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China’s mixed-ownership reform to cover locally-administered SOEs

Updated: Jul 12,2017 7:19 PM     Xinhua

BEIJING — Locally-administered state-owned enterprises (SOEs) will be allowed to experiment with mixed-ownership reform in the rest of the year, the Economic Information Daily run by Xinhua reported on July 12.

Two groups of about 20 central SOEs have piloted the mixed-ownership reform scheme and made progress in the electricity, oil, natural gas, railway, civil aviation, telecommunications and defense industries.

The new batch of companies will mainly cover the defense, oil and gas industries.

The report quoted an official with the National Development and Reform Commission saying that the reform would introduce strategic investors, improve corporate equity structure, enhance buildup of board of directors and explore better ways to integrate leadership of the party and corporate governance.

Mixed-ownership reform is conducted through diversifying the shareholding structure of SOEs with the introduction of private or even foreign investment.

Employees of some SOEs are offered stocks as incentives. SOEs with good performance also receive investments from state-owned capital investment companies.

China has 102 central SOEs, which manage the bulk of the country’s state assets. But their monopolies in many sectors shut out smaller market entities and lead to low efficiency and poor service.

Mixed-ownership reform appears to be the most significant means to improve the efficiency of central SOEs.