unveils stock ownership plan for state enterprise employees
Workers will be offered chance to take stake in companies in a move seen as a small but significant step towards partial privatisation
The mainland will allow minority ownership in some state-owned enterprises for people who actually work there, in a partial privatisation plan of its bloated state industrial behemoth.
Borrowing a few pages from the old playbooks of Margaret Thatcher in the 1980s, the government has officially given the go-ahead for employee stock ownership plans at state-owned enterprises with a few key caveats: no more than 30 per cent of equity in each company should be offered to employees and no individual should own more than 1 per cent.
Regulators’ silence on Communist Party presence in listed state companies is deafening
The State-owned Assets Supervision and Administration Commission is likely to approve about 10 state enterprises under the central government’s control and a handful of state firms in the hands of local governments, to start employee ownership plans this year.
Beijing will review the details in late 2018 to decide whether to roll out the scheme on a broad basis.
It is so far one of the most concrete solutions to revitalise the inefficient state sector. According to numbers published by the Finance Ministry, the combined equity of SOEs outside the financial sector was 42.4 trillion yuan (HK$49.58 trillion) by the end of June. But their gross profit was just 1.1 trillion yuan in the first half. The return on equity, which measures how well shareholder money is used, was no better than lending interest rates charged by banks.