At the State Council executive meeting on Dec 9, how to further promote upgrading State-owned enterprises (SOEs) was discussed. Premier Li Keqiang stressed the importance of SOEs and pointed out that their current problem is profit decline.

“Governmental work should focus on the development of the economy, while enterprises should focus on increasing profit,” the Premier said. “Many reasons caused the current problem, thus specific research needs to be done.”

The Premier said that some SOEs in construction and building materials industries still made a profit despite the market shrinkage. One participant explained the reason was that these enterprises introduced market mechanism, and never stopped trying to expand in the global market.

“They can provide what their customers want, thus they grab market demand,” Premier Li added. SOEs should face the market and meet the demand of the market, the Premier said. “Innovation in science and technology and mechanism is most important for SOEs’ development. They should fully utilize the domestic as well as overseas market,” the Premier said.

Premier Li asked related departments to analyze and research SOEs’ reports and give categorized instructions.

“We won’t interfere with SOEs’ operation,” the Premier said. “We see a company from its financial statement.”

The Premier also asked related departments to supervise production overcapacity and urge volume control. “Another thing is to promote the ownership reform of SOEs’ many subsidiary companies,” Premier Li said.

“We will never get back to monopolies,” the Premier said. “We should combine the regrouping and mixed-ownership reform to ensure that State-owned assets maintain or increase their value.”