SOEs' restructuring set to advance

Steps taken to avoid repeated investments, competition overlap; accelerate growth of enterprising pioneers

China plans to advance the strategic restructuring and professional integration of its State-owned enterprises in 2023, especially in the areas of medical and health care, equipment manufacturing and mineral resources, government officials and experts said.

The industries of product testing, coal and electricity will also be included in the government's plan to further deepen the reform of its SOEs this year, according to the State-owned Assets Supervision and Administration Commission of the State Council.

These efforts are meant to help SOEs avoid duplication of investment and homogeneous competition in which companies offer the same products or services. It is also meant to help accelerate the growth of pioneers in modern industrial chains.

The government announced that China had completed all the major tasks of its three-year plan for the reform of SOEs (2020-22) in January, said Peng Huagang, secretary-general of the commission.

Driven by this trend, China Water Conservancy and Electricity International Co Ltd, a subsidiary of China Three Gorges Corp, was transferred to China Communications Construction Co Ltd in January.

Power Construction Corp of China, known as PowerChina, also transferred the ownership of its 30 affiliated hospitals and clinics to China General Technology (Group) Holding Co Ltd in January, a move in response to the government's call to divest assets that are not within its main line of businesses.

"The work of ownership transfers will be completed within the first quarter of 2023," said Ding Yanzhang, PowerChina's board chairman.

A total of 37 centrally administered SOEs, including Sinosteel Group Corp Ltd, China Baowu Steel Group Corp, COFCO Corp and China Grain Reserves Group Ltd, conducted 25 professional integration activities in 2022.

The number of central SOEs has been reduced from 117 in 2012 to 98 this year via mergers and reorganizations, according to SASAC.

Promoting the strategic restructuring and specialized integration of central SOEs is a vital step in accelerating the optimization of the layout and structural adjustment of the State-owned economy, said Weng Jieming, SASAC's vice-chairman.

In addition to maintaining the stability of the industrial and supply chains in the country, these actions will accelerate the cultivation of world-class enterprises with global competitiveness, Weng said.

"The policy is aimed at achieving economies of scale through innovative application of resource integration to enhance the quality and efficiency of SOE development," said Zhou Lisha, a researcher with the Institute for State-owned Enterprises at Tsinghua University.

In a key meeting held in Beijing in early February, SASAC said that it would guide SOEs to develop strategic emerging industries and help build a modern industrial system with orderly links and high efficiency.

The government plans to accelerate the construction of world-class enterprises in all respects. It also plans to pursue outstanding products, prominent brands, advanced innovation and modern governance, as well as aims for excellence by benchmarking, adopting category-based policies and focusing on concrete actions, the commission said in a statement after the meeting.

In terms of cultivating modern industrial chain pioneers, SASAC said that nearly 1 trillion yuan ($143.6 billion) had been invested by 16 central SOEs, including State Power Investment Corp, China Electronics Technology Group Corp and China Communications Construction Co Ltd. This was done to strengthen and supplement industrial chains in recent years. Over 90 percent of their goals for 2022 were fulfilled, officials said.