Private investors are getting a bigger chance to take minority stakes in state firms as China pushes ahead with plans for “mixed ownership” of the 143-trillion-yuan (US$21.2 trillion) sector in the run-up to the Communist Party’s key national congress later this year.
While the party will continue to have the final say in the country’s biggest industrial conglomerates, Beijing is banking on an influx of private investors to revive bloated and inefficient state players, with particular emphasis on the electricity, petroleum, natural gas, railway, civil aviation and defence sectors.
By selling off equities or even state assets the authorities are aiming to cut overall debt in the state sector. Earlier this week the State Council announced that all big state enterprises under direct control of the central government must become joint-stock companies by the end of this year, helping pave the way for the equity deals.
“It’s preparation for the substantial reform in the future,” said Zhou Fangsheng, a veteran observer of state sector reform and a former official at the State-owned Assets Supervision and Administration Commission (Sasac).
There are signs the move is already under way. Last month China Eastern Airlines sold a 55 per cent equity stake in its air cargo arm, Eastern Air Logistics, to private investors and employees.