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Reform of State-owned enterprises will result in major benefits

Updated: Sep 16,2015 5:18 PM

The CPC Central Committee and the State Council have always attached great importance to the reform of State-owned companies, with a series of measures being adopted over the past three decades and more.

Such reform is an important part of the country’s efforts of taking the path of developing socialism with Chinese characteristics.

In the new era, the reform should be firmly continued, by focusing on the following major issues.

First, make State-owned enterprises stronger and better.

State-owned companies, under the ownership of the people, are important driving forces of China’s modernization and a guarantee of the people’s interest. To make such companies stronger and better helps to strengthen the economy, beef up defense capabilities, enhance national cohesion, as well as raise China’s status internationally. At the same time, it should also be made clear that State-owned companies are complementary with that of other types of ownership.

It is a key target of reforming State-owned enterprises in the new era to make them better and stronger. The reform helps to maintain and increase the value of State-owned assets, improve the competitiveness of the economy, and increase the functions of State-owned assets. To do so, it requires efforts to cultivate a group of core State-owned enterprises that are able to innovate and compete globally.

Specifically, efforts should be made to innovate relevant systems and mechanisms, to form a State-owned assets management and modern corporate system and market-oriented operation mechanisms that satisfy the current demands. Also, the State-owned assets should be encouraged to flow to key sectors that are closely related with national security, the economy and people’s living conditions, and infrastructure. More efforts are also needed to strengthen the companies’ capability to innovate, thus improving the efficiency of labor, knowledge, technology, management and capital. At finally, State-owned companies should be supported to participate in the construction of the “One Belt and One Road Initiative” and promote international production capacity cooperation.

Second, stick with socialist market economic reforms.

This is the necessary requirement to increase the vitality and competitiveness of State-owned companies.

In order to compete with Western multinationals at home and abroad, State-owned companies have to deepen reforms, get familiar with the international market environment, adapt to global rules thus forming their own competitive edges.

While the management system and operation mechanisms of State-owned companies have undergone significant changes after three decades of reform, there are still some deep-rooted problems that fall short of the demands of socialist economic development.

Therefore, efforts should be made to transform the functions of the government, giving more autonomy to enterprises; promote the reform to introduce corporate and shareholding systems, improving the companies’ market-oriented operation mechanism; and to create the conditions for State-owned enterprises to engage in fair competition as independent market participants.

Third, enhance supervision over State-owned assets.

The reform of State-owned enterprises, primarily, is to enhance supervision to avoid the loss of State-owned assets.

In recent years, though a series of measures have been adopted to strengthen supervision, some corruption cases in State-owned enterprises still revealed a serious loss of State-owned assets.

Efforts must be made to punish corruption, while pushing forward the reform of State-owned companies.

To do so, supervision should be enhanced within the enterprises to avoid the abuse of rights and an external board system should be improved to further supervise key sectors and links as well as State-owned assets abroad.

Also, the authorities should strengthen inspection and carry out tougher punishment to ensure the safety of State-owned assets and information should also be released in a timely fashion to inform the public on the operation of State-owned assets. Mechanisms should be set up and improved to punish those found responsible of transgressions.

Fourth, enhance the Party’s leadership of State-owned enterprises.

Over the past three decades since reform and opening up, a fundamental reason for the major progress achieved by State-owned enterprises’ reforms and development was the Party’s leadership.

The Party’s leadership is the important guarantee of making the State-owned companies stronger and better, and it is also a must in deepening reforms of State-owned companies.

Efforts should be done to combine the Party’s leadership with the management of State-owned companies.