China urges SOE modernization through mixed ownership reform

BEIJING -- The State Council has issued a new guideline urging State-owned enterprises (SOEs) to accept mixed ownership and modernize.

SOEs must improve their management through market-oriented reform while adhering to government guidance, said the guideline released on Thursday.

All kinds of capital are encouraged to invest in SOEs.

As SOEs face global competition, China is trying to attract private investors to give them a new lease of life. However, state capital should maintain "the absolute controlling position," especially in fields relating to national security, said the guideline.

SOEs in industries with sufficient market competition should actively take in other State-owned capital as well as private capital, the guideline said.

Foreign capital is welcome in restructuring through a variety of methods including overseas mergers and acquisitions, cooperation in investment and financing and offshore financing.

The guideline stresses using global resources such as the market, technology and talent to promote mixed ownership, participate in international competition, and improve resource allocation.

China's SOEs are an important foundation for national development but are in urgent need of reforms as languid mechanism and poor management have resulted in declining profits.

China has about 150,000 SOEs, holding more than 100 trillion yuan ($15.7 trillion) in assets and employing over 30 million people. But they posted a 2.3-percent decline in profits in the Jan-July period.

Aiming to make SOEs more creative and internationally competitive, China issued a guideline earlier this month to deepen SOE reforms, in which it pledged measures to modernize SOEs, enhance management of State assets, promote mixed ownership and prevent the erosion of State assets.